ADVFN Regulatory News (AFN)

31 Mar 2008 07:30

ADVFN PLC31 March 2008 ADVFN PLC Unaudited Interim Results for the Six Months Ended 31 December 2007 ADVFN, Europe's leading stocks and shares website, today announces its unauditedinterim results for the six months ended 31 December 2007. Highlights: • Turnover up 26.4% to £3.34M (2006 : £2.64M) • Loss after tax - down 39% to £572,000 (2006: £938,000) • Loss per share reduced by over 41% to 0.10p (2006: 0.17p) • Cash neutral for the six month period with cash in hand of £1.367M (June 2007: £1.358M) • ADVFN user numbers up almost 50% to 1.2M (2006 : 810K) • Total group user numbers up over 22% to 3.8M at the report date compared to 3.1M at the last interim report date of 30 March 2007 Clem Chambers, CEO of ADVFN commented: "The first six months have given us continued growth in all our main markets." Contacts:Clem Chambers clemc@advfn.comFrancesca De Franco, PR francescad@advfn.com 020 7070 0932Fiona Kindness, Grant Thornton UK LLP (Nominated Adviser) 020 7728 3414 Chief Executive's Statement Operating Review I am pleased to present another set of positive results which show turnover up26.4% to £3.34M for the six month period ending 31st December 2007 compared tothe similar period last year. During this period we have continued to experience strong growth against abackground of market volatility and have even been able to benefit from thecurrent market conditions. Traffic has grown significantly and alongside that,subscription numbers have grown apace. We continue to run at all time highlevels of advertising and subscription numbers. We have, over the years, stressed the importance of our international plans andthis period has validated that strategy as we have seen further growth anddevelopment in the international arena. While the UK continues to grow, it isclearly a sign of things to come that for every one extra subscriber we add inthe UK, we are adding three additional new subscribers in overseas markets.ADVFN has established its business model over eight years in the UK, so thatthis growth in international business is a strong sign of the long-term growthpotential that lies ahead. As we monetise this international usage we alsoexpect overall traffic to continue to rise. Recent market turbulence hasgenerated unprecedented usage levels and has introduced a wider global audienceto ADVFN. This in turn is increasing the level of new registrations. We expectthis to be part of a virtuous circle, with a broad horizon of opportunity forADVFN to develop. While this expansion is ongoing, it is gratifying to be able to report that cashbalances remain relatively constant, with cash levels marginally ahead of thelast year-end and similar to the last interim period -end. The board has andcontinues to work hard on controlling costs in an environment that remainsgeared towards growing the company. Financial performance Key financial performance for the period has been summarised as follows: Six months ended Six months ended Change Change 31 December 2007 31 December 2006 £'000 £'000 £'000 % Turnover 3,342 2,644 698 26Loss after tax (572) (938) 366 39Loss per share (0.10p) (0.17p) 0.07p 41 Current Trading Since the year-end we have continued to grow in line with previous levels. Ithas always been a question as to what the impact of a bear market would be onADVFN and so far, if one takes the current bear market to have begun lastsummer, it would appear that ADVFN is not negatively impacted by tough marketconditions. This was our previous experience in the downturn of 2000-2003 butnonetheless it is extremely pleasing to see this was not simply a one-off. Prospects Long-term shareholders may note that recent statements have de-emphasised bothCupidBay and Fotothing our two other web properties. This is not because theyare suffering harsh market conditions, but instead simply because they are notdemonstrating the sort of exciting growth and potential of the ADVFN site andits international properties. They continue to generate sales without being adrain on the group's resources, and represent an inherent value we continue toexplore at both a business and strategic level. Meanwhile progress on the ADVFN sites remains exciting on many levels and wefeel that we are continuing to make good progress towards the goal of becoming aglobal platform for financial information. This is a big target but one that wefeel increasingly confident we can deliver as overseas markets increasingly openup to us. The biggest opportunity remains of course the US, and we are focusingtightly on InvestorsHub and Silicon Investor as a bridgehead for this effort.Traffic is strong for both these sites, particularly with InvestorsHub and wefeel this effort is starting to pay off. With growth across the UK, Brazil,France, Italy, Japan and the US and with the potential to open localised sitesin any number of other attractive countries, the prospects from growth are verybright. ADVFN is a business which is active 24 hours a day, 7 days a week, 365 days ayear which relies on great dedication. I would like to take this opportunity