Last checked at 28 Oct 2008 16:45
ADVFN plc ('ADVFN' or 'the Company')
Preliminary Results for the Year Ended 30 June 2008
ADVFN, Europe's leading stocks and shares website, today announces its audited results for the year ended
30 June 2008.
Highlights:
Turnover up 15.1% to £6.93M (2007: £6.02M)
Loss after tax - down 36% to £882,000 (2007: £1,382,000)
Loss per share reduced by 38% to 0.15p (2007: 0.24p)
Increase in cash by 17.2% to £1.591M (June 2007: £1.358M)
ADVFN user numbers up 48% to 1.44M (2007: 970K)
Total group user numbers up 21% to 4.0M (2007: 3.3M)
Clem Chambers, CEO of ADVFN, commented:
"After another strong year ADVFN is experiencing more strong growth. Investors from around the world are flocking to us to see the global crash unfold before their eyes. The credit crunch is pushing our brand into the global spotlight with international subscriptions making up 75% of our record subscription levels as they climb at a record pace".
For further information, please contact:
Clem Chambers, clemc@advfn.com
Francesca De Franco, PR francescad@advfn.com 020 7070 0932
Fiona Kindness, Grant Thornton UK LLP (Nominated Adviser) 020 7728 3414
CHIEF EXECUTIVE'S STATEMENT
Turmoil in the world's financial markets has been beneficial to ADVFN. Since the beginning of the credit crunch we have experienced strong growth. A troubled market has boosted our traffic and subscriptions and has accelerated the growth of our international sites. While advertising income has been held back in comparison it is nonetheless resilient. Equity Development has had a good year as the demand for good quality research also proves robust.
Financial overview
These accounts have been prepared under International Financial Reporting Standards (IFRS) which are the accounting standards that listed groups now have to adopt. These accounts set out this year's figures and also restate last year's in the new format so you can see the changes. Turnover for the year ended 30 June 2008 was up 15% to £6,931,000 from last year. Our performance is in line with our expectations for the year and since the year end growth has continued to accelerate with subscriptions experiencing a burst in growth alongside the global equity crash.
Financial performance
Financial performance for the year has been analysed as follows:
| Year to 30 June 2008 | Year to 30 June 2007 | Change | Change | |
| £'000 | £'000 | £'000 | % | |
| Turnover | 6,931 | 6,022 | 909 | 15% |
| Net Loss | (882) | (1,382) | 500 | (36)% |
| Loss per share from continuing operations | (0.12p) | (0.19p) | 0.07p | (36)% |
Strategy
As it should be, our strategy has not changed for years; 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 are always working to enhance the service and create new technologies to keep the site fresh, while localising the platform for new markets. By innovation we try to create bundled products that give private investors information of a professional quality at a keen price. Where possible we work directly with our advertisers in a long term relationship to help them meet the needs of their marketing and business plans by tailoring our advertising opportunities. The ADVFN website is a significant technological achievement, a scalable platform streaming financial data from around the world 24/7/365. It is built to be able to grow to meet increasing demand, an important feature in today's tumultuous markets where demand for data and the supply of it from the markets has grown immensely. This architecture has allowed us to grow without expending huge amounts on new equipment, a key factor in our growth. Our ability to develop and maintain state of the art software has allowed us to grow overseas and so while we are the major player in this market niche in the UK, we can look to the rest of the world for growth. While still the mainstay of our income, the UK now only represents 18% of our website traffic, which has been an important strategic development in the last couple of years. This alone suggests that the potential for revenue growth is significant and that becoming less dependent on the local UK market puts us in a strong position in the current gloomy economic climate. Strong traffic growth in France, Italy, South America and the US is beginning to translate into new income with early signs of significant promise.
Turnover
Our turnover has continued to grow for the 8th consecutive year. Sales have achieved growth over the year of 15% and this growth shows no sign of stopping.
Operating costs
Costs across the world have increased and we have been no exception to the market. Bandwidth, market data, networking and hosting charges have all risen sharply but by an ongoing process of optimisation we have minimised the impact. Our staffing levels have been maintained rather than increased as we have paid intense focus to costs in general. Marketing and customer acquisition costs have remained as planned and have been reasonable static throughout the year.
