Last checked at 1 Oct 2009 07:30
ADVFN PLC
('ADVFN' or 'the Company')
Audited Results for the Year Ended 30 June 2009
ADVFN, Europe's leading stocks and shares website, announces its audited results for the year ended 30 June 2009
Highlights:
EBITDA profits of £641,000 (2008: loss of £48,000)
Operating loss reduced by 67% to £429,000 (2008:£1,308,000)
Loss after tax down 39% to £535,000 (2008: £882,000)
Loss per share reduced by 40% to 0.09p (2008: 0.15p)
For further information, please contact:
Clem Chambers
Michael Hodges (Chairman)
020 7070 0909
Fiona Kindness, Grant Thornton Corporate Finance (Nominated Adviser)
020 7728 3414
CHIEF EXECUTIVE'S STATEMENT
ADVFN finished the year end to June 2009 in strong shape. Even as the worst economic crisis in living memory has unfolded we have ended the year with overall sales growth and a series of much improved financial numbers.
Our EBITDA profit was £641,000.
We have not simply sailed through the "credit crunch," we have worked hard to optimise the business and this comes out in our figures, which show a much improved financial performance coming from a small increase in overall sales. Advertising sales has been under significant pressure during this period but has managed to hold at around previous year's level, showing a gross fall of 9% overall. This is a small drop in comparison to the kinds of slumps seen in print and TV advertising. While a drop, it represents a strong outcome and underlines the quality of our advertising product. Also feeling the pinch from the market crash, has been Equity Development, whose customers are listed SME and midcap companies many of which have experienced extremely harsh conditions. Considering the historic toughness of the economic environment, the improved results are a solid performance. While our subscription income has gone from strength to strength, we are just beginning to see some strength returning to our advertising demand and we expect to return to growth in this area in 2010.
We are making good overall progress in the UK and US, while our other markets continue to show subscription growth. With the launch of new products in the US we have seen our US business at Investors Hub and ADVFN start to take off strongly. This is particularly exciting. We have executed two significant corporate deals this year, the sale of Silicon Investor and the purchase of All IPO. The Silicon Investor deal enables us to rationalise our US focus and get paid to do it, while the All IPO purchase enables us to bring All IPO's technology under the ADVFN umbrella while gaining ADVFN access to a regulated company.
Financial overview
These accounts have been prepared under International Financial Reporting Standards (IFRS) as adopted by the European Union. They show a strong improvement in core performance. Our EBITDA (earnings before interest, tax, depreciation and amortisation) is calculated by adding back amortisation and depreciation to operating profit. The comparative figure for 2008 includes only continuing operations. This shows a £641,000 profit against a loss of £48,000 last year. Over the same period our operating loss fell 67% (from £1.3m in 2008 to £429,000 in 2009) and loss after tax fell 39% (from £882,000 in 2008 to £535,000 in 2009). This significant progress was made against a small rise in sales, up 1% to £7.0m (2008: £6.9m).
Our new finance team has worked hard during this turbulent year to optimise our business processes and the improved performance, while sales remain almost unchanged, reflects solid achievement in this area. Overall the Company has had a strong year against one of the harshest economic backdrops in living memory.
Strategy
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 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".
We think that our strategic consistency is one of the main reasons why we have been so fortunate in the current hard times. As we have a long term focus, our income streams have a built in resilience. This has been key to our success. Our long term approach turns out to be a good policy for hard times. Riding out another crash validates our strategy and we will continue with it. Meanwhile our US sites, ADVFN US and Investors Hub are growing well.
Turnover
Our turnover has continued to grow for the 9th consecutive year. While sales have only achieved growth of 1%, this is still a great achievement considering the economic meltdown of the world economy during this period.
Operating Costs
We have focused on our costs this year and have chosen to be quite defensive. We have curtailed our hiring and we have reengineered our content offerings and our marketing to try and drive our cost base down. The straightened times have helped us in this and our overall performance has been enhanced by our new finance team through this process.
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.
Cash
In these post credit crunch times shareholders look to our cash balances for reassurance. This was £1,509,000 at the end of the year down just £89,000 on the year before. (£1,591,000 2008) This strong overall improvement reflects strong subscription growth, counterbalanced by mild advertising weakness with a drop in performance from Equity Development.
Summary of key performance indicators
| 2009 Actual | 2009 Target | 2008 Actual | 2008 Target | |
| Average head count | 48 | 50 | 54 | 55 |
| ADVFN registered users | 1.72M | 1.6M | 1.44M | 1.2M |
With the harsh economic environment informing our development we have been less aggressive in replacing staff losses than in the past and as a result have reduced our headcount below target. Meanwhile the key metric of registration to ADVFN has come in well ahead of target helped by the very economic conditions that have seen us hire more cautiously.
