ADVFN Regulatory News (AFN)

10 November 2021

For immediate release

ADVFN PLC

("ADVFN" or the "Company")

ADVFN, the global stocks and shares website, announces its audited results for the year ended 30 June 2021.

Chief Executive's Statement

We have good cause to be delighted to present the results to 30 June 2021. Following our reorganisation in 2019 we have benefited from the silver lining that has accompanied the very dark clouds of the Covid-19 Pandemic.

While the pandemic has boosted business there are other tailwinds pushing us forwards.

There appears to have been an intersection of positive developments over this financial year that have combined to boost our business, including the Covid lockdowns and associated market disruptions, a boom in cryptocurrency markets and the rise of a new generation of traders and investors. We have of course worked hard to grow sales and control costs but the positive changes to ADVFN's business environment cannot be understated. There are always a host of difficult challenges to be faced and this year was no different, but we have solved them at the same time as enjoying a number of positive developments.

Global actions to cope with the pandemic have raised interest in trading and investing in markets and this has increased our subscriptions and advertising revenues. Cryptocurrency prices and investor interest increased substantially mid-year bringing another tailwind to support our progress. Meanwhile, our firm belief is that the next generation of traders and investors have now emerged and that this will represent a secular boost for us in the future. This last factor is possibly more important than the previous two because while emergencies come and go, and are always a business driver for us, underlying those cycles is the size of the audience; the bigger that audience the better our market.

In 2001, just after ADVFN was first floated on AIM, the stock market dotcom crash effectively drove away a generation of traders who had entered the markets as "privatisation novices" in the 1980s and 1990s and who exited the stock market as a result of losses in the Dotcom bust. Consequently, ADVFN has for much of its market existence operated against the headwinds of falling private investor participation in share ownership and stock market trading. However, we believe that falling trend has now reversed and that the next generation of new investors is here and increasingly engaging with the markets, initially through cryptocurrency interest but also responding to the allure of Fintech developments and showing increased interest in stocks. This is most clearly the case in the US, but it is also occurring elsewhere. This is a positive development and we expect it to continue.

At the year-end both advertising and subscription income were up on the previous year and consequently we have delivered a pre-tax profit of £1,608,000.

Dividend Policy and maiden dividend

As we announced in August this year, while the Board will continue to deploy the Group's cash resources to the growth of, and investment in, the business, the Board has concluded that as a result of the much-improved financial performance of the Group, the Company is now also in a position to adopt a dividend policy to generate returns for shareholders. Our objective is to provide shareholders with a stable flow of dividends balanced by a policy of prudential capital management and the Board will adhere to a dividend cover ratio of not less than 2 times profit after taxation attributable to shareholders based on a rolling basis of 3 years commencing from 1 July 2020. Accumulated earnings will be used to address short-term profit shortfalls that may occur. In applying the dividend policy, the Board will have regard for a range of factors including the macroeconomic outlook, business performance, balance sheet and growth outlook of the Company and may exercise its discretion and revise the calculated pay-out either up or down, to the extent these factors substantially impact the Company.

For the 2021 financial year only, the Board is pleased to announce that the Company will pay a maiden dividend of 1.5p pence per ordinary share payable as per the timetable below:

- Ex dividend dated: 23 December 2021

- Record date: 24 December 2021

- Payment date: 24 January 2022

This maiden dividend is being made in respect of the whole of the 2021 financial year. Subsequently, the Board intends to pay dividends twice a year in equal instalments on a semi-annual basis following the release of the interim and full year financial results, the dates of which will be communicated to shareholders with disclosure of the financial results.

Clement Chambers

CEO

9 November 2021

The annual report and accounts will shortly be sent to shareholders and will be available on the Company's website, http://www.advfn.com

Enquiries:

For further information please contact:

The information contained within this announcement is deemed by the Company to constitute inside information as stipulated under the Market Abuse Regulations (EU) No. 596/2014 as it forms part of UK Domestic Law by virtue of the European Union (Withdrawal) Act 2018. The person who arranged for the release of this announcement on behalf of the Company was Clem Chambers, Director.

STRATEGIC REPORT

Financial Overview

These consolidated and company accounts have been prepared under applicable law and International Accounting Standards (IAS) in conformity with the requirements of the Companies Act 2006.

We currently plan to continue to remain on a steady course while retaining perhaps a slightly defensive posture, remaining profitable, cashflow positive and dividend paying.

Results

The profit for the financial year after tax amounted to £1,618,000 (2020: loss of £225,000). The Directors have proposed the payment of a dividend amounting to £391,730 (2020: £nil).

Business Review

ADVFN's websites have operated well through the COVID-19 pandemic, we continue to be structured as a work from home organisation, experienced in maintaining a complex cloud-based offering operating 24/7/365 around the globe. 'Work from home' has helped us cut costs and maintain a very lean organization. Our site infrastructure remains hugely technically demanding and remains a deep defensive moat against competition. It also offers significant operational leverage in times or revenue growth as can be seen by this year's results.

