REG - ADVFN PLC - Final Results
10/11/2021 07:00
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RNS Number : 8574R ADVFN PLC 10 November 2021
10 November 2021
For immediate release
ADVFN PLC
("ADVFN" or the "Company")
Audited Results for the Year Ended 30 June 2021
ADVFN, the global stocks and shares website, announces its audited results for
the year ended 30 June 2021.
Chief Executive's Statement
We have good cause to be delighted to present the results to 30 June 2021.
Following our reorganisation in 2019 we have benefited from the silver lining
that has accompanied the very dark clouds of the Covid-19 Pandemic.
While the pandemic has boosted business there are other tailwinds pushing us
forwards.
There appears to have been an intersection of positive developments over this
financial year that have combined to boost our business, including the Covid
lockdowns and associated market disruptions, a boom in cryptocurrency markets
and the rise of a new generation of traders and investors. We have of course
worked hard to grow sales and control costs but the positive changes to
ADVFN's business environment cannot be understated. There are always a host of
difficult challenges to be faced and this year was no different, but we have
solved them at the same time as enjoying a number of positive developments.
Global actions to cope with the pandemic have raised interest in trading and
investing in markets and this has increased our subscriptions and advertising
revenues. Cryptocurrency prices and investor interest increased substantially
mid-year bringing another tailwind to support our progress. Meanwhile, our
firm belief is that the next generation of traders and investors have now
emerged and that this will represent a secular boost for us in the future.
This last factor is possibly more important than the previous two because
while emergencies come and go, and are always a business driver for us,
underlying those cycles is the size of the audience; the bigger that audience
the better our market.
In 2001, just after ADVFN was first floated on AIM, the stock market dotcom
crash effectively drove away a generation of traders who had entered the
markets as "privatisation novices" in the 1980s and 1990s and who exited the
stock market as a result of losses in the Dotcom bust. Consequently, ADVFN has
for much of its market existence operated against the headwinds of falling
private investor participation in share ownership and stock market trading.
However, we believe that falling trend has now reversed and that the next
generation of new investors is here and increasingly engaging with the
markets, initially through cryptocurrency interest but also responding to the
allure of Fintech developments and showing increased interest in stocks. This
is most clearly the case in the US, but it is also occurring elsewhere. This
is a positive development and we expect it to continue.
At the year-end both advertising and subscription income were up on the
previous year and consequently we have delivered a pre-tax profit of
£1,608,000.
Dividend Policy and maiden dividend
As we announced in August this year, while the Board will continue to deploy
the Group's cash resources to the growth of, and investment in, the business,
the Board has concluded that as a result of the much-improved financial
performance of the Group, the Company is now also in a position to adopt a
dividend policy to generate returns for shareholders. Our objective is to
provide shareholders with a stable flow of dividends balanced by a policy of
prudential capital management and the Board will adhere to a dividend cover
ratio of not less than 2 times profit after taxation attributable to
shareholders based on a rolling basis of 3 years commencing from 1 July 2020.
Accumulated earnings will be used to address short-term profit shortfalls that
may occur. In applying the dividend policy, the Board will have regard for a
range of factors including the macroeconomic outlook, business performance,
balance sheet and growth outlook of the Company and may exercise its
discretion and revise the calculated pay-out either up or down, to the extent
these factors substantially impact the Company.
For the 2021 financial year only, the Board is pleased to announce that the
Company will pay a maiden dividend of 1.5p pence per ordinary share payable as
per the timetable below:
- Ex dividend dated: 23 December 2021
- Record date: 24 December 2021
- Payment date: 24 January 2022
This maiden dividend is being made in respect of the whole of the 2021
financial year. Subsequently, the Board intends to pay dividends twice a year
in equal instalments on a semi-annual basis following the release of the
interim and full year financial results, the dates of which will be
communicated to shareholders with disclosure of the financial results.
