Final Results

RNS Number : 0098A

ADVFN PLC

01 October 2009

 



ADVFN PLC

('ADVFN' or 'the Company')

Audited Results for the Year Ended 30 June 2009

ADVFN, Europe's leading stocks and shares website, announces its audited results for the year ended 30 June 2009

Highlights:

• EBITDA profits of £641,000 (2008: loss of £48,000)

• Operating loss reduced by 67% to £429,000 (2008:£1,308,000)

• Loss after tax down 39% to £535,000 (2008: £882,000)

• Loss per share reduced by 40% to 0.09p (2008: 0.15p)

For further information, please contact:

Clem Chambers 

Michael Hodges (Chairman) 

020 7070 0909 

Fiona Kindness, Grant Thornton Corporate Finance (Nominated Adviser)

020 7728 3414

CHIEF EXECUTIVE'S STATEMENT

ADVFN finished the year end to June 2009 in strong shape. Even as the worst economic crisis in living memory has unfolded we have ended the year with overall sales growth and a series of much improved financial numbers. 

Our EBITDA profit was £641,000.

We have not simply sailed through the 'credit crunch,' we have worked hard to optimise the business and this comes out in our figures, which show a much improved financial performance coming from a small increase in overall sales. Advertising sales has been under significant pressure during this period but has managed to hold at around previous year's level, showing a gross fall of 9% overall. This is a small drop in comparison to the kinds of slumps seen in print and TV advertising. While a drop, it represents a strong outcome and underlines the quality of our advertising product. Also feeling the pinch from the market crash, has been Equity Development, whose customers are listed SME and midcap companies many of which have experienced extremely harsh conditions. Considering the historic toughness of the economic environment, the improved results are a solid performance. While our subscription income has gone from strength to strength, we are just beginning to see some strength returning to our advertising demand and we expect to return to growth in this area in 2010.

We are making good overall progress in the UK and US, while our other markets continue to show subscription growth. With the launch of new products in the US we have seen our US business at Investors Hub and ADVFN start to take off strongly. This is particularly exciting. We have executed two significant corporate deals this year, the sale of Silicon Investor and the purchase of All IPO. The Silicon Investor deal enables us to rationalise our US focus and get paid to do it, while the All IPO purchase enables us to bring All IPO's technology under the ADVFN umbrella while gaining ADVFN access to a regulated company.

Financial overview 

These accounts have been prepared under International Financial Reporting Standards (IFRS) as adopted by the European Union. They show a strong improvement in core performance. Our EBITDA (earnings before interest, tax, depreciation and amortisation) is calculated by adding back amortisation and depreciation to operating profit. The comparative figure for 2008 includes only continuing operations. This shows a £641,000 profit against a loss of £48,000 last year. Over the same period our operating loss fell 67% (from £1.3m in 2008 to £429,000 in 2009) and loss after tax fell 39% (from £882,000 in 2008 to £535,000 in 2009). This significant progress was made against a small rise in sales, up 1% to £7.0m (2008: £6.9m).

Our new finance team has worked hard during this turbulent year to optimise our business processes and the improved performance, while sales remain almost unchanged, reflects solid achievement in this area. Overall the Company has had a strong year against one of the harshest economic backdrops in living memory.

Strategy

A strategy is meant to be a long term plan and I'm happy to say ADVFN's strategy remains, at the year end, the same as it was at the time of the last statement. '...to build ADVFN internationally as the leading destination for private investors looking for information and to generate revenue from advertising sales and subscription products. 

We are always working to enhance the service and create new technologies to keep the site fresh, while localising the platform for new markets. By innovation we try to create bundled products that give private investors information of a professional quality at a keen price. Where possible we work directly with our advertisers in a long term relationship to help them meet the needs of their marketing and business plans by tailoring our advertising opportunities. 

The ADVFN website is a significant technological achievement, a scalable platform streaming financial data from around the world 24/7/365. It is built to be able to grow to meet increasing demand, an important feature in today's tumultuous markets where demand for data and the supply of it from the markets has grown immensely. This architecture has allowed us to grow without expending huge amounts on new equipment, a key factor in our growth. Our ability to develop and maintain state of the art software has allowed us to grow overseas and so while we are the major player in this market niche in the UK, we can look to the rest of the world for growth. 