Research and development
We continue to invest in the quality and design of our products. We believe continued investment in our research and development is fundamental to the continuing growth of the business and much of our cost base is effectively focused on developing products markets for the future.
Environmental policy
The company as a whole continues to look for ways to develop our environmental policy. It is our objective to improve our performance in this area.
Summary of key performance indicators
Below are some of the key performance indicators we use to monitor the group's progress. We have monitored the progress of the overall strategy and the individual strategic elements by reference to certain financial and non-financial key performance indicators as set out below:-
| 2008 Actual | 2008 Target | 2007 Actual | 2007 Target | |
| Growth in sales (%) | 15% | 15% | 35% | 30% |
| Staff turnover (%) | 35% | 25% | 18% | 20% |
| Average head count | 54 | 55 | 54 | 55 |
| Advfn registered users | 1.44M | 1.2M | 970K | 850K |
| Group registered users | 4.0M | 3.5M | 3.3M | 2.5M |
Future outlook for the business
Our strategy remains the same; to grow ADVFN internationally. Over the past months as the world Stock Markets have crashed we have worked flat out to keep up with the demand which has broken all previous levels. Having anticipated the 'credit crunch' as early as January 2007, it has come as a pleasant surprise that our business has not been hurt by this emergency and has in fact been helped by it. The crash has forced many investors on to the net to find the latest information which in turn has introduced large numbers of new users to ADVFN. With no quick end to the current world financial problems it would appear that ADVFN is well positioned to accelerate its international roll out.
Trading since the year end has established the trend that volatility in the markets is a benign environment for ADVFN and subscriptions are growing quickly in all of our major territories.
Principal risks and uncertainties
The management of the business and the nature of the company's strategy are subject to a number of risks. The directors have set out below the principal risks facing the business. The directors' are of the opinion that a thorough risk management process is adopted which involves the formal review of all the risks identified below. Where possible, processes are in place to monitor and mitigate such risks.
Economic downturn
The success of the world's Stock Markets could affect the business, in recent months most stock markets have crashed or had a very major correction. Events like this can have a knock on effect to consumer spending power although in the past when we have seen a drop in the worlds market or indices, the market down turn has not changed our customer requirement to know what is happening in the market. However we do not feel it prudent to discount the potential for problems going forwards. It is important the senior management respond to this risk, and aim to keep abreast of economic conditions around the World.
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.
Product obsolescence
The Technology that we use and develop is always moving on and changing, products are subject to technological advances and resultant obsolescence. 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 are all focused on creating the best possible service we can provide. I would like to thank them all for the hard work and dedication over the past year.
Clem Chambers
Chief Executive
28th October 2008
Consolidated Income Statement
for the year ended 30 June 2008
| 12 months to 30 June | 12 months to 30 June | ||
| 2008 | 2007 | ||
| £'000 | £'000 | ||
| Revenue | 6,931 | 6,022 | |
| Cost of sales | (640) | (513) | |
| Gross profit | 6,291 | 5,509 | |
| Share based payment | (90) | (169) | |
| Amortisation of intangible assets | (1,087) | (926) | |
| Other administrative expenses | (6,422) | (5,427) | |
| Total administrative expenses | (7,599) | (6,522) | |
| Operating loss | (1,308) | (1,013) | |
| Finance income | 57 | 43 | |
| Finance expense | (17) | (15) | |
| Result from associates after taxation | (221) | (418) | |
| Loss before tax | (1,489) | (1,403) | |
| Taxation | 775 | 335 | |
| Loss for the period from continuing operations | (714) | (1,068) | |
| Loss for the period from discontinued operations | (168) | (314) | |
| (882) | (1,382) | ||
| Loss per share - from continuing operations | |||
| Basic and diluted (pence per share) | (0.12) | (0.19) | |
| Loss per share - from continuing and discontinued operations | |||
| Basic and diluted (pence per share) | (0.15) | (0.24) | |
Consolidated Balance Sheet
at 30 June 2008
| 30 June | 30 June | ||
| 2008 | 2007 | ||
| £'000 | £'000 | ||
