Prelim results for the year ended 30 June 2016

RNS Number : 9200O

On-Line PLC

10 November 2016

 

10 November 2016

('On-line' or 'the Company')

Preliminary Results for the Year Ended 30 June 2016

On-line today announces preliminary results for the year ended 30 June 2016.

The annual report and accounts will shortly be sent to shareholders and will be available on the Company's website, www.on-line.co.uk. 

For further information, please contact:

Michael Hodges

Chairman and Managing Director                     

[e-mail]

Salmaan Khawaja/Jamie Barklem

Grant Thornton UK LLP (Nominated Adviser)

0207 383 5100

 

Chairman's Statement

On-line plc continues in its role of an investment company whose sole investment is that of a holding of 18.05% in ADVFN plc ("ADVFN"). On-line is the largest shareholder and the Company works closely with ADVFN to ensure its success, which the Directors of the Company hope that in time will be of great benefit to shareholders as ADVFN makes progress in the financial data market.

The Company's turnover for the year was £85,000 (2015: £94,000) giving a profit before tax of £12,000 (2015: loss of £4,000). 

The Company's financial performance for the year and Key Performance Indicators are analysed in the Strategic Report.

The information contained within this RNS is considered to be inside information prior to its release as defined in Article 7 of the Market Abuse Regulation No. 596/2014 and is disclosed in accordance with the Company's obligations under Article 17 of those Regulations.

EXTRACT FROM THE ADVFN plc CHIEF EXECUTIVE'S REPORT

2016 was a transformational year for ADVFN with a change in the long term strategy of the company from international growth to consolidation of the existing business.

Having had our plans derailed last year by the attempt to take control of the ADVFN board, we have made the decision to enter a period of retrenchment.

Cash burn and losses are almost unavoidable with the sort of investment programs we have undertaken in the past. Currently the UK stock market has no stomach to support this kind of strategy so we have changed course to avoid needing to raise further funding and to instead produce profits and cash flow.

Curtailing investment drops quickly through to the bottom line but also feeds through to reductions in sales. The net result is equilibrium at a lower level of activity, which we hope will provide a solid basis for future growth. This is what we are working towards and, so far, we have made good progress.

The operating losses dropped from £1,905,000 to £650,000 an improvement of 65.8%. Sales are down 10.7% from £9,297,000 in 2015 to £8,303,000. However, costs of sales and expenses were down 20.1% per cent from £11,202,000 in 2015 to £8,953,000.

The after tax loss for the year was £478,000 down from £1,560,000 in the same period last year represents an improvement of 69.4%.

As announced on 24 March 2016, the loss after tax for the 6 months to 31 December 2015 was £442,000, so it can be seen that the company made a significantly reduced loss of £36,000 in the final six months in the financial year. This is an improvement of £406,000 on the previous half.

The market for our services is fast changing, with mobile becoming the dominant platform for communication and information. We have positioned ourselves for this development with our mobile app which has enabled us to buffer these changes as our traffic transitions to mobile.

However the mobile platforms are a weaker environment for monetisation which means, from a business perspective, we have to progress just to remain stationary.

This shift of usage from the desktop to mobile adds uncertainty but change is always an opportunity. We are well used to adapting to changing circumstances. In line with this we are adding new products to ADVFN which provide new advertising opportunities, new subscription products and new investor relations services.

We believe these offerings will help keep ADVFN relevant to its users as the online landscape continues to shift.

 

EXTRACT FROM THE ADVFN plc STRATEGIC REPORT

Summary of key performance indicators

	2016	2016	2015	2015
	Actual	Target	Actual	Target
Turnover	£8.3M	£8.0M	£9.3M	£9 - £10M
Average head count	37	37	53	53
ADVFN registered users	3.5M	3.3M	3.2M	3.1M

On-Line plc's Strategic Report

The strategy for the Company remains that of an investment company and currently the single investment held by the Company is that of a holding of 18.05% in ADVFN plc.

As an investment company On-line plc is always looking for further investment opportunities and should other investment opportunities present themselves the Directors will investigate them appropriately. In the meantime On-line plc will continue to work with ADVFN to help them develop and build their business whose growth and potential profitability will directly benefit the Company.

Principal risks and uncertainties

The management of the Company 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.

Single investment

The Company has a single investment which can provide economic benefits to the Company; this places a reliance on the performance of the investee which is high risk. The directors see the close working relationship with ADVFN as well as the search for additional investments and the building of an investment portfolio in the long term as necessary mitigating activities. However, the prospects for ADVFN are currently very positive. The results in the extract above demonstrate a steadily improving performance in ADVFN and control of costs by reduction in headcount has paved the way to a better bottom line.

Economic downturn

The success of the world's stock markets might affect the business given the sector our investment operates in.  Many things around the world can affect a stock market from war to human error. This can also have a knock on effect to consumer spending power as has been seen with the recent credit crunch around the world, although in the past when we have seen a market downturn this has not impacted on usage of ADVFN, with customers generally wanting to know what is happening in the markets, be it good or bad. In response to this potential risk, senior management aim to keep abreast of economic conditions around the world; not only should senior management be aware of it, likewise so should our customers and members. In cases of severe economic downturn, marketing and pricing strategies are modified to reflect the new market conditions. The 'Brexit' referendum took place just before the end of the financial year and the lead up was a drag on the company. The situation has improved since the vote.
 

High proportion of fixed overheads

A large proportion of the Company's overheads are reasonably fixed. There is the risk that any significant changes in revenue may lead to the inability to cover such costs. Management closely monitor fixed overheads against budget on a monthly basis and cost saving exercises has been implemented.

