ADVFN PLC — Earnings Release 2016

Oct 21, 2016

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RNS Number : 2286N

ADVFN PLC

21 October 2016

ADVFN PLC

Audited Results for the Year Ended 30 June 2016

ADVFN, the global stocks and shares website, announces its audited results for the year ended 30 June 2016

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

For further information, please contact:

Clem Chambers,

ADVFN PLC CEO

0207 0700 909

Salmaan Khawaja/ Jamie Barklem

Grant Thornton UK LLP (Nominated Adviser)

0207 383 5100

CHIEF EXECUTIVE'S STATEMENT

2016 was a transformational year for ADVFN with a change in the long term strategy of the company from international growth to consolidation of the existing business.

Having had our plans derailed last year by the attempt to take control of the ADVFN board, we have made the decision to enter a period of retrenchment.

Cash burn and losses are almost unavoidable with the sort of investment programs we have undertaken in the past. Currently the UK stock market has no stomach to support this kind of strategy so we have changed course to avoid needing to raise further funding and to instead produce profits and cash flow.

Curtailing investment drops quickly through to the bottom line but also feeds through to reductions in sales. The net result is equilibrium at a lower level of activity, which we hope will provide a solid basis for future growth. This is what we are working towards and, so far, we have made good progress.

The operating losses dropped from £1,905,000 to £650,000 an improvement of 65.8%. Sales are down 10.7% from £9,297,000 in 2015 to £8,303,000. However, costs of sales and expenses were down 20.1% per cent from £11,202,000 in 2015 to £8,953,000.

The after tax loss for the year was £478,000 down from £1,560,000 in the same period last year represents an improvement of 69.4%.

As announced on 24 March 2016, the loss after tax for the 6 months to 31 December 2015 was £442,000, so it can be seen that the company made a significantly reduced loss of £36,000 in the final six months in the financial year. This is an improvement of £406,000 on the previous half.

The market for our services is fast changing, with mobile becoming the dominant platform for communication and information. We have positioned ourselves for this development with our mobile app which has enabled us to buffer these changes as our traffic transitions to mobile.

However the mobile platforms are a weaker environment for monetisation which means, from a business perspective, we have to progress just to remain stationary.

This shift of usage from the desktop to mobile adds uncertainty but change is always an opportunity. We are well used to adapting to changing circumstances. In line with this we are adding new products to ADVFN which provide new advertising opportunities, new subscription products and new investor relations services.

We believe these offerings will help keep ADVFN relevant to its users as the online landscape continues to shift.

Clement Chambers

CEO

21 October 2016

STRATEGIC REPORT

Financial Overview

These consolidated and company accounts have been prepared under International Financial Reporting Standards (IFRS) as adopted by the European Union.

There has been a continued environment of rising costs in data licenses and we continue to prune content where its costs outweigh its benefits.

We are comfortable with our new cost base and believe it has the capacity for business growth.

Business Review

ADVFN has restructured. We have cut costs, repriced product, closed international offices and created new offerings. The bulk of this process completed early this year. It would seem that our decision to do so was the correct one, with a general rise of fragility on many fronts. AIM, on which we are quoted, has been through a poor period with many companies delisting. Important foreign markets like Brazil and the US suffered from a deep malaise for most of the year. Even the dreaded Brexit was a drag on our business up until the aftermath of the vote.

These situations remain unresolved but we have in the meantime put our business onto a different footing. We made a significantly reduced loss of £36,000 in the final six months in the financial year.  This signals the end of a restructuring process that we undertook in this financial year and places us with a focus on our key US and UK territories. Business is stable and we are working on a series of initiatives to underpin that and with a little good fortune provide growth.

Operating Costs

We have significantly cut operating costs. We have slimmed down our offerings, international operations, marketing and cut headcount.

Closure of ADVFN Japan LLP and disposal of Investor Events Ltd

During the year the office in Japan was closed, however the on-line presence in Japan continues operating as normal with UK hosted websites.

On 19th May 2016 an agreement was reached to dispose of the business Investor Events Limited and was completed 30 September 2016. The proceeds of the disposal amounted to £40,000 and exceeded the book value of other related net assets and accordingly no impairment losses have been recognised.

Both of these strategic changes have been designed to bring the Group's focus back to the central, core offering. It also allows us the financial flexibility to react to the changing technology in our market place.

