ADVFN PLC Audited Results for the Year Ended 30 June 2016

Date : 10/21/2016 @ 12:56PM
Source :InvestorsHub NewsWire
Stock : Advfn (PC) (IHUBY)
Quote : 1.23  0.0 (0.00%) @ 2:15AM

ADVFN PLC Audited Results for the Year Ended 30 June 2016

TIDMAFN

RNS Number : 2286N

ADVFN PLC

21 October 2016

ADVFN PLC

Audited Results for the Year Ended 30 June 2016

ADVFN, the global stocks and shares website, announces its audited 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, http://www.advfn.com.

For further information, please contact:

Clem Chambers,

ADVFN PLC CEO

0207 0700 909

Salmaan Khawaja/ Jamie Barklem

Grant Thornton UK LLP (Nominated Adviser)

0207 383 5100

CHIEF EXECUTIVE'S STATEMENT

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 GBP1,905,000 to GBP650,000 an improvement of 65.8%. Sales are down 10.7% from GBP9,297,000 in 2015 to GBP8,303,000. However, costs of sales and expenses were down 20.1% per cent from GBP11,202,000 in 2015 to GBP8,953,000.

The after tax loss for the year was GBP478,000 down from GBP1,560,000 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 GBP442,000, so it can be seen that the company made a significantly reduced loss of GBP36,000 in the final six months in the financial year. This is an improvement of GBP406,000 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.

Clement Chambers

CEO

21 October 2016

STRATEGIC REPORT

Financial Overview

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

There has been a continued environment of rising costs in data licenses and we continue to prune content where its costs outweigh its benefits.

We are comfortable with our new cost base and believe it has the capacity for business growth.

Business Review

ADVFN has restructured. We have cut costs, repriced product, closed international offices and created new offerings. The bulk of this process completed early this year. It would seem that our decision to do so was the correct one, with a general rise of fragility on many fronts. AIM, on which we are quoted, has been through a poor period with many companies delisting. Important foreign markets like Brazil and the US suffered from a deep malaise for most of the year. Even the dreaded Brexit was a drag on our business up until the aftermath of the vote.

These situations remain unresolved but we have in the meantime put our business onto a different footing. We made a significantly reduced loss of GBP36,000 in the final six months in the financial year. This signals the end of a restructuring process that we undertook in this financial year and places us with a focus on our key US and UK territories. Business is stable and we are working on a series of initiatives to underpin that and with a little good fortune provide growth.

Operating Costs

We have significantly cut operating costs. We have slimmed down our offerings, international operations, marketing and cut headcount.

Closure of ADVFN Japan LLP and disposal of Investor Events Ltd

During the year the office in Japan was closed, however the on-line presence in Japan continues operating as normal with UK hosted websites.

On 19(th) May 2016 an agreement was reached to dispose of the business Investor Events Limited and was completed 30 September 2016. The proceeds of the disposal amounted to GBP40,000 and exceeded the book value of other related net assets and accordingly no impairment losses have been recognised.

Both of these strategic changes have been designed to bring the Group's focus back to the central, core offering. It also allows us the financial flexibility to react to the changing technology in our market place.

Research and Development

We are highly focused on new developments including improvements to our website and researching and developing other methods of accessing our offering. The web and mobile environment is going through a seismic shift on many levels and we are struggling to stay ahead of changes that threaten to make us obsolete. We have a road map for the shifting trends in platform, offering, exchange landscape and advertising infrastructure. We have managed to adapt over the last 16 years so we remain in good shape to cope with what is a very fast changing environment.

Environmental policy

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

Future outlook for the business

ADVFN has had a successful period of consolidation as you will note from the transformation in our results. We have turned this necessity into an opportunity to refocus our business away from international growth onto consolidation and redevelopment of the business.

Early outcomes from new product initiatives are promising and our goal is to return to growth in the next twelve to eighteen months whilst controlling costs. The whole market place we are operating in is changing dramatically. However we are confident that we can adapt to these changes by using our market knowledge, years of experience and strong technical platform to keep abreast of these developments.

Summary of key performance indicators

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:

Turnover - is of vital importance as it gives the sales department a goal and measures the financial success of the Group's service.

Head count - is a very significant part of the costs of the company and is fixed as an overhead. It provides a good indicator when taken against the revenue figure for the efficiency of the business. Talented people are a vital part of the business.