While still the mainstay of our income, the UK now only represents 18% of our website traffic, which has been an important strategic development in the last couple of years. This alone suggests that the potential for revenue growth is significant and that becoming less dependent on the local UK market puts us in a strong position in the current gloomy economic climate'.

We think that our strategic consistency is one of the main reasons why we have been so fortunate in the current hard times. As we have a long term focus, our income streams have a built in resilience. This has been key to our success. Our long term approach turns out to be a good policy for hard times. Riding out another crash validates our strategy and we will continue with it. Meanwhile our US sites, ADVFN US and Investors Hub are growing well.

Turnover

Our turnover has continued to grow for the 9th consecutive year. While sales have only achieved growth of 1%, this is still a great achievement considering the economic meltdown of the world economy during this period.

Operating Costs

We have focused on our costs this year and have chosen to be quite defensive. We have curtailed our hiring and we have reengineered our content offerings and our marketing to try and drive our cost base down. The straightened times have helped us in this and our overall performance has been enhanced by our new finance team through this process.

Research and Development

We continue to invest in the quality and design of our products. We believe continued investment in our research and development is fundamental to the continuing growth of the business and much of our cost base is effectively focused on developing products markets for the future.

Environmental policy

The Company as a whole continues to look for ways to develop our environmental policy. It is our objective to improve our performance in this area. 

Cash

In these post credit crunch times shareholders look to our cash balances for reassurance. This was £1,509,000 at the end of the year down just £89,000 on the year before. (£1,591,000 2008) This strong overall improvement reflects strong subscription growth, counterbalanced by mild advertising weakness with a drop in performance from Equity Development. 

Summary of key performance indicators

	2009 Actual	2009 Target	2008 Actual	2008 Target
Average head count	48	50	54	55
ADVFN registered users	1.72M	1.6M	1.44M	1.2M

 With the harsh economic environment informing our development we have been less aggressive in replacing staff losses than in the past and as a result have reduced our headcount below target. Meanwhile the key metric of registration to ADVFN has come in well ahead of target helped by the very economic conditions that have seen us hire more cautiously.

Future outlook for the business

Our strategy remains the same; to grow ADVFN internationally. This year has seen the most turbulent period for the UK and world economy in living memory. On balance this has done us no harm, a happy circumstance when compared to most businesses. This alone makes us very optimistic for the future. Given that we have survived the last 12 months, we should be well placed to flourish in any future recovery.

Our US activity is now growing strongly, the US and Brazil are performing well and the minor territories continue to show promise. Equity Development, whilst having a tough period, looks to have reached the base for a recovery. Meanwhile the acquisition of ALL IPO (in July 2009) not only simplifies ADVFN's corporate structure, its personnel and technology provide a solid opportunity to broaden the ADVFN platform. While the future of the market and the economy is uncertain it seems that ADVFN looks set for another year of progress and organic growth. 

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 have set out below the principal risks facing the business. 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. 

Economic downturn

While it appears that torrid times in the stock market may not have a detrimental effect on subscriptions, overall economic strength does affect our advertising revenue. While currently subscription income is making up for advertising weakness, it is possible that this may not be the case under certain instances and that however well the Company has overcome recent difficult times, in volatile global economic times it is not inconceivable that ADVFN could be adversely affected. As such the senior management are constantly looking to our weaknesses and threats to try to minimise potential downsides.

High proportion of fixed overheads and variable revenues

A major 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 are implemented on a constant review basis. We have had a strong period of cost optimisations since our finance function was reorganised.

Product obsolescence 

The technology that we use and develop is always in flux. Products are subject to technological change and advance and resultant obsolescence. We are constantly innovating to keep up with growing demand, change in product and new developments both at a technical and a marketing level. 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

A growing proportion 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 uses forward foreign exchange contracts and other derivatives/financial instruments to reduce the exposure. Currently hedging is not employed. If currency volatility was extreme and hedging activity did not mitigate the exposure, then the results and the financial condition of the Company might be adversely impacted by foreign currency fluctuations.

People

We have a very dedicated team that is focused on creating the best possible service we can provide. I would like to thank them all for the hard work and dedication over the past year.