Clement Chambers
CEO
9 November 2021
The annual report and accounts will shortly be sent to shareholders and will
be available on the Company's website, http://www.advfn.com
(http://www.advfn.com)
Enquiries:
For further information please contact:
ADVFN PLC +44 20 3868 670203
Clem Chambers
Beaumont Cornish Limited (Nominated Adviser)
www.beaumontcornish.com (http://www.beaumontcornish.com)
Roland Cornish/Michael Cornish +44 (0) 207 628 3396
The information contained within this announcement is deemed by the Company to
constitute inside information as stipulated under the Market Abuse Regulations
(EU) No. 596/2014 as it forms part of UK Domestic Law by virtue of the
European Union (Withdrawal) Act 2018. The person who arranged for the release
of this announcement on behalf of the Company was Clem Chambers, Director.
STRATEGIC REPORT
Financial Overview
These consolidated and company accounts have been prepared under applicable
law and International Accounting Standards (IAS) in conformity with the
requirements of the Companies Act 2006.
We currently plan to continue to remain on a steady course while retaining
perhaps a slightly defensive posture, remaining profitable, cashflow positive
and dividend paying.
Results
The profit for the financial year after tax amounted to £1,618,000 (2020:
loss of £225,000). The Directors have proposed the payment of a dividend
amounting to £391,730 (2020: £nil).
Business Review
ADVFN's websites have operated well through the COVID-19 pandemic, we continue
to be structured as a work from home organisation, experienced in maintaining
a complex cloud-based offering operating 24/7/365 around the globe. 'Work from
home' has helped us cut costs and maintain a very lean organization. Our site
infrastructure remains hugely technically demanding and remains a deep
defensive moat against competition. It also offers significant operational
leverage in times or revenue growth as can be seen by this year's results.
We continue to add news features and functionality and will continue to do so
under the company's current cost structure. Meanwhile, economic issues like
Covid and Brexit, for better or worse, seem to be settled. With or without
those factors, which are so important to so many, we feel very positive about
the prospects ahead.
Operating Costs
We continue to monitor the operating costs of the Group and there is currently
no plan for further significant change to our virtual organisation.
Research and Development ("R&D")
Research and Development is very important to us as the market we operate in
is constantly changing.
Technology development does not stop and, as such, nor can we. Especially as
many innovations break the infrastructure that worked before components of it
were 'improved'. Beyond the maintenance aspect of R&D, it is the research
and development of novel features and the need for scaling that is a key for
our future, because technology left alone decays. Web, exchange and mobile
environments are also changing all the time and we continue to evolve so that
we can stay relevant.
Our R & D investment this year has been £294,000 (2020: £277,000) and
all of this investment has been to develop the website and has been
capitalised. This constant investment ensures our web and mobile experience
remains up to date and fresh.
Environmental policy
As always, we continue to look for ways to develop in an environmental way. It
remains our objective to improve our performance in this area.
Future outlook for the business
Our improved operating performance and significant profit for the current year
despite the COVID-19 pandemic suggests that ADVFN continues to be a viable
business for the longer term. We have operated for many years without raising
further capital, which cannot be said for many small, listed companies, and we
have also provided our service to our customers for over 20 years, which is
also a rare achievement amongst our peer group. It has been a very challenging
year and will, no doubt, continue to be so in the future but we are well
placed to take advantage of any opportunities which come our way.
Summary of key performance indicators
Our key indicators have not changed, as they are an important part of the
business.
The Directors monitor the Key Performance Indicators on an ongoing basis. The
chart below shows the level of performance achieved in the financial year. The
individual items are as follows:
2021 2021 2020 2020
Actual Target Actual Target
Turnover £9.06M £8.70M £7.07M £8.70M
Average head count 38 42 52 56
ADVFN registered users 5.10M 5.00M 4.80M 4.75M
Turnover - An important indicator that gives an overall view of our place in
the market.
Head count - is a very significant part of the costs of the Group and is fixed
as an overhead. Talented people are a vital part of the business. As at the
year end, total headcount numbered 38 (2020: 52).
Registered users - give us an accurate indication of our audience pool and the
potential available for marketing our service.