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

 
                          2016      2016      2015      2015 
                        Actual    Target    Actual    Target 
----------  ----  ----  ----  ---- 
 
                                                      GBP9 - 
 Turnover              GBP8.3M   GBP8.0M   GBP9.3M    GBP10M 
                      ----  ----  ---- 
 Average head count         37        37        53        53 
----------  ----  ----  ----  ---- 
 ADVFN registered 
  users                   3.5M      3.3M      3.2M      3.1M 
----------  ----  ----  ----  ---- 
 

Principal risks and uncertainties

Economic downturn

There are signs of global economic recovery and these have shown up as bursts of traffic on ADVFN.

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 the credit crunch and now Brexit, so we feel that we have shown we are robust enough to withstand the financial conditions of economic emergencies.

High proportion of fixed overheads coupled with 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 and no forward contracts are in place. 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.

Following the volatility post Brexit, management will continue to monitor the impact of currency fluctuation. The exchange rate of the US Dollar has been a recent focus.

People

I would like to thank everyone at ADVFN who tirelessly provide a global service for private investors that never sleeps.

ON BEHALF OF THE BOARD

Clement Chambers

CEO

21 October 2016

 
 Consolidated income statement 
                                                   30 June   30 June 
                                                      2016      2015 
                                           Notes   GBP'000   GBP'000 
 
 
 Revenue                                     1       8,303     9,297 
 Cost of sales                                     (1,077)   (1,628) 
                                                  ----  ---- 
 
 Gross profit                                        7,226     7,669 
 
 Share based payment                                 (275)     (189) 
 Amortisation of intangible assets                   (425)     (647) 
 Other administrative expenses                     (7,176)   (8,738) 
                                                  ----  ---- 
 
 Total administrative expenses                     (7,876)   (9,574) 
 
 Operating loss                                      (650)   (1,905) 
 
 Finance income and expense                            126       114 
 
 Loss before tax                                     (524)   (1,791) 
 Taxation                                               46       231 
                                                  ----  ---- 
 
 Total loss for the period attributable 
  to shareholders of the parent              2       (478)   (1,560) 
 
 Loss per share 
 Total loss per share - basic 
  and diluted                                2     (1.89)p   (6.19)p 
 
 
 
 Consolidated statement of comprehensive 
  income 
                                             30 June     30 June 
                                                2016        2015 
                                             GBP'000     GBP'000 
 
 
 Loss for the period                           (478)     (1,560) 
 
 Other comprehensive income: 
 Items that will be reclassified 
  subsequently to profit or loss: 
 Exchange differences on translation 
  of foreign operations                          233         185 
 Deferred tax on translation 
  of foreign held assets                        (47)        (21) 
                                            ----  ----- 
 
 Total other comprehensive income                186         164 
 
 Total comprehensive income for 
  the year attributable to shareholders 
  of the parent                                (292)     (1,396) 
                                            ========  ========== 
 
 
 
 Consolidated balance sheet 
                                            30 June   30 June 
                                               2016      2015 
                                            GBP'000   GBP'000 
 Assets 
 Non-current assets 
 Property, plant and equipment                   68        99 
 Goodwill                                       918       784 
 Intangible assets                            1,321     1,216 
 Trade and other receivables                    155       103 
 Investments                                      -         6 
                                           ----  ---- 
 
                                              2,462     2,208 
 
 Current assets 
 Trade and other receivables                  1,025     1,095 
 Current tax recoverable                          -       181 
 Cash and cash equivalents                      843       986 
                                           ----  ---- 
 
                                              1,868     2,262 
 Assets in disposal group classified 
  as held for sale                      3       142         - 
                                           ----  ---- 
 
                                              2,010     2,262 
 
 Total assets                                 4,472     4,470 
 
 Equity and liabilities 
 Equity 
 Issued capital                                  51        50 
 Share premium                                  119         - 
 Share based payment reserve                    344       189 
 Foreign exchange reserve                       467       281 
 Retained earnings                              640     1,118 
                                           ----  ---- 
 
                                              1,621     1,638 
 
 Non-current liabilities 
 Deferred tax                                   100        97 
 
                                                100        97 
 
 Current liabilities 
 Trade and other payables                     2,583     2,731 
 Current tax                                     10         4 
 
                                              2,593     2,735 
 Liabilities directly associated 
  with assets in disposal groups 
  classified as held for sale           3       158         - 
                                           ----  ---- 
 
                                              2,751     2,735 
                                           ----  ---- 
 
 Total liabilities                            2,851     2,832 
                                           ----  ---- 
 
 Total equity and liabilities                 4,472     4,470 
                                           ========  ======== 
 
 

Consolidated statement of changes in equity

 
                                 Share      Share     Merger      Share     Foreign    Retained     Total 
                               capital    premium    reserve      based    exchange    earnings    equity 
                                                                payment     reserve 
                                                                reserve 
                               GBP'000    GBP'000    GBP'000    GBP'000     GBP'000     GBP'000   GBP'000 
 
