ADVFN Regulatory News (AFN)

For immediate release

21 December 2023

ADFVN PLC 

("ADVFN" or the "Company")

Audited Results for the year ended 30 June 2023

Notice of General Meeting

The Board of ADVFN announces the audited annual results for the year ended 30 June 2023. The Annual Report and Accounts will shortly be sent to shareholders and will be available on the Company's website,  http://www.advfnplc.com. A copy of this announcement is also available on the Company's website, http://www.advfnplc.com.

The Company is also publishing today a Notice of General Meeting which is due to be held on 12 January 2024 at 10.30 a.m at RPC, Tower Bridge House, St Katherine's Way, London E1W 1AA. A copy of the Notice is also available on the Company's website, http://www.advfnplc.com.

A copy of the Notice together with proxy voting forms and Accounts are being posted to all shareholders who are required to receive or have formally requested to receive these documents.

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 Amit Tauman, Director.

Beaumont Cornish Limited ("Beaumont Cornish") is the Company's Nominated Adviser and is authorised and regulated by the FCA. Beaumont Cornish's responsibilities as the Company's Nominated Adviser, including a responsibility to advise and guide the Company on its responsibilities under the AIM Rules for Companies and AIM Rules for Nominated Advisers, are owed solely to the London Stock Exchange. Beaumont Cornish is not acting for and will not be responsible to any other persons for providing protections afforded to customers of Beaumont Cornish nor for advising them in relation to the proposed arrangements described in this announcement or any matter referred to in it.

Chairman's Statement

As the Non-Executive Chairman of ADVFN, this year has been marked by significant evolution in both our Board and executive roles. The dramatic changes we've experienced have brought challenges, but they have also opened opportunities for future growth and improvement. Our focus has been on ensuring that these transitions align with our vision and future goals and reinforce our commitment to robust governance.

In supervising the executive team, led by CEO Amit Tauman, the Board has been instrumental in navigating these changes. We have emphasised operational efficiency and financial stability, ensuring that our strategic initiatives are both effective and responsible.

Currently, we are in the process of recruiting high-level positions further to strengthen our leadership team and enhance diversity. This pursuit is critical to our ongoing commitment to excellence in governance and strategic oversight.

In conclusion, we remain steadfast in our dedication to steering ADVFN towards sustained growth and success.

Lord Gold

Non-executive Chairman

Chief Executive's Statement

As the CEO of ADVFN, I am honored to guide our company through a transformative period. Upon assuming my role, I was confronted with a reality far more complex than anticipated: the company was struggling with significant financial limitations, possessing barely any cash reserves. Moreover, the need for a strategic overhaul in our organisational structure, culture and staff was evident, especially while navigating through difficult market conditions.

While this period has not been without its share of challenges, our progress over the last year has been substantial and encouraging. The work we have done and are continuing to do can be categorised under the following headings:

Overcoming Challenges and Legacy Constraints:

· We have addressed the challenges of outdated infrastructure and the risks associated with our old hardware, which often resulted in system downtime and additional risk exposures. In parallel, we have initiated a migration to cloud-based solutions to enhance performance and further mitigate risk.

· We have resolved complexities with our joint venture in Brazil, unexpected audits and historical vendor agreements which have now been agreed upon.

· We have wound down non-core operations including ALLIPO, MJAC, Fotothing, CupidBay and Dubai offices, which were loss making and no longer aligned with our strategic direction. In the current year, the group impaired the historic goodwill in InvestorsHUB, leading to an impairment of £978,000 on the income statement. This has been treated as exceptional in nature and has resulted in the goodwill balance being fully impaired.

· We have reshaped the board structure and related activities, incurring significant legal expenses, amounting to approximately £200,000. These costs are due to legal fees, relating to potential claims against some of the previous management with whom settlements were reached.

Reshaping Our Company:

We have restructured the Board of Directors and made comprehensive adjustments within our staff, moving from a traditional corporate structure to a startup mindset focused on growth and innovation. These shifts also meant parting ways with those who did not align with the company's new cultural standards.

Achievements and Ongoing Initiatives:

· Fundraising: We succeeded in raising £6.5m, mainly from our existing shareholders, reflecting an impressive belief in the new management. 

· Expanding our product offering: The launch of real-time option data and option flow product, new and unique editorial content, comprehensive global fundamental data for relevant markets, and the revamp of the InvestorsHub message board. 

· Expanding into Korea, forming a new arrangement with our Brazilian partners and establishing two additional partners in 2024. 

· R&D and Infrastructure: We have made substantial investments in high-capacity, low-latency data processing to improve site stability, laying the groundwork for developing large-scale real-time streaming products.

· Cost Reductions: We have managed to reduce the overall operational costs by 20% and reduce our headcount, including contractors, from 40 to 31, while onboarding new senior team members. 

