Last checked at 23 Oct 2015 17:30
ADVFN PLC
Audited Results for the Year Ended 30 June 2015
ADVFN, the global stocks and shares website, announces its audited results for the year ended 30 June 2015
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/ Jen Clarke/ Jamie Barklem
Grant Thornton UK LLP (Nominated Adviser)
0207 383 5100
CHIEF EXECUTIVE'S STATEMENT
2015 was a solid year with sales broadly in line with last year at £9,297,000 (2014: £9,702,000). Losses were £1,560,000 (2014: £454,000) an outcome significantly exacerbated by our difficult and costly defence of the illegal action of a particular shadowy group of share holders at the beginning of the year which was seeking to take control of the ADVFN board (the "Requisitioning Shareholders").
This was a major distraction and the situation was resolved by the UK Regulator this summer, very much to our relief.
Meanwhile we worked with our advisers on a potential acquisition of London South East Limited, a UK financial website and provider of stock data, with an eye to combine the business and talents with ADVFN. Since the end of the financial year, this deal has fallen into abeyance. Market conditions and changes in the VCT rules have meant the market currently has little appetite to finance this kind of deal but both parties have left the door open for working together in the future.
We have been focusing very keenly on reducing costs. Historically we have focused on growth opportunities and this has been the strategy for well over a decade. However we have decided to deviate from that path and instead shift our focus to cash flows and profitability. The initial phase of this was underway in the lead up to the year end and has continued beyond and by the end of the calendar year we will have refocused our efforts into optimising our businesses in the UK, US, Brazil. We will still enjoy significant traffic and revenues from the Rest of the World (ROW) but our focus in the medium term will not be investing material resources beyond those core territories.
The bear market that kicked off around spring time in the markets has created flashes of growth, especially in Brazil and it is likely that if the market continues to become more volatile, we will benefit from an increased level of interest this creates. Whilst seemingly counterintuitive, very bad markets are good for us and like our advertising clients, quiet markets are poor for us, while fast markets are excellent. It seems likely that volatility will increase.
Clement Chambers
CEO
22 October 2015
STRATEGIC REPORT
Financial Overview
These consolidated accounts have been prepared under International Financial Reporting Standards (IFRS) as adopted by the European Union.
There has been an environment of rising costs in data license fees and we have had to make a number of important changes to product make-up and pricing to accommodate this.
We have been extremely focused on keeping our cost base under control and have taken a series of further steps to take our model towards operating with significant cash flows and profitability.
Business Review
Last year's strategy to begin a US market outreach on the OTC QX market tier was scuppered by the proposed EGM by the Requisitioning Shareholders at the beginning of the year.. This intervention has contributed to the volatility of the Company's share price on a rollercoaster ride and left a fog of uncertainty that remains today over what might happen next. This has derailed our US plans because of the effort required to defend the Company in that period.
Whilst this veil of uncertainty remains, happily we have been able to get back to the business' main focus thanks to the intervention of the UK regulators in this matter.
Consequently, we have lost some momentum and this is reflected in the figures, but thankfully it has not disrupted our core business dynamics.
We have used this emergency situation as an opportunity to make some key decisions and it is fair to say that we have now deviated from our long-term strategy of ploughing everything back into trying to grow ADVFN globally. To some this may be a relief, but we still feel there are great opportunities outside our current focus but we have decided, that at least in the medium term, to grow profitability as a priority.
Operating Costs
We have been working hard on reducing these during the year and they are set on a downward trajectory.
Research and Development
R&D is a kind of life blood in technology, if you do not continue to develop you enter a spiral of decay that leads to obsolescence. We have continued to develop, scale and reinforce our platform. ADVFN sites run on a robust, flexible, low cost platform which we will continue to push forward to keep up with the financial data markets every increasing complexity.
Environmental policy
The Company 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 a history of growth. This tends to go in steps with intervening periods of plateau stability. We are on such a plateau again. While during these periods it can seem like nothing much is happening, there are always developments both good and bad occurring almost weekly. ADVFN grows when the markets go into volatility. No one can predict the timing of such events so it is hard to predict when the current plateau environment will change. It will however, that much is certain.
