Final Results

RNS Number : 0613V

ADVFN PLC

23 October 2014

 

 

ADVFN PLC

Audited Results for the Year Ended 30 June 2014

ADVFN, the global stocks and shares website, announces its audited results for the year ended 30 June 2014

·               EBITDA* profit increases to £298,000 (2013: profit of £108,000 )

·               Loss for the period down to £454,000 (2013: loss of £539,000)

·               ADVFN's registered user base continues to grow and is in excess of 3,000,000 (2013: 2,800,000)

For further information, please contact:

Clem Chambers,

ADVFN PLC CEO

0207 0700 909

Salmaan Khawaja/Edward Thomas

Grant Thornton UK LLP (Nominated Adviser)

0207 383 5100

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

 

CHIEF EXECUTIVE'S STATEMENT

2014 was a good year. Our EBITDA was £298,000 up 176%. This was on top of a significant improvement in the year before.

Sales were £9,702,000 up £1,625,000 from £8,077,000, an increase of 20% from 2013 levels.

The operating loss improved again in 2014 by £208,000 from a loss of £871,000 in 2013 to £663,000 this year.

Our cash rose by £214,000 to £1,675,000 from £1,461,000 in 2014.

These solid gains have been against a background of further investment, apparently depressed market activity as far as market participants are concerned and a rampant pound which suppressed the results of our very strong US performance.

Our US business has continued to perform very satisfactorily with particularly strong growth in the winter and spring of 2014. The US market has been far and away the highlight of the year.

ADVFN's growth has come from increased advertising sales, which has coincided with our total subscriber numbers rising.

Our focus remains the same with particular concentration on the US which continues to deliver on its promise.

Last year I mentioned that ADVFN has over the years grown and plateaued only to grow again when changes in the market or product breakthrough trigger a period of growth. As I write it appears we continue to be in a growth phase.

We continue to look out for acquisitions and joint ventures and one of these developments has been the joint venture with Topstocks.com in Australia. This has begun to be a revenue-generator for us and has given us another model to apply to opportunities where a JV is more appropriate with a website than the acquisition of all or part of it.

It is a positive sign that while 2014 has not been a bull year for world markets we have still been making good progress. It is of our opinion that if the market was to crash ADVFN would do very well as ultimately the thing traders hate most is inactivity in the market. Previous corrections and crashes have resulted in traffic increases for us, and this outcome would present an opportunity to showcase the site to a whole new generation.

We have been working extremely hard in 2014. That is not to say we do not every year, but 2013-2014 has been a period of significant change and reorganisation. This should have been invisible to our customers and shareholders; if it hasn't been then we have not done it smoothly enough.

We have been building out our sales force, re-engineering our infrastructure and working on new products and features.

This is the core process that will drive future growth.

We felt 2013-2014 would be another solid year and it has come in a little ahead of our expectations. We believe that 2014-2015 also looks positive.

Key to this year has been our US OTC QX listing in the US and our capital reorganization and American Depository Receipts (ADR) program. Picking our Google analytic stats at random, in April 2014 we had 5.4 million US visitors in that month according to Comscore we are the ninth biggest finance site in the US by page impressions.  The eight bigger were: Yahoo Finance, MSN Money, Dow Jones & Company, CNBC, Bloomberg, AOL Money & Finance, CNN Money and Forbes Digital. Anyone else you have ever heard of in our field is smaller than us in the US, that's staggering.

We, of course, know the numbers inside out but no matter how often we review ADVFN's website stats, our scale in America is significant and we are thrilled by it. In a nutshell it means we have an opportunity to add significant shareholder value in the medium to long term if we can gain a US internet valuation for our business.

We do have a natural advantage in this effort, as we have three million active, high risk small cap investors as a loyal and engaged user base within the US.

During 2015 we hope to continue to show how well we can present ourselves to this audience which, if we are successful in reaching them, will drive a flow of our UK shares into the US ADR.

It's an exciting prospect.

Clem Chambers

CEO

22 October 2014

STRATEGIC REPORT

Financial Overview

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

This year's Group results show a significant improvement with EBITDA improving by £190,000 from £108,000 to £298,000.

The result after tax, which includes £1,178,000 of non-cash items, was a loss of £454,000, an improvement of £85,000 against a loss in 2013 of £539,000.

We continue to be robust on costs, which has given us the resources to continue to invest heavily in R&D and international markets. We have also increased our marketing with online brand building.

