Last checked at 20 Sep 2010 14:15
ADVFN PLC
Audited Results for the Year Ended 30 June 2010
ADVFN, Europe's leading financial market website, announces its audited results for the year ended
30 June 2010
Highlights:
·; Profit for the period £30,000 (2009: a loss of £535,000)
·; EBITDA* profit up by 78% to £1,140,000 (2009:£641,000)
·; Turnover up 20% to £8,475,000 (2009: £7,034,000)
·; Positive cash flow; 'net cash generated by operations' £1,417,000 (2009: £392,000) bringing our cash and Gilts balance to £2,300,000 (2009: £1,509,000)
·; ADVFN's registered users now over 2,000,000 (2009: 1,720,000)
For further information, please contact:
Clem Chambers,
ADVFN PLC CEO
0207 0700 909
Fiona Kindness,
Grant Thornton Corporate Finance (Nominated Adviser)
0207 728 3414
*EBITDA is calculated as the operating profit / ( loss) for the year before depreciation and amortisation charges.
CHIEF EXECUTIVE'S STATEMENT
ADVFN has turned in a strong performance in the year to June 2010. While economic fundamentals have been harsh, ADVFN has seen strong growth.
Our sales have grown to £8,475,000 from £7,034,000 (Year ended June 09), an increase of 20%.
Our bottom line showed a significant improvement to £30,000 profit after tax for the year from a loss after tax of £535,000 (Year ended June 09). While the amount at this stage is small, this profit none-the-less marks an important milestone for the business.
This result reflects continuing progress brought about by sales growth and constant operational review.
This improvement is also reflected in positive cash flow. Our 'net cash generated by operations' increased to £1,417,000 from £392,000 (Year ended June 09), an increase of 261%. This has resulting in an increase in our cash and Gilts to £2,300,000 from £1,509,000 the year before (Year ended June 09), an increase of 52%
We continue to decrease our dependence on the UK market. We see our future as an international brand rather than a local one and the benefits of this are twofold: diversification and far greater prospects.
US progress is particularly exciting with strong growth in the year both on subscriptions and in advertising. I feel that while business levels are now significant for us, we have barely scratched the surface of this opportunity.
The year ending 2010 has been a particularly good period for subscriptions and the final months have seen advertising suddenly swap places with subscriptions as the growth driver.
Our revenue model has always been, in general terms, 50% subscription and 50% advertising, but in practice, depending on market conditions, these two axes of our business go through consolidation and growth phases that appear to run out of phase with each other. This means our overall income is quite predictable, as in one period, subscription growth takes over from advertising growth and then in another period the roles are reversed.
Financial overview
These accounts have been prepared under International Financial Reporting Standards (IFRS) as adopted by the European Union.
They show a strong performance and another set of improvements to the top and bottom lines.
Strategy
This is what I said last year and it would be odd if I didn't in essence repeat it.
"A strategy is meant to be a long-term plan and I'm happy to say ADVFN's strategy remains, at the year end, the same as it was at the time of the last statement: "...to build ADVFN internationally as the leading destination for private investors looking for information and to generate revenue from advertising sales and subscription products."
We have continued to deliver on that and we feel that the market potential is such that we can continue to go forwards at a similar pace as the past. This means that we believe, in the medium term, we can be a much larger enterprise than we are today.
Consequentially we will be pushing hard to grow our international businesses. It has to be said that international success is extremely difficult to achieve and not all our attempts have been as productive as Brazil and the US. However we feel we are making good progress in our current international portfolio and we will be looking to expand that.
Our platform has already proven it can deliver our product world-wide, so the challenge boils down to addressing the subtleties of local markets to provide the right balance of localised product offering.
While sounding simple, this is actually a challenging process but one we now can say we have achieved outside the UK more than once. If we can repeat that in a significant number of world markets the upside is tremendous.
Turnover
Our turnover has grown for the 10th consecutive year. Sales are up strongly.
Operating Costs
We have continued to focus on our costs but we have been more aggressive in our investment as we look towards further growth. We have carefully grown our technical resources, increased marketing and begun hiring. This has been achieved against a backdrop of an improving financial performance for the business and is funded from positive cash flow.