Summary of key performance indicators
2015 | 2015 | 2014 | 2014 | |
Actual | Target | Actual | Target | |
Turnover | £9.3M | £9 - £10M | £9.7M | £9 - £10M |
Average head count | 53 | 53 | 43 | 44 |
ADVFN registered users | 3.2M | 3.1M | 3.0M | 2.9M |
Principle risks and uncertainties
Economic downturn
There are signs of global economic recovery and these have shown up as bursts of traffic on ADVFN, for example in Brazil. 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 and the credit crunch, so we feel that we have shown we are robust enough to withstand the financial conditions of economic emergencies.
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 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.
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
22 October 2015
GROUP
Consolidated income statement | |||
12 months to 30 June | 12 months to 30 June | ||
2015 | 2014 | ||
Note | £'000 | £'000 | |
Revenue | 9,297 | 9,702 | |
Cost of sales | (1,628) | (1,165) | |
Gross profit | 7,669 | 8,537 | |
Share based payment | (189) | (54) | |
Amortisation of intangible assets | (630) | (914) | |
Other administrative expenses | (8,755) | (8,232) | |
Total administrative expenses | (9,574) | (9,200) | |
Operating loss | (1,905) | (663) | |
Finance income | 114 | 108 | |
Loss before tax | (1,791) | (555) | |
Taxation | 231 | 101 | |
Loss for the period attributable to shareholders of the parent | 2 | (1,560) | (454) |
Loss per share - basic and diluted based on consolidated shares | 2 | (6.19)p | (1.80)p |
Consolidated statement of comprehensive income | |||
12 months to 30 June | 12 months to 30 June | ||
2015 | 2014 | ||
£'000 | £'000 | ||
Loss for the period | (1,560) | (454) | |
Other comprehensive income: | |||
Items that will be reclassified subsequently to profit or loss: | |||
Exchange differences on translation of foreign operations | 185 | (190) | |
Deferred tax on translation of foreign held assets | (21) | 29 | |
Total other comprehensive income | 164 | (161) | |
Total comprehensive income for the year attributable to shareholders of the parent |
(1,396) |
(615) | |
GROUP
Consolidated balance sheet | |||
30 June | 30 June | ||
2015 | 2014 | ||
£'000 | £'000 | ||
Assets | |||
Non-current assets | |||
Property, plant and equipment | 99 | 71 | |
Goodwill | 784 | 724 | |
Intangible assets | 1,216 | 1,331 | |
Trade and other receivables | 103 | 295 | |
Investments | 6 | - | |
2,208 | 2,421 | ||
Current assets | |||
Trade and other receivables | 1,095 | 1,122 | |
Current tax recoverable | 181 | 60 | |
Cash and cash equivalents | 986 | 1,675 | |
2,262 | 2,857 | ||
Total assets | 4,470 | 5,278 | |
Equity and liabilities | |||
Equity | |||
Issued capital | 50 | 6,305 | |
Share premium | - | 8,102 | |
Merger reserve | - | 221 | |
Share based payment reserve | 189 | 617 | |
Foreign exchange reserve | 281 | 117 | |
Retained earnings | 1,118 | (12,517) | |
1,638 | 2,845 | ||
Non-current liabilities | |||
Deferred tax | 97 | 131 | |
97 | 131 | ||
Current liabilities | |||
Trade and other payables | 2,731 | 2,268 | |
Current tax | 4 | 34 | |
2,735 | 2,302 | ||
Total liabilities | 2,832 | 2,433 | |
Total equity and liabilities | 4,470 | 5,278 | |
GROUP
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 2013 | 6,291 | 8,062 | 221 | 563 | 278 | (12,063) | 3,352 |
Issue of shares | 14 | 40 | - | - | - | - | 54 |
Equity settled share options | - | - | - | 54 | - | - | 54 |
Transactions with owners | 14 | 40 | - | 54 | - | - | 108 |
Loss for the period after tax | - | - | - | - | - | (454) | (454) |
Other comprehensive income | |||||||
Exchange differences on translation of foreign operations |
- |
- |
- |
- |
(190) |
- |
(190) |
Deferred tax on translation of foreign held assets |
- |
- |
- |
- |
29 |
- |
29 |
Total comprehensive income for the year |
- |
- |
- |
- |
(161) |
(454) |
(615) |
At 30 June 2014 | 6,305 | 8,102 | 221 | 617 | 117 | (12,517) | 2,845 |
Equity settled share options | - | - | - | 189 | - | - | 189 |
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 comprehensive income | - | - | - | - | 164 | - | 164 |
Share consolidation | (6,255) | (8,102) | (221) | (617) | - | 15,195 | - |
