Final Results

RNS Number : 5102Q

ADVFN PLC

20 October 2011

 



 

ADVFN PLC

Audited Results for the Year Ended 30 June 2011

ADVFN, Europe's leading stocks and shares website, announces its audited results for the year ended  30 June 2011

Highlights:

·    Turnover up 7% to £9,167,000 (2010 restated: £8,591,000)

·    EBITDA* profit of £348,000 (2010 restated: £1,256,000)

·    Cash and gilts balance to £2,397,000 (2010: £2,300,000)

·    P&L (£862,000) (2010 restated: profit of £146,000)

·    Positive cash flow; 'net cash generated from operations' £595,000 (2010: £1,417,000) 

·    ADVFN's registered users base now over 2,200,000

(2010: 2,000,000)

For further information, please contact:

Clem Chambers,

ADVFN PLC CEO

0207 0700 909

Gerry Beaney

Grant Thornton Corporate Finance (Nominated Adviser)

0207 7383 5100

*EBITDA is calculated as the operating loss for the year before depreciation and amortisation charges.

CHIEF EXECUTIVE'S STATEMENT

ADVFN has had another strong year with turnover up 7% to £9,167,000. 2011 has been a pivotal year where we have begun the next phase of growth outside the UK.

We have made very good progress this year against a background which could hardly be described as easy. Our product and geographical diversity has served us well so that we have avoided many of the challenges other media players have had to contend with.

Subscriptions have been robust and advertising income has led our growth. The advertising lead growth is a vanguard of growth as it accelerates the broadening of our business to important new markets

Having strong sites in the UK, US and Brazil, we believe we have the necessary template now to expand into the emerging markets where audiences are vibrant and huge. Our strategy is to penetrate markets via sales offices, using advertising income to fund growth in the territories that warrant it most.

In line with this we have been opening regional sales offices in Japan, India and the Middle East and we have been focusing on expanding in these territories. This process is delivering the platform for growth in the coming years leveraging the considerable investment we have made over the last 10 years.

All sites have performed robustly against a backdrop of global financial uncertainty. The UK continues to prosper, Brazil has remained strong and continues to develop and the US continues to grow for our ADVFN and Investors Hub brands. We feel very positive about next year's prospects whatever the outcome of the markets and expect to see further progress even in the teeth of another crash.

Financial overview

These accounts have been prepared under International Financial Reporting Standards (IFRS) as adopted by the European Union.

These figures show an increase in sales of 7%, an EBITDA of £348,000 and cash flow from operations of £595,000.

We have been operating against a backdrop of a weakening dollar which has masked further underlying growth but as we are earning income in euro, US dollar, UK pounds and Yen we are to some extent hedged against the currency fluctuations of recent times.

Strategy

We are building out the business for the next phase of ADVFN's development which we see as taking us towards sales of £20,000,000 a year.

This year is another year of growth; a yearly goal we have achieved every year for the last 11 years.

The market opportunity for us in India, The Middle East, Mexico and the Philippines is large and involves a modest level of investment. The bulk of our platform for entering such large markets is already made so that each new office is a small measured risk. We expect each territory to come on stream in a 12 month set up window and to be quickly income generative thereafter.

Exposure to fast growing economies with active markets is the way forward for us, taking positive developments in each market and feeding them back into our global offering.

The size of the opportunity is sufficiently large to keep us very busy for a long time to come.

Operating Costs

We spend a great deal of time focusing on our cost base making sure we optimise the return on our outgoings where ever possible. As we enter this new phase we are earmarking resources to invest in growth. We have been hiring, increasing our technical platform and increasing marketing. This has been funded solely from positive cash flow which represents a strong financial and operational performance.

Research and Development

As always ADVFN never stops developing its technology and platform. With growing traffic and giant spikes of usage set off by the global economic chaos of recent times, ADVFN has adapted to supply the demand of a world hungry for updates the moment financial information is available. These demands have grown and grown over the years and we have seamlessly managed to keep up with growth on all fronts. This process will continue and represents a valuable and unique asset.

Environmental policy

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

Cash and GILTS

We are very happy to say that our improved general performance has directly translated to our cash and gilts balance. Our cash and GILTS balance at the end of the year was up £97,000 to £2,397,000, an increase of 4%

Summary of key performance indicators

	2011	2011	2010	2010
	Actual	Target	Actual	Target
Average head count	54	60	46	50
ADVFN registered users	2.2M	2.1M	2.0M	1.9M

Future outlook for the business

We are very comfortable of the prospects for next year and for that matter the years ahead. We are now rolling out ADVFN to more global audiences and feel assured that we have the people, the offerings and the technology to continue along the path we have set to be a global markets website with £100,000,000 in sales. In percentage terms we are as far away from that target today as we were from today's sales when we started out in 2001.