· Monetisation and Analytics: We have successfully completed the optimisation of our ad tech operations and effectively streamlined our funnels for user engagement and monetisation. Additionally, we have shifted towards a data-driven decision-making approach, integrating advanced analytics into our operations.

· App: We plan to release our new app by the end of Q2 2024.

Strategic Focus and Future Vision:

Given the challenging market conditions and stock market volatility, our short-term objective has been to transform into a small and dynamic team. We place a significant emphasis on cost-effectiveness, while prioritising the preservation of our cash reserves for strategic investments. As we reach a point of financial stability and become a more efficient organisation, we will be poised to identify and seize opportunities further to grow our business.

In the first 5 months of the present financial year, improvements are already being seen.

We are pleased to announce that our initial phase of changes and redesign of our product offering will be fully optimised by Q1 2024.

In 2024 we plan to introduce a new product which we believe is going to revolutionise the way our users consume financial information, utilise our existing community and tools in different ways. 

As the company's CEO, my foremost objective is to forge a clear vision and strategy for the Company to deliver these changes. I am confident that the trust of our shareholders, combined with the skills and motivation of our team under my leadership, will show much different results in 2024.

Amit Tauman

CEO

20 DECEMBER 2023

Strategic Report

Financial Overview

The financial reporting framework that has been applied in their preparation is applicable law and UK-adopted international accounting standards.

The loss for the financial year after tax amounted to £2,169,000 (2022: a loss of £1,368,000). The Directors are not proposing payment of a dividend.

Throughout this fiscal year, we encountered a series of exceptional expenses that impacted on our financial landscape. A considerable portion of our expenses, exceeding £200,000, arose from legal fees, particularly following the change in our board of directors and related to potential litigation resolved with former management. Another significant factor contributing to the loss was the impairment of goodwill of £978,000 related to InvestorsHub.

Further cash expenditure totalling £100,000 was incurred during our fundraising activities. In addition, we have wound down various operations, including the subsidiaries ALLIPO, CupidBay, MJAC, and Fotothing, and our presence in Dubai, all of which incurred one-time costs. While these closures were essential in redirecting our resources and focus on our primary objectives, they are also instrumental in our ongoing process of cost reduction. By adopting new technology, we anticipate further reductions in hosting and IT expenses beginning early 2024. Moreover, our exits and renegotiations with different providers are expected to lead to additional cost savings.

While the spend was high this year, we are moving toward one of our goals and seeing diminishing expenses and constantly reducing operational costs:

? Operational costs are down on average by 20% YoY. 7,076k vs 8,852k

? Headcount, reduced by 23% YoY from 40 to 31.

ADVFN 2022-2023 financial highlights:

? Revenue was £5.5 million compared to £7.8 million in the prior year.

? Net loss was £2.1 million (including £314k loss arising from discontinued operations, £978k impairment of goodwill and £200k of non-recurring legal fees) compared to net loss of £1.37 million in the prior year period.

? Cash and cash equivalents: £5.6 million compared to £0.9m in the prior year.

The Directors are not proposing payment of a dividend (2022: £589k).

Business Review

Navigating through current market conditions remains challenging. Market conditions in 2022/23 dampened retail investors' enthusiasm in the entire financial data sector.

However, the ADVFN team remains patient and focused on crafting a long-term strategy that we firmly believe will significantly enhance our financial standing over the coming years.

The focal point of the 2023/24 year's efforts lies in building our new app and our new product offering while simultaneously growing and cultivating our community and forums, together aiming to position ADVFN as a state-of-the-art one-stop shop for investors.

Summary of key performance indicators

As ADVFN continues to evolve, our approach to Key Performance Indicators (KPIs) reflects a significant shift from previous strategies. In line with our strategic plan for the future, we are focusing on a combination of immediate and long-range objectives that align with our current strategic path. Our operating costs have been reduced by 20% on a year-on-year basis. This concerted effort has paved the way for enhanced fiscal efficiency and positions us well on the trajectory towards our cost-effective goal. This ongoing trend underscores our commitment to fiscal prudence and the prudent allocation of resources. We remain confident that those costs will continue to diminish over H1.

1. Operational Cost Reductions: Our objective is adopting a cost-effective approach, aimed at cutting unnecessary expenses that do not align with our new strategy. This shift is exemplified by our reduced headcount, now at 31 from 40, though headcount is no longer a key metric in isolation.

2. Traffic Growth: We believe that traffic growth should be our foremost KPI. As we approach full optimisation, our primary focus is on the top of the funnel - increasing traffic while maintaining cost effectiveness to support this growth. This strategic emphasis is crucial for driving our next phase of development.

