Final Results

RNS Number : 8574R

ADVFN PLC

10 November 2021

 

10 November 2021

For immediate release

ADVFN PLC

("ADVFN" or the "Company")

Audited Results for the Year Ended 30 June 2021

ADVFN, the global stocks and shares website, announces its audited results for the year ended 30 June 2021.

Chief Executive's Statement

We have good cause to be delighted to present the results to 30 June 2021. Following our reorganisation in 2019 we have benefited from the silver lining that has accompanied the very dark clouds of the Covid-19 Pandemic.

While the pandemic has boosted business there are other tailwinds pushing us forwards.

There appears to have been an intersection of positive developments over this financial year that have combined to boost our business, including the Covid lockdowns and associated market disruptions, a boom in cryptocurrency markets and the rise of a new generation of traders and investors. We have of course worked hard to grow sales and control costs but the positive changes to ADVFN's business environment cannot be understated. There are always a host of difficult challenges to be faced and this year was no different, but we have solved them at the same time as enjoying a number of positive developments.

Global actions to cope with the pandemic have raised interest in trading and investing in markets and this has increased our subscriptions and advertising revenues. Cryptocurrency prices and investor interest increased substantially mid-year bringing another tailwind to support our progress. Meanwhile, our firm belief is that the next generation of traders and investors have now emerged and that this will represent a secular boost for us in the future. This last factor is possibly more important than the previous two because while emergencies come and go, and are always a business driver for us, underlying those cycles is the size of the audience; the bigger that audience the better our market.

In 2001, just after ADVFN was first floated on AIM, the stock market dotcom crash effectively drove away a generation of traders who had entered the markets as "privatisation novices" in the 1980s and 1990s and who exited the stock market as a result of losses in the Dotcom bust. Consequently, ADVFN has for much of its market existence operated against the headwinds of falling private investor participation in share ownership and stock market trading. However, we believe that falling trend has now reversed and that the next generation of new investors is here and increasingly engaging with the markets, initially through cryptocurrency interest but also responding to the allure of Fintech developments and showing increased interest in stocks. This is most clearly the case in the US, but it is also occurring elsewhere. This is a positive development and we expect it to continue.

At the year-end both advertising and subscription income were up on the previous year and consequently we have delivered a pre-tax profit of £1,608,000.

Dividend Policy and maiden dividend

As we announced in August this year, while the Board will continue to deploy the Group's cash resources to the growth of, and investment in, the business, the Board has concluded that as a result of the much-improved financial performance of the Group, the Company is now also in a position to adopt a dividend policy to generate returns for shareholders. Our objective is to provide shareholders with a stable flow of dividends balanced by a policy of prudential capital management and the Board will adhere to a dividend cover ratio of not less than 2 times profit after taxation attributable to shareholders based on a rolling basis of 3 years commencing from 1 July 2020. Accumulated earnings will be used to address short-term profit shortfalls that may occur. In applying the dividend policy, the Board will have regard for a range of factors including the macroeconomic outlook, business performance, balance sheet and growth outlook of the Company and may exercise its discretion and revise the calculated pay-out either up or down, to the extent these factors substantially impact the Company.

For the 2021 financial year only, the Board is pleased to announce that the Company will pay a maiden dividend of 1.5p pence per ordinary share payable as per the timetable below: 

-  Ex dividend dated: 23 December 2021 

-  Record date:  24 December 2021 

-  Payment date:  24 January 2022 

This maiden dividend is being made in respect of the whole of the 2021 financial year. Subsequently, the Board intends to pay dividends twice a year in equal instalments on a semi-annual basis following the release of the interim and full year financial results, the dates of which will be communicated to shareholders with disclosure of the financial results.

Clement Chambers

CEO

9 November 2021

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

Enquiries:

For further information please contact:

ADVFN PLC Clem Chambers	[phone]
Beaumont Cornish Limited (Nominated Adviser) www.beaumontcornish.com
Roland Cornish/Michael Cornish	[phone]

The information contained within this announcement is deemed by the Company to constitute inside information as stipulated under the Market Abuse Regulations (EU) No. 596/2014 as it forms part of UK Domestic Law by virtue of the European Union (Withdrawal) Act 2018. The person who arranged for the release of this announcement on behalf of the Company was Clem Chambers, Director.

 

STRATEGIC REPORT

Financial Overview

These consolidated and company accounts have been prepared under applicable law and International Accounting Standards (IAS) in conformity with the requirements of the Companies Act 2006.

