ADVFN Regulatory News (AFN)

31 Oct 2007 07:30

ADVFN PLC31 October 2007 Embargoed for release until 7.30 am Wednesday 31st October 2007 ADVFN plc ('ADVFN' or 'the Company') Preliminary Results for the Year Ended 30 June 2007 ADVFN, Europe's number one stocks and shares website, today announces itspreliminary results for the year ended 30 June 2007. Highlights: • Turnover up 35% to £6.0M (2006: £4.5M) • EBITDA profits of £262,000 (2006: loss £188,000) • Operating losses reduced by 19% to £1.07M (2006: £1.32M) • Net assets up over 27% to £6.8M (2006: £5.3M) • InvestorsHub.com Inc and SI Holdings LLC turnover up 107% for the nine months since acquisition to June 2007 compared to the previous nine months • ADVFN user numbers up over 38% to 970,000 (2006: 700,000) • Total group user numbers up 65% to 3.3M (2006: 2M) • InvestorsHub.com Inc and SI Holdings LLC successfully acquired and integrated into the group during the year Clem Chambers, CEO of ADVFN, commented: "The last year has been a year of record growth and international success. Weare poised to dramatically expand market share outside of the UK and lookforward to the future with optimism." For further information, please contact: Clem Chambers, clemc@advfn.comFrancesca De Franco, PR francescad@advfn.com 020 7070 0932Fiona Kindness, Grant Thornton UK LLP (Nominated Adviser) 020 7728 3414 Chief Executive's Statement The year to June 30th 2007 has been a strong period for the group. Our saleshave continued to grow, up 35% from £4,463,000 last year to £6,022,000. This hascome from growth in our subscription products, advertising income and EquityDevelopment's paid for equity research. This strong sales performance extendsright throughout the group, with Equity Development and our US operations,InvestorsHub.com (iHub) and Silicon Investor (SI), doing well. We have stated in the past that we intend to grow both at home and abroad and inthis period we have seen our international offerings take off. We have hadparticularly strong progress in Brazil and Italy, with encouraging developmentsin France and Germany. InvestorsHub.com and Silicon Investor have also hadstrong sales growth which we believe represents early evidence of significantrevenue potential going forwards. Based on the latest figures from webinformation company ALEXA (www.alexa.com), over 75% of total ADVFN globaltraffic now comes from outside of the UK. We are working hard translating thisinto the kind of revenue yields we currently enjoy in the UK market. This broadusage growth represents major revenue potential as we develop our advertisingand subscription products in localised markets. Strong international growth is an important and exciting development for ADVFNthat sees our strategy for creating a global financial information platformbegin to pay off. It would have been far easier to concentrate on the UK marketalone, but now as our local competition falls away and we enjoy acceleratingtraction in overseas markets, we feel confident we are in the early stages ofdelivering on the vision of a truly global business. While ADVFN continues togrow in the UK, with what is now an established business model,commercialisation is still at an early stage overseas. Yet even so, the initialcontributions to sales growth are significant and growing. As we tap furtherinto these new markets and continue to develop the iHub and SI properties, it isclear that the potential is there to multiply our revenues. This won't beachieved overnight but this across-the-board progress leads us to believe thatthis new phase is underway. Our registered user numbers are now, at the report date, over one million andour subscriber numbers are in a period of fast growth. The rates of acquisitionof both subscriptions and registrations are at record levels and have beenunaffected, perhaps even enhanced, by this summer's market turbulence. In avolatile market investors need access to unbiased market information whereverthey may be in the world; ADVFN remains one of the very few destinations thatcan fulfil this need. The operational leverage of a tried and tested, robust platform gives us anopportunity to become both highly profitable and cash generative. The smallvariance between our net cash at the year end and the previous interim period isan indication of how our growth is being achieved without any significant drainon our finances. Financial overview ADVFN has continued its growth in turnover for the seventh consecutive year.Turnover for the year ended 30 June 2007 was £6.02 million - a rise of 35 % onlast year (2006: £4.46 million). EBITDA for the year was £262,000 compared to£188,000 loss last year. Operating losses have been reduced by 19% to£1.07million (2006: £1.32million). The directors are encouraged with the performance for the year and believe thatADVFN is in a strong position to continue to expand its market share as we rollout our localised content and continue to integrate iHub and Silicon Investorinto the ADVFN infrastructure. Equity Development continues to grow and build anincreasing portfolio of clients as it leverages its reputation as a marketleader in sponsored research. Financial performance Key financial performance for the year has