3. Turnover Increase: We anticipate that the increase in traffic, bolstered by our fully established monetisation process, will in turn lead to an increase in turnover. Our focus on attracting and retaining users, coupled with efficient monetisation, lays the foundation for enhanced financial performance.

While specific metrics like headcount and registered users are no longer primary KPIs, they play a supportive role in our broader objectives.

Principal risks and uncertainties

1. Currency Fluctuations: Operating in multiple countries exposes us to the risks associated with fluctuating exchange rates of the Euro, GBP, and the US Dollar. These currency fluctuations can impact on our revenues, expenses, and overall financial stability, making it imperative to employ effective currency risk management strategies. To mitigate these risks, we are reviewing our pricing transfer agreements and primarily maintaining most our revenues in GBP. This approach helps stabilise our financial operations against currency volatility.

2. Interest Rates and Inflation: Rising interest rates and inflation pose challenges to our financial model. Not only can these factors increase our borrowing costs, but they can also affect end-user and provider fees, potentially eroding our profit margins. It is crucial to monitor and adapt to changes in these economic indicators. In response, we have secured long-term contracts with many of our providers, aiming to lock in current rates and mitigate the risks associated with inflation.

3. Ad Networks Industry Volatility: The ad networks industry is witnessing a decline in overall revenue, exemplified by the recent bankruptcy of companies like EMX and MediaMath. This is reflected in the Online Ad Revenue Index, which has dropped by over 30%. These industry-wide challenges necessitate a proactive approach in diversifying our revenue streams and ensuring financial stability. To address these industry-wide challenges, we are diversifying our revenue streams by expanding our product offerings and focusing on increasing subscriptions. This strategy is designed to reduce our dependence on ad revenues and enhance financial stability.

4. Market Uncertainty Impacting Traffic: The unpredictability in global markets directly impacts on our website traffic and user engagement. During times of economic uncertainty and a steady downward trend, users may reduce their online activity or shift their preferences, affecting our platform's performance. Developing resilience and adaptability strategies is essential to mitigate the adverse effects of market fluctuations on our traffic and user engagement. To counteract these effects, we are continually working on converting new traffic and intensively improving our SEO. These efforts are aimed at maintaining and growing our user base despite market fluctuations.

5. Regulatory adherence: In the ever-evolving landscape of digital regulation, we are acutely aware of the increasing complexities and tightening of rules surrounding GDPR and User-Generated Content (UGC) compliance. These regulatory frameworks are critical in shaping how we manage data and interact with our user base. To navigate these changes effectively, we are steadfast in our commitment to staying abreast of new regulations and governance practices. Our approach includes the development of robust compliance guidelines and ongoing consultations with legal experts and industry specialists.

6. Inadequate Disaster Recovery Procedures: Addressing the risks associated with our on-premises data storage, especially in the event of a disaster, is a top priority. Such events pose serious threats to our data integrity and infrastructure. To mitigate these risks, we are transitioning to cloud-based data storage for improved security and redundancy and are updating our infrastructure by replacing old hardware with more robust and reliable systems. This strategy is key to ensuring the protection and stability of our operations under any circumstances.

Consideration of the principal risks associated with financial instruments is contained in note 23.

People

I would like to thank the whole team at ADVFN who have worked hard during a tumultuous time in the markets.

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 the Group's engagement with stakeholders, the Directors seek 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 the Board makes will necessarily result in a positive outcome for all stakeholders. However, the Directors do 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

? the 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 to be 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 ensure the welfare of those employees.

Stakeholder engagement

The Group is entirely owned by the shareholders of ADVFN Plc and the shares of the Group are traded on AIM. 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

Amit Tauman

CEO

20 DECEMBER 2023

The accompanying accounting policies and notes form an integral part of these financial statements.

The financial statements on pages 23 to 63 were authorised for issue by the Board of Directors on 20 December 2023 and were signed on its behalf by:

Amit Tauman

CEO

Company number: 02374988

The accompanying accounting policies and notes form an integral part of these financial statements.

The financial statements were authorised for issue by the Board of Directors on 20 December 2023 and were signed on its behalf:

Amit Tauman

CEO

Company number: 02374988

Company statement of comprehensive income

As permitted by Section 408 of the Companies Act 2006, the income statement and statement of comprehensive income of the parent company is not presented as part of these financial statements. The parent company's result after taxation for the financial year was a loss of £2,146,000 (2022: loss of £2,231,000).

The accompanying accounting policies and notes form an integral part of these financial statements.

Consolidated statement of changes in equity

The accompanying accounting policies form an integral part of these financial statements.  Company statement of changes in equity

The accompanying accounting policies and notes form an integral part of these financial statements.  

All financing and investing activities were continuing.