Research and Development
ADVFN has always been and will always be a constantly developing platform. While to the users the site may appear peaceful there is a constant ongoing process of refinement and repair. While hopefully our users do not notice, markets, exchanges and companies are in a continuous state of flux and we are always positioning ourselves to accommodate change and try and be the best in what we offer and also first to provide it. However this is nothing new.
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.
Cash and GILTS
We are very happy to say that our improved general performance has directly translated to our cash and gilts balance.
Our cash and GILTS balance at the end of the year was up £791,000 to £2,300,000, an increase of 52%.
Summary of key performance indicators
|
| 2010 | 2010 | 2009 | 2009 |
|
| Actual | Target | Actual | Target |
|
|
|
|
|
|
| Average head count | 46 | 50 | 48 | 50 |
| Advfn registered users | 2.0M | 1.9M | 1.72M | 1.6M |
Future outlook for the business
We look forwards to the future. We believe we can sustain the growth rate of the last five to ten years and that means our business has significant potential to grow.
That growth will come from markets in Europe, America and Asia.
Our business is now reaping the benefit of a long period of investment and can go forward, self-funded, while retaining the financial flexibility to invest further should opportunities appear. However it is very much our plan to simply roll out what we have to a broader audience. There are many appealing territories to grow into.
As such the way ahead is clear and the prospects appealing.
Principal risks and uncertainties:
Economic downturn
An extended economic downturn is not to be taken lightly. However the recent turmoil has been easily overcome and may even have benefitted the company. In addition this is the second time in the company's short life that it has had to navigate a financial crash and both times it has come through bigger and stronger.
High proportion of fixed overheads and variable revenues
A major 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 are implemented on a constant review basis. We have had a strong period of cost optimisations since our finance function was reorganised and this process continues.
Product obsolescence
The technology that we use and develop is always in flux. Products are subject to technological change and advance and resultant obsolescence. We are constantly innovating to keep up with growing demand, change in product and new developments both at a technical and a marketing level. 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 team that is focused on creating the best possible service we can provide. We are constantly building this team. I would like to thank them all for their hard work and dedication over the past year.
Clem Chambers
CEO
20th September 2010
| Consolidated income statement |
|
|
|
|
|
| 12 months to 30 June | 12 months to 30 June |
|
|
| 2010 | 2009 |
|
| Note | £'000 | £'000 |
|
|
|
|
|
| Revenue |
| 8,475 | 7,034 |
| Cost of sales |
| (404) | (456) |
|
|
|
|
|
| Gross profit |
| 8,071 | 6,578 |
|
|
|
|
|
| Share based payment |
| (43) | (31) |
| Amortisation of intangible assets |
| (1,149) | (962) |
| All other administrative expenses |
| (6,963) | (6,111) |
|
|
|
|
|
| Total administrative expenses |
| (8,155) | (7,104) |
|
|
|
|
|
| Profit on disposal of assets |
| - | 97 |
|
|
|
|
|
| Operating loss |
| (84) | (429) |
|
|
|
|
|