At 30 June 2015 | 50 | - | - | 189 | 281 | 1,118 | 1,638 |
GROUP
Consolidated cash flow statement | |||
12 months to 30 June | 12 months to 30 June | ||
2015 | 2014 | ||
£'000 | £'000 | ||
Cash flows from operating activities | |||
Loss for the period before tax | (1,791) | (555) | |
Net finance income in the income statement (unwinding receivable) | (114) | (108) | |
Depreciation of property, plant & equipment | 61 | 47 | |
Amortisation | 647 | 914 | |
Adjustment to fair value of embedded derivative | 200 | 250 | |
Share based payments | 189 | 54 | |
Decrease/(Increase) in trade and other receivables | 133 | (149) | |
Increase in trade and other payables | 463 | 314 | |
Net cash (used by)/generated by continuing operations | (212) | 767 | |
Income tax receivable/(payable) | 46 | (3) | |
Net cash generated by operating activities | (166) | 764 | |
Cash flows from investing activities | |||
Payments for property plant and equipment | (89) | (57) | |
Purchase of intangibles | (472) | (495) | |
Purchase of investments | (6) | - | |
Net cash used by investing activities | (567) | (552) | |
Net (decrease) /increase in cash and cash equivalents | (733) | 212 | |
Exchange differences | 44 | 2 | |
Total (decrease) /increase in cash and cash equivalents | (689) | 214 | |
Cash and cash equivalents at the start of the period | 1,675 | 1,461 | |
Cash and cash equivalents at the end of the period | 986 | 1,675 |
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.
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:
2015
| Provision of financial information | Other | Total |
£'000 | £'000 | £'000 | |
Revenue from external customers | 8,695 | 602 | 9,297 |
Depreciation and amortisation | (630) | (78) | (708) |
Other operating expenses | (9,858) | (636) | (10,494) |
Segment operating loss | (1,793) | (112) | (1,905) |
Interest income | 114 | - | 114 |
Interest expense | - | - | - |
Segment assets | 4,629 | (159) | 4,470 |
Segment liabilities | (2,628) | (204) | (2,832) |
Purchases of non-current assets | 380 | 92 | 472 |
2014
| Provision of financial information | Other | Total |
£'000 | £'000 | £'000 | |
Revenue from external customers | 9,345 | 357 | 9,702 |
Depreciation and amortisation | (655) | (306) | (961) |
Other operating expenses | (8,913) | (491) | (9,404) |
Segment operating loss | (223) | (440) | (663) |
Interest income | 108 | - | 108 |
Interest expense | - | - | - |
Segment assets | 4,919 | 359 | 5,278 |
Segment liabilities | (1,951) | (482) | (2,433) |
Purchases of non-current assets | 589 | - | 589 |
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 | |
2015 | 2015 | 2014 | 2014 | |
£'000 | £'000 | £'000 | £'000 | |
UK (domicile) | 3,587 | 1,070 | 3,791 | 1,268 |
USA | 4,919 | 1,138 | 5,039 | 1,153 |
Other | 791 | - | 872 | - |
9,297 | 2,208 | 9,702 | 2,421 | |
Revenues are allocated to the country in which the customer resides. During both 2015 and 2014 no single customer accounted for more than 10% of the Group's total revenues.
2. Loss per share
12 months to 30 June | 12 months to 30 June | |
2015 | 2014 | |
£'000 | £'000 | |
Re-stated | ||
Loss for the year from continuing operations attributable to equity shareholders | (1,560) | (454) |
Total loss per share- basic and diluted | (6.19)p | (1.80)p |
Shares | Shares | |
Weighted average number of shares in issue for the year | 25,220,210 | 25,219,905 |
Dilutive effect of options | - | - |
Weighted average shares for diluted earnings per share | 25,220,210 | 25,219,905 |
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.
Restatement
A share consolidation took place on 20th August 2014 and resulted in a reduction in shares in issue from 630,505,244 to 25,220,210. To allow a more meaningful comparison the shares in issue at 30 June 2014 have been restated to present a consolidated share equivalent. Please see note 19 for further details of the share consolidation.
3. Events after the balance sheet date
There are no events of significance occurring after the balance sheet date to report.
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 2015 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 2015 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.