Performance

The performance of the Company is reliant on the performance of ADVFN plc. The Company supplies management services and makes advertising recharges to ADVFN which forms the turnover of the Company. As a result of this reliance the extract of the ADVFN accounts above will give necessary information and background on the factors affecting the performance of the Company.

The following financial KPIs may prove helpful:

	2016	2016	2015	2015
	Actual	Target	Actual	Target
Turnover (£'000)	85	85	94	80
Operating results (£'000)	12	0	(4)	0
Earnings/(loss) per share (pence)	0.16 p	0.00p	(0.05)p	0.00p

Financial KPIs

The financial indicators are designed to offer a dashboard check of the significant measures of the company's operations. The turnover has reached the gradually increasing target whilst the operating results and EPS demonstrate that costs are being controlled and profits earned.

The company does not currently monitor non-financial KPI's and will do so when they can offer additional clarity to the financial performance measures.

Operating costs

Our costs remain reasonably fixed and predictable and we do not see that changing in the immediate future. They are firmly under control and we hope this will allow the generation of profits in the future.

Research and development

We believe in trying to get the best from all areas that we work in. It is very important that On-line and ADVFN 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.

Environmental policy

This has always been important to the Company and as a whole we continue to look for ways to develop our environmental policy. It is our objective to improve our performance in this area. We have a very small foot print and try to reduce any waste we create; we are a small team which makes this task easier. Most of our communications are electronic which again cuts our use of non-environmentally friendly products.

Future developments for the business

We feel it is right for us to work with our investment and assist it with its growth. This has seen it increase its business and allow new areas to be explored. The prospect of ADVFN continuing to grow in the medium term provides the incentive to go on concentrating on this business in the immediate future. Should other investment opportunities present themselves the Directors will investigate them appropriately.

Approved and signed on behalf of the Board of Directors

Michael Hodges

Director

10 November 2016

 

Statement of Comprehensive Income

	Notes	2016	2015
		£'000	£'000
Revenue		85	94
Administrative expenses		(73)	(98)
Operating profit/(loss)		12	(4)
Interest payable		-	-
Profit/(loss) before taxation		12	(4)
Taxation		-	-
Profit/(loss) and total comprehensive income for the year attributable to share holders of the parent		12	(4)
Basic profit/(loss) per ordinary share	1	0.16 p	(0.05)p
Diluted profit/(loss) per ordinary share	1	0.15 p	(0.05)p

 

Statement of Financial Position at 30 June 2016

			2016	2015
			£'000	£'000
Non-current assets
Investments			868	868
Trade and other receivables			-	72
			868	940
Current assets
Trade and other receivables			159	8
Cash and cash equivalents			-	24
			159	32
Total assets			1,027	972
Equity and liabilities
Equity
Issued share capital			3,242	3,242
Share premium account			2,205	2,205
Share based payment reserve			36	35
Profit and loss account			(4,543)	(4,555)
Total shareholders' funds			940	927
Current liabilities
Trade and other payables			32	45
Borrowings (bank overdraft)			55	-
			87	45
Total assets less current liabilities			1,027	972

Statement of Changes in Equity

	Share  capital	Share premium account	Share based payment reserve	Retained earnings	Total  equity
At 1 July 2014	3,242	2,205	28	(4,551)	924
Transactions with owners
Equity settled share options	-	-	7	-	7
Total comprehensive income for the year	-	-	-	(4)	(4)
At 30 June 2015	3,242	2,205	35	(4,555)	927
Transactions with owners
Equity settled share options	-	-	1	-	1
Total comprehensive income for the year	-	-	-	12	12
At 30 June 2016	3,242	2,205	36	(4,543)	940

Statement of Cashflows

		2016	2015
		£'000	£'000
Cash flows from operating activities
Profit/(loss) for the period before tax		12	(4)
Share based payments		1	7
(Increase)/decrease in trade and other receivables		(79)	29
(Decrease)/increase in trade and other payables		(13)	7
Net cash generated/(used) by operating activities		(79)	39
(Decrease)/increase in cash and cash equivalents		(79)	39
Cash and cash equivalents at the start of the period		24	(15)
Cash and cash equivalents at the end of the period		(55)	24

1.             Earnings per share

		2016			2015
	Loss	Number of	Earnings	Loss	Number of	Earnings
		shares	per share		shares	per share
	£'000	'000	p	£'000	'000	p
Basic earnings per share
Profit/(loss) for the year	12			(4)
Weighted average number of shares		7,662			7,662
Basic earnings/(loss) per share			0.16 p			(0.05)p
Diluted earnings per share
Dilution of shares		129
Weighted average number of shares		7,791
Diluted earnings/(loss) per share			0.15 p

Where there is a loss for the year the existence of share options is not dilutive.

2.             Transition to FRS 102

The company has adopted FRS 102 for the year ended 30 June 2016. The transition date is 1 July 2014 and the statements of financial position for years ending 30 June 2015 and 30 June 2016 are shown in the primary statements.

There are no adjustments which impact the financial results; however the presentation of the primary statements and disclosure notes has changed in line with the new standard. The most significant items can be summarised as follows:

The Statement of Financial Position has replaced the balance sheet.

The Statement of Comprehensive Income has replaced the profit and loss account.

Various disclosures concerning the movements in the reserves have been combined into the Statement of Changes in Equity.

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 statement of financial position at 30 June 2016 and the income statement, statement of changes in equity, the statement of cashflows and associated notes for the year then ended have been extracted from the Company's 2016 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.

 

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