 At 1 July 2014                  6,305      8,102        221        617         117    (12,517)     2,845 
 
 Equity settled 
  share options                      -          -          -        189           -           -       189 
                             -----  -----  -----  -----  -----  -----  ---- 
 
 Total transactions 
  with owners                        -          -          -        189           -           -       189 
 
 Loss for the period 
  after tax                          -          -          -          -           -     (1,560)   (1,560) 
 
 Other comprehensive 
  income 
 Exchange differences 
  on translation 
  of foreign operations              -          -          -          -         185           -       185 
 Deferred tax on 
  translation of 
  foreign held assets                -          -          -                   (21)           -      (21) 
 
 Total other comprehensive 
  income                             -          -          -          -         164           -       164 
                             -----  -----  -----  -----  -----  -----  ---- 
 
 Total comprehensive 
  income                             -          -          -          -         164     (1,560)   (1,396) 
 
 Share consolidation           (6,255)    (8,102)      (221)      (617)           -      15,195         - 
 
 At 30 June 2015                    50          -          -        189         281       1,118     1,638 
 
 Equity settled 
  share options                      -          -          -        155           -           -       155 
 Share issues                        1        119          -          -           -           -       120 
                             -----  -----  -----  -----  -----  -----  ---- 
 
 Total transactions 
  with owners                        1        119          -        155           -           -       275 
 
 Loss for the period 
  after tax                          -          -          -          -           -       (478)     (478) 
 
 Other comprehensive 
  income 
 Exchange differences 
  on translation 
  of foreign operations              -          -          -          -         233           -       233 
 Deferred tax on 
  translation of 
  foreign held assets                -          -          -          -        (47)           -      (47) 
                             -----  -----  -----  -----  -----  -----  ---- 
 
 Total other comprehensive 
  income                             -          -          -          -         186           -       186 
                             -----  -----  -----  -----  -----  -----  ---- 
 
 Total comprehensive 
  income                             -          -          -          -         186       (478)     (292) 
 
 At 30 June 2016                    51        119          -        344         467         640     1,621 
                             =========  =========  =========  =========  ==========  ==========  ======== 
 
 
 
 Consolidated cash flow statement 
                                           12 months   12 months 
                                                  to          to 
                                             30 June     30 June 
                                                2016        2015 
                                             GBP'000     GBP'000 
 
 Cash flows from operating activities 
 Loss for the year                             (478)     (1,560) 
 
 Taxation                                       (46)       (231) 
 Net finance income in the income 
  statement                                    (126)       (114) 
 Depreciation of property, plant 
  & equipment                                     83          61 
 Amortisation                                    425         647 
 Adjustment to fair value of 
  embedded derivative                            225         200 
 Share based payments - options                  155         189 
 Issue of share capital                          120           - 
 Increase in trade and other 
  receivables                                   (80)         133 
 (Decrease)/increase in trade 
  and other payables                           (148)         463 
 
 Net cash generated /(used) by 
  continuing operations                          130       (212) 
 
 Income tax receivable                           236          46 
                                          -----  ----- 
 
 Net cash generated/(used) by 
  operating activities                           366       (166) 
 
 Cash flows from financing activities 
 Interest paid                                   (1)           - 
 
 Net cash generated by financing                 (1)           - 
  activities 
 
 Cash flows from investing activities 
 Payments for property plant 
  and equipment                                 (52)        (89) 
 Purchase of intangibles                       (399)       (472) 
 Sale/(purchase) of investments                    6         (6) 
 
 Net cash used by investing activities         (445)       (567) 
 
 Net decrease in cash and cash 
  equivalents                                   (80)       (733) 
 Exchange differences                           (79)          44 
                                          -----  ----- 
 
 Decrease in cash and cash equivalents 
  continuing operations                        (159)       (689) 
 Cash generated by disposal group                 16           - 
                                          -----  ----- 
 
 Net decrease in cash and cash 
  equivalents                                  (143)       (689) 
 Cash and cash equivalents at 
  the start of the period                        986       1,675 
                                          -----  ----- 
 
 Cash and cash equivalents at 
  the end of the period                          843         986 
                                          ==========  ========== 
 
   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 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.

