TIDMAFN

RNS Number : 3846U

ADVFN PLC

23 October 2017

Audited Results for the Year Ended 30 June 2017

ADVFN, the global stocks and shares website, announces its audited results for the year ended 30 June 2017

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

As covered in previous statements, the 2016 financial year had been a transformational year with a change in the long term strategy of the Company from international growth to consolidation of the existing business. We had also reported that cash burn and losses were almost unavoidable with the sort of investment programs the Company had undertaken in the past. The ADVFN board believed that the UK stock market did not favour a strategy of further investment so the Company had changed direction during the course of the last financial year in order to avoid needing to raise further funding and to instead produce profits and cash flow.

As a result of a focus on profits rather than growth, we have pulled back from investment and have continued to strive for profitability. Whilst this has crimped our ability to grow, we have made good progress on the bottom line.

We remain however in a complex and difficult marketplace which constantly brings new challenges whether we look for them or not. This business environment continues to change rapidly and we have kept a pace with it from the agility of the ADVFN team.

The operating loss of the past (GBP650,000 in 2016) has now become a profit of GBP47,000, a solid improvement. Sales are at a similar level to 2016 at GBP8,186,000 (GBP8,303,000 in 2016) and this is a strong result in the circumstances.

Advertising and subscription sales have waxed and waned and we have been able to make up for developing weaknesses with new products, price rises and other innovations.

While our performance has been satisfactory, looking ahead, the strengthening of the Sterling, which has occurred since the year end could potentially be a significant drag on us if the US dollar does not appreciate alongside the Sterling, which currently it is not.

Clement Chambers

CEO

23 October 2017

STRATEGIC REPORT

Financial Overview

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

As ever we are in a continued environment of rising costs in data licenses and exchange fees. We will continue to monitor these and adapt as required.

Business Review

As I said in last year's statement ADVFN has undergone a restructuring process which, whilst not requiring additional investment, was not an easy one but the change in our numbers is shown in these results. The markets have risen over the past year to record levels and some people have done well. However, this rise seems to have gone almost unnoticed by the mainstream media. Other areas are now what is entertaining the one time would be trader. Brexit has collected all the headlines as has the election of President Trump, both of which have caused an interesting ride for our market. Our focus on the technology is important as we look forward to the forthcoming year with great excitement

Operating Costs

Our main costs are relatively fixed but licence and exchange fees are continuing to rise and it is these we must keep a close eye on and if need be change what we offer.

Research and Development ("R&D")

Like most technology / media companies we are highly focused on new developments including improvements to our website, products, tools etc. Our research and development is key to our future. The web and mobile environment continue to move and change and it's our R&D that allows us to keep ahead. Our R & D investment this year has been GBP379,000 (2016: GBP399,000) and ensures our web experience remains fresh and relevant.

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

It is important for us to keep focused on the technology and continue to strive to be ahead of this new market changing process. If we can do so, it will open up many new opportunities that I hope we can develop and into which we can push the business.

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:

 
                          2017      2017      2016      2016 
                        Actual    Target    Actual    Target 
----------  ----  ----  ----  ---- 
 
 Turnover              GBP8.2M   GBP8.0M   GBP8.3M   GBP8.0M 
                      ----  ----  ---- 
 Average head count         32        35        37        37 
----------  ----  ----  ----  ---- 
 ADVFN registered 
  users                   4.0M      3.8M      3.5M      3.3M 
----------  ----  ----  ----  ---- 
 

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

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.

It is clear that our small reduction in headcount has been accompanied by a rise in both registered users and turnover. Our conclusion is that we are becoming more productive and by reducing our single largest cost, potentially more profitable. This is a fine line to tread and we will not compromise on the quality of our staff. For the future, any new products could have a ready market in our increasing number of users.

STRATEGIC REPORT (continued)

Summary of key performance indicators (continued)

Principal risks and uncertainties

Economic downturn

The global economic recovery is a very slow process and as it does we hope we ride with it.

However, as I mentioned above we face many new potential issues. We have no control over the outcome and impact of the Brexit negotiations. This, mixed with the new technologies which are on their way, could make for an interesting ride.

High proportion of fixed overheads coupled with variable revenues

A reasonable 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.

Product obsolescence

Our technology that we use is always in development and constantly changing. All our technology and products are subject to technological change and could become obsolete fast.

We must 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 major 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

Once again, I would like to thank the whole team at ADVFN who tirelessly provide a global service for private investors that never sleep.