We currently plan to continue to remain on a steady course while retaining perhaps a slightly defensive posture, remaining profitable, cashflow positive and dividend paying.

Results

The profit for the financial year after tax amounted to £1,618,000 (2020: loss of £225,000). The Directors have proposed the payment of a dividend amounting to £391,730 (2020: £nil).

Business Review

ADVFN's websites have operated well through the COVID-19 pandemic, we continue to be structured as a work from home organisation, experienced in maintaining a complex cloud-based offering operating 24/7/365 around the globe. 'Work from home' has helped us cut costs and maintain a very lean organization. Our site infrastructure remains hugely technically demanding and remains a deep defensive moat against competition. It also offers significant operational leverage in times or revenue growth as can be seen by this year's results.

We continue to add news features and functionality and will continue to do so under the company's current cost structure. Meanwhile, economic issues like Covid and Brexit, for better or worse, seem to be settled. With or without those factors, which are so important to so many, we feel very positive about the prospects ahead.

Operating Costs

We continue to monitor the operating costs of the Group and there is currently no plan for further significant change to our virtual organisation.

Research and Development ("R&D")

Research and Development is very important to us as the market we operate in is constantly changing.

Technology development does not stop and, as such, nor can we. Especially as many innovations break the infrastructure that worked before components of it were 'improved'. Beyond the maintenance aspect of R&D, it is the research and development of novel features and the need for scaling that is a key for our future, because technology left alone decays. Web, exchange and mobile environments are also changing all the time and we continue to evolve so that we can stay relevant.

Our R & D investment this year has been £294,000 (2020: £277,000) and all of this investment has been to develop the website and has been capitalised. This constant investment ensures our web and mobile experience remains up to date and fresh.

Environmental policy

As always, we continue to look for ways to develop in an environmental way. It remains our objective to improve our performance in this area.

Future outlook for the business

Our improved operating performance and significant profit for the current year despite the COVID-19 pandemic suggests that ADVFN continues to be a viable business for the longer term. We have operated for many years without raising further capital, which cannot be said for many small, listed companies, and we have also provided our service to our customers for over 20 years, which is also a rare achievement amongst our peer group. It has been a very challenging year and will, no doubt, continue to be so in the future but we are well placed to take advantage of any opportunities which come our way.

 

Summary of key performance indicators

Our key indicators have not changed, as they are an important part of the business.

The Directors monitor the Key Performance Indicators on an ongoing basis. The chart below shows the level of performance achieved in the financial year. The individual items are as follows:

	2021	2021	2020	2020
	Actual	Target	Actual	Target
Turnover	£9.06M	£8.70M	£7.07M	£8.70M
Average head count	38	42	52	56
ADVFN registered users	5.10M	5.00M	4.80M	4.75M

Turnover - An important indicator that gives an overall view of our place in the market.

Head count - is a very significant part of the costs of the Group and is fixed as an overhead. Talented people are a vital part of the business. As at the year end, total headcount numbered 38 (2020: 52).

Registered users - give us an accurate indication of our audience pool and the potential available for marketing our service.

COVID-19

We have been most fortunate as a company with little adverse impact on the business resulting from the pandemic. We will continue to monitor the situation and be prepared to change tactics as circumstances and advice arise. Whilst the battle against COVID-19 has not been, and may never be, entirely won, we are optimistic that there is light at the end of the tunnel.

People

I would like to thank the whole team at ADVFN who tirelessly provide a global service for private investors 24 hours a day.

 

Directors' statement of responsibilities under section 172 Companies Act 2006

The Directors have considered the requirements of Section 172(1) of the Companies Act 2006 to prepare a statement explaining how the Directors have considered the wider stakeholder needs when performing their duties under Section 172 of the Companies Act 2006.

The Directors consider the stakeholders to be the people who work for us, work with us, invest with us, own us, regulate us and live in the societies we serve. The Directors recognise that building strong relationships with our stakeholders will help deliver the Group's strategy in line with the long-term values. The Directors are committed to effective engagement with all of our stakeholders and seek to understand the interests and views of the Group's stakeholders by engaging with them directly as appropriate.

Depending on the nature of the issue in question, the relevance of each stakeholder group may differ and, as such, as part of Group's engagement with stakeholders, the Directors seeks to understand the relative interests and priorities of each group and to have regard to these, as appropriate, in their decision making. The Directors acknowledge, however, that not every decision it makes will necessarily result in a positive outcome for all stakeholders. The directors also challenge management to ensure all stakeholder interests are considered in the day to day management and operations of the Group.

.