Principal risks and uncertainties:

Economic downturn

An extended economic down turn is not to be taken lightly. However the recent turmoil has been easily overcome and may even have benefitted the company. In addition this is the third time in the company's short life that it has had to navigate a financial crash and both times it has come through bigger and stronger.

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 and this process continues.

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. We are constantly building this team and have been hiring to enable us to grow during the next phase of our development. I would like to thank them all for their hard work and dedication over the past year.

Clem Chambers

CEO

19 October 2011

Consolidated income statement
		12 months to  30 June	12 months to  30 June
		2011	2010
	Note	£'000	£'000
			Restated
Revenue		9,167	8,591
Cost of sales		(538)	(404)
Gross profit		8,629	8,187
Share based payment		(84)	(43)
Amortisation of intangible assets		(1,089)	(1,149)
All other administrative expenses		(8,241)	(6,963)
Total administrative expenses		(9,414)	(8,155)
Operating (loss)/profit		(785)	32
Finance income		7	23
Finance expense		(5)	(8)
Gain on bargain purchase and associated fair value loss on previously held equity investment		-	(214)
Result from associates after taxation		-	(18)
Loss before tax		(783)	(185)
Taxation		(79)	331
(Loss)/profit for the period attributable to shareholders of the parent		(862)	146
(Loss)/earnings per share - from continuing operations
Basic and diluted (pence per share)	3	(0.14)	0.02

Consolidated statement of comprehensive income
		12 months to  30 June	12 months to  30 June
		2011	2010
		£'000	£'000
			Restated
(Loss)/profit for the period		(862)	146
Other comprehensive income:
Exchange differences on translation of foreign operations		253	(8)
Deferred tax on translation of foreign held assets		(46)	-
Total comprehensive income for the year attributable to shareholders of the parent		(655)	138

Consolidated balance sheet
		30 June	30 June	1 July
		2011	2010	2009
		£'000	£'000	£'000
Assets			Restated	Restated
Non-current assets
Property, plant and equipment		106	84	92
Goodwill		1,697	1,590	1,590
Intangible assets		2,584	2,973	2,297
Investments in associates		-	-	905
Trade and other receivables		119	113	204
		4,506	4,760	5,088
Current assets
Trade and other receivables		1,121	890	977
Current tax recoverable		75	92	65
Other financial assets (available for sale)		712	709	32
Cash and cash equivalents		1,716	1,599	1,509
		3,624	3,290	2,583
Total assets		8,130	8,050	7,671
Equity and liabilities
Equity
Issued capital		6,249	6,238	6,156
Share premium		7,941	7,900	7,758
Merger reserve		221	221	221
Share based payment reserve		533	485	456
Foreign exchange reserve		181	(26)	(18)
Retained earnings		(10,007)	(9,181)	(9,341)
		5,118	5,637	5,232
Non-current liabilities
Deferred tax		533	342	314
Borrowings - obligations under finance leases		1	6	11
		534	348	325
Current liabilities
Trade and other payables		2,455	2,052	2,085
Current tax		18	-	-
Borrowings - obligations under finance leases		5	13	29
		2,478	2,065	2,114
Total liabilities		3,012	2,413	2,439
Total equity and liabilities		8,130	8,050	7,671

Consolidated statement of changes in equity

	Share capital	Share premium	Merger reserve	Share based payment reserve	Foreign exchange reserve	Retained earnings Restated	Total equity Restated
	£'000	£'000	£'000	£'000	£'000	£'000	£'000
At 1 July 2009 as previously stated	6,156	7,758	221	456	(18)	(8,789)	5,784
Prior year adjustment	-	-	-	-	-	(552)	(552)
	6,156	7,758	221	456	(18)	(9,341)	5,232
Issue of shares	82	142	-	-	-	-	224
Exercise of share options	-	-	-	(14)	-	14	-
Equity settled share options	-	-	-	43	-	-	43
Transactions with owners	82	142	-	29	-	14	267
Profit for the period after tax	-	-	-	-	-	146	146
Other comprehensive income
Exchange differences on translation of foreign operations	-	-	-	-	(8)	-	(8)
Total comprehensive income for the year	-	-	-	-	(8)	146	138
At 30 June 2010	6,238	7,900	221	485	(26)	(9,181)	5,637
Issue of shares	11	41	-	-	-	-	52
Exercise of share options	-	-	-	(36)	-	36	-
Equity settled share options	-	-	-	84	-	-	84
Transactions with owners	11	41	-	48	-	36	136
Loss for the period after tax	-	-	-	-	-	(862)	(862)
Other comprehensive income
Exchange differences on translation of foreign operations	-	-	-	-	253	-	253
Deferred tax on translation of foreign held assets	-	-	-	-	(46)	-	(46)
Total comprehensive income for the year	-	-	-	-	207	(862)	(655)
At 30 June 2011	6,249	7,941	221	533	181	(10,007)	5,118