tothank our hard working staff who have to contend with the strains of rapidgrowth in both customers and traffic. Clem ChambersCEO31st March 2008 Condensed consolidated income statement 6 months to 6 months to 12 months to 31 Dec 31 Dec 30 June 2007 2006 2007 £'000 £'000 £'000 unaudited unaudited unaudited NotesRevenue 3,342 2,644 6,022Cost of sales (317) (223) (513) Gross profit 3,025 2,421 5,509 Share based payments (50) (78) (169)Amortisation of intangible assets (541) (307) (926)Impairment of financial asset - - (1)Other administrative expenses (3,065) (2,621) (5,427) Operating loss (631) (585) (1,014) Net finance income 17 8 34Result from associates after taxation (273) (372) (738) Loss before tax (887) (949) (1,718)Taxation 315 11 340 Loss for the period (572) (938) (1,378) Loss per shareBasic and diluted (pence per share) 5 (0.10) (0.17) (0.24) Condensed consolidated balance sheet 31 Dec 31 Dec 30 June 2007 2006 2007 £'000 £'000 £'000 unaudited unaudited unaudited Notes AssetsNon-current assetsProperty, plant and equipment 258 299 258Goodwill 1,388 1,388 1,388Intangible assets 2,696 2,941 2,853Investments in associates 1,288 1,909 1,595Trade and other receivables 206 204 206 Total non-current assets 5,836 6,741 6,300 Current assetsTrade and other receivables 1,305 821 1,209Other financial assets (available for sale) 68 42 59Other short term financial assets 13 - 13Cash and cash equivalents 1,367 1,382 1,358 Total current assets 2,753 2,245 2,639 Total assets 8,589 8,986 8,939 Equity and liabilitiesEquityIssued capital 5,932 5,870 5,870Share premium 7,710 7,607 7,600Shares to be issued 166 332 332Merger reserve 221 221 221Share based payments reserve 393 252 335Foreign exchange reserve (6) (138) (92)Retained earnings (7,939) (6,927) (7,367) Total equity 6,477 7,217 6,899 Non-current liabilitiesDeferred tax 372 445 394Obligations under finance leases 22 41 20 Total non-current liabilities 394 486 414 Current liabilitiesTrade and other payables 1,718 1,283 1,626 Total current liabilities 1,718 1,283 1,626 Total liabilities 2,112 1,769 2,040 Total equity and liabilities 8,589 8,986 8,939 Condensed consolidated statement of changes in equity Share Share Shares to Merger Other Foreign Retained Total capital premium be issued reserve reserve exchange earnings equity £'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000 At 1 July 2006 4,798 5,634 498 221 174 - (5,989) 5,336 Exchange differences ontranslation of foreign operations (138) (138)Net income recognised directly inequity (138) (138)Loss for the period after tax (938) (938)Total recognised income and (138) (938) (1,076)expense Issue of shares 1,072 2,147 (166) 3,053Associated costs (174) (174)Equity settled share options 78 78 At 31 December 2006 5,870 7,607 332 221 252 (138) (6,927) 7,217 Exchange differences ontranslation of foreign operations 46 46Net income recognised directly inequity 46 46Loss for the period after tax (440) (440)Total recognised income and 46 (440) (394)expense Costs associated with share issue (7) (7)Equity settled share options 83 83 At 30 June 2007 5,870 7,600 332 221 335 (92) (7,367) 6,899 Exchange differences ontranslation of foreign operations (4)Net income recognised directly inequity (4) (4)Loss for the period after tax 90 (572) (482)Total recognised income and 86 (572) (486)expense Issue of shares 62 110 (166) 6Equity settled share options 58 58 At 31 December 2007 5,932 7,710 166 221 393 (6) (7,939) 6,477 Condensed consolidated cash flow statement 6 months to 6 months to 12 months to 31 Dec 31 Dec 30 June 2007 2006 2007 £'000 £'000 £'000 unaudited unaudited unaudited NotesCash flows from operating activities Loss for the period before tax (887) (949) (1,718) Finance costs in the income statement (17) (8) (34)Results for associates 273 372 738Depreciation of non-current assets 67 101 180Amortisation 541 307 926Investment acquired as payment for services (9) - (30)Share based payments 58 78 169(Increase) / decrease in trade and other receivables (70) (87) (197)Increase / (decrease) in trade and other payables 100 (216) 83 Net cash generated from / (used in) operations 56 (402) 117 Interest paid - - (15)Income tax receivable 267 - - Net cash generated by / (used in) operating activities 323 (402) 102 Cash flows from investing activitiesInterest received 17 8 49Payments for property plant and equipment (455) (392) (937)Disposal of interest in associates 132 - -Purchase of subsidiary undertakings (net) - (1,637) (1,624) Net cash used in investing activities (306) (2,021) (2,512) Cash flows from financing activitiesProceeds from issue of equity shares 6 3,053 3,053Issue costs - (174) (181)Loans repaid (finance leases) (6) (12) (34) Net cash generated by financing activities - 2,867 2,838 Net increase in cash and cash equivalents 17 444 428Exchange losses (8) - (8) Total increase in cash and cash equivalents 9 444 420Cash and cash equivalents at the start of the period 1,358 938 938 Cash and cash equivalents at the end of the period 1,367 1,382 1,358 1. Basis of preparation The unaudited consolidated interim financial information is