We continue to add news features and functionality and will continue to do so under the company's current cost structure. Meanwhile, economic issues like Covid and Brexit, for better or worse, seem to be settled. With or without those factors, which are so important to so many, we feel very positive about the prospects ahead.

Operating Costs

We continue to monitor the operating costs of the Group and there is currently no plan for further significant change to our virtual organisation.

Research and Development ("R&D")

Research and Development is very important to us as the market we operate in is constantly changing.

Technology development does not stop and, as such, nor can we. Especially as many innovations break the infrastructure that worked before components of it were 'improved'. Beyond the maintenance aspect of R&D, it is the research and development of novel features and the need for scaling that is a key for our future, because technology left alone decays. Web, exchange and mobile environments are also changing all the time and we continue to evolve so that we can stay relevant.

Our R & D investment this year has been £294,000 (2020: £277,000) and all of this investment has been to develop the website and has been capitalised. This constant investment ensures our web and mobile experience remains up to date and fresh.

Environmental policy

As always, we continue to look for ways to develop in an environmental way. It remains our objective to improve our performance in this area.

Future outlook for the business

Our improved operating performance and significant profit for the current year despite the COVID-19 pandemic suggests that ADVFN continues to be a viable business for the longer term. We have operated for many years without raising further capital, which cannot be said for many small, listed companies, and we have also provided our service to our customers for over 20 years, which is also a rare achievement amongst our peer group. It has been a very challenging year and will, no doubt, continue to be so in the future but we are well placed to take advantage of any opportunities which come our way.

Summary of key performance indicators

Our key indicators have not changed, as they are an important part of the business.

The Directors monitor the Key Performance Indicators on an ongoing basis. The chart below shows the level of performance achieved in the financial year. The individual items are as follows:

Turnover - An important indicator that gives an overall view of our place in the market.

Head count - is a very significant part of the costs of the Group and is fixed as an overhead. Talented people are a vital part of the business. As at the year end, total headcount numbered 38 (2020: 52).

Registered users - give us an accurate indication of our audience pool and the potential available for marketing our service.

COVID-19

We have been most fortunate as a company with little adverse impact on the business resulting from the pandemic. We will continue to monitor the situation and be prepared to change tactics as circumstances and advice arise. Whilst the battle against COVID-19 has not been, and may never be, entirely won, we are optimistic that there is light at the end of the tunnel.

People

I would like to thank the whole team at ADVFN who tirelessly provide a global service for private investors 24 hours a day.

Directors' statement of responsibilities under section 172 Companies Act 2006

The Directors have considered the requirements of Section 172(1) of the Companies Act 2006 to prepare a statement explaining how the Directors have considered the wider stakeholder needs when performing their duties under Section 172 of the Companies Act 2006.

The Directors consider the stakeholders to be the people who work for us, work with us, invest with us, own us, regulate us and live in the societies we serve. The Directors recognise that building strong relationships with our stakeholders will help deliver the Group's strategy in line with the long-term values. The Directors are committed to effective engagement with all of our stakeholders and seek to understand the interests and views of the Group's stakeholders by engaging with them directly as appropriate.

Depending on the nature of the issue in question, the relevance of each stakeholder group may differ and, as such, as part of Group's engagement with stakeholders, the Directors seeks to understand the relative interests and priorities of each group and to have regard to these, as appropriate, in their decision making. The Directors acknowledge, however, that not every decision it makes will necessarily result in a positive outcome for all stakeholders. The directors also challenge management to ensure all stakeholder interests are considered in the day to day management and operations of the Group.

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As part of their deliberations and decision making process, the Directors take into account the following:

• the likely consequences of any decisions in the long term;

• interests of the Group's employees;

• need to foster the Group's business relationships with suppliers, customers and others;

• impact of the Group's operations on the community and environment;

• desirability of the Group maintaining a reputation for high standards of business conduct; and

• need to act fairly as between members of the Group.

As a result of these activities, the Directors believe that they have demonstrated compliance with their obligations under s.172 of the Companies Act 2006

Business

The Directors' aim for the Group is to be and remain a contributing and good "Corporate Citizen".

Our business does not have a high carbon footprint and we consider it a sustainable business. We try to ensure that our planet's precious resources are used appropriately for the benefit of current and future generations. The Board considers that the business and strategic decisions which it takes now, in furtherance of the Group's business objectives, do not damage the global environment.

Employees

The Group has a small number of employees but those it has are situated and are deployed on the Group's business around the World. We ensure that we comply with all local labour laws and apply what the Directors believe are appropriate standards and systems to monitor and to ensure the welfare of those employees.

Stakeholder engagement

The Group is entirely owned and controlled by the shareholders of ADVFN Plc and the shares of the Group are traded on the Alternative Investment Market. The stakeholders of the Group consist predominantly of the shareholders, employees, advisers and suppliers. The Directors recognise the importance of these relationships and take active steps to develop and strengthen them through dialogue and engagement. These relationships are regularly monitored at Board level.