As part of their deliberations and decision making process, the Directors take into account the following:

• the likely consequences of any decisions in the long term;

• interests of the Group's employees;

• need to foster the Group's business relationships with suppliers, customers and others;

• impact of the Group's operations on the community and environment;

• desirability of the Group maintaining a reputation for high standards of business conduct; and

• need to act fairly as between members of the Group.

As a result of these activities, the Directors believe that they have demonstrated compliance with their obligations under s.172 of the Companies Act 2006

Business

The Directors' aim for the Group is to be and remain a contributing and good "Corporate Citizen".

Our business does not have a high carbon footprint and we consider it a sustainable business. We try to ensure that our planet's precious resources are used appropriately for the benefit of current and future generations. The Board considers that the business and strategic decisions which it takes now, in furtherance of the Group's business objectives, do not damage the global environment.

Employees

The Group has a small number of employees but those it has are situated and are deployed on the Group's business around the World. We ensure that we comply with all local labour laws and apply what the Directors believe are appropriate standards and systems to monitor and to ensure the welfare of those employees.

Stakeholder engagement

The Group is entirely owned and controlled by the shareholders of ADVFN Plc and the shares of the Group are traded on the Alternative Investment Market. The stakeholders of the Group consist predominantly of the shareholders, employees, advisers and suppliers. The Directors recognise the importance of these relationships and take active steps to develop and strengthen them through dialogue and engagement. These relationships are regularly monitored at Board level. 

Governance

Each Board meeting addresses compliance by the Group with its corporate governance codes and reinforces the Board's requirement that its business be conducted with integrity and with due regard for ethical standards.

ON BEHALF OF THE BOARD

Clement Chambers

CEO

9 November 2021

Consolidated income statement
		30 June	30 June
		2021	2020
	Notes	£'000	£'000
Revenue		9,059	7,069
Cost of sales		(452)	(324)
Gross profit		8,607	6,745
Share based payment		(43)	-
Amortisation of intangible assets		(251)	(296)
Other administrative expenses		(6,849)	(6,769)
Total administrative expenses		(7,143)	(7,065)
Government grant		162	-
Operating profit/(loss)		1,626	(320)
Finance income/(expense)		(22)	(29)
Other income		4	-
Profit/(loss) before tax		1,608	(349)
Taxation		10	124
Total profit/(loss) for the period attributable to shareholders of the parent		1,618	(225)
Profit/(loss) per share
Basic	3	6.28p	(0.88 p)
Diluted	3	5.97p	(0.88 p)

Consolidated statement of comprehensive income
		30 June	30 June
		2021	2020
		£'000	£'000
Profit/(loss) for the period		1,618	(225)
Other comprehensive income:
Items that will be reclassified subsequently to profit or loss:
Exchange differences on translation of foreign operations		(95)	23
Total other comprehensive income		(95)	23
Total comprehensive income for the year attributable to shareholders of the parent		1,523	(202)

 

Consolidated balance sheet
		30 June	30 June
		2021	2020
	Notes	£'000	£'000
Assets
Non-current assets
Property, plant and equipment		239	365
Goodwill		870	1,002
Intangible assets		1,562	1,428
Trade and other receivables		110	-
		2,781	2,795
Current assets
Trade and other receivables		546	574
Cash and cash equivalents		1,939	915
		2,485	1,489
Total assets		5,266	4,284
Equity and liabilities
Equity
Issued capital		52	51
Share premium		223	167
Share based payment reserve		343	367
Foreign exchange reserve		210	305
Retained earnings		2,295	610
		3,123	1,500
Non-current liabilities
Borrowing - bank loans	4	54	144
Borrowing - lease liabilities	4	87	94
		141	238
Current liabilities
Trade and other payables		1,886	2,278
Borrowing - bank loans	4	13	80
Borrowing - lease liabilities	4	103	188
		2,002	2,546
Total liabilities		2,143	2,784
Total equity and liabilities		5,266	4,284

 

Consolidated statement of changes in equity

	Share capital	Share premium	Share based payment reserve	Foreign exchange reserve	Retained earnings	Total equity
	£'000	£'000	£'000	£'000	£'000	£'000
At 1 July 2019	51	167	367	282	835	1,702
Loss for the period after tax	-	-	-	-	(225)	(225)
Other comprehensive income
Exchange differences on translation of foreign operations	-	-	-	23	-	23
Total other comprehensive income	-	-	-	23	-	23
Total comprehensive income	-	-	-	23	(225)	(202)
At 30 June 2020	51	167	367	305	610	1,500
Transactions with equity shareholders:
Share issues	1	56	-	-	-	57
Transfer on exercise	-	-	(67)	-	67	-
	1	56	(67)	-	67	57
Reprice share options			43	-	-	43
Profit for the year after tax	-	-	-	-	1,618	1,618
Other comprehensive income
Exchange differences on translation of foreign operations	-	-	-	(95)	-	(95)
Total other comprehensive income	-	-	-	(95)	-	(95)
Total comprehensive income	-	-	-	(95)	1,618	1,523
At 30 June 2021	52	223	343	210	2,295	3,123