Consolidated cash flow statement
		12 months to  30 June	12 months to  30 June
		2011	2010
		£'000	£'000
			Restated
Cash flows from operating activities
Loss for the period before tax		(783)	(185)
Net finance income in the income statement		(2)	(15)
Loss from associates		-	18
Depreciation of property, plant & equipment		44	75
Amortisation		1,089	1,149
Gain on bargain purchase and associated fair value loss on previously held equity investment		-	214
Impairment of financial assets		(3)	24
Share based payments		84	43
Decrease in trade and other receivables		(237)	236
Increase/(decrease) in trade and other payables		403	(142)
Net cash generated from operations		595	1,417
Interest paid		(5)	(8)
Income tax (payable) / receivable		101	(17)
Net cash generated by operating activities		691	1,392
Cash flows from investing activities
Interest received		7	23
Payments for property plant and equipment		(66)	(30)
Purchase of intangibles		(571)	(570)
Purchase of UK Government gilts		-	(701)
Acquisition of subsidiary  (net of cash with subsidiary)		-	(22)
Net cash used in investing activities		(630)	(1,300)
Cash flows from financing activities
Proceeds from issue of equity shares		52	27
Loans repaid (finance leases)		(13)	(21)
Net cash generated by financing activities		39	6
Net increase in cash and cash equivalents		100	98
Exchange differences		17	(8)
Total increase in cash and cash equivalents		117	90
Cash and cash equivalents at the start of the period		1,599	1,509
Cash and cash equivalents at the end of the period		1,716	1,599

1.      Prior year adjustment

During the year the Group upgraded its reporting systems for its subscription website which enabled it to generate more accurate information over the unexpired level of live subscriptions at any period end.  The information generated by the new reports has enabled the Group to accurately quantify the level of deferred subscription levels at 30 June 2011 and prior year ends.  In prior years the Group had calculated deferred revenue using the information available to it, together with certain estimation techniques.

The new reports have identified that the deferred income calculated and reflected in the financial statements for prior periods was materially incorrect.  In accordance with IAS 8 'Accounting Policies, Changes in Accounting Estimates and Errors' the comparative financial statements have been restated.  The effect of the prior year adjustment on each line item within the prior year financial statements is set out below:

Consolidated income statement
	As originally reported 12 months to 30 June 2010	Prior year adjustment	As restated 12 months to  30 June 2010
	£'000	£'000	£'000
Revenue	8,475	116	8,591
Profit for the period attributable to shareholders of the parent	30	116	146
(Loss)/earnings per share - from continuing operations
Basic and diluted (pence per share)	-	0.02	0.02

Consolidated statement of comprehensive income
	As originally reported 12 months to 30 June 2010	Prior year adjustment	As restated 12 months to  30 June 2010
	£'000	£'000	£'000
			Restated
Total comprehensive income for the year attributable to shareholders of the parent	22	116	138

Consolidated cash flow statement
	As originally reported 12 months to 30 June 2010	Prior year adjustment	As restated 12 months to  30 June 2010
Loss for the period before tax	(301)	116	(185)
Decrease in trade and other payables	(26)	(116)	(142)
Other movements	1,744	-	1,744
Net cash generated from operations	1,417	-	1,417

2.      Segmental analysis

The directors identify reportable segments based upon the information which is regularly reviewed by the chief operating decision maker. The Group considers that the chief operating decision maker is the Board of Directors. The Group has identified two reportable operating segments, being that of the provision of financial information and that of research services. The provision of financial information is made via the Group's various website platforms. Research activities are provided by the Group's staff, primarily to corporate customers.

