Final Results

RNS Number : 3711P

ADVFN PLC

23 October 2012

 

ADVFN PLC

Audited Results for the Year Ended 30 June 2012

ADVFN, Europe's leading stocks and shares website, announces its audited results for the year ended 30 June 2012

ADVFN's registered users base continues to grow and is now over 2,600,000 (2011: 2,200,000)

Turnover almost unchanged at £8,485,000 in continuing operations (2011: £8,563,000)

EBITDA* loss for continuing operations of £362,000

(2011: profit £340,000)

For further information, please contact:

Clem Chambers,

ADVFN PLC CEO

0207 0700 909

Gerry Beaney or Salmaan Khawaja

Grant Thornton Corporate Finance (Nominated Adviser)

0207 383 5100

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

CHIEF EXECUTIVE'S STATEMENT

ADVFN has undergone many changes this year. It has broadened its offering geographically and content-wise.

ADVFN has been able to ride out local and global economic trends and continues to invest to position itself globally while keeping up with technological developments like the rise of mobile with its own best of breed offering.

We continue to position ourselves for growth.

Consequently, the board considers the outcome for the year to be positive especially when considered against the economic back drop.

Our global spread continues to serve us well, with changing circumstances in different territories acting together to smooth out much of the volatility seen around the world during the year.

Developing international markets continues to be our focus, a strategy we are also seeing in many of our customers such as the spread betting firms. The successful launch of our mobile platform bodes well for next year and will give us a tail wind in many markets where the desktop is less common than in the UK.

Our entrance into news, eBooks and comment has also bedded in well, with our Book line taking the top slot and at one point 3 places in the top 5 of Amazon UK's Investing chart. Meanwhile divesting Equity Development enabled us to focus even more tightly on the ADVFN brand.

Our goal is to further leverage and monetise our brand and audience. This will see ADVFN venturing carefully into segments where we can cross sell our content in related markets.

Our successful foray into mobile and eBooks suggests ADVFN is capable of going beyond its core medium of the World Wide Web enabled desktop and on to other platforms like smart phones and e-readers. We plan to continue the process of expanding our sales into other categories to add to our income of site advertising and data subscriptions.

Financial overview

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

The results are materially similar to last year's figures. They show turnover of £8,485,000 ( 2011 £8,563,000 ) and a total loss after taxation for continuing operations of  £1,276,000 ( 2011 £869,000).

Since the mid-year we have taken a more conservative line on expansion which positions us well to benefit quickly from fairer macro-economic conditions should they appear.

Strategy

We are continuing with our strategy, which has been for many years now, to build the company's global audience and international revenue.

There remain many untapped markets in which private investors would welcome our offering. We are addressing as many as we sensibly can at this time and will address more as opportunities arise. In addition we are now producing offerings for new formats, such as smart phones like the ipad, tablets and e-readers to leverage our audience onto other media platforms. Our mobile offering and ADVFN Books are performing well ahead of expectations.

While still early days in both these categories, it is clear to see that such diversifications bring not only direct sales but other cross selling and promotional benefits. They also give us another tool to use in opening new markets.

Operating Costs

We put a great deal of focus on our costs and try where possible to be as lean as we can be. We have made numerous optimisations over the year and this sees us leaner than we have been for some time.We have become less aggressive against the current economic backdrop over this period and this is coming through in lower operating costs. We will continue to adjust our stance as we go.

Research and Development

ADVFN is always engaged in development. We keep ourselves at the leading edge of technology to assure our long term competitiveness.

Our systems and platform is what makes our company unique and valuable.

Without this investment and the efforts of all our development team we would have not been able to achieve what we have thus far.

To grow alongside the opportunity this investment is vital and we are proud that we continue to be a market leader employing such modest sums.

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

	2012	2012	2011	2011
	Actual	Target	Actual	Target
Average head count	60	60	54	60
ADVFN registered users	2.6M	2.5M	2.2M	2.1M

Future outlook for the business

The future for ADVFN is bright. We have more opportunities now than ever before, as much competition fades.

Market conditions appear to change a great deal more than our business performance and affect us a good deal less than others.

This allows us to look forward with confidence. We feel it is fair to say "bear markets do not last forever"

Principal risks and uncertainties:

Economic downturn

An extended economic down turn is not to be taken lightly and as we all know this has been one of the worst in anyone's memory.