The accompanying accounting policies and notes form an integral part of these financial statements.

The accompanying accounting policies and notes on form an integral part of these financial statements.

Notes to the financial statements

1. General information

The principal activity of ADVFN PLC ("the Company") and its subsidiaries (together "the Group") is the development and provision of financial information, primarily via the internet, research services and the development and exploitation of ancillary internet sites.

The principal trading subsidiaries are All IPO Plc, InvestorsHub.com Inc, N A Data Inc, MJAC InvestorsHub International Conferences Ltd and Cupid Bay Limited.

The Company is a public limited company which is quoted on the AIM of the London Stock Exchange and is incorporated and domiciled in the UK. The address of the registered office is Suite 28, Ongar Business Centre, The Gables, Fyfield Road, Ongar, Essex, CM5 0GA.

The registered number of the company is 02374988.

Exemption from audit

For the year ended 30 June 2023 ADVFN Plc has provided a guarantee in respect of all liabilities due by its subsidiary companies Cupid Bay Limited (Company No. 04001650), All IPO Plc (Company Number 03230460) and MJAC InvestorsHub International Conferences Ltd (Company No. 11000464) thus entitling them to exemption from audit under section 479A of the Companies Act 2006 relating to subsidiary companies.

2. Summary of significant accounting policies

Basis of preparation

The consolidated and company financial statements are for the year ended 30 June 2023. The financial reporting framework that has been applied in their preparation is applicable law and UK-adopted international accounting standards as at 30 June 2023. 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.

The subsidiary companies Cupid Bay Limited, All IPO Plc and MJAC InvestorsHub International Conferences Ltd are exempt from an audit under s479A of the Companies Act 2006.

Going concern

The financial statements have been prepared on the going concern basis which assumes the Group will continue in existence for the foreseeable future. The Directors have prepared a detailed forecast of future trading and cash flows for the next three years after the accounts are approved. The forecasts take into potential future growth of the business both in the UK and USA, the development of products that will enhance the growth of the business and the potential areas for additional cost saving if required. At 30 June 2023 the Group's cash balances amounted to £5,557,000. The group forecasts are based on nil revenue growth in 2024 and then growth in 2025 of 5% to 10% for advertising and subscription revenue with costs not increasing by more than 5% for the UK and USA business over the two years. The forecasts show that the group and the company have sufficient funding to enable them to carry on as a going concern for the next twelve months from the date of signing the audit report. The Directors are also planning on developing new products that will enhance the growth of the business and will consider further areas for additional cost saving if required. The directors have given due consideration to the two subsidiaries for whom ADVFN Plc has given guarantees under the audit exemption rules and do not consider this will affect the Group's risk position. Accordingly, the Directors have prepared these financial statements on the going concern basis.

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 2023 financial statements

IFRS 17 - Insurance Contracts 1 January 2023

Amendments to IFRS 17 - Insurance Contracts; and Extension of the Temporary Exemption from Applying IFRS 9 (Amendments to IFRS 4 Insurance Contracts) 1 January 2023

Disclosure of Accounting Policies (Amendments to IAS 1 Presentation of Financial Statements and IFRS Practice Statement 2 Making Materiality Judgements) 1 January 2023

Definition of Accounting Estimates (Amendments to IAS 8 Accounting Policies, Changes in Accounting Estimates and Errors) 1 January 2023

Deferred Tax related to Assets and Liabilities arising from a Single Transaction (Amendments to IAS 12 Income Taxes) 1 January 2023

Lease Liability in a Sale and Leaseback (Amendments to IFRS 16) 1 January 2024

The Directors continue to monitor developments in the relevant accounting standards but do not believe that these changes will significantly impact the Group.Notes to the financial statements (continued)

Summary of significant accounting policies (continued)

Basis of Consolidation

The Group's financial statements consolidate those of the parent company and all of its subsidiaries drawn up to 30 June 2023. The parent controls a subsidiary if it is exposed, or has rights, to variable returns from its involvement with the subsidiary and has the ability to affect those returns through its power over the subsidiary. The existence and effect of potential voting rights that are currently exercisable or convertible are considered when assessing whether the Group controls another entity. Subsidiaries are fully consolidated from the date on which control is transferred to the Group. They are deconsolidated on the date control ceases.

Inter-company transactions, balances and unrealised gains and losses (where they do not provide evidence of impairment of the asset transferred) on transactions between Group companies are eliminated.

Business combinations

The Group uses the acquisition method of accounting for the acquisition of a subsidiary. The consideration transferred is measured at the fair value of the assets given, equity instruments issued and liabilities incurred or assumed at the date of exchange. Costs directly attributable to the acquisition are expensed in the period.