Research and Development

We are highly focused on new developments including improvements to our website and researching and developing other methods of accessing our offering. The web and mobile environment is going through a seismic shift on many levels and we are struggling to stay ahead of changes that threaten to make us obsolete. We have a road map for the shifting trends in platform, offering, exchange landscape and advertising infrastructure. We have managed to adapt over the last 16 years so we remain in good shape to cope with what is a very fast changing environment.

Environmental policy

The Group as a whole continues to look for ways to develop its environmental policy. It remains our objective to improve our performance in this area.

Future outlook for the business

ADVFN has had a successful period of consolidation as you will note from the transformation in our results. We have turned this necessity into an opportunity to refocus our business away from international growth onto consolidation and redevelopment of the business.

Early outcomes from new product initiatives are promising and our goal is to return to growth in the next twelve to eighteen months whilst controlling costs. The whole market place we are operating in is changing dramatically. However we are confident that we can adapt to these changes by using our market knowledge, years of experience and strong technical platform to keep abreast of these developments.  

Summary of key performance indicators

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

Turnover - is of vital importance as it gives the sales department a goal and measures the financial success of the Group's service. 

Head count - is a very significant part of the costs of the company and is fixed as an overhead. It provides a good indicator when taken against the revenue figure for the efficiency of the business. Talented people are a vital part of the business. 

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

	2016	2016	2015	2015
	Actual	Target	Actual	Target
Turnover	£8.3M	£8.0M	£9.3M	£9 - £10M
Average head count	37	37	53	53
ADVFN registered users	3.5M	3.3M	3.2M	3.1M

Principal risks and uncertainties

Economic downturn

There are signs of global economic recovery and these have shown up as bursts of traffic on ADVFN.

However there can be no certainty in a return to economic normality in the near future but as previously stated the Company has bridged both the dotcom crash the credit crunch and now Brexit, so we feel that we have shown we are robust enough to withstand the financial conditions of economic emergencies.

High proportion of fixed overheads coupled with variable revenues

A large proportion of the company's overheads are fixed. There is the risk that any significant changes in revenue may lead to the inability to cover such costs. Management closely monitor fixed overheads against budget on a monthly basis and cost saving exercises are implemented on a constant review basis. We have had a strong period of cost optimisations that are updated on a regular basis.

Product obsolescence

The technology that we use is always in development and constantly changing. All our products are subject to technological change and advance and resultant obsolescence.

We have no choice but to keep innovating to keep up with growing technical challenges that are changing all the time.

The Directors are committed to the Research and Development strategy in place, and are confident that the company is able to react effectively to the developments within the market.

Fluctuations in currency exchange rates

A growing proportion of our turnover relates to overseas operations. As a company, we are therefore exposed to foreign currency fluctuations. The Company manages its foreign exchange exposure on a net basis, and if required uses forward foreign exchange contracts and other derivatives/financial instruments to reduce the exposure. Currently hedging is not employed and no forward contracts are in place. If currency volatility was extreme and hedging activity did not mitigate the exposure, then the results and the financial condition of the company might be adversely impacted by foreign currency fluctuations.

Following the volatility post Brexit, management will continue to monitor the impact of currency fluctuation. The exchange rate of the US Dollar has been a recent focus.

People

I would like to thank everyone at ADVFN who tirelessly provide a global service for private investors that never sleeps.

ON BEHALF OF THE BOARD

Clement Chambers

CEO

21 October 2016

Consolidated income statement
		30 June	30 June
		2016	2015
	Notes	£'000	£'000
Revenue	1	8,303	9,297
Cost of sales		(1,077)	(1,628)
Gross profit		7,226	7,669
Share based payment		(275)	(189)
Amortisation of intangible assets		(425)	(647)
Other administrative expenses		(7,176)	(8,738)
Total administrative expenses		(7,876)	(9,574)
Operating loss		(650)	(1,905)
Finance income and expense		126	114
Loss before tax		(524)	(1,791)
Taxation		46	231
Total loss for the period attributable to shareholders of the parent	2	(478)	(1,560)
Loss per share
Total loss per share - basic and diluted	2	(1.89)p	(6.19)p

Consolidated statement of comprehensive income
		30 June	30 June
		2016	2015
		£'000	£'000
Loss for the period		(478)	(1,560)
Other comprehensive income:
Items that will be reclassified subsequently to profit or loss:
Exchange differences on translation of foreign operations		233	185
Deferred tax on translation of foreign held assets		(47)	(21)
Total other comprehensive income		186	164
Total comprehensive income for the year attributable to shareholders of the parent		(292)	(1,396)