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. The Disposal Group segment comprises Investor Events Limited which is held for sale with completion on 30 September 2016. Segment information can be analysed as follows for the reporting period under review:

 
 2016                            Provision     Other     Total   Disposal     Total 
                              of financial                          Group 
                               information 
                                   GBP'000   GBP'000   GBP'000    GBP'000   GBP'000 
 
 Revenue from external 
  customers                          7,558       745     8,303          -     8,303 
 Depreciation and 
  amortisation                       (604)       117     (487)          -     (487) 
 Other operating 
  expenses                         (7,710)     (756)   (8,466)          -   (8,466) 
                            -------  ----  ----  -----  ---- 
 
 Segment operating 
  loss                               (756)       106     (650)          -     (650) 
 
 Interest income                       126         -       126          -       126 
 Interest expense                        -         -         -          -         - 
                            ==============  ========  ========  =========  ======== 
 
 Segment assets                      4,348      (18)     4,330        142     4,472 
 Segment liabilities               (2,620)      (73)   (2,693)      (158)   (2,851) 
 Purchases of non-current 
  assets                               316        86       402          -       402 
                            ==============  ========  ========  =========  ======== 
 
 
 
 2015                            Provision     Other      Total   Disposal      Total 
                              of financial                           group 
                               information 
                                   GBP'000   GBP'000    GBP'000    GBP'000    GBP'000 
 
 Revenue from external 
  customers                          8,695       228      9,297          -      9,297 
 Depreciation and 
  amortisation                       (612)      (78)      (690)          -      (690) 
 Other operating 
  expenses                         (9,876)     (262)   (10,512)          -   (10,512) 
                            -------  ----  -----  -----  ----- 
 
 Segment operating 
  loss                             (1,793)     (112)    (1,905)          -    (1,905) 
 
 Interest income                       114         -        114          -        114 
 Interest expense                        -         -          -          -          - 
                            ==============  ========  =========  =========  ========= 
 
 Segment assets                      4,595     (276)      4,319        151      4,470 
 Segment liabilities               (2,586)     (164)    (2,750)       (82)    (2,832) 
 Purchases of non-current 
  assets                               380        92        472          -        472 
                            ==============  ========  =========  =========  ========= 
 

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   Revenue   Non-current 
                                 assets                  assets 
                     2016          2016      2015          2015 
                  GBP'000       GBP'000   GBP'000       GBP'000 
 
 UK (domicile)      3,807         1,209     3,587         1,070 
 USA                3,731         1,253     4,919         1,138 
 Other                765             -       791             - 
 
                    8,303         2,462     9,297         2,208 
                 ========  ============  ========  ============ 
 
 

Revenues are allocated to the country in which the customer resides. During both 2016 and 2015 no single customer accounted for more than 10% of the Group's total revenues.

   2.   Loss per share 
 
                                         12 months    12 months 
                                                to           to 
                                           30 June      30 June 
                                              2016         2015 
                                           GBP'000      GBP'000 
 
 Loss for the year attributable to 
  equity shareholders                        (478)      (1,560) 
 
 Total loss per share - basic and 
  diluted                                  (1.89)p      (6.19)p 
 
                                            Shares       Shares 
 
 Weighted average number of shares 
  in issue for the year                 25,237,597   25,220,210 
 Dilutive effect of options                      -            - 
                                       ------  ------ 
 
 Weighted average shares for diluted 
  earnings per share                    25,237,597   25,220,210 
                                       ===========  =========== 
 
 

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.   Disposal of Investor Events Limited 

On 19(th) May 2016 an agreement was reached to dispose of the business Investor Events Limited. The disposal was effected in order to generate cash flow to benefit the other Group businesses. The disposal was completed 30 September 2016. The proceeds of the disposal amounted to GBP40,000 and exceeded the book value of other related net assets and accordingly no impairment losses have been recognised. The major classes of assets and liabilities comprising the operation are as below:

 
 Net assets of the disposal group               2016 
                                             GBP'000 
 
 Current assets 
 Trade receivables                                18 
 Other receivables                               120 
 Cash and cash equivalents                         4 
 
 Total assets classified as held for sale        142 
                                            ======== 
 
 Current liabilities 
 Accrued expenses                              (158) 
 
 Total liabilities associated with assets 
  classified as held for sale                  (158) 
                                            ---- 
 
 Net assets of disposal group                   (16) 
                                            ======== 
 

The result for the company was a profit of GBP11,000 (2015: GBPnil)

   4.   Events after the balance sheet date 

The sale of the subsidiary company Investor Events Limited was completed on 30 September 2016 (see note 3). The amount of the consideration exceeded the carrying value of the net assets and therefore no impairment was required.

There are no other events of significance occurring after the balance sheet date to report.

   5.   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 2016 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 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.

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

This information is provided by RNS

The company news service from the London Stock Exchange

END

FR BLBDGISDBGLB

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October 21, 2016 12:56 ET (16:56 GMT)

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