Business Review

I normally find myself trying to say the long term plan for the business is exactly the same one as we had last year and the year before. We try to stick with our long term strategy and we have ploughed the same strategic furrow for more than a decade. Our strategy has not made us a billion dollar company but it has left us as one of only a smattering of surviving dotcom boom internet companies on AIM.

We aren't however complacent about our progress. We are trying to become an internet colossus and we are working hard towards that goal, even if we are still not galloping towards that destination at great speed.

While we are not going to throw our strategy away we are however thinking a new thought.

Whilst the UK is a great place for technical and sales talent and sits in the heart of the global financial system, it is not necessarily, from a financial markets perspective, the most benign environment for small internet and technology companies.

This is why we have gone to the considerable trouble of listing on the OTC Markets QX tier. Our huge user base in the US loves small cap companies as much as US investors in general love tech companies. As such with our new US listing we plan to try to become a highly regarded listed small cap internet company in the US. With this in mind we have put the technical equity mechanisms in place to make it possible to operate a dual listing, which allows our shares to flow freely from the UK to the significantly larger market place of our US customers.

It's been hard work setting it all up, but the potential is very exciting as anyone calculating the sales to market cap of US internet companies will note.

We think a lot can go right in 2015.

Operating Costs

We have been very focused on costs over the last three years and we have taken the decision to grow our head count again especially in sales to monetize our increased inventory. While it takes time for new hires to skill up at ADVFN we expect to begin feeling the benefits of this investment in the latter half of the next financial year.

Research and Development

R&D at ADVFN never stops and this year was no different.

As an aggregator of a myriad of feeds, we are always fixing what gets broken upstream from us.

In the old days we would have said one of our core values was we have a platform that pulls an ocean of financial information together and then disseminates it to a huge audience. We are one of a few vendors that can or do this for world markets. These days you don't hear that this kind of platform is worth beyond gold. It is however a big barrier of entry to competition.

 We also must keep our infrastructure up to the latest standards and ahead of demand, which might spike to giant levels should the market, for example, crash.

Additionally this year we won patent pending status for new market technology that we will apply to new product which we feel could be breakthrough for us. If it isn't we will still have made another step along the way.

As I said last year, R&D will always be the heart of ADVFN.

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.

Summary of key performance indicators

	2014	2014	2013	2013
	Actual	Target	Actual	Target
EBITDA	£298k	£200k	£108k	£50k
Average head count	43	44	37	40
ADVFN registered users	3.0M	2.9M	2.8M	2.7M

Future outlook for the business.

You may have noticed from the tone of this year's report, I am very positive about the road ahead.

While it's good to have strong top line growth and solid all round performance improvements there is nothing like the prospect of a shot of a breakthrough to raise spirits.

The opportunity of being able to present the company to millions of new investors is a bracing prospect.

Meanwhile we are expecting to continue along the same path as the last two years.

Principle risks and uncertainties

Economic downturn

There are signs of global economic recovery and these have shown up as bursts of traffic on ADVFN, for example in Japan. However there can be no certainty in a return to economic normality in the near future but as previously stated the company has bridged both the dotcom crash and the credit crunch, so we feel that we have shown we are robust enough to withstand the financial conditions of economic emergencies.

High proportion of fixed overheads and variable revenues

A large proportion of the company's overheads are 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 that are updated on a regular basis.

Product obsolescence

The technology that we use is always in development and constantly changing. All our products are subject to technological change and advance and resultant obsolescence.

We have no choice but to keep innovating to keep up with growing technical challenges that are changing all the time.

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.

Consideration of the principle risks associated with financial instruments is contained in note 22.

People

We are a dedicated, highly skilled and loyal team. I would like to thank everyone for enabling ADVFN to provide a superb 24/7/365 service to millions of users around the globe; the private investors of the world.