been summarised as follows: Year to 30 Year to 30 Change Change June 2007 June 2006 £'000 £'000 £'000 % Turnover 6,022 4,463 1,559 35 Operating Loss (1,073) (1,318) 245 19 EBITDA We have many non-cash expenses and therefore feel that our EBITDA is a moreaccurate measure of our performance than our operating results, which can beseen from the table below: EBITDA - Earnings before interest, tax, 2007 2006 depreciation, amortisation and exceptional items £'000 £'000 Loss on ordinary activities after (1,499) (1,021) taxation Amortisation 195 337 Depreciation 971 678 Taxation (278) (58) Share of associates operating losses 738 567 Exceptional item - gain on part disposal - (761) of subsidiary Share options expense 169 115 Net interest (34) (45) EBITDA 262 (188) Strategy Our continued strategy is to build on our market position which is number one inthe UK and Europe while at the same time expanding our model into other worldmarkets. In the main, this is being achieved from London or via joint ventureswith local partners. In the USA, the ADVFN, SI and iHub brands have now leapedahead of the UK in terms of site traffic. Our USA traffic is now over 30% of ourtotal traffic, which now places the UK into second place at around 23%. This isa trend we expect to see continuing as we move forward. Likewise, we expectincome from overseas markets to become an increasing percentage of our turnover,which should eventually reflect the market size and economy of the variousterritories we become established in. This should, over time, transform ADVFNinto a much larger enterprise. Turnover As detailed above, our sales have achieved growth over the year of 35%. Weexpect this growth to continue and accelerate as we open new markets and beginto benefit from our USA operations. As also shown in the table above, ouroperating loss has been reduced by £245,000 or 19% compared to 2006. Despite thereduction in our operating loss, our net loss for the year actually rose by 47%to £1,499,000. This is due to two things: Firstly the share of operating lossesof our associates rose by 30% to £738,000, relating to our investment in All IPOPlc and the technical impact on our accounts of our shareholding in ADVFN Japan.Secondly last year we had an exceptional gain of £761,000 relating to a gain onpart disposal of associates which more than wiped out the share of associate'slosses, whereas this year there was no such gain to help reduce this charge. Operating costs Compared to the 35% growth in turnover, our operating costs known asadministrative expenses have grown by nearly 26% to £6,582,000. Within thisthere are items of £169,000 for share option valuation expense, £174,000 foramortisation of goodwill, plus the £312,000 overhead of our US acquisitionsduring the period. Due to the introduction of FRS 20 we have had to bear anexpense of £169,000 in connection with share options issued being expensed, with£115,000 included for 2006 within the restated figures. In addition, we have hadto bear £174,000 of amortisation costs relating to goodwill on consolidationcompared to £77,000 in 2006. Market data-feed costs have increased as havebandwidth, networking and hosting charges which have increased our costs. Due toorganic growth and acquisition, staffing levels and wages have also risen givingus an increase in total overheads of 25%, which is in line with ourexpectations. Our marketing and customer acquisition costs have remainedreasonably static throughout the year and we expect this level to be maintainedfor the next 12 months. Research and development The company continues to invest in the quality and design of its products. Webelieve sustained investment in our research and development is fundamental tothe continuing growth of the business. Environmental policy Management continued to look for ways to develop the group's environmentalpolicy during the year. It is our objective to consistently improve ourperformance in this area. Summary of key performance indicators The directors have monitored the progress of the overall company strategy andthe individual strategic elements by reference to certain financial andnon-financial key performance indicators, as outlined below: 2007 2007 2006 2006 Actual Target Actual Target Growth in sales (%) 35% 30% 35% 30% Staff turnover (%) 18% 20% 25% 20% Average head count 54 55 47 45 Advfn registered users 970K 850K 700K 650K Group registered users 3.3M 2.5M 2M 1.75M Future developments for the business We believe our continued investment in our service and product ranges and brandslike Equity Development, ADVFN, Silicon Investor and InvestorsHub in thefinancial sector and CupidBay and Fotothing in the leisure space plus theaddition of new products across our services, will enable us to improve on ouralready strong market position. Our emphasis on quality, design and employingpeople with the relevant expertise underlines this development. As a result weremain confident that we will continue to maintain our current level ofperformance in the foreseeable future. Principal risks and uncertainties The management of the business and the nature of the Company's strategy aresubject to a number of risks. The directors are of the opinion that a thoroughrisk