for the six monthperiod ended 31 December 2007. The financial information has been prepared inaccordance with the accounting policies set out below which are based on therecognition and measurement principles of IFRS in issue as adopted by theEuropean Union (EU) and are effective at 30 June 2008 or are expected to beadopted and effective at 30 June 2008, our first annual reporting date at whichwe are required to use IFRS accounting standards adopted by the EU. The interimfinancial information does not include all of the information required for fullannual financial statements. From 1 July 2006 the Group has adopted International Financial ReportingStandards (IFRS) in the preparation of its consolidated financial statements.Comparative financial information previously published under UK GenerallyAccepted Accounting Principles has been restated on an IFRS basis for theopening balance sheet as at 1 July 2006, interim accounts as at 31 December 2006and for the year end 30 June 2007. The change in the groups reported performanceand financial position on adopting IFRS is fully disclosed in these interimconsolidated financial statements. The interim financial information has not been audited nor has it been reviewedunder ISRE 2410 of the Auditing Practices Board. The financial information setout in this interim report does not constitute statutory accounts as defined inSection 240 of the Companies Act 1985. The Group's statutory financialstatements for the year ended 30 June 2007 prepared under UK GAAP have beenfiled with the Registrar of Companies. The auditor's report on those financialstatements was unqualified and did not contain a statement under Section 237(2)of the Companies Act 1985. 2. First time adoption The opening IFRS balance sheet as at the date of transition on 1 July 2006 hasbeen prepared with regard to the measurement and recognition rules of IFRS 1 'First time adoption'. The most significant optional exemptions adopted are setout below:- a) IFRS 3 Business combinations Business combinations prior to the date of transition to IFRS need not berestated (IFRS 1 'First time adoption of IFRS'). b) IAS 21 'The effects of foreign exchange differences' Cumulative translation differences which exist at the date of transition can betransferred into retained earnings and the foreign exchange reserve thereforeonly shows differences arising after transition. Upon disposal, pre-transitionforeign exchange differences will not be recycled (IFRS 1 'First time adoptionof IFRS'). 3. Accounting policies The principal accounting policies adopted by the group in conformity with theIFRSs in force at 30 June 2007 are set out below. Consolidation Subsidiaries are all entities over which the group has the power to govern thefinancial and operating policies generally accompanying a shareholding of overone half of the voting rights. The existence and effect of potential votingrights that are currently exercisable or convertible are considered whenassessing whether the group controls another entity. Subsidiaries are fullyconsolidated from the date on which control is transferred to the group. Theyare deconsolidated on the date control ceases. The group uses the purchase method of accounting for the acquisition of asubsidiary. The cost of an acquisition is measured by the fair value of theassets given, equity instruments issued and liabilities incurred or assumed atthe date of exchange, plus costs directly attributable to the acquisition.Identifiable assets acquired and liabilities and contingent liabilities assumedin a business combination are measured initially at their fair values at theacquisition date irrespective of the extent of any minority interest. The excessof the cost of acquisition over the fair value of the group's share of theidentifiable net assets acquired is recorded as goodwill. If the cost of theacquisition is less than the fair value of the net assets of the subsidiaryacquired the difference is recognised directly in the income statement. Inter-company transactions, balances and unrealised gains and losses ontransactions between group companies are eliminated. Investments in associates An associate is an entity over which the Group has significant influence andthat is neither a subsidiary nor an interest in a joint venture. Significantinfluence is the power to participate in the financial and operating policydecisions of the investee but is not control or joint control over thosepolicies. The results and assets and liabilities of associates are incorporated in thesefinancial statements using the equity method of accounting. Under the equitymethod, investments in associates are carried in the consolidated balance sheetat a cost as adjusted for post acquisition changes in the Group's share of thenet assets of the associate, less any impairment in the value of individualinvestments. Losses of an associate in excess of the Group's interest in thatassociate (which includes any long term interests in that, in substance, formpart of the Group's net investment in the associate) are not recognised, unlessthe Group has incurred legal