Consolidated balance sheet
		30 June	30 June
		2016	2015
		£'000	£'000
Assets
Non-current assets
Property, plant and equipment		68	99
Goodwill		918	784
Intangible assets		1,321	1,216
Trade and other receivables		155	103
Investments		-	6
		2,462	2,208
Current assets
Trade and other receivables		1,025	1,095
Current tax recoverable		-	181
Cash and cash equivalents		843	986
		1,868	2,262
Assets in disposal group classified as held for sale	3	142	-
		2,010	2,262
Total assets		4,472	4,470
Equity and liabilities
Equity
Issued capital		51	50
Share premium		119	-
Share based payment reserve		344	189
Foreign exchange reserve		467	281
Retained earnings		640	1,118
		1,621	1,638
Non-current liabilities
Deferred tax		100	97
		100	97
Current liabilities
Trade and other payables		2,583	2,731
Current tax		10	4
		2,593	2,735
Liabilities directly associated with assets in disposal groups classified as held for sale	3	158	-
		2,751	2,735
Total liabilities		2,851	2,832
Total equity and liabilities		4,472	4,470

Consolidated statement of changes in equity

	Share capital	Share premium	Merger reserve	Share based payment reserve	Foreign exchange reserve	Retained earnings	Total equity
	£'000	£'000	£'000	£'000	£'000	£'000	£'000
At 1 July 2014	6,305	8,102	221	617	117	(12,517)	2,845
Equity settled share options	-	-	-	189	-	-	189
Total transactions with owners	-	-	-	189	-	-	189
Loss for the period after tax	-	-	-	-	-	(1,560)	(1,560)
Other comprehensive income
Exchange differences on translation of foreign operations	-	-	-	-	185	-	185
Deferred tax on translation of foreign held assets	-	-	-		(21)	-	(21)
Total other comprehensive income	-	-	-	-	164	-	164
Total comprehensive income	-	-	-	-	164	(1,560)	(1,396)
Share consolidation	(6,255)	(8,102)	(221)	(617)	-	15,195	-
At 30 June 2015	50	-	-	189	281	1,118	1,638
Equity settled share options	-	-	-	155	-	-	155
Share issues	1	119	-	-	-	-	120
Total transactions with owners	1	119	-	155	-	-	275
Loss for the period after tax	-	-	-	-	-	(478)	(478)
Other comprehensive income
Exchange differences on translation of foreign operations	-	-	-	-	233	-	233
Deferred tax on translation of foreign held assets	-	-	-	-	(47)	-	(47)
Total other comprehensive income	-	-	-	-	186	-	186
Total comprehensive income	-	-	-	-	186	(478)	(292)
At 30 June 2016	51	119	-	344	467	640	1,621

Consolidated cash flow statement
		12 months to  30 June	12 months to  30 June
		2016	2015
		£'000	£'000
Cash flows from operating activities
Loss for the year		(478)	(1,560)
Taxation		(46)	(231)
Net finance income in the income statement		(126)	(114)
Depreciation of property, plant & equipment		83	61
Amortisation		425	647
Adjustment to fair value of embedded derivative		225	200
Share based payments - options		155	189
Issue of share capital		120	-
Increase in trade and other receivables		(80)	133
(Decrease)/increase in trade and other payables		(148)	463
Net cash generated /(used) by continuing operations		130	(212)
Income tax receivable		236	46
Net cash generated/(used) by operating activities		366	(166)
Cash flows from financing activities
Interest paid		(1)	-
Net cash generated by financing activities		(1)	-
Cash flows from investing activities
Payments for property plant and equipment		(52)	(89)
Purchase of intangibles		(399)	(472)
Sale/(purchase) of investments		6	(6)
Net cash used by investing activities		(445)	(567)
Net decrease in cash and cash equivalents		(80)	(733)
Exchange differences		(79)	44
Decrease in cash and cash equivalents continuing operations		(159)	(689)
Cash generated by disposal group		16	-
Net decrease in cash and cash equivalents		(143)	(689)
Cash and cash equivalents at the start of the period		986	1,675
Cash and cash equivalents at the end of the period		843	986

1.   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.