ON BEHALF OF THE BOARD

Clem Chambers

CEO

22 October 2014

Consolidated income statement
		12 months to  30 June	12 months to  30 June
		2014	2013
		£'000	£'000
Revenue		9,702	8,077
Cost of sales		(1,165)	(339)
Gross profit		8,537	7,738
Share based payment		(54)	(93)
Amortisation of intangible assets		(914)	(917)
Other administrative expenses		(8,232)	(7,599)
Total administrative expenses		(9,200)	(8,609)
Operating loss		(663)	(871)
Finance income		108	95
Loss before tax		(555)	(776)
Taxation		101	242
Total loss after taxation for continuing operations		(454)	(534)
Total (loss)/profit after taxation from discontinued operations		-	(5)
Loss for the period attributable to shareholders of the parent		(454)	(539)
Loss per share - basic and diluted based on consolidated shares		(1.80)p	(2.14)p

Consolidated statement of comprehensive income
		12 months to  30 June	12 months to  30 June
		2014	2013
		£'000	£'000
Loss for the period		(454)	(539)
Other comprehensive income:
Items that will be reclassified subsequently to profit or loss:
Exchange differences on translation of foreign operations		(190)	69
Deferred tax on translation of foreign held assets		29	(6)
Total other comprehensive income		(161)	63
Total comprehensive income for the year attributable to shareholders of the parent		(615)	(476)

Consolidated balance sheet
		30 June	30 June
		2014	2013
		£'000	£'000
Assets
Non-current assets
Property, plant and equipment		71	61
Goodwill		724	806
Intangible assets		1,331	1,777
Trade and other receivables		295	485
		2,421	3,129
Current assets
Trade and other receivables		1,122	925
Current tax recoverable		60	46
Cash and cash equivalents		1,675	1,461
		2,857	2,432
Total assets		5,278	5,561
Equity and liabilities
Equity
Issued capital		6,305	6,291
Share premium		8,102	8,062
Merger reserve		221	221
Share based payment reserve		617	563
Foreign exchange reserve		117	278
Retained earnings		(12,517)	(12,063)
		2,845	3,352
Non-current liabilities
Deferred tax		134	249
		134	249
Current liabilities
Trade and other payables		2,269	1,954
Current tax		31	6
		2,299	1,960
Total liabilities		2,433	2,209
Total equity and liabilities		5,278	5,561

Consolidated statement of changes in equity

	Share capital	Share premium	Merger reserve	Share based payment reserve	Foreign exchange reserve	Retained earnings	Total equity
	£'000	£'000	£'000	£'000	£'000	£'000	£'000
At 1 July 2012	6,289	8,057	221	474	215	(11,528)	3,728
Issue of shares	2	5	-	-	-	-	7
Exercise of share options	-	-	-	(4)	-	4	-
Equity settled share options	-	-	-	93	-	-	93
Transactions with owners	2	5	-	89	-	4	100
Loss for the period after tax	-	-	-	-	-	(539)	(539)
Other comprehensive income
Exchange differences on translation of foreign operations	-	-	-	-	69	-	69
Deferred tax on translation of foreign held assets	-	-	-	-	(6)	-	(6)
Total comprehensive income for the year	-	-	-	-	63	(539)	(476)
At 30 June 2013	6,291	8,062	221	563	278	(12,063)	3,352
Issue of shares	14	40	-	-	-	-	54
Equity settled share options	-	-	-	54	-	-	54
Transactions with owners	14	40	-	54	-	-	108
Loss for the period after tax	-	-	-	-	-	(454)	(454)
Other comprehensive income
Exchange differences on translation of foreign operations	-	-	-	-	(190)	-	(190)
Deferred tax on translation of foreign held assets	-	-	-	-	29	-	29
Total comprehensive income for the year	-	-	-	-	(161)	(454)	(615)
At 30 June 2014	6,305	8,102	221	617	117	(12,517)	2,845

Consolidated cash flow statement
		12 months to  30 June	12 months to  30 June
		2014	2013
		£'000	£'000
Cash flows from operating activities
Loss for the period before tax		(555)	(776)
Net finance income in the income statement (unwinding receivable)		(108)	(95)
Depreciation of property, plant & equipment		47	62
Amortisation		914	917
Adjustment to fair value of embedded derivative		250	300
Share based payments		54	93
(Increase)/decrease in trade and other receivables		(149)	149
Increase/(decrease) in trade and other payables		314	(199)
Net cash generated by continuing operations		767	451
Net cash used by discontinued operations		-	(5)
		767	446
Income tax (payable)/receivable		(3)	77
Net cash generated by operating activities		764	523
Cash flows from investing activities
Payments for property plant and equipment		(57)	(40)
Purchase of intangibles		(495)	(499)
Net cash used by investing activities		(552)	(539)
Cash flows from financing activities
Proceeds from issue of equity shares		-	7
Net cash generated by financing activities		-	7
Net increase /(decrease) in cash and cash equivalents		212	(9)
Exchange differences		2	30
Total increase in cash and cash equivalents		214	21
Cash and cash equivalents at the start of the period		1,461	1,440
Cash and cash equivalents at the end of the period		1,675	1,461

1.      Segmental analysis

The directors identify operating segments based upon the information which is regularly reviewed by the chief operating decision maker. The Group considers that the chief operating decision makers are the executive members of  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.