Future outlook for the business
Our strategy remains the same; to grow ADVFN internationally. This year has seen the most turbulent period for the UK and world economy in living memory. On balance this has done us no harm, a happy circumstance when compared to most businesses. This alone makes us very optimistic for the future. Given that we have survived the last 12 months, we should be well placed to flourish in any future recovery.
Our US activity is now growing strongly, the US and Brazil are performing well and the minor territories continue to show promise. Equity Development, whilst having a tough period, looks to have reached the base for a recovery. Meanwhile the acquisition of ALL IPO (in July 2009) not only simplifies ADVFN's corporate structure, its personnel and technology provide a solid opportunity to broaden the ADVFN platform. While the future of the market and the economy is uncertain it seems that ADVFN looks set for another year of progress and organic growth.
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
While it appears that torrid times in the stock market may not have a detrimental effect on subscriptions, overall economic strength does affect our advertising revenue. While currently subscription income is making up for advertising weakness, it is possible that this may not be the case under certain instances and that however well the Company has overcome recent difficult times, in volatile global economic times it is not inconceivable that ADVFN could be adversely affected. As such the senior management are constantly looking to our weaknesses and threats to try to minimise potential downsides.
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.
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. I would like to thank them all for the hard work and dedication over the past year.
Clem Chambers
Managing Director
30th September 2009
| Consolidated income statement | |||
| 12 months to 30 June | 12 months to 30 June | ||
| 2009 | 2008 | ||
| £'000 | £'000 | ||
| Revenue | 7,034 | 6,931 | |
| Cost of sales | (456) | (640) | |
| Gross profit | 6,578 | 6,291 | |
| Share based payment | (31) | (90) | |
| Amortisation of intangible assets | (962) | (1,087) | |
| All other administrative expenses | (6,111) | (6,422) | |
| Total administrative expenses | (7,104) | (7,599) | |
| Profit on disposal of assets | 97 | - | |
| Operating loss | (429) | (1,308) | |
| Finance income | 12 | 57 | |
| Finance expense | (11) | (17) | |
| Result from associates after taxation | (282) | (221) | |
| Loss before tax | (710) | (1,489) | |
| Taxation | 175 | 775 | |
| Loss for the period from continuing operations | (535) | (714) | |
| Loss for the period from discontinued operations | - | (168) | |
| (535) | (882) | ||
| Loss per share - from continuing operations | 2 | ||
| Basic and diluted (pence per share) | (0.09) | (0.12) | |
| Loss per share - from continuing and discontinued operations | 2 | ||
| Basic and diluted (pence per share) | (0.09) | (0.15) |
| Consolidated balance sheet | 30 June | 30 June | |
| 2009 | 2008 | ||
| £'000 | £'000 | ||
| Assets | |||
| Non-current assets | |||
| Property, plant and equipment | 92 | 187 | |
| Goodwill | 1,590 | 1,590 | |
| Intangible assets | 2,297 | 2,577 | |
| Investments in associates | 905 | 1,187 | |
| Trade and other receivables | 204 | 182 | |
| 5,088 | 5,723 | ||
| Current assets | |||
| Trade and other receivables | 977 | 1,019 | |
| Current tax recoverable | 65 | 163 | |
| Other financial assets (available for sale) | 32 | 67 | |
| Cash and cash equivalents | 1,509 | 1,591 | |
| 2,583 | 2,840 | ||
| Total assets | 7,671 | 8,563 | |
| Equity and liabilities | |||
| Equity | |||
| Issued capital | 6,156 | 5,932 | |
| Share premium | 7,758 | 7,710 | |
| Shares to be issued | - | 249 | |
| Merger reserve | 221 | 221 | |
| Share based payment reserve | 456 | 425 | |
| Foreign exchange reserve | (18) | - | |
| Retained earnings | (8,789) | (8,254) | |
| 5,784 | 6,283 | ||
| Non-current liabilities | |||
| Deferred tax | 314 | 425 | |
| Borrowings - obligations under finance leases | 11 | 31 | |
| 325 | 456 | ||
| Current liabilities | |||
| Trade and other payables | 1,533 | 1,771 | |
| Borrowings - obligations under finance leases | 29 | 53 | |
| 1,562 | 1,824 | ||
| Total liabilities | 1,887 | 2,280 | |
| Total equity and liabilities | 7,671 | 8,563 | |
The financial statements were authorised for issue by the Board of Directors on 30 September 2009 and were signed on its behalf:
Clem Chambers
Managing Director
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 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 |
| Exchange differences on translation of foreign operations | - | - | - | - | - | (18) | - | (18) |
| Net income recognised directly in equity | - | - | - | - | - | (18) | - | (18) |
| Loss for the period after tax | - | - | - | - | - | - | (535) | (535) |
| Total recognised income and expense | - | - | - | - | - | (18) | (535) | (553) |
| Issue of shares | 224 | 48 | (249) | - | - | - | - | 23 |
