REG - ADVFN PLC - Final Results
5 November 2018
ADVFN PLC
("ADVFN" or the "Company")
Audited Results for the Year Ended 30 June 2018
ADVFN, the global stocks and shares website, announces its audited results for the year ended 30 June 2018.
CHIEF EXECUTIVE'S STATEMENT
The financial year 2017/18 was a very interesting and challenging year, one that has seen us add significant upside potential to ADVFN. 2017 was the year of Bitcoin, which saw Cryptocurrency and blockchains explode on to centre stage of the financial markets. While even at the peak around Xmas of 2017 the Cryptocurrency market was a tiny market in comparison with forex and equities markets, it is of huge interest to the global private investor.
We have an operating profit of £384,000 (£47,000 in 2017) a solid improvement. Sales are up to £9,201,000
(£8,186,000 in 2017) and this is a strong result in the circumstances.
This year we took advantage of these opportunities and have positioned ourselves in the US and UK market with a strong cryptocurrency information offering which has since become stronger since the year end.
The timing of the Bitcoin bubble was fortunate as private investor interest in equities has been at an all-time low. It is perverse but our business in equities flourishes best when the market crashes and our customers are hurt by corrections and slumps. In strong markets investor complacency is not good for our business and we rely on the diversified nature of our sales to maintain revenue.
Happily, we were able to sail past these equity doldrums powered by a compensating tailwind of Cryptocurrency information traffic. Cryptocurrency information for the likes of Bitcoin and Ethereum is a new category of financial information and one we are excited about.
We are very bullish about the potential of future demand for Cryptocurrency information and feel this can be a business multiplier for us in the next 3-5 years. As you will see from the figures, we have made the investment in technology and skills to master and provide this information, without the costs materially affecting our bottom line and you can see for yourself the quality of our offering on the ADVFN and Investorshub website. This is the platform from which we are building out our Blockchain information offerings which we believe can be as lucrative as our equity offerings.
Equities and Blockchain have distinct audiences and we find the combination exciting. We believe our market potential just grew significantly and that we can grow to fill it.
Clement Chambers
CEO
2 November 2018
The annual report and accounts will shortly be sent to shareholders and will be available on the Company's website, http://www.advfn.com
Enquiries:
For further information please contact:
ADVFN PLC
Clem Chambers
+44 (0) 207 070 0909
Beaumont Cornish Limited (Nominated Adviser)
Roland Cornish/Michael Cornish
+44 (0) 207 628 3396
The information contained within this announcement is deemed to constitute inside information as stipulated under the Market Abuse Regulations (EU) No. 596/2014. The person who arranged for the release of this announcement on behalf of the Company was Clem Chambers, Director.
STRATEGIC REPORT
Financial Overview
These consolidated and company accounts have been prepared under International Financial Reporting Standards (IFRS) as adopted by the European Union.
As always, we are in a continued environment of rising costs in data licenses and exchange fees. We will continue to monitor these and adapt as required.
Business Review
Our product, which is our website, can be seen at www.advfn.com. Operating our websites is very technically challenging and is subject to constant maintenance and engineering.
With the advent of the Blockchain and Cryptocurrencies we have now added a new segment to the website to cater for the need of the global cryptocurrency audience for timely and accurate data. We expect this to expand the audience and traffic of our sites.
For our UK audience Brexit will be on most peoples agenda over the next year and perhaps several years. We believe this market stressing event could create increased interest in the markets in the UK which is a very important market for us. ADVFN's information sites are important windows onto world markets that private investors around the world use to help manage their investing and trading and we see opportunities for growth in providing these sites.
Turnover has grown substantially in the last year and, as has happened in previous years, the growth in the headcount has been in parallel. This underlines the importance of having the talented staff available in the company when there are opportunities to expand. Our registered users go on increasing and provide us with a ready market for the new products we are able to offer.
Operating Costs
Our main costs are relatively fixed but licence and exchange fees are continuing to rise and it is these we must keep a close eye on and if need be change what we offer.
Research and Development ("R&D")
Like most technology / media companies we are highly focused on new developments including improvements to our website, products, tools etc. Our research and development is key to our future. The web and mobile environment continue to move and change and it's our R&D that allows us to keep ahead. Our R & D investment this year has been £353,000 (2017: £379,000) and all of this investment has been to develop the website and has been capitalised. This constant investment ensures our web experience remains fresh and relevant.
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
It is important for us to keep focused on the technology and continue to strive to be ahead of this new market changing process. The Blockchain and Crypto Currencies are a new area that we are building upon, which could open up new opportunities that I hope we can develop and into which we can push the business.
Summary of key performance indicators
Our key indicators have not changed, as they are an important part of the business.