Clem Chambers 

Managing Director 

30th September 2009

Consolidated income statement
		12 months to  30 June	12 months to  30 June
		2009	2008
		£'000	£'000
Revenue		7,034	6,931
Cost of sales		(456)	(640)
Gross profit		6,578	6,291
Share based payment		(31)	(90)
Amortisation of intangible assets		(962)	(1,087)
All other administrative expenses		(6,111)	(6,422)
Total administrative expenses		(7,104)	(7,599)
Profit on disposal of assets		97	-
Operating loss		(429)	(1,308)
Finance income		12	57
Finance expense		(11)	(17)
Result from associates after taxation		(282)	(221)
Loss before tax		(710)	(1,489)
Taxation		175	775
Loss for the period from continuing operations		(535)	(714)
Loss for the period from discontinued operations		-	(168)
		(535)	(882)
Loss per share - from continuing operations	2
Basic and diluted (pence per share)		(0.09)	(0.12)
Loss per share - from continuing and discontinued operations	2
Basic and diluted (pence per share)		(0.09)	(0.15)

Consolidated balance sheet		30 June	30 June
		2009	2008
		£'000	£'000
Assets
Non-current assets
Property, plant and equipment		92	187
Goodwill		1,590	1,590
Intangible assets		2,297	2,577
Investments in associates		905	1,187
Trade and other receivables		204	182
		5,088	5,723
Current assets
Trade and other receivables		977	1,019
Current tax recoverable		65	163
Other financial assets (available for sale)		32	67
Cash and cash equivalents		1,509	1,591
		2,583	2,840
Total assets		7,671	8,563
Equity and liabilities
Equity
Issued capital		6,156	5,932
Share premium		7,758	7,710
Shares to be issued		-	249
Merger reserve		221	221
Share based payment reserve		456	425
Foreign exchange reserve		(18)	-
Retained earnings		(8,789)	(8,254)
		5,784	6,283
Non-current liabilities
Deferred tax		314	425
Borrowings - obligations under finance leases		11	31
		325	456
Current liabilities
Trade and other payables		1,533	1,771
Borrowings - obligations under finance leases		29	53
		1,562	1,824
Total liabilities		1,887	2,280
Total equity and liabilities		7,671	8,563

The financial statements were authorised for issue by the Board of Directors on 30 September 2009 and were signed on its behalf:

Clem Chambers

Managing Director 

Consolidated statement of changes in equity

	Share capital	Share premium	Shares to  be issued	Merger reserve	Share based payment reserve	Foreign exchange reserve	Retained earnings	Total  equity
	£'000	£'000	£'000	£'000	£'000	£'000	£'000	£'000
At 1 July 2007	5,870	7,600	332	221	335	(92)	(7,372)	6,894
Disposal of interest in associate	-	-	-	-	-	92	-	92
Net income recognised directly in equity	-	-	-	-	-	92	-	92
Loss for the period after tax	-	-	-	-	-	-	(882)	(882)
Total recognised income and expense						92	(882)	(790)
Issue of shares	62	110	(83)	-	-	-	-	89
Equity settled share options	-	-	-	-	90	-	-	90
At 30 June 2008	5,932	7,710	249	221	425	-	(8,254)	6,283
Exchange differences on translation of foreign operations	-	-	-	-	-	(18)	-	(18)
Net income recognised directly in equity	-	-	-	-	-	(18)	-	(18)
Loss for the period after tax	-	-	-	-	-	-	(535)	(535)
Total recognised income and expense	-	-	-	-	-	(18)	(535)	(553)
Issue of shares	224	48	(249)	-	-	-	-	23
Equity settled share options	-	-	-	-	31	-	-	31
At 30 June 2009	6,156	7,758	-	221	456	(18)	(8,789)	5,784

Consolidated cash flow statement
		12 months to  30 June	12 months to  30 June
		2009	2008
		£'000	£'000
Cash flows from operating activities
Loss for the period before tax		(710)	(1,489)
Net finance income in the income statement		(1)	(40)
Results for associates		282	221
Depreciation of property, plant & equipment		108	173
Amortisation		962	1,087
Gain on disposal of property, plant and equipment		(97)	-
Impairment of financial assets		35	5
Share based payments		31	90
Decrease / (increase) in trade and other receivables		20	(53)
(Decrease) / increase in trade and other payables		(238)	209
Net cash generated from operations		392	203
Interest paid		(11)	(17)
Income tax receivable		162	783
Net cash generated by operating activities		543	969
Cash flows from investing activities
Interest received		12	57
Payments for property plant and equipment		(22)	(62)
Purchase of intangibles		(682)	(811)
Disposal of interest in associates		-	132
Disposal of assets		106	-
Net cash used in investing activities		(586)	(684)
Cash flows from financing activities
Proceeds from issue of equity shares		23	9
Issue costs		-	-
Loans repaid (finance leases)		(44)	(61)
Net cash generated by financing activities		(21)	(52)
Net (decrease)/ increase in cash and cash equivalents		(64)	233
Exchange differences		(18)	-
Total (decrease)/ increase in cash and cash equivalents		(82)	233
Cash and cash equivalents at the start of the period		1,591	1,358
Cash and cash equivalents at the end of the period		1,509	1,591