Despite this we have continued to push forward and will continue to do so.

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 which are updated on a regular basis.

Product obsolescence

The technology that we use and develop is always in development and constant change. 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. 

People

We have a very dedicated, loyal team. I would like to thank them for enabling ADVFN to provide a superb service to our millions of users; the private investors of the world.

Clem Chambers

CEO

22nd  October 2012

Consolidated income statement
		12 months to  30 June	12 months to  30 June
		2012	2011
	Notes	£'000	£'000
			Restated
Revenue	1	8,485	8,563
Cost of sales		(319)	(426)
Gross profit		8,166	8,137
Share based payment		(96)	(84)
Amortisation of intangible assets		(1,001)	(1,089)
All other administrative expenses		(8,508)	(7,757)
Total administrative expenses		(9,605)	(8,930)
Operating loss		(1,439)	(793)
Finance income		-	7
Finance expense		-	(4)
Loss before tax		(1,439)	(790)
Taxation		163	(79)
Total loss after taxation for continuing operations		(1,276)	(869)
Total (loss)/profit after taxation from discontinued operations	3	(400)	7
Loss for the period attributable to shareholders of the parent		(1,676)	(862)
Loss per share - basic and diluted	2	(0.27)	(0.14)

Consolidated statement of comprehensive income
		12 months to  30 June	12 months to  30 June
		2012	2011
		£'000	£'000
			Restated
Loss for the period		(1,676)	(862)
Other comprehensive income:
Exchange differences on translation of foreign operations		35	253
Deferred tax on translation of foreign held assets		(1)	(46)
Total comprehensive income for the year attributable to shareholders of the parent		(1,642)	(655)

Consolidated balance sheet
		30 June	30 June
		2012	2011
	Notes	£'000	£'000
Assets
Non-current assets
Property, plant and equipment		83	106
Goodwill		789	1,697
Intangible assets		2,179	2,584
Trade and other receivables		105	119
		3,156	4,506
Current assets
Trade and other receivables		1,070	1,121
Current tax recoverable		151	75
Other financial assets (available for sale)		-	712
Cash and cash equivalents		1,440	1,716
		2,661	3,624
Total assets of the continuing operations		5,817	8,130
Assets in disposal group classified as held for sale	3	706	-
Total assets		6,523	8,130
Equity and liabilities
Equity
Issued capital		6,289	6,249
Share premium		8,057	7,941
Merger reserve		221	221
Share based payment reserve		474	533
Foreign exchange reserve		215	181
Retained earnings		(11,528)	(10,007)
		3,728	5,118
Non-current liabilities
Deferred tax		487	533
Borrowings - obligations under finance leases		-	1
		487	534
Current liabilities
Trade and other payables		2,153	2,455
Current tax		38	18
Borrowings - obligations under finance leases		-	5
		2,191	2,478
Total liabilities of the continuing operations		2,678	3,012
Liabilities in disposal group classified as held for sale	3	117	-
Total liabilities		2,795	3,012
Total equity and liabilities		6,523	8,130

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 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
Issue of shares	40	116	-	-	-	-	156
Exercise of share options	-	-	-	(155)	-	155	-
Equity settled share options	-	-	-	96	-	-	96
Transactions with owners	40	116	-	(59)	-	155	252
Loss for the period after tax	-	-	-	-	-	(1,676)	(1,676)
Other comprehensive income
Exchange differences on translation of foreign operations	-	-	-	-	35	-	35
Deferred tax on translation of foreign held assets	-	-	-	-	(1)	-	(1)
Total comprehensive income for the year	-	-	-	-	34	(1,676)	(1,642)
At 30 June 2012	6,289	8,057	221	474	215	(11,528)	3,728