COVID-19
We have been most fortunate as a company with little adverse impact on the
business resulting from the pandemic. We will continue to monitor the
situation and be prepared to change tactics as circumstances and advice arise.
Whilst the battle against COVID-19 has not been, and may never be, entirely
won, we are optimistic that there is light at the end of the tunnel.
People
I would like to thank the whole team at ADVFN who tirelessly provide a global
service for private investors 24 hours a day.
Directors' statement of responsibilities under section 172 Companies Act 2006
The Directors have considered the requirements of Section 172(1) of the
Companies Act 2006 to prepare a statement explaining how the Directors have
considered the wider stakeholder needs when performing their duties under
Section 172 of the Companies Act 2006.
The Directors consider the stakeholders to be the people who work for us, work
with us, invest with us, own us, regulate us and live in the societies we
serve. The Directors recognise that building strong relationships with our
stakeholders will help deliver the Group's strategy in line with the long-term
values. The Directors are committed to effective engagement with all of our
stakeholders and seek to understand the interests and views of the Group's
stakeholders by engaging with them directly as appropriate.
Depending on the nature of the issue in question, the relevance of each
stakeholder group may differ and, as such, as part of Group's engagement with
stakeholders, the Directors seeks to understand the relative interests and
priorities of each group and to have regard to these, as appropriate, in their
decision making. The Directors acknowledge, however, that not every decision
it makes will necessarily result in a positive outcome for all stakeholders.
The directors also challenge management to ensure all stakeholder interests
are considered in the day to day management and operations of the Group.
.
As part of their deliberations and decision making process, the Directors take
into account the following:
• the likely consequences of any decisions in the long term;
• interests of the Group's employees;
• need to foster the Group's business relationships with suppliers,
customers and others;
• impact of the Group's operations on the community and environment;
• desirability of the Group maintaining a reputation for high standards of
business conduct; and
• need to act fairly as between members of the Group.
As a result of these activities, the Directors believe that they have
demonstrated compliance with their obligations under s.172 of the Companies
Act 2006
Business
The Directors' aim for the Group is to be and remain a contributing and good
"Corporate Citizen".
Our business does not have a high carbon footprint and we consider it a
sustainable business. We try to ensure that our planet's precious resources
are used appropriately for the benefit of current and future generations. The
Board considers that the business and strategic decisions which it takes now,
in furtherance of the Group's business objectives, do not damage the global
environment.
Employees
The Group has a small number of employees but those it has are situated and
are deployed on the Group's business around the World. We ensure that we
comply with all local labour laws and apply what the Directors believe are
appropriate standards and systems to monitor and to ensure the welfare of
those employees.
Stakeholder engagement
The Group is entirely owned and controlled by the shareholders of ADVFN Plc
and the shares of the Group are traded on the Alternative Investment Market.
The stakeholders of the Group consist predominantly of the shareholders,
employees, advisers and suppliers. The Directors recognise the importance of
these relationships and take active steps to develop and strengthen them
through dialogue and engagement. These relationships are regularly monitored
at Board level.
Governance
Each Board meeting addresses compliance by the Group with its corporate
governance codes and reinforces the Board's requirement that its business be
conducted with integrity and with due regard for ethical standards.