or constructive obligations or made payments onbehalf of the associate. Any excess of the cost of acquisition over the Group's share of the net fairvalue of the identifiable assets, liabilities and contingent liabilities of theassociate are recognised at the date of acquisition is recognised as goodwill.The goodwill is included within the carrying amount of the investment and isassessed for impairment as part of the investment. Any excess of the Group'sshare of the net fair value of the identifiable assets, liabilities andcontingent liabilities over the cost of the acquisition, after reassessment, isrecognised immediately in profit or loss. Where a Group entity transacts with an associate of the Group, profits andlosses are eliminated to the extent of the Group's interest in the relevantassociate. Foreign currency translation a) Functional and presentational currency Items included in the financial statements of each of the group's entities aremeasured using the currency of the primary economic environment in which theentity operates (the functional currency). The company's functional currency andthe Group's presentational currency is Sterling. b) Transactions and balances Foreign currency transactions are translated into the functional currency usingthe exchange rates prevailing at the dates of the transactions. Foreign exchangegains and losses resulting from the settlement of such transactions and from thetranslation at reporting period end exchange rates of monetary assets andliabilities denominated in foreign currencies are recognised in the incomestatement. c) Group companies • The results and financial position of all group entities that have afunctional currency different from the presentation currency are translated intothe presentation currency as follows: • Assets and liabilities for each balance sheet presented are translated atthe closing rate at the date of the balance sheet. • Income and expenses for each income statement are translated at the rate ofexchange at the transaction date and; • On consolidation, exchange differences arising from the translation of thenet investment in foreign entities are taken to a separate component of equity.Post transition exchange differences are recycled to the income statement upondisposal of the foreign operation. Income and expense recognition Revenue is the fair value of the total amount receivable by the group forsupplies of products as principal and for services. Subscription and advertisingincome is recognised over the period in which the service is provided. VAT orsimilar local taxes and trade discounts are excluded. Interest income and expenditure are reported on an accruals basis. Dividendsreceived, other than those from investments in associates, are recognised at thetime of their distribution. Operating expenses are recognised in the incomestatement 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 ischarged to the income statement. Intangible assets - Licenses Licences are amortised over a five year period on a straight line basis. - Goodwill Goodwill is the difference between the fair value of the consideration paid andthe fair value of the assets and liabilities acquired. It is capitalised as anintangible asset and allocated to cash generating units (with separatelyidentifiable cash flows) and is subject to impairment testing on an annual basisor more frequently if circumstances indicate that the asset may have beenimpaired. - Internally generated intangible assets An internally generated intangible asset arising from development (or thedevelopment phase) of an internal project is recognised if, and only if, all ofthe 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 isthe sum of the expenditure incurred from the date when the intangible assetfirst meets the recognition criteria listed above. Where no internally generatedintangible asset can be recognised, development expenditure is charged to theincome statement in the period in which it is incurred. Subsequent to initial recognition, internally generated intangible assets arereported at cost less accumulated amortisation and accumulated impairmentlosses. Research expenditure is recognised as an expense in the period in which it isincurred. - Intangible assets acquired as part of a business combination Intangible assets acquired in a business combination are identified andrecognised separately from goodwill where they satisfy the definition of anintangible asset and their fair values can be measured reliably. The cost ofsuch intangible assets is their fair value at the acquisition date. Allintangible assets acquired through business combination are amortised over theiruseful lives estimated at 10 years. Subsequent to initial recognition, intangible assets acquired in a businesscombination are reported at cost less accumulated amortisation and accumulatedimpairment losses. Property, plant and equipment Property, plant and equipment are recorded at cost net of accumulateddepreciation and any provision for impairment. Depreciation is provided usingthe straight line method to write off the cost of the