Identifiable assets acquired and liabilities and contingent liabilities assumed in a business combination are measured initially at their fair values at the acquisition date irrespective of the extent of any non-controlling interest.

Goodwill is recognised at the acquisition date measured as the excess of the aggregate of:

· The fair value of the consideration transferred

· The fair value or, alternatively, the share of net assets of the non-controlling interest in the acquiree

· In a combination achieved in stages, the fair value of the acquirer's previously held equity interest in the acquiree over the net of the acquisition date fair value of the identifiable assets acquired and the liabilities assumed.

Where the goodwill calculation results in a negative amount (bargain purchase) this amount is taken to the income statement in the period in which it is derived.

Joint arrangements

The Group has a joint arrangement in Brazil, ADVFN Brasil LTDA for the purpose of operating the ADVFN website in Brazil. ADVFN and Infoadvanced Prestacao De Servicos De Informacoes E Cotacoes Via Internet LTDA (Infoadvanced). each own 50% of ADVFN Brasil. Both ADVFN and Infoadvanced have control over the entity. The agreement is structured as a joint operation as both parties would have the rights to separate income streams and be responsible for the related costs.

Foreign currency translation

a) Functional and presentational currency

Items included in the financial statements of each of the Group's entities are measured using the currency of the primary economic environment in which the entity operates (the functional currency). The Company's functional currency and the Group's presentational currency is Sterling.

b) Transactions and balances

Foreign currency transactions are translated into the functional currency using the exchange rates prevailing at the dates of the transactions. Foreign exchange gains and losses resulting from the settlement of such transactions and from the translation at the reporting period end exchange rates of monetary assets and liabilities denominated in foreign currencies are recognised in the income statement.

c) Group companies

The results and financial position of all Group entities that have a functional currency different from the presentation currency are translated into the presentation currency as follows:

· Assets and liabilities for each balance sheet presented are translated at the closing rate at the date of the balance sheet.

· Income and expenses for each income statement are translated at the rate of exchange at the transaction date. Where this is not possible, the average rate for the period is used but only if there is no significant fluctuation in the rate and;

· On consolidation, exchange differences arising from the translation of the net investment in foreign entities are recognised in other comprehensive income and accumulated in a separate component of equity. Post transition exchange differences are recycled to profit or loss as a reclassification adjustment upon disposal of the foreign operation.

Notes to the financial statements (continued)

Summary of significant accounting policies (continued)

Income and expense recognition

Revenue is the fair value of the total amount receivable by the Group for supplies of services. VAT or similar local taxes and trade discounts are excluded.

The revenues of the group are now accounted for under IFRS 15 'Revenue from contracts with customers' and reported as follows:

· Subscriptions - both monthly and annual subscriptions are offered and the price for the subscription is quoted on the website. Revenue for annual subscriptions is deferred on a time basis with equal monthly transfers to the income statement to allocate the recognition across the period of service provision. Payment is received in advance of subscription fulfilment.

· Advertising - fees for advertising are recognised when the service obligations are fulfilled and are subject to agreement by a written contract which includes pricing. Where there are multiple obligations amounts specific to that obligation are transferred to the income statement. Payment terms are 30 days following invoicing.

Interest income and expenditure are reported on an accruals basis. Operating expenses are recognised in the income statement upon utilisation of the service or at the date of their origin.

Employee benefits

The cost of pensions in respect of the Group's defined contribution scheme is charged to profit or loss in the period in which the related employee services were provided.

Non-recurring items

Certain administrative costs have been shown separately under the heading of "Administrative expenses - non-recurring items". The Directors consider these items to be unusual, one-off costs that are unlikely to reoccur in subsequent financial years. A breakdown of these costs is shown in note 6.

Notes to the financial statements (continued)

Summary of significant accounting policies (continued)

Intangible assets

- Licences

Licences are recognised at cost less any subsequent impairment and amortisation charges, they are amortised over a five-year period on a straight-line basis.

- Goodwill

Goodwill arose on the acquisition of InvestorsHub.com (IHUB). Goodwill is capitalised as an intangible asset and allocated to cash generating units (with separately identifiable cash flows). IHUB is considered to be a single CGU. Goodwill is subject to impairment testing on an annual basis or more frequently if circumstances indicate that the asset may have been impaired, by comparing the carrying value to the recoverable amount, being the higher of the fair value less cost of disposal and the value in use. The value in use has been determined based on management forecasts for the next 5 years, discounted at a rate of 10%. In the current year, the value in use was deemed to be lower than the carrying value and therefore the goodwill has been impaired in full.