ON BEHALF OF THE BOARD
Clement Chambers
CEO
9 November 2021
Consolidated income statement
30 June 30 June
2021 2020
Notes £'000 £'000
Revenue 9,059 7,069
Cost of sales (452) (324)
Gross profit 8,607 6,745
Share based payment (43) -
Amortisation of intangible assets (251) (296)
Other administrative expenses (6,849) (6,769)
Total administrative expenses (7,143) (7,065)
Government grant 162 -
Operating profit/(loss) 1,626 (320)
Finance income/(expense) (22) (29)
Other income 4 -
Profit/(loss) before tax 1,608 (349)
Taxation 10 124
Total profit/(loss) for the period attributable to shareholders of the parent
1,618 (225)
Profit/(loss) per share
Basic 3 6.28p (0.88 p)
Diluted 3 5.97p (0.88 p)
Consolidated statement of comprehensive income
30 June 30 June
2021 2020
£'000 £'000
Profit/(loss) for the period 1,618 (225)
Other comprehensive income:
Items that will be reclassified subsequently to profit or loss:
Exchange differences on translation of foreign operations (95) 23
Total other comprehensive income (95) 23
Total comprehensive income for the year attributable to shareholders of the
parent
1,523 (202)
Consolidated balance sheet
30 June 30 June
2021 2020
Notes £'000 £'000
Assets
Non-current assets
Property, plant and equipment 239 365
Goodwill 870 1,002
Intangible assets 1,562 1,428
Trade and other receivables 110 -
2,781 2,795
Current assets
Trade and other receivables 546 574
Cash and cash equivalents 1,939 915
2,485 1,489
Total assets 5,266 4,284
Equity and liabilities
Equity
Issued capital 52 51
Share premium 223 167
Share based payment reserve 343 367
Foreign exchange reserve 210 305
Retained earnings 2,295 610
3,123 1,500
Non-current liabilities
Borrowing - bank loans 4 54 144
Borrowing - lease liabilities 4 87 94
141 238
Current liabilities
Trade and other payables 1,886 2,278
Borrowing - bank loans 4 13 80
Borrowing - lease liabilities 4 103 188
2,002 2,546
Total liabilities 2,143 2,784
Total equity and liabilities 5,266 4,284
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 2019 51 167 367 282 835 1,702
Loss for the period after tax - - - - (225) (225)
Other comprehensive income
Exchange differences on translation of foreign operations
- - - 23 - 23
Total other comprehensive income - - - 23 - 23
Total comprehensive income - - - 23 (225) (202)
At 30 June 2020 51 167 367 305 610 1,500
Transactions with equity shareholders:
Share issues 1 56 - - - 57
Transfer on exercise - - (67) - 67 -
1 56 (67) - 67 57
Reprice share options 43 - - 43
Profit for the year after tax - - - - 1,618 1,618
Other comprehensive income
Exchange differences on translation of foreign operations
- - - (95) - (95)
Total other comprehensive income - - - (95) - (95)
Total comprehensive income - - - (95) 1,618 1,523
At 30 June 2021 52 223 343 210 2,295 3,123
Consolidated cash flow statement
12 months to 12 months to
30 June 30 June
2021 2020
Notes £'000 £'000
Cash flows from operating activities
Profit for the year 1,618 (225)
Taxation (10) (124)
Net finance income in the income statement 22 29
Depreciation of property, plant & equipment 167 177
Amortisation of intangible assets 251 296
Forgiveness of US loan (174) -
Loss on disposal of PPE - 2
Share based payments - options/warrants 43 -
(Increase)/decrease in trade and other receivables (72) 227
Decrease in trade and other payables (392) (278)
Net cash generated by continuing operations 1,453 104
Income tax receivable - 124
Net cash generated by operating activities 1,453 228
Cash flows from financing activities
Issue of share capital 57 -
Drawdown loans 4 17 224
Repay lease liability 4 (92) -
Lease interest paid (19) -
Other interest paid (3) (29)
Net cash generated by financing activities (40) 195
Cash flows from investing activities
Payments for property, plant and equipment (39) (117)
Purchase of intangibles (385) (277)
Net cash used by investing activities (424) (394)
Net increase in cash and cash equivalents 989 29
Exchange differences 35 (1)
Net increase in cash and cash equivalents 1,024 28
Cash and cash equivalents at the start of the period 915 887
Cash and cash equivalents at the end of the period 1,939 915
1. Basis of preparation
The consolidated and company financial statements are for the year ended 30
June 2021. They have been prepared under applicable law and International
Accounting Standards (IAS) in conformity with the requirements of the
Companies Act 2006 as at 30 June 2021. Whilst the financial information
included in the announcement has been prepared in accordance with
International Accounting Standards (IAS) in conformity with the requirements
of the Companies Act 2006, this announcement itself does not contain
sufficient information to comply with International Accounting Standards (IAS)
in conformity with the requirements of the Companies Act 2006.