asset less any residualvalue over its useful economic life. The residual values of assets are reviewedannually and revised where necessary. Assets useful economic lives are asfollows: Short leasehold improvements The shorter of the useful life of the asset or the term of the lease Computer equipment 33% per annum Office equipment 20% per annum Impairment For the purposes of assessing impairment, assets are grouped at the lowest levelfor which there are separately identifiable cash flows. As a result some assetsare tested individually for impairment and some are tested at cash-generatingunit level. Goodwill, other individual assets or cash-generating units that includegoodwill, other intangible assets with an indefinite useful life and thoseintangible assets not yet available for use are tested for impairment at leastannually. All other individual assets or cash-generating units are tested forimpairment whenever events or changes in circumstances indicate that thecarrying amount may not be recoverable. An impairment loss is recognised for the amount by which the carrying amountexceeds the recoverable amount of the asset or cash-generating unit. Therecoverable amount is the higher of fair value, reflecting market conditionsless costs to sell, and value in use based on an internal discounted cash flowevaluation. With the exception of goodwill, all assets are subsequentlyreassessed for indications that an impairment loss previously recognised may nolonger exist. Financial assets Financial assets consist of cash and financial instruments. Financialinstruments are sub divided into receivables and available for sale financialassets. Financial assets are assigned to their different categories bymanagement on initial recognition, depending on the purpose for which theinvestment was acquired. Trade receivables Trade receivables are recognised initially at fair value and subsequentlymeasured at amortised cost using the effective interest method less provisionfor impairment. A provision for impairment of trade receivables is establishedwhen there is objective evidence that the Group will not be able to collect allamounts due according to the original terms of the receivables. Significantfinancial difficulties of the debtor, probability that the debtor will enterbankruptcy or financial reorganisation, and default in payments are consideredindicators that a trade receivable is impaired. The amount of the provision isthe difference between the assets carrying amount and the present value ofestimated future cash flows, discounted at the original effective interest rate.The carrying amount of the asset is reduced through the use of an allowanceaccount, and the amount of the loss is recognised in the income statement withinadministrative expenses. When a trade receivable is uncollectible it is writtenoff against the allowance account for trade receivables. Subsequent recoveriesof amounts previously written off are credited against administrative expensesin the income statement. Investments Current asset investments are classified as 'available for sale' as they areheld for short term investment only and are intended to be realised within oneyear of the balance sheet date. They are measured at fair value with gains andlosses arising on their fair value being included in the income statement.Listed investments are stated at bid prices. Derecognition of financial instruments occurs when the rights to receive cashflows from the investments expire or are transferred and substantially all ofthe risks and rewards of ownership have been transferred. An assessment forimpairment is undertaken at least at each balance sheet date whether or notthere is objective evidence that a financial asset or a group of financialassets is impaired. Interest and other cash flows resulting from holding financial assets arerecognised in profit and loss when received, regardless of how the relatedcarrying amount of financial assets is measured. Financial liabilities The group's financial liabilities include trade and other payables. Financial liabilities are recognised when the group becomes a party to thecontractual agreements of the instrument. All interest related charges arerecognised as an expense in the income statement. Trade payables are recognised initially at their fair value, net of transactioncosts and subsequently measured at amortised costs less settlement payments. Dividend distributions to shareholders are included when the dividends areapproved by the shareholder's meeting. Leases Where the Group retains substantially all the risks and rewards of ownership ofan asset subject to a lease, the lease is treated as a finance lease. Otherleases are treated as operating leases. Future instalments payable under financeleases net of finance charges are included in creditors with the correspondingasset values recorded in tangible assets and depreciated over the shorter oftheir estimated useful lives or their lease terms. Lease payments areapportioned between the finance element, which is charged to the incomestatement as interest, and the capital element, which