| Finance income |
| 23 | 12 |
| Finance expense |
| (8) | (11) |
| Negative goodwill and associated fair value loss on previously held equity investment |
|
(214) |
- |
| Result from associates after taxation |
| (18) | (282) |
|
|
|
|
|
| Loss before tax |
| (301) | (710) |
| Taxation |
| 331 | 175 |
|
|
|
|
|
| Profit/(loss) for the period attributable to shareholders of the parent |
|
30 |
(535) |
|
|
|
|
|
| Earnings / (loss) per share - from continuing operations |
|
|
|
| Basic and diluted (pence per share) | 2 | - | (0.09) |
|
|
|
|
|
|
|
|
|
|
| Consolidated statement of comprehensive income |
|
|
|
|
|
| 12 months to 30 June | 12 months to 30 June |
|
|
| 2010 | 2009 |
|
|
| £'000 | £'000 |
|
|
|
|
|
| Profit / (loss) for the period |
| 30 | (535) |
|
|
|
|
|
| Other comprehensive income: |
|
|
|
| Exchange differences on translation of foreign operations |
| (8) | (18) |
|
|
|
|
|
| Total comprehensive income for the year |
| 22 | (553) |
|
|
|
|
|
| Consolidated balance sheet |
| 30 June | 30 June |
|
|
| 2010 | 2009 |
|
|
| £'000 | £'000 |
| Assets |
|
|
|
| Non-current assets |
|
|
|
| Property, plant and equipment |
| 84 | 92 |
| Goodwill |
| 1,590 | 1,590 |
| Intangible assets |
| 2,973 | 2,297 |
| Investments in associates |
| - | 905 |
| Trade and other receivables |
| 113 | 204 |
|
|
|
|
|
|
|
| 4,760 | 5,088 |
|
|
|
|
|
| Current assets |
|
|
|
| Trade and other receivables |
| 890 | 977 |
| Current tax recoverable |
| 92 | 65 |
| Other financial assets (available for sale) |
| 709 | 32 |
| Cash and cash equivalents |
| 1,599 | 1,509 |
|
|
|
|
|
|
|
| 3,290 | 2,583 |
|
|
|
|
|
| Total assets |
| 8,050 | 7,671 |
|
|
|
|
|
| Equity and liabilities |
|
|
|
| Equity |
|
|
|
| Issued capital |
| 6,238 | 6,156 |
| Share premium |
| 7,900 | 7,758 |
| Merger reserve |
| 221 | 221 |
| Share based payment reserve |
| 485 | 456 |
| Foreign exchange reserve |
| (26) | (18) |
| Retained earnings |
| (8,745) | (8,789) |
|
|
|
|
|
|
|
| 6,073 | 5,784 |
|
|
|
|
|
| Non-current liabilities |
|
|
|
| Deferred tax |
| 342 | 314 |
| Borrowings - obligations under finance leases |
| 6 | 11 |
|
|
|
|
|
|
|
| 348 | 325 |
|
|
|
|
|
| Current liabilities |
|
|
|
| Trade and other payables |
| 1,616 | 1,533 |
| Borrowings - obligations under finance leases |
| 13 | 29 |
|
|
|
|
|
|
|
| 1,629 | 1,562 |
|
|
|
|
|
| Total liabilities |
| 1,977 | 1,887 |
|
|
|
|
|
| Total equity and liabilities |
| 8,050 | 7,671 |
|
|
|
|
|
The financial statements were authorised for issue by the Board of Directors on 20 September 2010 and were signed on its behalf by:
Clem Chambers
CEO
| Consolidated statement of changes in equity | Share capital | Share premium | Shares to be issued | Merger reserve | Share based payment reserve | Foreign exchange reserve | Retained earnings | Total equity |
|
| £'000 | £'000 | £'000 | £'000 | £'000 | £'000 | £'000 | £'000 |
|
|
|
|
|
|
|
|
|
|
| At 1 July 2008 | 5,932 | 7,710 | 249 | 221 | 425 | - | (8,254) | 6,283 |
|
|
|
|
|
|
|
|
|
|
| Issue of shares | 224 | 48 | (249) | - | - | - | - | 23 |
| Equity settled share options | - | - | - | - | 31 | - | - | 31 |
| Transactions with owners | 224 | 48 | (249) | - | 31 | - | - | 54 |
|
|
|
|
|
|
|
|
|
|
| Loss for the period after tax | - | - | - | - | - | - | (535) | (535) |
|
|
|
|
|
|
|
|
|
|
| Other comprehensive income |
|
|
|
|
|
|
|
|
| Exchange differences on translation of foreign operations |
- |
- |
- |
- |
- |
(18) |
- |
(18) |
|
|
|
|
|
|
|
|
|
|