The consolidated and company financial statements have been prepared under the
historical cost convention and are presented in Sterling rounded to the
nearest thousand (£'000) except where indicated otherwise.
Standards and amendments to existing standards adopted in these accounts
IAS 1 Presentation of Financial Statements and IAS 8 Accounting policies,
Changes in Accounting Estimates and Errors (Amendment - Definition of
Material)
Interest Rate Benchmark Reform - IBOR 'phase 2' (Amendments to IFRS 7)
IFRS 3 Business Combinations (Amendment - Definition of Business)
Revised Conceptual Framework for Financial Reporting
COVID-19 Related Rent Concessions (Amendments to IFRS 16)
Standards, amendments and interpretations to existing standards that are not
yet effective and have not been early adopted by the Company in the 30 June
2021 financial statements
Onerous Contracts - Cost of Fulfilling a Contract (Amendments to IAS 37)
Property Plant and Equipment: Proceeds before intended use. (Amendments to IAS
16)
Annual improvements to IFRS Standards 2018-2020
References to Conceptual Framework (Amendments to IFRS 3)
Classification of liabilities as Current or Non-current (Amendments to IAS 1)
IFRS 17 - Insurance Contracts
Amendments to IFRS 17 - Insurance Contracts; and Extension of the Temporary
Exemption from Applying IFRS 9 (Amendments to IFRS 4 Insurance Contracts)
Disclosure of Accounting Policies (Amendments to IAS 1 Presentation of
Financial Statements and IFRS Practice Statement 2 Making Materiality
Judgements)
Definition of Accounting Estimates (Amendments to IAS 8 Accounting Policies,
Changes in Accounting Estimates and Errors)
Deferred Tax related to Assets and Liabilities arising from a Single
Transaction (Amendments to IAS 12 Income Taxes)
The Directors continue to monitor developments in the accounting standards
they see as relevant but do not believe that these changes will significantly
impact the Group.
2. Segmental analysis
The directors identify operating segments based upon the information which is
regularly reviewed by the chief operating decision maker. The Group considers
that the chief operating decision makers are the executive members of the
Board of Directors. The Group has identified two reportable operating
segments, being that of the provision of financial information and that of
other services. The provision of financial information is made via the Group's
various website platforms.
The parent entities operations are entirely of the provision of financial
information.
Three minor operating segments, for which IFRS 8's quantitative thresholds
have not been met, are currently combined below under 'other'. The main
sources of revenue for these operating segments is the provision of financial
broking services, financial conference events and other internet services not
related to financial information. Segment information can be analysed as
follows for the reporting period under review:
2021 Provision of financial information Other Total
£'000 £'000 £'000
Revenue from external customers 9,020 39 9,059
Depreciation and amortisation (408) (21) (429)
Other operating expenses (6,763) (403) (7,166)
Other operating income 162 - 162
Segment operating (loss)/profit 2,011 (385) 1,626
Interest income - - -
Interest expense (21) (1) (22)
Segment assets 4,451 815 5,266
Segment liabilities (2,113) (30) (2,143)
Purchases of non-current assets 424 - 424
2020 Provision of financial information Other Total
£'000 £'000 £'000
Revenue from external customers 7,034 35 7,069
Depreciation and amortisation (426) (41) (467)
Other operating expenses (6,482) (440) (6,922)
Segment operating (loss)/profit 126 (446) (320)
Interest income - - -
Interest expense 29 - 29
Segment assets 3,671 613 4,284
Segment liabilities (2,755) (29) (2,784)
Purchases of non-current assets 581 95 676
Revenue recognition per IFRS 15
Point in time Over time Total
£'000 £'000 £'000
Revenue during 2020 3,715 3,354 7,069
Revenue during 2021 5,266 3,793 9,059
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
2021 2021 2020 2020
UK (domicile) 3,655 1,734 3,111 1,515
USA 5,240 1,047 3,746 1,280
Other 164 - 212 -
9,059 2,781 7,069 2,795
Revenues are allocated to the country in which the customer resides. During
both 2021 and 2020 no single customer accounted for more than 10% of the
Group's total revenues.