| Assets | |||
| Non-current assets | |||
| Property, plant and equipment | 187 | 258 | |
| Goodwill | 1,590 | 1,510 | |
| Intangible assets | 2,577 | 2,853 | |
| Investments in associates | 1,187 | 1,595 | |
| Trade and other receivables | 182 | 206 | |
| 5,723 | 6,422 | ||
| Current assets | |||
| Trade and other receivables | 1,019 | 942 | |
| Current tax recoverable | 163 | 267 | |
| Other financial assets (available for sale) | 67 | 59 | |
| Other short term financial assets | - | 13 | |
| Cash and cash equivalents | 1,591 | 1,358 | |
| 2,840 | 2,639 | ||
| Total assets | 8,563 | 9,061 | |
| Equity and liabilities | |||
| Equity | |||
| Issued capital | 5,932 | 5,870 | |
| Share premium | 7,710 | 7,600 | |
| Shares to be issued | 249 | 332 | |
| Merger reserve | 221 | 221 | |
| Share based payment reserve | 425 | 335 | |
| Foreign exchange reserve | - | (92) | |
| Retained earnings | (8,254) | (7,372) | |
| 6,283 | 6,894 | ||
| Non-current liabilities | |||
| Deferred tax | 425 | 521 | |
| Borrowings - obligations under finance leases | 31 | 20 | |
| 456 | 541 | ||
| Current liabilities | |||
| Trade and other payables | 1,771 | 1,562 | |
| Borrowings - obligations under finance leases | 53 | 64 | |
| 1,824 | 1,626 | ||
| Total liabilities | 2,280 | 2,167 | |
| Total equity and liabilities | 8,563 | 9,061 | |
The preliminary results were approved by the Board of Directors on 28 October 2008.
Consolidated Statement of Changes in Equity
for the year ended 30 June 2008
| 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 2006 | 4,798 | 5,634 | 498 | 221 | 174 | - | (5,990) | 5,335 |
| Exchange differences on translation of foreign operations | - | - | - | - | - | (92) | - | (92) |
| Net income recognised directly in equity | - | - | - | - | - | (92) | - | (92) |
| Loss for the period after tax | - | - | - | - | - | - | (1,382) | (1,382) |
| Total recognised income and expense | - | - | - | - | - | (92) | (1,382) | (1,474) |
| Issue of shares | 1,072 | 2,147 | (166) | - | - | - | - | 3,053 |
| Associated costs | - | (181) | - | - | - | - | - | (181) |
| Equity settled share options | - | - | - | - | 161 | - | - | 161 |
| At 30 June 2007 | 5,870 | 7,600 | 332 | 221 | 335 | (92) | (7,372) | 6,894 |
| Disposal of interest in associate | - | - | - | - | - | 92 | - | 92 |
| Net income recognised directly in equity | - | - | - | - | - | 92 | - | 92 |
| Loss for the period after tax | - | - | - | - | - | - | (882) | (882) |
| Total recognised income and expense | 92 | (882) | (790) | |||||
| Issue of shares | 62 | 110 | (83) | - | - | - | - | 89 |
| Equity settled share options | - | - | - | - | 90 | - | - | 90 |
| At 30 June 2008 | 5,932 | 7,710 | 249 | 221 | 425 | - | (8,254) | 6,283 |
Consolidated Cash Flow Statement
for the year ended 30 June 2008
| 12 months to 30 June | 12 months to 30 June | ||
| 2008 | 2007 | ||
| £'000 | £'000 | ||
| Cash flows from operating activities | |||
| Loss for the period before tax | (1,489) | (1,403) | |
| Finance costs in the income statement | (40) | (28) | |
| Results for associates | 221 | 418 | |
| Depreciation of property, plant & equipment | 173 | 180 | |
| Amortisation | 1,087 | 926 | |
| Investment acquired as payment for services | - | (30) | |
| Impairment of financial assets | 5 | - | |
| Share based payments | 90 | 169 | |
| Increase in trade and other receivables | (53) | (197) | |
| Increase in trade and other payables | 209 | 89 | |
| Net cash generated from operations | 203 | 124 | |
| Interest paid | (17) | (15) | |
| Income tax receivable | 783 | - | |
| Net cash generated by operating activities | 969 | 109 | |
| Cash flows from investing activities | |||
| Interest received | 57 | 43 | |
| Payments for property plant and equipment | (62) | (111) | |
| Purchase of intangibles | (811) | (827) | |
| Disposal of interest in associates | 132 | - | |
| Purchase of subsidiary undertakings (net) | - | (1,624) | |
| Net cash used in investing activities | (684) | (2,519) | |
| Cash flows from financing activities | |||
| Proceeds from issue of equity shares | 9 | 3,053 | |
| Issue costs | - | (181) | |
| Loans repaid (finance leases) | (61) | (34) | |
| Net cash generated by financing activities | (52) | 2,838 | |
| Net increase in cash and cash equivalents | 233 | 428 | |
| Exchange differences | - | (8) | |
| Total increase in cash and cash equivalents | 233 | 420 | |
| Cash and cash equivalents at the start of the period | 1,358 | 938 | |
| Cash and cash equivalents at the end of the period | 1,591 | 1,358 |
Notes for the year ended 30 June 2008
Publication of Non Statutory Accounts
The financial information set out in this preliminary announcement does not constitute statutory accounts as defined in section 240 of the Companies Act 1985.