The Directors monitor the Key Performance Indicators on an ongoing basis. The chart below shows the level of performance achieved in the financial year. The individual items are as follows:
2018
2018
2017
2017
Actual
Target
Actual
Target
Turnover
£9.2M
£8.5M
£8.2M
£8.0M
Average head count
46
40
32
35
ADVFN registered users
4.5M
4.2M
4.0M
3.8M
Turnover - is of vital importance as it gives the sales department a goal and measures the financial success of the Group's services.
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.
STRATEGIC REPORT (continued)
Summary of key performance indicators (continued)
Registered users - give us an accurate indication of our audience pool and the potential available for marketing our service.
Principal risks and uncertainties
Economic downturn
I mentioned above we may face many new potential issues. We have no control over the outcome and impact of the Brexit negotiations and the leaving process its self. This, mixed with the new technologies which are on their way, could make for an interesting experience.
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. We closely monitor fixed overheads against budget on a monthly basis and cost saving exercises are implemented on a constant review basis.
Product obsolescence
I have said many times our technology that we use is always in development and constantly changing and up dating. All our technology and products are subject to technological change and could become obsolete quickly.
As always we have to constantly innovate to keep up with growing technical challenges that are changing all the time.
The Board is 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 major 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 the whole team at ADVFN who tirelessly provide a global service for private investors that never sleep.
ON BEHALF OF THE BOARD
Clement Chambers
CEO
2 November 2018
Consolidated income statement
30 June
30 June
2018
2017
Notes
£'000
£'000
Revenue
9,201
8,186
Cost of sales
(392)
(201)
Gross profit
8,809
7,985
Share based payment
(21)
-
Amortisation of intangible assets
(202)
(302)
Other administrative expenses
(8,202)
(7,636)
Total administrative expenses
(8,425)
(7,938)
Operating profit
384
47
Finance income and expense
-
167
Income from related parties
3
58
-
Profit before tax
442
214
Taxation
(49)
30
Total profit for the period attributable to shareholders of the parent
393
244
Profit per share
Basic
2
1.53 p
0.10 p
Diluted
2
1.53 p
0.10 p
Consolidated statement of comprehensive income
30 June
30 June
2018
2017
£'000
£'000
Profit for the period
393
244
Other comprehensive income:
Items that will be reclassified subsequently to profit or loss:
Exchange differences on translation of foreign operations
(33)
(281)
Deferred tax on translation of foreign held assets
-
92
Total other comprehensive income
(33)
(189)
Total comprehensive income for the year attributable to shareholders of the parent
360
55
Consolidated balance sheet
30 June
30 June
2018
2017
£'000
£'000
Assets
Non-current assets
Property, plant and equipment
136
53
Goodwill
941
948
Intangible assets
1,307
1,156
Investments
3
-
Deferred tax
4
6
Trade and other receivables
111
92
2,502
2,255
Current assets
Trade and other receivables
855
948
Cash and cash equivalents
1,061
963
1,916
1,911
Total assets
4,418
4,166
Equity and liabilities
Equity
Issued capital
51
51
Share premium
145
145
Share based payment reserve
365
344
Foreign exchange reserve
245
278
Retained earnings
1,277
884
2,083
1,702
Current liabilities
Trade and other payables
2,313
2,464
Current tax
22
-
2,335
2,464
Total liabilities
2,335
2,464
Total equity and liabilities
4,418
4,166
Consolidated statement of changes in equity
Share capital
Share premium
Share based payment reserve
Foreign exchange reserve
Retained earnings
Total equity
£'000
£'000
£'000
£'000
£'000
£'000
At 1 July 2016
51
119
344
467
640
1,621
Equity settled share options
Share issues
-
26
-
-
-
26
Total transactions with owners
-
26
-
-
-
26
Profit for the period after tax
-
-
-
-
244
244
Other comprehensive income
Exchange differences on translation of foreign operations
-
-
-
(281)
-
(281)
Deferred tax on translation of foreign held assets
-
-
-
92
-
92
Total other comprehensive income
-
-
-
(189)
-
(189)
Total comprehensive income
-
-
-
(189)
244
55
At 30 June 2017
51
145
344
278
884
1,702
Equity settled share options
-
-
21
-
-
21
Total transactions with owners
-
-
21
-
-
21
Profit for the period after tax
-
-
-
-
393
393
Other comprehensive income
Exchange differences on translation of foreign operations
-
-
-
(33)
-
(33)
Total other comprehensive income
-
-
-
(33)
-
(33)
Total comprehensive income
(33)
393
360
At 30 June 2018
51
145
365
245
1,277
2,083
Consolidated cash flow statement
12 months to
30 June
12 months to
30 June
2018
2017
£'000
£'000
Cash flows from operating activities
Profit/(loss) for the year
393
244
Taxation
49
(30)
Net finance income in the income statement
-
(167)
Depreciation of property, plant & equipment
68
52
Amortisation
202
286
Profit on disposal of Investor Events
-
(56)
Profit on disposal of Equity Holdings
(53)
-
Adjustment to fair value of embedded derivative
-
225
Share based payments - options/warrants
21
-
Decrease in trade and other receivables
74
82
Decrease in trade and other payables
(151)
(119)
Net cash generated by continuing operations
603
517
Income tax (payable)/receivable
(27)
14
Net cash generated by operating activities
576
531
Cash flows from financing activities
Issue of share capital
-
26
Interest paid
-
-
Net cash generated/(used) by financing activities
-
26
Cash flows from investing activities
Payments for property plant and equipment
(151)
(37)
Purchase of intangibles
(353)
(379)
Sale of Investor Events
-
40
Receipt from related party
50
-
Net cash used by investing activities
(454)
(376)
Net decrease in cash and cash equivalents
122
181
Exchange differences
(24)
(61)
Net increase in cash and cash equivalents
98
120
Cash and cash equivalents at the start of the period
963
843
Cash and cash equivalents at the end of the period
1,061
963
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.