3. Profit per share
12 months to 12 months to
30 June 30 June
2021 2020
£'000 £'000
Profit/(loss) for the year attributable to equity shareholders 1,618 (225)
Total loss per share - basic and diluted
Basic 6.28p (0.88 p)
Diluted 5.97p (0.88 p)
Shares Shares
Weighted average number of shares in issue for the year 25,773,739 25,703,845
Dilutive effect of options 1,336,807 -
Weighted average shares for diluted earnings per share 27,110,546 25,703,845
Where a loss has been recorded for the year the diluted loss per share does
not differ from the basic loss per share. Where a profit has been recorded but
the average share price for the year remains under the exercise price the
existence of options is not normally dilutive. However whilst the average
exercise price of all outstanding options is above the average share price
there are a number of options which are not. Under these circumstances those
options where the exercise price is below the average share price are treated
as dilutive.
4. Interest bearing borrowings
Bank loans
As a result of the COVID-19 pandemic the Directors considered it prudent to
take further steps to ensure that short term cashflow did not present a
problem for the Group. Short term finance offered under the Business Bounce
Back loan scheme and the US equivalent has provided an additional layer of
protection whilst the economy rides out the effects of the pandemic. The US
loan was drawn down on the basis that the loan would be over 2 years at 1%
interest with a payment free period. However, this loan has now been
'forgiven' by the US Government and has become a grant, The UK loan is charged
at 2.5% over 6 years with an interest and payment free period for the first 12
months.
Lease liabilities
The carrying value of the lease liabilities is included in the borrowing
classification. There are no leases carried in the Company. For further
details please see Note 21
GROUP
2021 2020
£'000 £'000
Non-current
Bank loans 54 144
Lease liability 87 94
141 238
Brought forward 238 -
Cash flows (106) 230
Interest and fees 9 8
As at 30 June 141 238
Current
Bank loans 13 80
Lease liability 103 188
116 268
Brought forward 268 -
Cash flows (160) 255
Interest and fees 8 13
As at 30 June 116 268
5. Events after the balance sheet date
On 5 July 2021 the Directors proposed a dividend amounting to £391,730 which is at the rate of approximately 1.5 pence per share. There are no other events of significance to report occurring after the balance sheet date.
6. Publication of non-statutory accounts
The financial information set out in this preliminary announcement does not
constitute statutory accounts as defined in section 435 of the Companies
Act 2006.
The consolidated balance sheet at 30 June 2021 and the consolidated income
statement, consolidated statement of comprehensive income, consolidated
statement of changes in equity, consolidated cash flow statement and
associated notes for the year then ended have been extracted from the
Company's 2021 statutory financial statements upon which the
auditors' opinion is unqualified and does not include any statement under
Section 498(2) or (3) of the Companies Act 2006.
The annual report and accounts will shortly be sent to shareholders and will
be available on the Company's website, http://www.advfn.com
(http://www.advfn.com) .
ADVFN Capital Markets Event - Clem Chambers, CEO of ADVFN, will be providing
a live company presentation for analysts and investors on Thursday,
11(th) November at 2pm. The event will be hosted by the London Stock
Exchange on its Spark Live Platform and will encompass an update on current
trading and strategy, provide details on the company's maiden dividend and
present ADVFN's full year results. It will conclude with a Q&A session.
Register interest here:
https://www.lsegissuerservices.com/spark/ADVFN/events/af99e8e4-22a6-4367-a4ad-2766635588ea
(https://www.lsegissuerservices.com/spark/ADVFN/events/af99e8e4-22a6-4367-a4ad-2766635588ea)
Analysts wishing to participate in the call and receive a dial in code should
email: ir@advfnplc.com (mailto:ir@advfnplc.com) .
ENDS
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