- Internally generated intangible assets

An internally generated intangible asset (website and mobile application) arising from development (or the development phase) of an internal project is recognised if, and only if, all of the following have been demonstrated:

· the technical feasibility of completing the intangible asset so that it will be available for use or sale

· the intention to complete the intangible asset and use or sell it

· the ability to use or sell the intangible asset

· how the intangible asset will generate probable future economic benefits

· the availability of adequate technical, financial and other resources to complete the development and to use or sell the intangible asset

· the ability to measure reliably the expenditure attributable to the intangible asset during its development.

The amount initially recognised for internally generated intangible assets is the sum of the expenditure incurred from the date when the intangible asset first meets the recognition criteria listed above. Where no internally generated intangible asset can be recognised, development expenditure is charged to profit or loss in the period in which it is incurred.

Subsequent to initial recognition, internally generated intangible assets are reported at cost less accumulated amortisation and accumulated impairment losses. Internally generated intangibles not yet in use are subject to annual impairment testing.

Internally generated intangible assets are amortised over three to five years. Amortisation commences when the asset is made available for use.

Research expenditure is recognised as an expense in the period in which it is incurred.

- Intangible assets acquired as part of a business combination

Intangible assets acquired in a business combination are identified and recognised separately from goodwill where they satisfy the definition of an intangible asset. The cost of such intangible assets is their fair value at the acquisition date and comprises brand names, subscriber lists, certain website development costs and licenses. All intangible assets acquired through business combination are amortised over their useful lives estimated at between 5 and 10 years.

Subsequent to initial recognition, intangible assets acquired in a business combination are reported at cost less accumulated amortisation and accumulated impairment losses.

- Intangible assets purchased

Intangible assets are purchased when the opportunity arises and capitalised at cost (fair value). Purchased intangible assets are amortised over their useful lives estimated at between 5 and 10 years. Subsequent to initial recognition, purchased intangible assets are reported at cost less accumulated amortisation and accumulated impairment losses.

Property, plant and equipment

Property, plant and equipment are recorded at cost net of accumulated depreciation and any provision for impairment. Depreciation is provided using the straight-line method to write off the cost of the asset less any residual value over its useful economic life. The residual values of assets are reviewed annually and revised where necessary. Assets' useful economic lives are as follows:

Leasehold improvements The shorter of the useful life of the asset or the term of the lease (1 to 3 years)

Computer equipment 33% per annum over 3 years

Office equipment 20% per annum over 5 years

Right of use lease assets The earlier of the end of the useful life of the asset or the end of the lease term

Notes to the financial statements (continued)

Summary of significant accounting policies (continued)

Intangible assets (continued)

Impairment

For the purposes of assessing impairment, assets are grouped at the lowest level for which there are separately identifiable cash flows. As a result, some assets are tested individually for impairment and some are tested at cash-generating unit level.

Goodwill, other individual assets or cash-generating units that include goodwill and those intangible assets not yet available for use are tested for impairment at least annually. All other individual assets or cash-generating units are tested for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable.

An impairment loss is recognised for the amount by which the carrying amount exceeds the recoverable amount of the asset or cash-generating unit. The recoverable amount is the higher of fair value, reflecting market conditions less costs to sell, and value in use based on an internal discounted cash flow evaluation. The cashflow evaluations are a result of the Director's estimation of future sales and expenses based on their past experience and the current market activity within the business. With the exception of goodwill, all assets are subsequently reassessed for indications that an impairment loss previously recognised may no longer exist.

Financial assets

On initial recognition, the Group classifies its financial assets as either financial assets at fair value through profit or loss, at amortised cost or fair value through comprehensive income, as appropriate. The classification depends on the purpose for which the financial assets were acquired. At the reporting year-end the financial assets of the Group were all classified as loans or receivables.

Trade receivables

These assets are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market. They arise principally through the provision of goods and services to customers but also incorporate other types of contractual monetary assets.

They are initially recognised at fair value and measured subsequent to initial recognition at amortised cost using the effective interest method, less any impairment loss.

The Group's financial assets comprise trade receivables, other receivables (excluding prepayments) and cash and cash equivalents.

Trade and other receivables - impairment

The group applies an expected credit loss model to calculate the impairment losses on its trade receivables. The group applies the simplified approach to providing for expected credit losses prescribed by IFRS 9, which permits the use of the lifetime expected loss provision for all trade receivables. Trade receivables at the balance sheet date have been put into groups based on days past the due date for payment and an expected loss percentage has been applied to each group to generate the expected credit loss provision for each group and a total expected credit loss provision has thus been calculated.

Financial liabilities

The Group's financial liabilities include trade and other payables and borrowings which include lease liabilities.

Financial liabilities are recognised when the Group becomes a party to the contractual agreements of the instrument. All interest related charges are recognised as an expense in the income statement.

Trade payables are recognised initially at their fair value, net of transaction costs and subsequently measured at amortised costs less settlement payments.