ON BEHALF OF THE BOARD

Clement Chambers

CEO

23 October 2017

 
 Consolidated income statement 
                                                   30 June   30 June 
                                                      2017      2016 
                                           Notes   GBP'000   GBP'000 
 
 
 Revenue                                             8,186     8,303 
 Cost of sales                                       (201)   (1,077) 
                                                  ----  ---- 
 
 Gross profit                                        7,985     7,226 
 
 Share based payment                                     -     (275) 
 Amortisation of intangible assets                   (302)     (425) 
 Other administrative expenses                     (7,636)   (7,176) 
                                                  ----  ---- 
 
 Total administrative expenses                     (7,938)   (7,876) 
 
 Operating profit/(loss)                                47     (650) 
 
 Finance income and expense                            167       126 
 
 Profit/(loss) before tax                              214     (524) 
 Taxation                                               30        46 
                                                  ----  ---- 
 
 Total loss for the period attributable 
  to shareholders of the parent                        244     (478) 
 
 Profit/(loss) per share 
 Basic                                       2      0.10 p   (1.89)p 
 Diluted                                     2      0.10 p   (1.89)p 
 
 
 
 
 Consolidated statement of comprehensive 
  income 
                                             30 June   30 June 
                                                2017      2016 
                                             GBP'000   GBP'000 
 
 
 Profit/(loss) for the period                    244     (478) 
 
 Other comprehensive income: 
 Items that will be reclassified 
  subsequently to profit or loss: 
 Exchange differences on translation 
  of foreign operations                        (281)       233 
 Deferred tax on translation 
  of foreign held assets                          92      (47) 
                                            ----  ---- 
 
 Total other comprehensive income              (189)       186 
 
 Total comprehensive income for 
  the year attributable to shareholders 
  of the parent                                   55     (292) 
                                            ========  ======== 
 
 
 
 Consolidated balance sheet 
                                                 30 June   30 June 
                                                    2017      2016 
                                        Notes    GBP'000   GBP'000 
 Assets 
 Non-current assets 
 Property, plant and equipment                        53        68 
 Goodwill                                            948       918 
 Intangible assets                                 1,156     1,321 
 Deferred tax                                          6         - 
 Trade and other receivables                          92       155 
 
                                                   2,255     2,462 
 
 Current assets 
 Trade and other receivables                         948     1,025 
 Cash and cash equivalents                           963       843 
                                                ----  ---- 
 
                                                   1,911     1,868 
 Assets in disposal group classified 
  as held for sale                                     -       142 
                                                ----  ---- 
 
                                                   1,911     2,010 
 
 Total assets                                      4,166     4,472 
 
 Equity and liabilities 
 Equity 
 Issued capital                                       51        51 
 Share premium                                       145       119 
 Share based payment reserve                         344       344 
 Foreign exchange reserve                            278       467 
 Retained earnings                                   884       640 
                                                ----  ---- 
 
                                                   1,702     1,621 
 
 Non-current liabilities 
 Deferred tax                                          -       100 
 
                                                       -       100 
 
 Current liabilities 
 Trade and other payables                          2,464     2,583 
 Current tax                                           -        10 
 
                                                   2,464     2,593 
 Liabilities directly associated 
  with assets in disposal groups 
  classified as held for sale                          -       158 
                                                ----  ---- 
 
                                                   2,464     2,751 
                                                ----  ---- 
 
 Total liabilities                                 2,464     2,851 
                                                ----  ---- 
 
 Total equity and liabilities                      4,166     4,472 
                                                ========  ======== 
 
 

Consolidated statement of changes in equity

 
                                   Share      Share      Share     Foreign    Retained     Total 
                                 capital    premium      based    exchange    earnings    equity 
                                                       payment     reserve 
                                                       reserve 
                                 GBP'000    GBP'000    GBP'000     GBP'000     GBP'000   GBP'000 
 
 At 1 July 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 
 
 Equity settled share 
  options 
 Share issues                          -         26          -           -           -        26 
                               -----  -----  -----  -----  -----  ---- 
 
 Total transactions 
  with owners                          -         26          -           -           -        26 
 
 Profit for the period 
  after tax                            -          -          -           -         244       244 
 
 Other comprehensive 
  income 
 Exchange differences 
  on translation of 
  foreign operations                   -          -          -       (281)           -     (281) 
 Deferred tax on translation 
  of foreign held assets               -          -          -          92           -        92 
                               -----  -----  -----  -----  -----  ---- 
 
 Total other comprehensive 
  income                               -          -          -       (189)           -     (189) 
                               -----  -----  -----  -----  -----  ---- 
 
 Total comprehensive 
  income                               -          -          -       (189)         244        55 
                               -----  -----  -----  -----  -----  ---- 
 
 At 30 June 2017                      51        145        344         278         884     1,702 
                               =========  =========  =========  ==========  ==========  ======== 
 
 
 
 
 Consolidated cash flow statement 
                                                   12 months   12 months 
                                                          to          to 
                                                     30 June     30 June 
                                                        2017        2016 
                                          Notes      GBP'000     GBP'000 
 
 Cash flows from operating activities 
 Profit/(loss) for the year                              244       (478) 
 
 Taxation                                               (30)        (46) 
 Net finance income in the income 
  statement                                            (167)       (126) 
 Depreciation of property, plant 
  & equipment                                             52          83 
 Amortisation                                            286         425 
 Profit on disposal of Investor 
  Events                                                (56) 
 Adjustment to fair value of 
  embedded derivative                                    225         225 
 Share based payments - options                            -         155 
 Increase in trade and other 
  receivables                                             82        (80) 
 (Decrease)/increase in trade 
  and other payables                                   (119)       (148) 
 