The consolidated balance sheet at 30 June 2008 and the consolidated income statement, consolidated statement of changes in equity, consolidated cash flow statement and associated notes for the year then ended have been extracted from the Group's 2008 statutory financial statements upon which the auditors' opinion is unqualified and does not include any statement under Section 237 of the Companies Act 1985.
Those financial statements have not yet been delivered to the registrar of companies.
1. Basis of preparation
The consolidated financial statements are for the year ended 30 June 2008. They have been prepared in compliance with International Financial Reporting Standards (IFRSs) and International Financial Reporting Interpretations Committee (IFRIC) interpretations as adopted by the European Union as at 30 June 2008. The consolidated financial statements have been prepared under the historical cost convention as modified by the revaluation of certain financial instruments.
In the current year the Group has adopted International Financial Reporting Standards for the first time and has applied IFRS 1 'First time adoption of IFRS' from the transition date of 1 July 2006. Please refer to note 4 for the details of the adjustments required to present the accounts under IFRS.
IFRS permits Groups adopting IFRS for the first time to take certain exemptions from the full requirements of IFRS in the transition period. These financial statements have been prepared on the basis of taking the following exemptions:
-IFRS 3 'Business combinations'
Business combinations that occurred before the opening IFRS balance sheet date are exempt from the application of the standard. Goodwill is no longer amortised and negative goodwill is written off to the income statement.
-IAS 21 'The effects of changes in foreign exchange rates'
Cumulative translation differences which exist at the time of the transition can be transferred into the retained earnings and the foreign exchange reserve therefore shows only differences arising after transition. Exchange differences recycled to the income statement on disposal of a foreign operation only relate to post transition differences.
The accounting policies used have been consistently applied from the transition balance sheet and throughout all periods presented in the first IFRS financial statements.
Copies of the annual report are being posted to shareholders and copies will be available from the company's registered office at Suite 27, Essex Technology Centre, The Gables, Fyfield Road, Ongar, Essex, CM5 0GA and from the Company's website, www.advfn.com .
2. Loss per Share
| 12 months to 30 June | 12 months to 30 June | |
| 2008 | 2007 | |
| From continuing operations: | £'000 | £'000 |
| Loss for the year attributable to equity shareholders | (882) | (1,382) |
| Adjustments to exclude loss for the period from discontinued operations | 168 | 314 |
| Loss for the year from continuing operations attributable to equity shareholders | (714) | (1,068) |
| Loss per share from continuing operations | ||
| Basic loss per share (pence) | (0.12) | (0.19) |
| Diluted loss per share (pence) | (0.12) | (0.19) |
| Loss per share from discontinued operations | ||
| Basic loss per share (pence) | (0.03) | (0.06) |
| Diluted loss per share (pence) | (0.03) | (0.06) |
| Shares | Shares | |
| Issued ordinary shares at start of the year | 586,979,000 | 479,805,000 |
| Ordinary shares issued in the year (Note 23) | 6,213,000 | 107,174,000 |
| Issued ordinary shares at end of the year | 593,192,000 | 586,979,000 |
| Weighted average number of shares in issue for the year. | 591,468,000 | 565,331,000 |
| Dilutive effect of options | - | - |
| Weighted average shares for diluted earnings per share | 591,468,000 | 565,331,000 |
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. Segmental analysis
The Group has a single class of business; that of developing and providing financial information primarily via the internet. The directors therefore consider that the Group's primary format for reporting segmental information is geographical by location of assets as this is the dominant source of the group's risks and rewards. The group also provides segmental information by the geographical location of its customers.