Notes to the financial statements (continued)

Summary of significant accounting policies (continued)

Leases

Where the group enters into leasing arrangements within the scope of IFRS 16, it recognises right-of-use assets and liabilities as required. Where leases meet the low value or short-term lease exemption, the expense is recognised directly in the income statement.

The right-of-use asset is initially measured at cost, which comprises the initial amount of the lease liability adjusted for any lease payments made before the commencement date, plus any initial direct costs incurred and an estimate of costs to dismantle and remove the underlying asset or to restore the underlying asset or the site on which it is located, less any lease incentive received.

The right-of-use asset is subsequently depreciated using the straight-line method from the commencement date to the earlier of the end of the useful life of the right-of-use asset or the end of the lease term. The estimated useful lives of right-of-use assets are determined on the same basis as those of property and equipment. In addition, the right-of-use asset is periodically reduced by impairment losses, if any, and adjusted for certain remeasurements of the lease liability.

Lease payments included in the measurement of the lease liability comprise the following:

- fixed payments, including in-substance fixed payments,

- variable lease payments that depend on an index or rate, initially measured using the index or rate at the commencement date,

- amounts expected to be payable under a residual value guarantee, and

- the exercise price under a purchase option that the group is reasonably certain to exercise, lease payments in an optional renewal period if the group is reasonably certain to exercise such an option to extend and penalties for early termination of a lease unless the group is reasonably certain not to terminate early.

The lease liability is measured at amortised cost using the effective interest method. It is remeasured when there is a change in future lease payments arising from a change in an index or rate, if there is a change in the group's estimate of the amount expected to be payable under a residual value guarantee or if the group changes its assessment of whether it will exercise a purchase, extension or termination option.

When the lease liability is remeasured in this way, a corresponding adjustment is made to the carrying amount of the right-of-use asset or is recorded in profit or loss if the carrying amount of the right-of-use asset has been reduced to zero.

The group presents right-of-use assets in 'property, plant and equipment' and lease liabilities in 'loans and borrowings' separately on the balance sheet.

Income taxes

Current income tax assets and liabilities comprise those obligations to fiscal authorities in the countries in which the Group carries out its operations. They are calculated according to the tax rates and tax laws applicable to the fiscal period and the country to which they relate. All changes to current tax liabilities are recognised as a component of tax expense in the income statement unless the tax relates to an item taken directly to equity in which case the tax is also taken directly to equity. Tax relating to items recognised in other comprehensive income is recognised in other comprehensive income. 

Deferred income taxes are calculated using the liability method on temporary differences. Deferred tax is generally provided on the difference between the carrying amounts of assets and liabilities and their tax bases. However, deferred tax is not provided on the initial recognition of goodwill, nor on the initial recognition of an asset or liability unless the related transaction is a business combination or affects tax or accounting profit. Deferred tax on temporary differences associated with shares in subsidiaries and joint ventures is not provided if reversal of these temporary differences can be controlled by the Group and it is probable that reversal will not occur in the foreseeable future. In addition, tax losses available to be carried forward as well as other income tax credits to the group are assessed for recognition as deferred tax assets.

Deferred tax liabilities are always provided for in full. Deferred tax assets such as those resulting from assessing deferred tax on the expense of share-based payments, are recognised to the extent that it is probable that future taxable profits will be available against which the temporary differences can be utilised. Deferred tax assets and liabilities are calculated at tax rates that are expected to apply to their respective period of realisation, provided they are enacted or substantively enacted at the balance sheet date.

Notes to the financial statements (continued)

Summary of significant accounting policies (continued)

Provisions, contingent liabilities and contingent assets

Provisions are recognised when the present obligations arising from legal or constructive commitment resulting from past events, will probably lead to an outflow of economic resources from the Group which can be estimated reliably.

Provisions are measured at the present value of the estimated expenditure required to settle the present obligation, based on the most reliable evidence available at the balance sheet date.

All provisions are reviewed at each balance sheet date and adjusted to reflect the current best estimates.

Share based employee compensation

The Group operates equity settled share-based compensation plans for remuneration of its employees.

All employee services received in exchange for the grant of any share-based compensation are measured at their fair values. These are indirectly determined by reference to the share options awarded. Their value is appraised at the grant date and excludes the impact of any non-market vesting conditions (e.g. profitability or sales growth targets).

All share-based compensation is ultimately recognised as an expense in the income statement with a corresponding credit to the share-based payment reserve, net of deferred tax where applicable. If vesting periods or other vesting conditions apply, the expense is allocated over the vesting period, based on the best available estimate of the number of share options expected to vest. Non-market vesting conditions are included in assumptions about the number of options that are expected to become exercisable. Estimates are subsequently revised if there is any indication that the number of share options expected to vest differs from previous estimates. No adjustment to expense recognised in prior periods is made if fewer share options ultimately are exercised than originally estimated.