Notes for the year ended 30 June 2009

1. Segmental analysis

The Company has a single class of business; that of developing and providing financial information primarily via the internet. The directors therefore consider that the Company's primary format for reporting segmental information is geographical by location of assets as this is the dominant source of the Company's risks and rewards. The Company also provides segmental information by the geographical location of its customers.

2009 Segmental analysis by location of assets	UK	The  Americas	Rest of the World	Total
	£'000	£'000	£'000	£'000
Revenue from external customers (rendering of services)	6,544	490	-	7,034
Loss for the period	(296)	(239)	-	(535)
Assets	5,873	1,798	-	7,671
Liabilities	1,141	746	-	1,887
Capital expenditure	15	7	-	22
Depreciation of property, plant and equipment	92	16	-	108
Amortisation of intangibles	810	152	-	962
Share of results of associates	(282)	-	-	(282)
Aggregate investment in associates	905	-	-	905

2008 Segmental analysis by location of assets	UK	The  Americas	Rest of the World	Total
	£'000	£'000	£'000	£'000
	Continuing	Continuing	Discontinued
Revenue from external customers (rendering of services)	6,410	521	-	6,931
Loss for the period	(466)	(248)	(168)	(882)
Assets	6,531	2,032	-	8,563
Liabilities	1,827	453	-	2,280
Capital expenditure	880	33	-	913
Depreciation of property, plant and equipment	110	63	-	173
Amortisation of intangibles	935	152	-	1,087
Share of results of associates	(221)	-	(168)	(389)
Aggregate investment in associates	1,187	-	-	1,187

Discontinued operations relate solely to ADVFN Japan K.K., an associated entity. The Company's interest in ADVFN Japan was sold during the year to 30 June 2008.

The following geographical segments are based on an analysis of revenue by the location of the Company's customers:

Revenue	2009	2008
	£'000	£'000
UK  - Continuing	4,840	5,141
The Americas	1,702	1,486
Rest of the world - continuing	492	-
Rest of the world - discontinued	-	304
	7,034	6,931

2. Loss per share

	12 months to  30 June	12 months to  30 June
	2009	2008
From continuing operations:	£'000	£'000
Loss for the year attributable to equity shareholders	(535)	(882)
Adjustments to exclude loss for the period from discontinued operations	-	168
Loss for the year from continuing operations attributable to equity shareholders	(535)	(714)
Loss per share from continuing operations
Basic loss per share (pence)	(0.09)	(0.12)
Diluted loss per share (pence)	(0.09)	(0.12)
Loss per share from discontinued operations
Basic loss per share (pence)	-	(0.03)
Diluted loss per share (pence)	-	(0.03)
	Shares	Shares
Issued ordinary shares at start of the year	593,192,435	586,979,305
Ordinary shares issued in the year (Note 23)	22,376,466	6,213,130
Issued ordinary shares at end of the year	615,568,901	593,192,435
Weighted average number of shares in issue for the year.	605,430,000	591,468,000
Dilutive effect of options	-	-
Weighted average shares for diluted earnings per share	605,430,000	591,468,000

The diluted loss per share does not differ from the basic loss per share as the exercise of share options would have the effect of reducing the loss per share and is therefore not dilutive under the terms of IAS 33.

3. Publication of Non Statutory Accounts

The financial information set out in this preliminary announcement does not constitute statutory accounts as defined in section 435 of the Companies Act 2006.

The consolidated balance sheet at 30 June 2009 and the consolidated income statement, consolidated statement of changes in equity, consolidated cash flow statement and associated notes for the year then ended have been extracted from the Company's 2009 statutory financial statements upon which the auditors' opinion is unqualified and does not include any statement under Section 498(2) or (3) of the Companies Act 2006.

The annual report and accounts will shortly be sent to shareholders and will be available on the Company's website, http://www.advfn.com/.

 

END

 

 

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