| 2008 Segmental analysis by location of assets | UK | The Americas | Rest of the World | Total |
| £'000 | £'000 | £'000 | £'000 | |
| Continuing | Continuing | Discontinued | ||
| Revenue from external customers (rendering of services) | 6,410 | 521 | - | 6,931 |
| Loss for the period | (466) | (248) | (168) | (882) |
| Assets | 6,531 | 2,032 | - | 8,563 |
| Liabilities | 1,827 | 453 | - | 2,280 |
| Capital expenditure | 880 | 33 | - | 913 |
| Depreciation of property, plant and equipment | 110 | 63 | - | 173 |
| Amortisation of intangibles | 935 | 152 | - | 1,087 |
| Share of results of associates | (221) | - | (168) | (389) |
| Aggregate investment in associates | 1,187 | - | - | 1,187 |
| 2007 Segmental analysis by location of assets | UK | The Americas | Rest of the World | Total |
| £'000 | £'000 | £'000 | £'000 | |
| Continuing | Continuing | Discontinued | ||
| Revenue from external customers (rendering of services) | 5,633 | 389 | - | 6,022 |
| Loss for the period | (1,017) | (51) | (314) | (1,382) |
| Assets | 6,680 | 2,173 | 208 | 9,061 |
| Liabilities | 1,632 | 535 | - | 2,167 |
| Capital expenditure | 947 | 38 | - | 985 |
| Depreciation of property, plant and equipment | 163 | 17 | - | 180 |
| Amortisation of intangibles | 812 | 114 | - | 926 |
| Share of results of associates | (418) | - | (314) | (732) |
| Aggregate investment in associates | 1,387 | - | 208 | 1,595 |
Discontinued operations relate solely to ADVFN Japan K.K., an associated entity. The group's interest in ADVFN Japan was sold during the year.
The following geographical segments are based on an analysis of revenue by the location of the group's customers:
| Revenue | 2008 | 2007 |
| £'000 | £'000 | |
| UK - Continuing | 5,141 | 4,857 |
| The Americas - Continuing | 1,486 | 876 |
| Rest of the world - Discontinued | 304 | 289 |
| 6,931 | 6,022 |
.
4. UK GAAP to IFRS transition adjustments
An explanation of how the transition from UK GAAP to IFRS has affected the Group's financial position, financial performance and cash flows is set out below.
IFRS 1 'First time adoption of IFRS'
The presentation and recognition requirements of this standard demand that the element of debtors which is over one year must be shown in the 'Non-current assets' heading and not, as previously presented under UK GAAP, under the overall Debtors heading within 'Current assets'.
IFRS 3 'Business combinations' and IAS 12 'Income taxes'.
By claiming the exemption from applying the standard retrospectively the Group will stop amortising positive goodwill at the transition date and, instead, it becomes the subject of regular impairment tests. In addition, the separable intangibles recognised on acquisitions after the transition date will be shown under the intangible assets heading and amortised in line with the Group accounting policy. Deferred tax is recognised on the separable intangible assets resulting from the acquisition and a deferred tax liability has resulted under IAS 12 'Income taxes'.
IAS 21 'The effects of foreign exchange differences'
Cumulative translation differences which exist at the date of transition can be transferred into retained earnings and the foreign exchange reserve therefore only shows differences arising after transition. Upon disposal, pre-transition foreign exchange differences will not be recycled (IFRS 1 'First time adoption of IFRS').
IAS 38 'Intangible assets'
Computer software and web site development costs are capitalised as a tangible asset under UK GAAP, however, under IFRS:
IAS 39 'Financial instruments, recognition and measurement'
Under UK GAAP current asset investments were carried at cost and the treatment under IFRS requires that the asset be recognised under one of four types, in this case 'available for sale', and that they be carried at fair value (in this case market value). The adjustment to fair value is taken directly to equity.