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:

2014	Provision of financial information	Other	Total
	£'000	£'000	£'000
Revenue from external customers	9,354	357	9,711
Depreciation and amortisation	(793)	-	(793)
Other operating expenses	(9,101)	(325)	(9,426)
Segment operating profit/(loss)	(540)	32	(508)
Interest income	108	-	108
Interest expense	-	-	-
Segment assets	7,169	245	7,414
Segment liabilities	(2,451)	(10)	(2,461)
Purchases of non-current assets	549	-	549

2013	Provision of financial information	Other	Total continuing operations	Research services (Disposal group)	Total
	£'000	£'000	£'000	£'000	£'000
Revenue from external customers	7,835	252	8,087	16	8,103
Depreciation and amortisation	(804)	(3)	(807)	-	(807)
Other operating expenses	(7,754)	(182)	(7,936)	(21)	(7,957)
Segment operating (loss)/profit	(723)	67	(656)	(5)	(661)
Interest income	95	-	95	-	95
Interest expense	-	-	-	-	-
Segment assets	7,407	254	7,661	-	7,661
Segment liabilities	(2,080)	(57)	(2,137)	-	(2,137)
Purchases of non-current assets	(554)	-	(554)	-	(554)

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
	2014	2014	2013	2013
	£'000	£'000	£'000	£'000
UK (domicile)	3,800	3,140	3,594	3,134
USA	5,039	1,225	3,639	1,409
Other	872	1	854	-
Discontinued operations	-	-	16	-
	9,711	4,366	8,103	4,543

Revenues are allocated to the country in which the customer resides. During both 2014 and 2013 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:

	2014	2013
	£'000	£'000
Revenue
Total segment revenue	9,711	8,103
Consolidation adjustment	(9)	(10)
Group revenue	9,702	8,093
Disposal group revenue	-	(16)
Group revenue net of discontinued operations	9,702	8,077
Segment profit or loss
Total segment operating (loss)	(508)	(661)
Consolidation adjustments	(393)	(396)
IFRS conversion adjustments	238	186
Group operating loss	(663)	(871)
Finance income	108	95
Group loss before tax	(555)	(776)
	2014	2013
	£'000	£'000
Segment assets
Total segment assets	7,414	7,661
Consolidation adjustments	(2,933)	(2,669)
IFRS conversion adjustments	797	569
Total Group assets	5,278	5,561
Segment liabilities
Total segment liabilities	(2,461)	(2,137)
Consolidation adjustments	(860)	(848)
IFRS conversion adjustments	923	665
Total Group liabilities	(2,398)	(2,320)

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. Significant items adjusting for both consolidation and IFRS conversion items were amortisation of intangible assets and depreciation of property plant and equipment.

2.     Loss per share

	12 months to  30 June	12 months to  30 June
	2014	2013
	£'000	£'000
		Re-stated
(Loss) for the year from continuing operations attributable to equity shareholders	(454)	(534)
(Loss)/profit for the year from discontinued operations	-	(5)
Total (loss) for the year	(454)	(539)
Total (loss) per share- basic and diluted - following share consolidation	(1.80)p	(2.14)p
Loss per share based on pre-consolidation shares in issue	(0.07)p	(0.09)p
Weighted average number of shares in issue for the year - consolidated	25,219,905	25,163,136
Dilutive effect of options	-	-
Weighted average shares for diluted earnings per share - consolidated	25,219,905	25,163,136

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.

Share consolidation

At the company's General Meeting held on 20 August 2014, the resolution to approve the share consolidation of existing issued Ordinary shares of £0.01 each in the capital of the company shall be consolidated into Ordinary shares of £0.25 each, was duly passed. The number of post consolidation Ordinary shares is disclosed above.

3.             Events after the balance sheet date

At the company's General Meeting held on 20 August 2014, the resolution to approve the share consolidation of existing issued Ordinary shares of £0.01 each in the capital of the company shall be consolidated into Ordinary shares of £0.25 each, was duly passed. In addition, approval was also sought for the cancellation of the share premium account and the capitalisation of the share based payment account and the merger reserve.

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 2014 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 2014 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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