reduces the outstandingobligation for future instalments. Payments under operating leases are charged to the income statement on astraight line basis over the lease term. Income taxes Current income tax assets and liabilities comprise those obligations to fiscalauthorities in the countries in which the group carries out its operations. Theyare calculated according to the tax rates and tax laws applicable to the fiscalperiod and the country to which they relate. All changes to current taxliabilities are recognised as a component of tax expense in the income statementunless the tax relates to an item taken directly to equity in which case the taxis also taken directly to equity. Deferred income taxes are calculated using the liability method on temporarydifferences. Deferred tax is generally provided on the difference between thecarrying amounts of assets and liabilities and their tax bases. However,deferred tax is not provided on the initial recognition of goodwill, nor on theinitial recognition of an asset or liability unless the related transaction is abusiness combination or affects tax or accounting profit. Deferred tax ontemporary differences associated with shares in subsidiaries and joint venturesis not provided if reversal of these temporary differences can be controlled bythe group and it is probable that reversal will not occur in the foreseeablefuture. In addition, tax losses available to be carried forward as well asother income tax credits to the group are assessed for recognition as deferredtax assets. Deferred tax liabilities are always provided for in full. Deferred tax assetssuch as those resulting from assessing deferred tax on the expense of sharebased payments, are recognised to the extent that it is probable that futuretaxable profits will be available against which the temporary differences can beutilised. Deferred tax assets and liabilities are calculated at tax rates thatare expected to apply to their respective period of realisation, provided theyare enacted or substantively enacted at the balance sheet date. Cash and cash equivalents Cash and cash equivalents include cash at bank and in hand. Provisions, contingent liabilities and contingent assets Other provisions are recognised when the present obligations arising from legalor constructive commitment resulting from past events, will probably lead to anoutflow of economic resources from the group which can be estimated reliably. Provisions are measured at the present value of the estimated expenditurerequired to settle the present obligation, based on the most reliable evidenceavailable at the balance sheet date. All provisions are reviewed at each balance sheet date and adjusted to reflectthe current best estimates. Share based employee compensation The group operates equity settled share based compensation plans forremuneration of its employees. All employee services received in exchange for the grant of any share basedcompensation are measured at their fair values. These are indirectly determinedby reference to the share options awarded. Their value is appraised at the grantdate 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 theincome statement with a corresponding credit to additional paid in capital, netof deferred tax where applicable. If vesting periods or other vesting conditionsapply, the expense is allocated over the vesting period, based on the bestavailable estimate of the number of share options expected to vest. Non marketvesting conditions are included in assumptions about the number of options thatare expected to become exercisable. Estimates are subsequently revised if thereis any indication that the number of share options expected to vest differs fromprevious estimates. No adjustment to expense recognised in prior periods is madeif fewer share options ultimately are exercised than originally estimated. Upon exercise of share options, the proceeds received, net of any directlyattributable transaction costs, up to the nominal value of the shares issued arereallocated to share capital with any excess being recorded as additional sharepremium. 4. Segmental reporting The Group has a single class of business; that of developing and providingfinancial information primarily via the internet. The group maintainsinformation on the location of subscribers and the secondary segmental analysisis by subscriber location. 5. Earnings per share 6 months to 6 months to 12 months to 31 Dec 31 Dec 30 June 2007 2006 2007 £'000 £'000 £'000 Loss for the year attributable to equity shareholders (572) (938) (1,378) Loss per shareBasic and diluted (pence per share)* (0.10) (0.17) (0.24) '000 Shares '000 Shares '000 Shares Issued ordinary shares at start of the period 586,979 479,805 479,805 Ordinary shares issued in the period 6,213 107,174 107,174 Issued ordinary shares at end of the period 593,192 586,979 586,979 Weighted average number of shares in issue for the period 589,763 544,618 565,331 \* The diluted loss per share does not differ from the basic loss per share as theexercise of share options would have the effect of reducing the loss per shareand is therefore not dilutive under the terms of IAS 33. 