Consolidated cash flow statement
		12 months to  30 June	12 months to  30 June
		2012	2011
	Notes	£'000	£'000
			Restated
Cash flows from operating activities
Loss for the period before tax		(1,439)	(790)
Net finance income in the income statement		-	(3)
Depreciation of property, plant & equipment		76	44
Amortisation		1,001	1,089
Impairment of financial assets		-	(3)
Share based payments		96	84
(Increase) in trade and other receivables		(53)	(237)
(Decrease)/increase in trade and other payables		(147)	403
Net cash (used in)/generated from continuing operations		(466)	587
Net cash used in discontinued operations	3	(43)	7
		(509)	594
Interest paid		-	(4)
Income tax receivable		61	101
Net cash (used in)/generated from operating activities		(448)	691
Cash flows from investing activities
Interest received		-	7
Payments for property plant and equipment		(59)	(66)
Purchase of intangibles		(593)	(571)
Sale of UK Government gilts - available for sale financial assets		681	-
Sale of current asset investments by discontinued operations	3	15	-
Net cash used in investing activities		44	(630)
Cash flows from financing activities
Proceeds from issue of equity shares		156	52
Loans repaid (finance leases)		-	(13)
Loans repaid (finance leases)-discontinued operations	3	(3)	-
Net cash generated by financing activities		153	39
Net (decrease)/increase in cash and cash equivalents		(251)	100
Exchange differences		4	17
Total (decrease)/increase in cash and cash equivalents		(247)	117
Cash and cash equivalents at the start of the period		1,716	1,599
Cash and cash equivalents at the end of the period		1,469	1,716
Cash and cash equivalents of the disposal group	3	(29)	-
Cash and cash equivalents for continuing operations		1,440	1,716

The cash flows of the discontinued operations are shown in note 3.

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 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:

2012	Provision of financial information	Other	Total continuing operations	Research services (Disposal group)	Total
	£'000	£'000	£'000	£'000	£'000
Revenue from external customers	8,347	143	8,490	579	9,069
Depreciation and amortisation	(888)	(3)	(891)	(4)	(895)
Other operating expenses	(9,301)	(77)	(9,378)	(594)	(9,972)
Segment operating profit/(loss)	(1,842)	63	(1,779)	(19)	(1,798)
Interest income	-	-	-	-	-
Interest expense	-	-	-	-	-
Segment assets	7,698	52	7,750	152	7,902
Segment liabilities	(2,391)	(6)	(2,397)	(117)	(2,514)
Purchases of non-current assets	(748)	-	(748)	-	(748)

2011	Provision of financial information	Other	Total continuing operations	Research services (Disposal group)	Total
	£'000	£'000	£'000	£'000	£'000
Revenue from external customers	8,422	141	8,563	604	9,167
Depreciation and amortisation	(1,177)	(3)	(1,180)	(6)	(1,186)
Other operating expenses	(8,254)	45	(8,209)	(589)	(8,798)
Segment operating (loss)/profit	(1,009)	183	(826)	9	(817)
Interest income	7	-	7	-	7
Interest expense	(4)	-	(4)	(1)	(5)
Segment assets	9,178	23	9,201	216	9,417
Segment liabilities	(2,357)	(5)	(2,362)	(162)	(2,524)
Purchases of non-current assets	(662)	-	(662)	-	(662)

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
	2012	2012	2011	2011
	£'000	£'000	£'000	£'000
UK (domicile)	3,843	3,520	3,788	4,320
USA	3,568	1,567	3,419	1,456
Other	1,079	1	946	-
Discontinued operations	579	24	1,014	6
	9,069	5,112	9,167	5,782

Revenues are allocated to the country in which the customer resides. During both 2012 and 2011 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:

	2012	2011
	£'000	£'000
Revenue
Total segment revenue	9,069	9,167
Consolidation adjustment	(5)	-
Group revenue	9,064	9,167
Disposal group revenue	(579)	(604)
Group revenue net of discontinued operations	8,485	8,563
Segment profit or loss
Total segment operating (loss)/profit	(1,798)	(817)
Consolidation adjustments	(393)	(324)
IFRS conversion adjustments	752	348
Group operating loss	(1,439)	(793)
Finance income	-	7
Finance expense	-	(4)
Group loss before tax	(1,439)	(790)

	2012	2011
	£'000	£'000
Segment assets
Total segment assets	7,902	9,417
Consolidation adjustments	(2,122)	(2,113)
IFRS conversion adjustments	743	826
Total Group assets	6,523	8,130
Segment liabilities
Total segment liabilities	(2,514)	(2,524)
Consolidation adjustments	(979)	(46)
IFRS conversion adjustments	698	(442)
Total Group liabilities	(2,795)	(3,012)

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. The consolidation adjustment for segment assets also includes the impact of the fair value adjustment to the disposal group amounting to £381,000 (see note 3).

Restatement of comparative figures has been done solely as a result of the presentation requirements of IFRS.

