ADVFN Regulatory News (AFN)

ADVFN PLC

ADVFN, Europe's leading stocks and shares website, announces its audited results for the year ended 30 June 2011

Highlights:

·; Turnover up 7% to £9,167,000 (2010 restated: £8,591,000)

·; EBITDA* profit of £348,000 (2010 restated: £1,256,000)

·; Cash and gilts balance to £2,397,000 (2010: £2,300,000)

·; P&L (£862,000) (2010 restated: profit of £146,000)

·; Positive cash flow; 'net cash generated from operations' £595,000 (2010: £1,417,000) 

·; ADVFN's registered users base now over 2,200,000

(2010: 2,000,000)

For further information, please contact:

Clem Chambers,

ADVFN PLC CEO

0207 0700 909

Gerry Beaney

Grant Thornton Corporate Finance (Nominated Adviser)

0207 7383 5100

*EBITDA is calculated as the operating loss for the year before depreciation and amortisation charges.

CHIEF EXECUTIVE'S STATEMENT

ADVFN has had another strong year with turnover up 7% to £9,167,000. 2011 has been a pivotal year where we have begun the next phase of growth outside the UK.

We have made very good progress this year against a background which could hardly be described as easy. Our product and geographical diversity has served us well so that we have avoided many of the challenges other media players have had to contend with.

Subscriptions have been robust and advertising income has led our growth. The advertising lead growth is a vanguard of growth as it accelerates the broadening of our business to important new markets

Having strong sites in the UK, US and Brazil, we believe we have the necessary template now to expand into the emerging markets where audiences are vibrant and huge. Our strategy is to penetrate markets via sales offices, using advertising income to fund growth in the territories that warrant it most.

In line with this we have been opening regional sales offices in Japan, India and the Middle East and we have been focusing on expanding in these territories. This process is delivering the platform for growth in the coming years leveraging the considerable investment we have made over the last 10 years.

All sites have performed robustly against a backdrop of global financial uncertainty. The UK continues to prosper, Brazil has remained strong and continues to develop and the US continues to grow for our ADVFN and Investors Hub brands. We feel very positive about next year's prospects whatever the outcome of the markets and expect to see further progress even in the teeth of another crash.

Financial overview

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

These figures show an increase in sales of 7%, an EBITDA of £348,000 and cash flow from operations of £595,000.

We have been operating against a backdrop of a weakening dollar which has masked further underlying growth but as we are earning income in euro, US dollar, UK pounds and Yen we are to some extent hedged against the currency fluctuations of recent times.

Strategy

We are building out the business for the next phase of ADVFN's development which we see as taking us towards sales of £20,000,000 a year.

This year is another year of growth; a yearly goal we have achieved every year for the last 11 years.

The market opportunity for us in India, The Middle East, Mexico and the Philippines is large and involves a modest level of investment. The bulk of our platform for entering such large markets is already made so that each new office is a small measured risk. We expect each territory to come on stream in a 12 month set up window and to be quickly income generative thereafter.

Exposure to fast growing economies with active markets is the way forward for us, taking positive developments in each market and feeding them back into our global offering.

The size of the opportunity is sufficiently large to keep us very busy for a long time to come.

Operating Costs

We spend a great deal of time focusing on our cost base making sure we optimise the return on our outgoings where ever possible. As we enter this new phase we are earmarking resources to invest in growth. We have been hiring, increasing our technical platform and increasing marketing. This has been funded solely from positive cash flow which represents a strong financial and operational performance.

Research and Development

As always ADVFN never stops developing its technology and platform. With growing traffic and giant spikes of usage set off by the global economic chaos of recent times, ADVFN has adapted to supply the demand of a world hungry for updates the moment financial information is available. These demands have grown and grown over the years and we have seamlessly managed to keep up with growth on all fronts. This process will continue and represents a valuable and unique asset.

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 £97,000 to £2,397,000, an increase of 4%

Summary of key performance indicators

Future outlook for the business

We are very comfortable of the prospects for next year and for that matter the years ahead. We are now rolling out ADVFN to more global audiences and feel assured that we have the people, the offerings and the technology to continue along the path we have set to be a global markets website with £100,000,000 in sales. In percentage terms we are as far away from that target today as we were from today's sales when we started out in 2001.

Principal risks and uncertainties:

Economic downturn

An extended economic down turn 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 third 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 and have been hiring to enable us to grow during the next phase of our development. I would like to thank them all for their hard work and dedication over the past year.

Clem Chambers

CEO

19 October 2011

Consolidated statement of changes in equity

1. Prior year adjustment

During the year the Group upgraded its reporting systems for its subscription website which enabled it to generate more accurate information over the unexpired level of live subscriptions at any period end. The information generated by the new reports has enabled the Group to accurately quantify the level of deferred subscription levels at 30 June 2011 and prior year ends. In prior years the Group had calculated deferred revenue using the information available to it, together with certain estimation techniques.

The new reports have identified that the deferred income calculated and reflected in the financial statements for prior periods was materially incorrect. In accordance with IAS 8 'Accounting Policies, Changes in Accounting Estimates and Errors' the comparative financial statements have been restated. The effect of the prior year adjustment on each line item within the prior year financial statements is set out below:

2. Segmental analysis

The directors 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. 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.

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:

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:

Revenues are allocated to the country in which the customer resides. During both 2011 and 2010 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:

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.

3. (Loss) / earnings per share

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.

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 2011 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 2011 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.