Two minor operating segments, for which IFRS 8's quantitative thresholds have not been met, are currently combined below under 'other'. The main sources of revenue for these operating segments is the provision of financial broking services and other internet services not related to financial information. Segment information can be analysed as follows for the reporting period under review:

2011	Provision of financial information	Research services	Other	Total
	£'000	£'000	£'000	£'000
Revenue from external customers	8,422	604	141	9,167
Depreciation and amortisation	(1,177)	(6)	(3)	(1,186)
Other operating expenses	(8,254)	(589)	45	(8,798)
Segment operating (loss)/profit	(1,009)	9	183	(817)
Interest income	7	-	-	7
Interest expense	(4)	(1)	-	(5)
Segment assets	9,178	216	23	9,417
Segment liabilities	(2,357)	(162)	(5)	(2,524)
Purchases of non-current assets	(662)	-	-	(662)

2010	Provision of financial information	Research services	Other	Total
	£'000	£'000	£'000	£'000
	Restated			Restated
Revenue from external customers	7,979	526	102	8,607
Depreciation and amortisation	(1,327)	(7)	(3)	(1,337)
Other operating expenses	(6,514)	(684)	(61)	(7,259)
Segment operating (loss)/profit	138	(165)	38	11
Results from associates	(18)	-	-	(18)
Interest income	23	-	-	23
Interest expense	(5)	(3)	-	(8)
Segment assets	9,618	196	26	9,840
Segment liabilities	(1,958)	(127)	(8)	(2,093)
Purchases of non-current assets	(895)	(10)	(1)	(906)

The Group's revenues, which wholly relate to the sale of services, from external customers and its non-current assets are divided into the following geographical areas:

	Revenue	Non-current assets	Revenue	Non-current assets
	2011	2011	2010	2010
	£'000	£'000	£'000	£'000
			Restated
UK (domicile)	4,802	4,326	4,906	3,119
USA	3,419	1,456	3,071	1,641
Other	946	-	630	-
	9,167	5,782	8,607	4,760

Revenues are allocated to the country in which the customer resides. During both 2011 and 2010 no single customer accounted for more than 10% of the Group's total revenues.

The segmental information regularly reviewed by the Board is presented under UK GAAP and, as a result, a key reconciling item between the segmental and the Group financial information relates to IFRS conversion.

The totals presented for the Group's operating segments reconcile to the entity's key financial figures as presented in its financial statements as follows:

	2011	2010
	£'000	£'000
		Restated
Segment revenues
Total segment revenues	9,167	8,607
Consolidation adjustments	-	(16)
	9,167	8,591
Segment profit or loss
Total segment operating (loss)/profit	(817)	11
Consolidation adjustments	(324)	(15)
IFRS conversion adjustments	356	36
Group operating (loss)/profit	(785)	32
Finance income	7	23
Finance expense	(5)	(8)
Negative goodwill and associated fair value loss on previously held equity investment	-	(214)
Result from associate after taxation	-	(18)
Group loss before tax	(783)	(185)

	2011	2010	2009
	£'000	£'000	£'000
		Restated	Restated
Segment assets
Total segment assets	9,417	9,840	7,950
Consolidation adjustments	(2,113)	(1,777)	(1,382)
IFRS conversion adjustments	826	(13)	1,103
Total Group assets	8,130	8,050	7,671
Segment liabilities
Total segment liabilities	(2,524)	(2,093)	(2,128)
Consolidation adjustments	(46)	-	-
IFRS conversion adjustments	(442)	(320)	(311)
Total Group liabilities	(3,012)	(2,413)	(2,439)

Consolidation adjustments primarily relate to the elimination of investments and the calculation of goodwill. IFRS conversion adjustments primarily relate to the different accounting bases for the Group's intangible and tangible assets under IFRS and UK GAAP.

3.     (Loss) / earnings per share

	12 months to  30 June	12 months to  30 June
	2011	2010
	£'000	£'000
(Loss) / profit for the year from continuing operations attributable to equity shareholders	(862)	146
(Loss) / earnings per share from continuing operations
Basic  (loss) / earnings per share (pence)	(0.14)	0.02
Diluted (loss) / earnings per share (pence)	(0.14)	0.02
	Shares	Shares
Issued ordinary shares at start of the year	623,764,505	615,568,903
Ordinary shares issued in the year (Note 23)	1,149,999	8,195,602
Issued ordinary shares at end of the year	624,914,504	623,764,505
Weighted average number of shares in issue for the year	624,207,656	622,267,954
Dilutive effect of options	-	7,100,433
Weighted average shares for diluted earnings per share	624,207,656	629,368,387

Where a loss has been recorded for the year 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.

4.    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 2011 and the consolidated income statement, consolidated statement of comprehensive income, 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 2011 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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