2.     Loss per share

	12 months to  30 June	12 months to  30 June
	2012	2011
	£'000	£'000
		Restated
(Loss) for the year from continuing operations attributable to equity shareholders	(1,276)	(869)
(Loss)/profit for the year from discontinued operations	(400)	7
Total (loss) for the year	(1,676)	(862)
(Loss) per share from continuing operations - basic and diluted	(0.20)	(0.14)
(Loss) per share from discontinued operations - basic and diluted	(0.07)	-
Total (loss) per share- basic and diluted	(0.27)	(0.14)
	Shares	Shares
Weighted average number of shares in issue for the year	625,522,552	624,207,656
Dilutive effect of options	-	-
Weighted average shares for diluted earnings per share	625,522,552	624,207,656

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.

3.     Events after the balance sheet date

On 4th July 2012 an agreement was reached between ADVFN Plc and Bashco Ltd whereby Bashco Ltd acquired Equity Holdings Ltd together with its subsidiary Equity Developments Ltd.

Bashco Ltd is owned by Brian Basham who is the current Chairman of Equity Developments Ltd.

Consideration is payable in cash amounting to GBP 200,000 due in equal instalments on the 2nd, 3rd, 4th and 5th anniversaries of the completion of the agreement, which is 4th July 2012.

In addition, a convertible loan note was issued to ADVFN plc by Equity Developments on the completion date of 4th July 2012 in the amount of £1 million maturing on 31 July 2017.

The conditions covering the rights of conversion of the loan note to equity are as follows:

If the cash consideration is paid in full within 30 days of the respective due dates but the purchaser fails to make the cash payment of £1 million on the maturity date (31 July 2017) then the loan notes will convert automatically on the maturity date to shares comprising 49% of the issued share capital of Equity Developments. Equity Holdings will retain the majority shareholding of 51%.

If the cash consideration is not paid in full within 30 days of the respective due dates then the holder of the loan notes has the right to demand full repayment of £1 million in cash immediately on the default. If that amount is not paid then the loan notes will convert automatically on the maturity date to shares comprising 99.5% of the issued share capital of Equity Developments. Equity Holdings will retain the remaining shareholding of 0.05%.

The results of Equity Holdings and Equity Developments and the post tax loss resulting from the fair value adjustments of assets and liabilities classified as held for sale are presented as a single line entry after tax in the income statement as discontinued operations. The prior year comparative income statement is restated so that it is presented in the same format. The assets and liabilities have been allocated to a disposal group - held for sale and written down by £381,000 to their fair value less costs to sell of £589,000 being the discounted value of the deferred cash consideration and the loan note.

Discontinued operations

The single line entry in the income statement for the post tax loss for the disposal group consists of the post-tax loss of Equity Holdings and Equity Developments for the year ended 30 June 2012.

	Discontinued operations
	2012	2011
	£'000	£'000
Revenue	579	1,014
Expenses	(598)	(1,007)
(Loss)/profit before taxation	(19)	7
Taxation	-	-
(Loss)/profit after taxation	(19)	7
Disposal group fair value adjustment	(381)	-
Total (loss)/profit attributable to the disposal group	(400)	7

The total assets and liabilities comprising the disposal group are as follows:

		Disposal
		group
		£'000
ASSETS
Non-current
Property, plant and equipment		3
Goodwill		934
Other debtors		21
Non-current assets		958
Current
Trade and other receivables		85
Current asset investments		15
Cash and cash equivalents		29
Current assets		129
Total assets		1,087
Disposal group fair value adjustment		(381)
Total assets after fair value adjustment		706
LIABILITIES
Non-current
Long-term finance leases		2
Current
Trade and other payables		114
Short-term finance leases		1
Current liabilities		115
Total liabilities		117

The cash flows for the disposal group were as follows:

		Disposal
		group
		£'000
Cash flows from operations
Loss for the year before fair value adjustment		(19)
Adjusted for depreciation		4
Decrease in receivables		12
Decrease in payables		(40)
Cash outflow from operations		(43)
Cash flows from investing
Current asset investments		15
Cash flows from investing		15
Cash flows from financing
Repayment of finance lease creditor		(3)
Cash flows from investing		(3)
Total movement in cash		(31)
Cash at the beginning of the period		60
Cash at the end of the period		29

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 2012 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 2012 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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