| Equity settled share options | - | - | - | - | 31 | - | - | 31 |
| At 30 June 2009 | 6,156 | 7,758 | - | 221 | 456 | (18) | (8,789) | 5,784 |
| Consolidated cash flow statement | |||
| 12 months to 30 June | 12 months to 30 June | ||
| 2009 | 2008 | ||
| £'000 | £'000 | ||
| Cash flows from operating activities | |||
| Loss for the period before tax | (710) | (1,489) | |
| Net finance income in the income statement | (1) | (40) | |
| Results for associates | 282 | 221 | |
| Depreciation of property, plant & equipment | 108 | 173 | |
| Amortisation | 962 | 1,087 | |
| Gain on disposal of property, plant and equipment | (97) | - | |
| Impairment of financial assets | 35 | 5 | |
| Share based payments | 31 | 90 | |
| Decrease / (increase) in trade and other receivables | 20 | (53) | |
| (Decrease) / increase in trade and other payables | (238) | 209 | |
| Net cash generated from operations | 392 | 203 | |
| Interest paid | (11) | (17) | |
| Income tax receivable | 162 | 783 | |
| Net cash generated by operating activities | 543 | 969 | |
| Cash flows from investing activities | |||
| Interest received | 12 | 57 | |
| Payments for property plant and equipment | (22) | (62) | |
| Purchase of intangibles | (682) | (811) | |
| Disposal of interest in associates | - | 132 | |
| Disposal of assets | 106 | - | |
| Net cash used in investing activities | (586) | (684) | |
| Cash flows from financing activities | |||
| Proceeds from issue of equity shares | 23 | 9 | |
| Issue costs | - | - | |
| Loans repaid (finance leases) | (44) | (61) | |
| Net cash generated by financing activities | (21) | (52) | |
| Net (decrease)/ increase in cash and cash equivalents | (64) | 233 | |
| Exchange differences | (18) | - | |
| Total (decrease)/ increase in cash and cash equivalents | (82) | 233 | |
| Cash and cash equivalents at the start of the period | 1,591 | 1,358 | |
| Cash and cash equivalents at the end of the period | 1,509 | 1,591 |
Notes for the year ended 30 June 2009
1. Segmental analysis
The Company has a single class of business; that of developing and providing financial information primarily via the internet. The directors therefore consider that the Company's primary format for reporting segmental information is geographical by location of assets as this is the dominant source of the Company's risks and rewards. The Company also provides segmental information by the geographical location of its customers.
| 2009 Segmental analysis by location of assets | UK | The Americas | Rest of the World | Total |
| £'000 | £'000 | £'000 | £'000 | |
| Revenue from external customers (rendering of services) | 6,544 | 490 | - | 7,034 |
| Loss for the period | (296) | (239) | - | (535) |
| Assets | 5,873 | 1,798 | - | 7,671 |
| Liabilities | 1,141 | 746 | - | 1,887 |
| Capital expenditure | 15 | 7 | - | 22 |
| Depreciation of property, plant and equipment | 92 | 16 | - | 108 |
| Amortisation of intangibles | 810 | 152 | - | 962 |
| Share of results of associates | (282) | - | - | (282) |
| Aggregate investment in associates | 905 | - | - | 905 |
| 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 |
Discontinued operations relate solely to ADVFN Japan K.K., an associated entity. The Company's interest in ADVFN Japan was sold during the year to 30 June 2008.
The following geographical segments are based on an analysis of revenue by the location of the Company's customers:
| Revenue | 2009 | 2008 |
| £'000 | £'000 | |
| UK - Continuing | 4,840 | 5,141 |
| The Americas | 1,702 | 1,486 |
| Rest of the world - continuing | 492 | - |
| Rest of the world - discontinued | - | 304 |
| 7,034 | 6,931 |
2. Loss per share
| 12 months to 30 June | 12 months to 30 June | |
| 2009 | 2008 | |
| From continuing operations: | £'000 | £'000 |
| Loss for the year attributable to equity shareholders | (535) | (882) |
| Adjustments to exclude loss for the period from discontinued operations | - | 168 |
| Loss for the year from continuing operations attributable to equity shareholders | (535) | (714) |
| Loss per share from continuing operations | ||
| Basic loss per share (pence) | (0.09) | (0.12) |
| Diluted loss per share (pence) | (0.09) | (0.12) |
| Loss per share from discontinued operations | ||
| Basic loss per share (pence) | - | (0.03) |
| Diluted loss per share (pence) | - | (0.03) |
| Shares | Shares | |
| Issued ordinary shares at start of the year | 593,192,435 | 586,979,305 |
| Ordinary shares issued in the year (Note 23) | 22,376,466 | 6,213,130 |
| Issued ordinary shares at end of the year | 615,568,901 | 593,192,435 |
| Weighted average number of shares in issue for the year. | 605,430,000 | 591,468,000 |
| Dilutive effect of options | - | - |
| Weighted average shares for diluted earnings per share | 605,430,000 | 591,468,000 |
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. 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 2009 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 Company's 2009 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/.