| Total comprehensive income for the year | - | - | - | - | - | (18) | (535) | (553) |
|
|
|
|
|
|
|
|
|
|
| At 30 June 2009 | 6,156 | 7,758 | - | 221 | 456 | (18) | (8,789) | 5,784 |
|
|
|
|
|
|
|
|
|
|
| Issue of shares | 82 | 142 | - | - | - | - | - | 224 |
| Equity settled share options | - | - | - | - | 43 | - | - | 43 |
| Transactions with owners | 82 | 142 | - | - | 43 | - | - | 267 |
|
|
|
|
|
|
|
|
|
|
| Profit for the period after tax | - | - | - | - | - | - | 30 | 30 |
|
|
|
|
|
|
|
|
|
|
| Other comprehensive income |
|
|
|
|
|
|
|
|
| Exercise of share options | - | - | - | - | (14) | - | 14 | - |
| Exchange differences on translation of foreign operations |
- |
- |
- |
- |
- |
(8) |
- |
(8) |
|
|
|
|
|
|
|
|
|
|
| Total comprehensive income for the year | - | - | - | - | (14) | (8) | 44 | 22 |
|
|
|
|
|
|
|
|
|
|
| At 30 June 2010 | 6,238 | 7,900 | - | 221 | 485 | (26) | (8,745) | 6,073 |
|
|
|
|
|
|
|
|
|
|
| Consolidated cash flow statement |
|
|
|
|
|
| 12 months to 30 June | 12 months to 30 June |
|
|
| 2010 | 2009 |
|
|
| £'000 | £'000 |
| Cash flows from operating activities |
|
|
|
|
|
|
|
|
| Loss for the period before tax |
| (301) | (710) |
|
|
|
|
|
| Net finance income in the income statement |
| (15) | (1) |
| Loss from associates |
| 18 | 282 |
| Depreciation of property, plant & equipment |
| 75 | 108 |
| Amortisation |
| 1,149 | 962 |
| Gain on disposal of property, plant and equipment |
| - | (97) |
| Negative goodwill and associated fair value loss on previously held equity investment |
|
214 |
- |
| Impairment of financial assets |
| 24 | 35 |
| Share based payments |
| 43 | 31 |
| Decrease in trade and other receivables |
| 236 | 20 |
| Decrease in trade and other payables |
| (26) | (238) |
|
|
|
|
|
| Net cash generated from operations |
| 1,417 | 392 |
|
|
|
|
|
| Interest paid |
| (8) | (11) |
| Income tax (payable) / receivable |
| (17) | 162 |
|
|
|
|
|
| Net cash generated by operating activities |
| 1,392 | 543 |
|
|
|
|
|
| Cash flows from investing activities |
|
|
|
| Interest received |
| 23 | 12 |
| Payments for property plant and equipment |
| (30) | (22) |
| Purchase of intangibles |
| (570) | (682) |
| Purchase of UK Government gilts |
| (701) | - |
| Acquisition of subsidiary (net of cash with subsidiary) |
| (22) | - |
| Disposal of assets |
| - | 106 |
|
|
|
|
|
| Net cash used in investing activities |
| (1,300) | (586) |
|
|
|
|
|
| Cash flows from financing activities |
|
|
|
| Proceeds from issue of equity shares |
| 27 | 23 |
| Loans repaid (finance leases) |
| (21) | (44) |
|
|
|
|
|
| Net cash generated by financing activities |
| 6 | (21) |
|
|
|
|
|
| Net increase /(decrease) in cash and cash equivalents |
| 98 | (64) |
| Exchange differences |
| (8) | (18) |
|
|
|
|
|
| Total increase /(decrease) in cash and cash equivalents |
| 90 | (82) |
| Cash and cash equivalents at the start of the period |
| 1,509 | 1,591 |
|
|
|
|
|
| Cash and cash equivalents at the end of the period |
| 1,599 | 1,509 |
1. Segmental analysis
Following the adoption of IFRS 8 'Operating segments' the directors now identify reportable 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. As a result of this change 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. In the prior year the Group presented segmental information on the basis of geographical analysis only as it considered that it had one primary reporting segment. Accordingly, the comparative segmental information has been restated to reflect the change in reportable segments.