Three minor operating segments, for which IFRS 8's quantitative thresholds have not been met, are currently combined below under 'other'. The main sources of revenue for these operating segments is the provision of financial broking services, financial conference events and other internet services not related to financial information. Segment information can be analysed as follows for the reporting period under review:
2018
Provision of financial information
Other
Total
£'000
£'000
£'000
Revenue from external customers
8,900
301
9,201
Depreciation and amortisation
(388)
122
(266)
Other operating expenses
(7,984)
(567)
(8,551)
Segment operating (loss)/profit
528
(144)
384
Interest income
-
-
-
Interest expense
-
-
-
Segment assets
3,831
587
4,418
Segment liabilities
(2,196)
(139)
(2,335)
Purchases of non-current assets
444
60
504
2017
Provision of financial information
Other
Total
£'000
£'000
£'000
Revenue from external customers
7,814
372
8,186
Depreciation and amortisation
(465)
127
(338)
Other operating expenses
(7,380)
(421)
(7,801)
Segment operating (loss)/profit
(31)
78
47
Interest income
167
-
167
Interest expense
-
-
-
Segment assets
3,935
231
4,166
Segment liabilities
(2,430)
(34)
(2,464)
Purchases of non-current assets
313
103
416
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
2018
2018
2017
2017
UK (domicile)
3,466
1,547
3,288
1,278
USA
5,259
955
4,348
977
Other
476
-
550
-
9,201
2,502
8,186
2,255
Revenues are allocated to the country in which the customer resides. During both 2018 and 2017 no single customer accounted for more than 10% of the Group's total revenues.
Notes to the financial statements (continued)
2. Profit per share
12 months to
30 June
12 months to
30 June
2018
2017
£'000
£'000
Profit for the year attributable to equity shareholders
393
244
Total loss per share - basic and diluted
Basic
1.53 p
0.10 p
Diluted
1.53 p
0.10 p
Shares
Shares
Weighted average number of shares in issue for the year
25,523,845
25,612,338
Dilutive effect of options
100,000
-
Weighted average shares for diluted earnings per share
25,623,845
25,612,338
Where a profit has been recorded but the average share price for the year remains under the exercise price the existence of options is not dilutive
3. Disposal of Equity Holdings Ltd and Equity Development Ltd
Following the failure of Bashco Limited to make any payments to the Company for the acquisition of Equity Holdings Ltd and its subsidiary Equity Developments Ltd, the Company decided that it was not in its interests to take back the majority ownership of the disposed companies. The companies were not within the Group's core operations and disposal had been the correct decision. In order that the option to take back the disposed companies should lapse it was agreed between the parties that a payment be made by Bashco Ltd to ADVFN Plc amounting to a cash payment of £50,000 plus the issue to ADVFN Plc of shares amounting to a 30% stake in the disposed companies (as announced on 9 March 2018). These payments have now been received and the parties consider the transaction complete. The Directors have considered whether they have significant control over Equity Holdings as a result of this shareholding and have decided that this is not the case. The shareholding is therefore recognised as an available for sale financial asset within investments on the balance sheet.
4. Events after the balance sheet date
There are no 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 2018 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 2018 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.
ENDS
This information is provided by RNS, the news service of the London Stock Exchange. RNS is approved by the Financial Conduct Authority to act as a Primary Information Provider in the United Kingdom. Terms and conditions relating to the use and distribution of this information may apply. For further information, please contact rns@lseg.com or visit www.rns.com.ENDFR FKBDPPBDDFDK
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