 Net cash generated by continuing 
  operations                                             517         130 
 
 Income tax receivable                                    14         236 
                                                  -----  ----- 
 
 Net cash generated by operating 
  activities                                             531         366 
 
 Cash flows from financing activities 
 Issue of share capital                                   26         120 
 Interest paid                                             -         (1) 
 
 Net cash generated/(used) by 
  financing activities                                    26         (1) 
 
 Cash flows from investing activities 
 Payments for property plant 
  and equipment                                         (37)        (52) 
 Purchase of intangibles                               (379)       (399) 
 Sale of Investor Events                                  40           - 
 Sale/(purchase) of investments                            -           6 
 
 Net cash used by investing activities                 (376)       (445) 
 
 Net decrease in cash and cash 
  equivalents                                            181        (80) 
 Exchange differences                                   (61)        (79) 
                                                  -----  ----- 
 
 Decrease in cash and cash equivalents 
  continuing operations                                  120       (159) 
 Cash generated by disposal group                          -          16 
                                                  -----  ----- 
 
 Net decrease in cash and cash 
  equivalents                                            120       (143) 
 Cash and cash equivalents at 
  the start of the period                                843         986 
                                                  -----  ----- 
 
 Cash and cash equivalents at 
  the end of the period                                  963         843 
                                                  ==========  ========== 
 
   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 comprised Investor Events Limited which was held for sale with completion on 30 September 2016. Segment information can be analysed as follows for the reporting period under review:

 
 2017                            Provision     Other     Total   Disposal     Total 
                              of financial                          group 
                               information 
                                   GBP'000   GBP'000   GBP'000    GBP'000   GBP'000 
 
 Revenue from external 
  customers                          7,814       372     8,186          -     8,186 
 Depreciation and 
  amortisation                       (465)       127     (338)          -     (338) 
 Other operating 
  expenses                         (7,380)     (421)   (7,801)          -   (7,801) 
                            -------  ----  ----  -----  ---- 
 
 Segment operating 
  (loss)/profit                       (31)        78        47          -        47 
 
 Interest income                       167         -       167          -       167 
 Interest expense                        -         -         -          -         - 
                            ==============  ========  ========  =========  ======== 
 
 Segment assets                      3,935       231     4,166          -     4,166 
 Segment liabilities               (2,430)      (34)   (2,464)          -   (2,464) 
 Purchases of non-current 
  assets                               313       103       416          -       416 
                            ==============  ========  ========  =========  ======== 
 
 
 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)/profit                      (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 
                            ==============  ========  ========  =========  ======== 
 
 

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 
                     2017          2017      2016          2016 
                                          GBP'000       GBP'000 
 
 UK (domicile)      3,288         1,272     3,807         1,209 
 USA                4,348           977     3,731         1,253 
 Other                550             -       765             - 
 
                    8,186         2,249     8,303         2,462 
                 ========  ============  ========  ============ 
 
 

Revenues are allocated to the country in which the customer resides. During both 2017 and 2016 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 
                                              2017         2016 
                                           GBP'000      GBP'000 
 
 Loss for the year attributable to 
  equity shareholders                          244        (478) 
 
 Total loss per share - basic and 
  diluted 
 Basic                                      0.10 p      (1.89)p 
 Diluted                                    0.10 p      (1.89)p 
 
                                            Shares       Shares 
 
 Weighted average number of shares 
  in issue for the year                 25,612,338   25,237,597 
 Dilutive effect of options                      -            - 
                                       ------  ------ 
 
 Weighted average shares for diluted 
  earnings per share                    25,612,338   25,237,597 
                                       ===========  =========== 
 
 

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. Where a profit has been recorded but the average share price for the year remains under the exercise price the existence of options is likewise not dilutive.

   3.             Disposal of Investor Events Limited 

On 19 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 on 30 September 2016. The proceeds of the disposal amounted to GBP40,000 and exceeded the book value of other related net assets. The profit on disposal amounted to GBP56,000 as net liabilities of GBP16,000 were disposed.

   4.             Events after the balance sheet date 

Payments due from the shareholders of Equity Holdings and its subsidiary Equity Developments as consideration for the purchase of the companies has not been received. Amounts outstanding at the reporting date comprise GBP200,000 in cash and the repayment of an outstanding loan note of GBP1,000,000 was due on 31 July 2017. Neither the loan note nor the cash instalments have been received and therefore, ADVFN Plc has the right to acquire 99.5% of the shares of Equity Holdings Limited as the loan note has converted automatically to an option to acquire those shares. The Directors have decided not to enforce said right as the business of Equity Holdings remains outside of the longer term strategy of the group. As a result the Directors have commenced proceeding to alter the arrangements so as to potentially give ADVFN Plc a right to equity in Equity Holdings should it grow in market value.

Apart from that there are no 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 2017 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 2017 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

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October 23, 2017 12:37 ET (16:37 GMT)