management process is adopted which involves the formal review of all therisks identified below. Where possible, processes are in place to monitor andmitigate such risks. We have set out below the principal risks facing thebusiness. Economic downturn The success of the world's stock markets could affect the business and manythings around the world can affect a stock market from war to human error. Thiscan also have a knock on effect on consumer spending power. However, in the pastwhen we have seen a market downturn it has not changed our customer appetite forinformation about what is happening in the market be it good or bad. In responseto this risk, senior management aim to keep abreast of economic conditionsaround the world. Not only should senior management be aware of it, likewise soshould our customers and members. In cases of severe economic downturn,marketing and pricing strategies are modified to reflect the new marketconditions. High proportion of fixed overheads and variable revenues A large proportion of the company's overheads are reasonably fixed. There is therisk that any significant changes in revenue may lead to the inability to coversuch costs. Management closely monitor fixed overheads against budget on amonthly basis and cost-saving exercises would be implemented should there be ananticipated decline in revenues. Product obsolescence Due to the nature of the market in which the company operates, products aresubject to technological advances and resultant obsolescence. The directors arecommitted to the research and development strategy in place, and are confidentthat the company is able to react effectively to the developments within themarket. Fluctuations in currency exchange rates Approximately 20% of our turnover relates to overseas operations. As a company,we are therefore exposed to foreign currency fluctuations. The company managesits foreign exchange exposure on a net basis, and if required would use forwardforeign exchange contracts and other derivatives/financial instruments to reducethe exposure. If the hedging activity does not mitigate the exposure, then theresults and the financial condition of the company might be adversely impactedby foreign currency fluctuations. People Our team of experienced people is critical to the ongoing success of thebusiness. I would like to take this opportunity to once again thank both theboard and the staff for their continued hard work. Prospects There are many opportunities opening up for us as we roll out the ADVFN platformworldwide. With rapid progress in the US, Brazil and Italy, we feel that theADVFN model is ready to address a much bigger market. The company is thereforewell positioned over the next two years to become strongly cash generative andprofitable. Clem Chambers Chief Executive 30th October 2007 ADVFN PLCConsolidated Profit and Loss Accountfor the year ended 30 June 2007 Continuing Continuing Total 2006 Acquisitions 2007 2007 2007 As restated Notes £'000 £'000 £'000 £'000 Turnover 5,633 389 6,022 4,463 Cost of sales (442) (71) (513) (537) Gross profit 5,191 318 5,509 3,926 Administrative expenses Share option valuation expense (169) - (169) (115) Amortisation of goodwill (174) - (174) (77) Other administrative expenses (5,926) (313) (6,239) (5,052) Total administrative expenses (6,269) (313) (6,582) (5,244) Operating (loss)/profit (1,078) 5 (1,073) (1,318) Exceptional item: Gain on part disposal of associates - - - 761 Share of operating losses of associates (738) - (738) (567) Net interest 34 - 34 45 (Loss)/profit on ordinary activities before taxation (1,782) 5 (1,777) (1,079) Tax on loss on ordinary activities 278 - 278 58 (Loss)/profit on ordinary activities after taxation (1,504) 5 (1,499) (1,021) Loss per ordinary share 2 Basic (0.27p) (0.22p)Fully diluted (0.27p) (0.22p) All operations are continuing. ADVFN PLCBalance Sheetsat 30 June 2007 Group Company Group Company 2007 2007 2006 2006 As As restated restated Notes £'000 £'000 £'000 £'000 Fixed assets Intangible assets 2,280 - 874 21 Tangible assets 1,703 1,510 1,681 1,407 Investments 1,595 2,692 2,402 1,055 5,578 4,202 4,957 2,483 Current assets Debtors 1,415 1,681 938 1,200 Investments 78 29 48 29 Cash at bank and in hand 1,358 1,161 938 862 2,851 2,871 1,924 2,091 Creditors: amounts falling due within one year (1,626) (1,274) (1,512) (1,305) Net current assets 1,225 1,597 412 786 Total assets less current liabilities 6,803 5,799 5,369 3,269 Creditors: amounts falling due after more than one year (20) (20) (28) (28) 6,783 5,779 5,341 3,241 Capital and reserves Called up share capital 5,870 5,870 4,798 4,798 Share premium account 7,600 7,600 5,634 5,634 Option valuation reserve 335 343 174 174 Merger reserve 221 221 221 221 Shares to be issued 332 332 498 498 Profit and loss account (7,575) (8,587) (5,984) (8,084) Shareholders' funds 3 6,783 5,779 5,341 3,241 The financial statements were approved by the Board of Directors on 30th October2007 ADVFN PLCConsolidated Cash Flow Statementfor the year ended 30 June 2007 2007 2006 Notes £'000 £'000 Net cash inflow from operating 4 109 65 activities Returns on investment and servicing of finance Interest received 49 50 Interest paid (15) (5) 34 45 Capital