In addition, 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:
| 2010
| Provision of financial information | Research services | Other | Total |
|
| £'000 | £'000 | £'000 | £'000 |
|
|
|
|
|
|
| Revenue from external customers | 7,863 | 526 | 102 | 8,491 |
| Depreciation and amortisation | (1,327) | (7) | (3) | (1,337) |
| Other operating expenses | (6,514) | (684) | (61) | (7,259) |
|
|
|
|
|
|
| Segment operating (loss)/profit | 22 | (165) | 38 | (105) |
|
|
|
|
|
|
| Results from associates | (18) | - | - | (18) |
| Interest income | 23 | - | - | 23 |
| Interest expense | (5) | (3) | - | (8) |
| Segment assets | 9,618 | 196 | 26 | 9,840 |
| Segment liabilities | (1,522) | (127) | (8) | (1,657) |
| Purchases of non-current assets | (895) | (10) | (1) | (906) |
| 2009
| Provision of financial information | Research services | Other | Total |
|
| £'000 | £'000 | £'000 | £'000 |
|
|
|
|
|
|
| Revenue from external customers | 6,364 | 741 | 33 | 7,138 |
| Depreciation and amortisation | (918) | (9) | - | (927) |
| Other operating expenses | (5,787) | (768) | (57) | (6,612) |
| Profit on disposal of assets | 97 | - | - | 97 |
|
|
|
|
|
|
| Segment operating (loss) | (244) | (36) | (24) | (304) |
|
|
|
|
|
|
| Results from associates | (282) | - | - | (282) |
| Interest income | 6 | 6 | - | 12 |
| Interest expense | (11) | - | - | (11) |
| Segment assets | 7,511 | 432 | 7 | 7,950 |
| Segment liabilities | (1,470) | (99) | (7) | (1,576) |
| Investment in associates | 905 | - | - | 905 |
| Purchases of non-current assets | (704) | - | - | (704) |
The Group's revenues from external customers and its non-current assets are divided into the following geographical areas:
|
| Revenue | Non-current assets | Revenue | Non-current assets |
|
| 2010 | 2010 | 2009 | 2009 |
|
| £'000 | £'000 | £'000 | £'000 |
|
|
|
|
|
|
| UK (domicile) | 4,790 | 3,119 | 4,944 | 3,304 |
| USA | 3,071 | 1,641 | 1,702 | 1,784 |
| Other | 630 | - | 492 | - |
|
|
|
|
|
|
|
| 8,491 | 4,760 | 7,138 | 5,088 |
|
|
|
|
|
|
Revenues are allocated to the country in which the customer resides. During both 2010 and 2009 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:
|
| 2010 | 2009 |
|
| £'000 | £'000 |
|
|
|
|
| Segment revenues |
|
|
| Total segment revenues | 8,491 | 7,138 |
| Consolidation adjustments | (16) | (104) |
|
|
|
|
|
| 8,475 | 7,034 |
|
|
|
|
| Segment profit or loss |
|
|
| Total segment operating (loss) | (105) | (304) |
| Consolidation adjustments | (15) | 20 |
| IFRS conversion adjustments | 36 | (145) |
|
|
|
|
| Group operating loss | (84) | (429) |
|
|
|
|
| Finance income | 23 | 12 |
| Finance expense | (8) | (11) |
| Negative goodwill and associated fair value loss on previously held equity investment | (214) | - |
| Result from associate after taxation | (18) | (282) |
|
|
|
|
| Group loss before tax | (301) | (710) |
|
|
|
|
|
|
|
|
| Segment assets |
|
|
| Total segment assets | 9,840 | 7,950 |
| Consolidation adjustments | (1,777) | (1,382) |
| IFRS conversion adjustments | (13) | 1,103 |
|
|
|
|
| Total Group assets | 8,050 | 7,671 |
|
|
|
|
| Segment liabilities |
|
|
| Total segment liabilities | (1,657) | (1,576) |
| IFRS adjustments | (320) | (311) |
|
|
|
|
| Total Group liabilities | (1,977) | (1,887) |
|
|
|
|
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.
2. Earnings / (loss) per share
|
| 12 months to 30 June | 12 months to 30 June |
|
| 2010 | 2009 |
|
| £'000 | £'000 |
|
|
|
|
| Profit / (loss) for the year from continuing operations attributable to equity shareholders | 30 | (535) |
|
|
|
|
| Earnings / (loss) per share from continuing operations |
|
|
| Basic earnings / (loss) per share (pence) | - | (0.09) |
| Diluted earnings / (loss) per share (pence) | - | (0.09) |
|
|
|
|
|
| Shares | Shares |
|
|
|
|
| Issued ordinary shares at start of the year | 615,568,903 | 593,192,437 |
| Ordinary shares issued in the year | 8,195,602 | 22,376,466 |
|
|
|
|
| Issued ordinary shares at end of the year | 623,764,505 | 615,568,903 |
|
|
|
|
| Weighted average number of shares in issue for the year | 622,267,954 | 605,430,000 |
| Dilutive effect of options | 7,100,433 | - |
|
|
|
|
| Weighted average shares for diluted earnings per share | 629,368,387 | 605,430,000 |
|
|
|
|
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. 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 2010 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 2010 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/.