Consolidated cash flow statement
		12 months to  30 June	12 months to  30 June
		2021	2020
	Notes	£'000	£'000
Cash flows from operating activities
Profit for the year		1,618	(225)
Taxation		(10)	(124)
Net finance income in the income statement		22	29
Depreciation of property, plant & equipment		167	177
Amortisation of intangible assets		251	296
Forgiveness of US loan		(174)	-
Loss on disposal of PPE		-	2
Share based payments - options/warrants		43	-
(Increase)/decrease in trade and other receivables		(72)	227
Decrease in trade and other payables		(392)	(278)
Net cash generated by continuing operations		1,453	104
Income tax receivable		-	124
Net cash generated by operating activities		1,453	228
Cash flows from financing activities
Issue of share capital		57	-
Drawdown loans	4	17	224
Repay lease liability	4	(92)	-
Lease interest paid		(19)	-
Other interest paid		(3)	(29)
Net cash generated by financing activities		(40)	195
Cash flows from investing activities
Payments for property, plant and equipment		(39)	(117)
Purchase of intangibles		(385)	(277)
Net cash used by investing activities		(424)	(394)
Net increase in cash and cash equivalents		989	29
Exchange differences		35	(1)
Net increase in cash and cash equivalents		1,024	28
Cash and cash equivalents at the start of the period		915	887
Cash and cash equivalents at the end of the period		1,939	915

1.  Basis of preparation

The consolidated and company financial statements are for the year ended 30 June 2021. They have been prepared under applicable law and International Accounting Standards (IAS) in conformity with the requirements of the Companies Act 2006  as at 30 June 2021. Whilst the financial information included in the announcement has been prepared in accordance with International Accounting Standards (IAS) in conformity with the requirements of the Companies Act 2006,  this announcement itself does not contain sufficient information to comply with International Accounting Standards (IAS) in conformity with the requirements of the Companies Act 2006.

The consolidated and company financial statements have been prepared under the historical cost convention and are presented in Sterling rounded to the nearest thousand (£'000) except where indicated otherwise.

Standards and amendments to existing standards adopted in these accounts

IAS 1 Presentation of Financial Statements and IAS 8 Accounting policies, Changes in Accounting Estimates and Errors (Amendment - Definition of Material)

Interest Rate Benchmark Reform - IBOR 'phase 2' (Amendments to IFRS 7)

IFRS 3 Business Combinations (Amendment - Definition of Business)

Revised Conceptual Framework for Financial Reporting

COVID-19 Related Rent Concessions (Amendments to IFRS 16)

Standards, amendments and interpretations to existing standards that are not yet effective and have not been early adopted by the Company in the 30 June 2021 financial statements

Onerous Contracts - Cost of Fulfilling a Contract (Amendments to IAS 37)

Property Plant and Equipment: Proceeds before intended use. (Amendments to IAS 16)

Annual improvements to IFRS Standards 2018-2020

References to Conceptual Framework (Amendments to IFRS 3)

Classification of liabilities as Current or Non-current (Amendments to IAS 1)

IFRS 17 - Insurance Contracts

Amendments to IFRS 17 - Insurance Contracts; and Extension of the Temporary Exemption from Applying IFRS 9 (Amendments to IFRS 4 Insurance Contracts)

Disclosure of Accounting Policies (Amendments to IAS 1 Presentation of Financial Statements and IFRS Practice Statement 2 Making Materiality Judgements)

Definition of Accounting Estimates (Amendments to IAS 8 Accounting Policies, Changes in Accounting Estimates and Errors)

Deferred Tax related to Assets and Liabilities arising from a Single Transaction (Amendments to IAS 12 Income Taxes)

The Directors continue to monitor developments in the accounting standards they see as relevant but do not believe that these changes will significantly impact the Group.

2.  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 other services. The provision of financial information is made via the Group's various website platforms.

The parent entities operations are entirely of the provision of financial information.