expenditure Payments to acquire tangible (937) (1,067) fixed assets Payments to acquire investments - (15) (937) (1,082) Acquisitions Purchase of subsidiary (1,637) (246) undertaking Cash acquired with subsidiary 13 - undertaking (1,624) (246) Net cash outflow before (2,418) (1,218) financing Financing Issue of ordinary share capital 3,053 344 Share issue costs (181) (3) Capital element of finance leases and hire purchase (34) (24) contracts repaid Net cash inflow from financing 2,838 317 Increase / (decrease) in cash 5,6 420 (901) Statement of Total Recognised Gains and Lossesfor the year ended 30 June 2007 2007 2006 £'000 £'000 (Loss) for the financial year (1,499) (1,021) Currency differences on foreign (92) - currency net investments Total losses recognised since (1,591) (1,021) last financial statements ADVFN PLC Notes for the year ended 30 June 2007 1. General The financial information herein does not constitute statutory accounts asdefined in section 240 of the Companies Act 1985. The financial information hasbeen extracted from the Company's 2007 statutory financial statements upon whichthe auditors reported on 30 October 2007. Their opinion does not include anystatement under section 237 of the Companies Act 1985. The financial statements have been prepared in accordance with applicable UnitedKingdom Accounting Standards and under the historical cost convention. Theprincipal accounting policies have remained unchanged since the previous yearexcept for the adoption of FRS 20 "Share based payments". The Company has adopted FRS20 with effect from 1 July 2006. FRS20 requires therecognition of a charge to the profit and loss account for all applicable sharebased payments, including share options. The Company has equity-settled sharebased payments but no cash-settled share based payments. All share basedpayments awards granted after 7 November 2002 which had not vested prior to 1July 2006 are recognised in the financial statements at their fair value at thedate of grant. As vesting periods and non-market based vesting conditions apply, the expense isallocated over the vesting period, based on the best available estimate of shareoptions expected to vest. Estimates are revised subsequently if there is anyindication that the number of share options expected to vest differs fromprevious estimates. Any cumulative adjustment prior to vesting is recognised inthe current period. All equity-settled share based payments are ultimatelyrecognised as an expense in the profit and loss account with a correspondingcredit to the option valuation reserve. The adoption of FRS20 requires a prior period adjustment to be made for awardsgranted before 1 July 2006. This has created an opening balance within theoption valuation reserve at 1 July 2006 of £174,000 and reduced the profit andloss account reserve by an equal amount. In addition, the re-stated loss aftertax for the year ended 30 June 2006 has increased by £115,000. Copies of the annual report are being posted to shareholders and copies will beavailable from the company's registered office at Suite 27, Essex TechnologyCentre, The Gables, Fyfield Road, Ongar, Essex, CM5 0GA. 2. Loss per ordinary share 2007 2006 Loss Number Loss Loss Number Loss of shares per share of shares per share As As restated restated £'000 '000 p £'000 '000 p Loss for the year (1,499) (1,021) Weighted average number of shares 565,331 469,165 Loss per share (0.27p) (0.22p) The options are anti-dilutive for both years due to the losses incurred. 3. Reconciliation of movements in shareholders' funds 2007 2006 As restated £'000 £'000 Loss for the financial year (1,499) (1,021) Recognition of equity settled share based payments in the 161 115 year (FRS20) Foreign exchange differences (92) - Net receipts from issues of 3,038 632 shares Shares to be issued (166) 498 Net increase in shareholders' 1,442 224 funds Shareholders' funds at 1 July 5,341 5,117 2006 Shareholders' funds at 30 June 6,783 5,341 2007 4. Reconciliation of operating loss to net cash outflow from operatingactivities 2007 2006 As restated £'000 £'000 Operating loss (1,073) (1,318) Recognition of equity settled share based payments in the 169 115 year (FRS20) Amortisation 195 337 Depreciation 971 678 Increase in debtors (197) (135) Increase in creditors 82 388 Investments acquired for services (30) - rendered Foreign exchange differences (8) - Net cash inflow from operating 109 65 activities 5. Reconciliation of net cash flow to movement in net funds 2007 2006 £'000 £'000 Increase / (decrease) in cash for the year 407 (901) Cash acquired on acquisitions 13 15 Inception of new finance leases and hire purchase (49) (75) agreements Cash outflow from capital repayments of hire purchase 34 24 agreements Movement in net funds in the year 405 (937) Net funds at 1 July 2006 869 1,806 Net funds at 30 June 2007 1,274 869 6. Analysis of movements in net funds At 1 July Cash flow Acquisitions Non cash At 2006 items 30 June 2007 £'000 £'000 £'000 £'000 £'000 Cash in hand and at bank 938 407 13 - 1,358 Finance leases and hire purchase agreements (69) 34 - (49) (84) 869 441 13 (49) 1,274 This information is provided by RNS The company news service from the London Stock Exchange