Upon exercise of share options, the proceeds received, net of any directly attributable transaction costs, up to the nominal value of the shares issued are reallocated to share capital with any excess being recorded as additional share premium.

Where modifications are made to the vesting or lapse dates of options the excess of the fair value of the revised options over the fair value of the original options at the modification date is expensed over the remaining vesting period.

Dividends

During the year, no dividends (2022: £589k) were paid. The board is not recommending the payment of any further dividends in the current financial year.

Final equity dividends to the shareholders of ADVFN plc are recognised in the period that they are approved by shareholders. Interim equity dividends are recognised in the period that they are paid.

Dividends receivable are recognised when the Company's right to receive payment is established.

Equity

Issued capital

Ordinary shares are classified as equity. The nominal value of shares is included in issued capital.

Share premium

The share premium account represents the excess over nominal value of the fair value of consideration received for equity shares, net of the expenses of the share issue.

Share based payment reserve

The share-based payment reserve represents equity settled share-based employee remuneration until such share options are exercised.

Warrant reserve

The warrant reserve represents equity settled warrants granted as part of the open offer in January 2023 until such warrants are exercised.

Foreign exchange reserve

The foreign exchange reserve represents foreign exchange gains and losses arising on translation of investments in overseas subsidiaries into the consolidated financial statements.

Retained earnings

The retained earnings include all current and prior period results for the Group and the post-acquisition results of the Group's subsidiaries as determined by the income statement.

Notes to the financial statements (continued)

Summary of significant accounting policies (continued)

Use of key accounting estimates and judgements

Many of the amounts included in the financial statements involve the use of judgement and/or estimation. These judgements and estimates are based on management's best knowledge of the relevant facts and circumstances, having regard to prior experience, but actual results may differ from the amounts included in the financial statements. Information about such judgements and estimates is contained in the accounting policies and/or the notes to the financial statements and the key areas are summarised below:

Judgements in applying accounting policies

a) Capitalisation of development costs in accordance with IAS 38 requires analysis of the technical feasibility and commercial viability of the project in the future. This in turn requires a long-term judgement to be made about the development of the industry in which the development will be marketed. Where the directors consider that sufficient evidence exists surrounding the technical feasibility and commercial viability of the project, which indicate that the costs incurred will be recovered they are capitalised within intangible fixed assets. The amount of the capitalisation is based on estimates to judge the percentage of the time relevant staff spend on projects as specific timesheets are not maintained. Where insufficient evidence exists, the costs are expensed to the income statement.

b) The directors have used their judgement to decide whether the Group should be treated as a going concern and continue in existence for the foreseeable future. Having considered the latest Group forecasts, which cover a period of three years from the balance sheet date, together with the cash resources available to them, the directors have judged that it is appropriate for the financial statements to be prepared on the going concern basis.

c) The application of IFRS 15 - Revenue from contracts with customers requires an assessment of the elements of the contract to separate potentially bundled services requiring different treatment, the recognition of revenue at the point of performance obligations and the assessment of the correct amount of revenue for each of those obligations.

d) The directors have used their judgement in the classification of ADVFN Brasil Ltda as a joint operation, rather than a joint venture, based on the historic treatment by both sides of the revenues and expenses incurred, the substance of the arrangement and the share agreement by both parties of the nature of the operating arrangements.

e) On issuing the warrants related to the rights issue in January 2023, as the warrants were offered to all existing shareholders and therefore, in the directors estimation, these warrants are classified as equity instruments in line with IAS 32.

f) The directors have used their judgement to assess the valuation of the call option agreed on 3 May 2023 to purchase 50% of ADVFN Brasil Ltda within the next 4 years. Management have considered the future performance of the business and have judged that this will remain out of the money for the remainder of its existence and therefore it has no intrinsic value.

Sources of estimation uncertainty

a) Determining whether goodwill and other intangible assets are impaired requires an estimation of the value in use of the cash generating unit to which the goodwill and intangibles have been allocated. The carrying value of the investments are also assessed. The value in use calculations require an estimation of the future cash flows expected to arise from the cash generating units and a suitable discount rate in order to calculate a suitable present value. During the year, the review of the goodwill led to an impairment of £978,000. For the Company, the review led to an impairment of the investments in Group Companies of £1,000,000.

3. 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 are 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:

Notes to the financial statements (continued)

Segmental analysis (continued)

Revenue recognition per IFRS 15

Notes to the financial statements (continued)

Segmental analysis (continued)

The Group's revenues from all operations, 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 2023 and 2022 no single customer accounted for more than 10% of the Group's total revenues.

4. Operating loss

Remuneration of key senior management for Group and Company