Three 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, financial conference events and other internet services not related to financial information. Segment information can be analysed as follows for the reporting period under review:

2021	Provision of financial information	Other	Total
	£'000	£'000	£'000
Revenue from external customers	9,020	39	9,059
Depreciation and amortisation	(408)	(21)	(429)
Other operating expenses	(6,763)	(403)	(7,166)
Other operating income	162	-	162
Segment operating (loss)/profit	2,011	(385)	1,626
Interest income	-	-	-
Interest expense	(21)	(1)	(22)
Segment assets	4,451	815	5,266
Segment liabilities	(2,113)	(30)	(2,143)
Purchases of non-current assets	424	-	424

2020	Provision of financial information	Other	Total
	£'000	£'000	£'000
Revenue from external customers	7,034	35	7,069
Depreciation and amortisation	(426)	(41)	(467)
Other operating expenses	(6,482)	(440)	(6,922)
Segment operating (loss)/profit	126	(446)	(320)
Interest income	-	-	-
Interest expense	29	-	29
Segment assets	3,671	613	4,284
Segment liabilities	(2,755)	(29)	(2,784)
Purchases of non-current assets	581	95	676

Revenue recognition per IFRS 15

	Point in time	Over time	Total
	£'000	£'000	£'000
Revenue during 2020	3,715	3,354	7,069
Revenue during 2021	5,266	3,793	9,059

 

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
	2021	2021	2020	2020
UK (domicile)	3,655	1,734	3,111	1,515
USA	5,240	1,047	3,746	1,280
Other	164	-	212	-
	9,059	2,781	7,069	2,795

Revenues are allocated to the country in which the customer resides. During both 2021 and 2020 no single customer accounted for more than 10% of the Group's total revenues.

3.  Profit per share

	12 months to       30 June	12 months to           30 June
	2021	2020
	£'000	£'000
Profit/(loss) for the year attributable to equity shareholders	1,618	(225)
Total loss per share - basic and diluted
Basic	6.28p	(0.88 p)
Diluted	5.97p	(0.88 p)
	Shares	Shares
Weighted average number of shares in issue for the year	25,773,739	25,703,845
Dilutive effect of options	1,336,807	-
Weighted average shares for diluted earnings per share	27,110,546	25,703,845

Where a loss has been recorded for the year the diluted loss per share does not differ from the basic loss per share. Where a profit has been recorded but the average share price for the year remains under the exercise price the existence of options is not normally dilutive. However whilst the average exercise price of all outstanding options is above the average share price there are a number of options which are not. Under these circumstances those options where the exercise price is below the average share price are treated as dilutive.

4.  Interest bearing borrowings

Bank loans

As a result of the COVID-19 pandemic the Directors considered it prudent to take further steps to ensure that short term cashflow did not present a problem for the Group. Short term finance offered under the Business Bounce Back loan scheme and the US equivalent has provided an additional layer of protection whilst the economy rides out the effects of the pandemic. The US loan was drawn down on the basis that the loan would be over 2 years at 1% interest with a payment free period. However, this loan has now been 'forgiven' by the US Government and has become a grant, The UK loan is charged at 2.5% over 6 years with an interest and payment free period for the first 12 months.

Lease liabilities

The carrying value of the lease liabilities is included in the borrowing classification. There are no leases carried in the Company. For further details please see Note 21

GROUP

	2021	2020
	£'000	£'000
Non-current
Bank loans	54	144
Lease liability	87	94
	141	238
Brought forward	238	-
Cash flows	(106)	230
Interest and fees	9	8
As at 30 June	141	238
Current
Bank loans	13	80
Lease liability	103	188
	116	268
Brought forward	268	-
Cash flows	(160)	255
Interest and fees	8	13
As at 30 June	116	268

5.  Events after the balance sheet date

On 5 July 2021 the Directors proposed a dividend amounting to £391,730 which is at the rate of approximately 1.5 pence per share. There are no other events of significance to report occurring after the balance sheet date.

6.  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 2021 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 2021 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.

ADVFN Capital Markets Event - Clem Chambers, CEO of ADVFN, will be providing a live company presentation for analysts and investors on Thursday, 11^th November at 2pm. The event will be hosted by the London Stock Exchange on its Spark Live Platform and will encompass an update on current trading and strategy, provide details on the company's maiden dividend and present ADVFN's full year results. It will conclude with a Q&A session. 

Register interest here: 

https://www.lsegissuerservices.com/spark/ADVFN/events/af99e8e4-22a6-4367-a4ad-2766635588ea

Analysts wishing to participate in the call and receive a dial in code should email: [e-mail].

ENDS

 

END

 

 

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