Two minor operating segments, for which IFRS 8's quantitative thresholds have not been met, are currently combined below under 'other'. The main sources of revenue for these operating segments is the provision of financial broking services and other internet services not related to financial information. The Disposal Group segment comprises Investor Events Limited which is held for sale with completion on 30 September 2016. Segment information can be analysed as follows for the reporting period under review:

2016	Provision of financial information	Other	Total	Disposal Group	Total
	£'000	£'000	£'000	£'000	£'000
Revenue from external customers	7,558	745	8,303	-	8,303
Depreciation and amortisation	(604)	117	(487)	-	(487)
Other operating expenses	(7,710)	(756)	(8,466)	-	(8,466)
Segment operating loss	(756)	106	(650)	-	(650)
Interest income	126	-	126	-	126
Interest expense	-	-	-	-	-
Segment assets	4,348	(18)	4,330	142	4,472
Segment liabilities	(2,620)	(73)	(2,693)	(158)	(2,851)
Purchases of non-current assets	316	86	402	-	402

2015	Provision of financial information	Other	Total	Disposal group	Total
	£'000	£'000	£'000	£'000	£'000
Revenue from external customers	8,695	228	9,297	-	9,297
Depreciation and amortisation	(612)	(78)	(690)	-	(690)
Other operating expenses	(9,876)	(262)	(10,512)	-	(10,512)
Segment operating loss	(1,793)	(112)	(1,905)	-	(1,905)
Interest income	114	-	114	-	114
Interest expense	-	-	-	-	-
Segment assets	4,595	(276)	4,319	151	4,470
Segment liabilities	(2,586)	(164)	(2,750)	(82)	(2,832)
Purchases of non-current assets	380	92	472	-	472

The Group's revenues, which wholly relate to the sale of services, from external customers and its non-current assets, are divided into the following geographical areas:

	Revenue	Non-current assets	Revenue	Non-current assets
	2016	2016	2015	2015
	£'000	£'000	£'000	£'000
UK (domicile)	3,807	1,209	3,587	1,070
USA	3,731	1,253	4,919	1,138
Other	765	-	791	-
	8,303	2,462	9,297	2,208

Revenues are allocated to the country in which the customer resides. During both 2016 and 2015 no single customer accounted for more than 10% of the Group's total revenues.

2.   Loss per share

	12 months to  30 June	12 months to  30 June
	2016	2015
	£'000	£'000
Loss for the year attributable to equity shareholders	(478)	(1,560)
Total loss per share - basic and diluted	(1.89)p	(6.19)p
	Shares	Shares
Weighted average number of shares in issue for the year	25,237,597	25,220,210
Dilutive effect of options	-	-
Weighted average shares for diluted earnings per share	25,237,597	25,220,210

Where a loss has been recorded for the year the diluted loss per share does not differ from the basic loss per share as the exercise of share options would have the effect of reducing the loss per share and is therefore not dilutive under the terms of IAS 33.

3.   Disposal of Investor Events Limited

On 19th May 2016 an agreement was reached to dispose of the business Investor Events Limited. The disposal was effected in order to generate cash flow to benefit the other Group businesses. The disposal was completed 30 September 2016. The proceeds of the disposal amounted to £40,000 and exceeded the book value of other related net assets and accordingly no impairment losses have been recognised. The major classes of assets and liabilities comprising the operation are as below:

Net assets of the disposal group	2016
	£'000
Current assets
Trade receivables	18
Other receivables	120
Cash and cash equivalents	4
Total assets classified as held for sale	142
Current liabilities
Accrued expenses	(158)
Total liabilities associated with assets classified as held for sale	(158)
Net assets of disposal group	(16)

The result for the company was a profit of £11,000 (2015: £nil)

4.   Events after the balance sheet date

The sale of the subsidiary company Investor Events Limited was completed on 30 September 2016 (see note 3). The amount of the consideration exceeded the carrying value of the net assets and therefore no impairment was required.

There are no other events of significance occurring after the balance sheet date to report.

5.   Publication of non-statutory accounts

The financial information set out in this preliminary announcement does not constitute statutory accounts as defined in section 435 of the Companies Act 2006.

The consolidated balance sheet at 30 June 2016 and the consolidated income statement, consolidated statement of comprehensive income, consolidated statement of changes in equity, consolidated cash flow statement and associated notes for the year then ended have been extracted from the Company's 2016 statutory financial statements upon which the auditors' opinion is unqualified and does not include any statement under Section 498(2) or (3) of the Companies Act 2006.

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

This information is provided by RNS

The company news service from the London Stock Exchange

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