Governance

Each Board meeting addresses compliance by the Group with its corporate governance codes and reinforces the Board's requirement that its business be conducted with integrity and with due regard for ethical standards.

ON BEHALF OF THE BOARD

Clement Chambers

CEO

9 November 2021

Consolidated statement of changes in equity

1. Basis of preparation

The consolidated and company financial statements are for the year ended 30 June 2021. They have been prepared under applicable law and International Accounting Standards (IAS) in conformity with the requirements of the Companies Act 2006 as at 30 June 2021. Whilst the financial information included in the announcement has been prepared in accordance with International Accounting Standards (IAS) in conformity with the requirements of the Companies Act 2006, this announcement itself does not contain sufficient information to comply with International Accounting Standards (IAS) in conformity with the requirements of the Companies Act 2006.

The consolidated and company financial statements have been prepared under the historical cost convention and are presented in Sterling rounded to the nearest thousand (£'000) except where indicated otherwise.

Standards and amendments to existing standards adopted in these accounts

IAS 1 Presentation of Financial Statements and IAS 8 Accounting policies, Changes in Accounting Estimates and Errors (Amendment - Definition of Material)

Interest Rate Benchmark Reform - IBOR 'phase 2' (Amendments to IFRS 7)

IFRS 3 Business Combinations (Amendment - Definition of Business)

Revised Conceptual Framework for Financial Reporting

COVID-19 Related Rent Concessions (Amendments to IFRS 16)

Standards, amendments and interpretations to existing standards that are not yet effective and have not been early adopted by the Company in the 30 June 2021 financial statements

Onerous Contracts - Cost of Fulfilling a Contract (Amendments to IAS 37)

Property Plant and Equipment: Proceeds before intended use. (Amendments to IAS 16)

Annual improvements to IFRS Standards 2018-2020

References to Conceptual Framework (Amendments to IFRS 3)

Classification of liabilities as Current or Non-current (Amendments to IAS 1)

IFRS 17 - Insurance Contracts

Amendments to IFRS 17 - Insurance Contracts; and Extension of the Temporary Exemption from Applying IFRS 9 (Amendments to IFRS 4 Insurance Contracts)

Disclosure of Accounting Policies (Amendments to IAS 1 Presentation of Financial Statements and IFRS Practice Statement 2 Making Materiality Judgements)

Definition of Accounting Estimates (Amendments to IAS 8 Accounting Policies, Changes in Accounting Estimates and Errors)

Deferred Tax related to Assets and Liabilities arising from a Single Transaction (Amendments to IAS 12 Income Taxes)

The Directors continue to monitor developments in the accounting standards they see as relevant but do not believe that these changes will significantly impact the Group.

2. 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.

The parent entities operations are entirely of the provision of financial information.

Three 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, financial conference events and other internet services not related to financial information. Segment information can be analysed as follows for the reporting period under review:

Revenue recognition per IFRS 15

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 2021 and 2020 no single customer accounted for more than 10% of the Group's total revenues.

3. Profit 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. Where a profit has been recorded but the average share price for the year remains under the exercise price the existence of options is not normally dilutive. However whilst the average exercise price of all outstanding options is above the average share price there are a number of options which are not. Under these circumstances those options where the exercise price is below the average share price are treated as dilutive.

4. Interest bearing borrowings

Bank loans

As a result of the COVID-19 pandemic the Directors considered it prudent to take further steps to ensure that short term cashflow did not present a problem for the Group. Short term finance offered under the Business Bounce Back loan scheme and the US equivalent has provided an additional layer of protection whilst the economy rides out the effects of the pandemic. The US loan was drawn down on the basis that the loan would be over 2 years at 1% interest with a payment free period. However, this loan has now been 'forgiven' by the US Government and has become a grant, The UK loan is charged at 2.5% over 6 years with an interest and payment free period for the first 12 months.

Lease liabilities

The carrying value of the lease liabilities is included in the borrowing classification. There are no leases carried in the Company. For further details please see Note 21

GROUP

5. Events after the balance sheet date

On 5 July 2021 the Directors proposed a dividend amounting to £391,730 which is at the rate of approximately 1.5 pence per share. There are no other events of significance to report occurring after the balance sheet date.

6. 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 2021 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 2021 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.

ADVFN Capital Markets Event - Clem Chambers, CEO of ADVFN, will be providing a live company presentation for analysts and investors on Thursday, 11th November at 2pm. The event will be hosted by the London Stock Exchange on its Spark Live Platform and will encompass an update on current trading and strategy, provide details on the company's maiden dividend and present ADVFN's full year results. It will conclude with a Q&A session. 

Register interest here: 

https://www.lsegissuerservices.com/spark/ADVFN/events/af99e8e4-22a6-4367-a4ad-2766635588ea

Analysts wishing to participate in the call and receive a dial in code should email: ir@advfnplc.com.

ENDS