6. Business combination On 25 September 2006 the group acquired the entire share capital ofInvestorsHub.com Inc. which also encompassed the business of SI Holdings LLC fora consideration of US$ 3,000,000 (£1,637,000) satisfied entirely by cash. The Group acquired assets at a book value of £36,000 and in addition the Groupalso recognised separable intangible assets amounting to £1,522,000 comprisingbrand names, visitors and subscriber lists. The assets acquired and theadjustments made are as follows: Book value Fair value Fair value adjustments £'000 £'000 £'000Non-current assetsProperty, plant and equipment 8 - 8Intangible assets (identified at acquisition) - 1,522 1,522 8 1,522 1,530 Current assetsTrade and other receivables 24 - 24Cash and cash equivalents 13 - 13 37 - 37Current liabilitiesTrade payables (9) - (9) Non-current liabilitiesDeferred tax - (456) (456) Net assets 36 1,066 1,102 Fair value of consideration (1,637) Goodwill for this transaction 535 The following separable intangible assets were recognised on acquisitiontogether with the deferred tax impact of the recognition as follows: Intangible Amortisation Deferred tax Fair value £'000 £'000Brand names 10 years (12) 41Subscriber (customer lists) 10 years (114) 381Visitors (non customer relationships) 10 years (330) 1,100 (456) 1,522 7. Transition to IFRS As stated in the Basis of Preparation these are the Group's first condensedconsolidated interim financial statements for part of the period covered by thefirst IFRS annual consolidated financial statements to be prepared in accordancewith IFRS. IFRS permits Groups adopting IFRS for the first time to take certain exemptionsfrom the full requirements of IFRS in the transition period. These interimfinancial statements have been prepared on the basis of taking the followingexemptions: IFRS 3 'Business combinations' Business combinations that occurred before the opening IFRS balance sheet dateare exempt from the application of the standard. An explanation of how the transition from UK GAAP to IFRS has affected theGroup's financial position, financial performance and cash flows is set outbelow. IFRS 1 'First time adoption of IFRS' The presentation and recognition requirements of this standard demand that theelement of debtors which is over one year must be shown in the 'Non-currentassets' heading and not, as previously presented under UK GAAP, under theoverall Debtors heading within 'Current assets'. IFRS 3 'Business combinations' and IAS 12 'Income taxes'. By claiming the exemption from applying the standard retrospectively the Groupwill stop amortising positive goodwill at the transition date and, instead, itbecomes the subject of regular impairment tests. In addition, the separableintangibles recognised on acquisitions after the transition date will be shownunder the intangible assets heading and amortised in line with the Groupaccounting policy. Deferred tax is recognised on the separable intangible assetsresulting from the acquisition and a deferred tax liability has resulted underIAS 12 'Income taxes'. IAS 21 'The effects of foreign exchange differences' Cumulative translation differences which exist at the date of transition can betransferred into retained earnings and the foreign exchange reserve thereforeonly shows differences arising after transition. Upon disposal, pre-transitionforeign exchange differences will not be recycled (IFRS 1 'First time adoptionof IFRS'). IAS 38 'Intangible assets' Computer software and web site development costs are capitalised as a tangibleasset under UK GAAP, however, under IFRS: i) if the software is separate from the computer and its immediate operatingsystem it must be regarded as a stand alone asset and recognised as anintangible asset and, ii) the web site development costs are capitalised as an intangible assetunder IFRS if they are recognised as such under IAS 38. IAS 39 'Financial instruments, recognition and measurement' Under UK GAAP current asset investments were carried at cost and the treatmentunder IFRS requires that the asset be recognised under one of four types, inthis case 'available for sale', and that they be carried at fair value (in thiscase market value). The adjustment to fair value is taken directly to equity. Detailed reconciliations between UK GAAP and IFRS of both equity and profit areshown below. Reconciliation of equity as at 1 July 2006 UK GAAP IFRS 1 IFRS 3 IAS 38 IAS 39 IFRS £'000 £'000 £'000 £'000 £'000 £'000AssetsNon-current assetsProperty, plant and equipment 1,681 (1,409) 272Goodwill 853 853Intangible assets 21 1,409 1,430Investments in associates 2,402 2,402Trade and other receivables - 203 203 Total non-current assets 4,957 203 - 5,160 Current assetsTrade and other receivables 938 (203) 735Financial assets (available for 48 (5) 43sale)Other short term financial assets - -Cash and cash equivalent 938 938 Total current assets 1,924 (203) (5) 1,716 Total assets 6,881 - (5) 6,876 Equity and liabilitiesEquityIssued capital 4,798 4,798Share premium 5,634 5,634Shares to be issued 498 498Merger reserve 221 221Share based payments reserve 174 174Foreign exchange reserve - -Retained earnings (5,984) (5) (5,989) Total equity 5,341 (5) 5,336 Non-current liabilitiesDeferred taxObligations under finance leases 28 28 Total non-current liabilities 28 28 Current liabilitiesTrade and other payables 1,512 1,512 Total current liabilities 1,512 1,512 Total liabilities 1,540 1,540 Total equity and liabilities 6,881 (5) 6,876 Reconciliation of equity as at 31 December 2006 UK GAAP IFRS 1 IFRS 3 IAS 38 IAS 39 IFRS £'000 £'000 £'000 £'000 £'000 £'000AssetsNon-current assetsProperty, plant and equipment 1,756 (1,457) 299Goodwill 2,343 (955) 1,388Intangible assets - 1,484 1,457 2,941Investments in associates 1,909 1,909Trade and other receivables - 204 204 Total non-current assets 6,008 204 529 - - 6,741 Current assetsTrade and other receivables 1,025 (204) 821Financial assets (available for 47 (5) 42sale)Other short term financial assets - -Cash and cash equivalent 1,382 1,382 Total current assets 2,454 (204) (5) 2,245 Total assets 8,462 - 529 - (5) 8,986 Equity and liabilitiesEquityIssued capital 5,870 5,870Share premium 7,607 7,607Shares to be issued 332 332Merger reserve 221 221Share based payments reserve 252 252Foreign exchange reserve (138) (138)Retained earnings (7,006) 84 (5) (6,927) Total equity 7,138 84 (5) 7,217 Non-current liabilitiesDeferred tax - 445 445Obligations under finance leases 41 41 Total non-current liabilities 41 445 486 Current liabilitiesTrade and other payables 1,283 1,283 Total current liabilities 1,283 1,283 Total liabilities 1,324 445 1,769 Total equity and liabilities 8,462 529 (5) 8,986 Reconciliation of equity as at 30 June 2007 UK GAAP IFRS 1 IFRS 3 IAS 38 IAS 39 IFRS £'000 £'000 £'000 £'000 £'000 £'000AssetsNon-current assetsProperty, plant and equipment 1,703 (1,445) 258Goodwill 2,280 (892) 1,388Intangible assets - 1,408 1,445 2,853Investments in associates 1,595 1,595Trade and other receivables - 206 206 Total non-current assets 5,578 206 516 - - 6,300 Current assetsTrade and other receivables 1,415 (206) 1,209Financial assets (available for 65 (6) 59sale)Other short term financial assets 13 13Cash and cash equivalent 1,358 1,358 Total current assets 2,851 (206) (6) 2,639 Total assets 8,429 - 516 - (6) 8,939 Equity and liabilitiesEquityIssued capital 5,870 5,870Share premium 7,600 7,600Shares to be issued 332 332Merger reserve 221 221Share based payments reserve 335 335Foreign exchange reserve (92) (92)Retained earnings (7,483) 122 (6) (7,367) Total equity 6,783 122 (6) 6,899 Non-current liabilitiesDeferred tax 394 394Obligations under finance leases 20 20 Total non-current liabilities 20 394 414 Current liabilitiesTrade and other payables 1,626 1,626 Total current liabilities 1,626 1,626 Total liabilities 1,646 394 2,040 Total equity and liabilities 8,429 516 (6) 8,939 Reconciliation of profit for the 6 months ended 31 December 2006 UK GAAP IFRS 3 IAS 38 IFRS £'000 £'000 £'000 £'000 Revenue 2,644 2,644Cost of sales (223) (223) Gross profit 2,421 2,421 Share based payment (78) (78)Amortisation of intangible assets (82) 73 (298) (307)Other administrative expenses (2,919) 298 (2,621) Operating loss (658) 73 - (585) Net finance income 8 8Result from associates after taxation (372) (372) Loss before tax (1,022) 73 (949)Taxation - 11 11 Loss for the period (1,022) 84 (938) Reconciliation of profit for the year ended 30 June 2007 UK GAAP IFRS 3 IAS 38 IFRS £'000 £'000 £'000 £'000 Revenue 6,022 6,022Cost of sales (513) (513) Gross profit 5,509 5,509 Share based payment (169) (169)Amortisation of intangible assets (174) 60 (812) (926)Other administrative expenses (6,239) 812 (5,427) Operating loss (1,073) 60 - (1,013) Net finance income 34 34Result from associates after taxation (738) (738) Loss before tax (1,777) 60 (1,717)Taxation 278 62 340 Loss for the period (1,499) 122 (1,377) Cashflow As a result of the transition to IFRS the following changes have resulted in thecashflow statement. The definition of cash under UK GAAP is narrower than under IAS 7 'Cash flowstatements'. Under IFRS highly liquid investments, readily convertible to aknown amount of cash and with an insignificant risk of a change in value areregarded as cash equivalents. This does not include investments in listed sharesheld for sale. Under UK GAAP payments to acquire property, plant and equipment were classifiedas part of 'Capital expenditure and financial investment' whilst under IFRS suchpayments have been reclassified as part of 'Investing activities'. There are no other material differences between the cashflow statement presentedunder IFRS and that presented under UK GAAP. 8. The directors do not recommend the payment of a dividend. 9. Copies of this statement are being posted to shareholders shortly and willbe available from the company's registered office at Suite 27, Essex TechnologyCentre, The Gables, Fyfield Road, Ongar, Essex, CM5 0GA and in electronic formfrom the Company's website, http://www.advfn.com/advfn_ir/ . This information is provided by RNS The company news service from the London Stock Exchange