RNS Number : 1109D
ADVFN PLC
26 October 2020
26 October 2020
For immediate release
ADVFN PLC
("ADVFN" or the "Company")
Audited Results for the Year Ended 30 June 2020
ADVFN, the global stocks and shares website, announces its audited results for the year ended 30 June 2020.
Chief Executive's Statement
A lot has changed since the last year end and a lot has changed since the last interims. First, I want to draw your attention to the improved financial performance of ADVFN at the year-end compared to the end of the first half. Contrary to a difficult period following the COVID-19 outbreak, we have experienced an improved operating performance since then.
In the first half of the business year (the six months ended December 2019) and prior to any COVID-19 impact, we experienced an unexpected drop in advertising income as a result of which we decided to reorganise the business ahead of the potential of this becoming a long-term situation; staff numbers were reduced with a move in the UK to homeworking and the lease for office in Throgmorton Street was not renewed. As it happened, this drop in advertising income continued with the outbreak of the COVID-19 pandemic which has seen a global slump in advertising in line with what we had already experienced in the tail half of 2019.
Our reorganisation meant we have created a lower-cost platform for us to operate during the COVID-19 pandemic with no loss of operational capability during the lockdowns in either the UK or US. Our lower cost base and continuing subscriptions income has ensured we have long term visibility of the way ahead.
Meanwhile, as I have mentioned on several previous occasions, the occurrence of significant disruption economically or socially is seen as an emergency by investors which typically buoys up our general business so that the more drastic effects on the economy as a whole have, to a large extent, been attenuated for ADVFN.
Subscriptions income increased slightly in the second half and advertising has stabilised.
As I write I would be foolhardy to make brave positive predictions but, looking back over the last six months, I can stress that the whole ADVFN team has put in a massive effort and delivered a tremendous performance through challenging times. We will be aiming to continue the progress we have made in the second half if circumstances allow.
Clement Chambers
CEO
23 October 2020
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:
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.
We currently have no plans for expansion and will be operating in a defensive posture until the COVID-19 pandemic is well past.
Results
The loss for the financial year after tax amounted to £225,000 (2019: loss of £411,000). The Directors do not propose the payment of a dividend (2019: £nil).
Business Review
We are a website; it can be seen at www.advfn.com.
Our product is purely digital and could be called 'software as a service' (SAAS) and 'in the cloud' and run from various remote server hosting locations and as such it has experienced little need for operational change during the COVID-19 pandemic. Most of our workforce now work from home and will continue to do so permanently. This has helped us lower costs.
ADVFN is a technically challenging site which is subject to constant 24-hour maintenance and engineering. This is both a significant cost but also a wide defensive moat and barrier to entry to our business. It is a hugely complicated and expensive service to provide which has proved prohibitive to many competitors over the years. This is a strength in many ways but also a weakness in others.
We are always developing the service adding new and different data, Blockchain and Cryptocurrencies have proven popular and we expect decentralised finance (DeFi), a subset of the cryptocurrency segment, to be the next phase in this area. DeFi has experienced a boom and we already have a live data offering which we will be developing further over time. Expanding our offering opens up markets for us which helps us ride out periods of volatility, exemplified by the last 12 months.
Challenges ahead include the completion of BREXIT, the continuation of the COVID-19 pandemic, the tremendous political and economic aftermath all of which will affect our business model. Hopefully, the relationship of volatility to positive business will continue to buffer us from the worst effects.
Operating Costs
This year has seen us make a series of one-off cost cuts and we have reduced costs.
License and exchange fees
Many of our main costs are fixed, but the licence and exchange fees portion tend to continually rise. We monitor this closely and have been adapting our offering to compensate. We have removed some markets and added others and have, up to now, seen little impact to our business by rejecting exchanges that become too costly for their profile.
Office and staffing costs
During December and January, we reorganised our UK operation and reduced total head count to 38 at the end of June 2020 (compared to 68 in November 2019). In addition, we decided not to renew the lease for our Throgmorton Street offices which expired in March 2020.
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 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 £277,000 (2019: £360,000) 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 reduced losses through the COVID-19 pandemic suggests that ADVFN is a viable business for the longer term. Although we have not had many profitable years, we have operated for many without raising further capital, which cannot be said for many small listed companies, We have also provided our service to our customers for over 20 years which is also a rare achievement amongst our peer group. While it has been a very challenging year, we are able to look to the future with more certainty and prospects than earlier in the year.
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:
2020
2020
2019
2019
Actual
Target
Actual
Target
Turnover
£7.07M
£8.7M
£8.7M
£8.8M
Average head count
52
56
46
44
ADVFN registered users
4.8M
4.75M
4.7M
4.6M
Turnover - An important indicator that gives an overall view. The targets for 2020 were set before the drop in advertising we have reported, followed by COVID-19.
Head count - is a very significant part of the costs of the company and is fixed as an overhead. Talented people are a vital part of the business. As at the period end, total headcount numbered 38 (2019: 49).
Registered users - give us an accurate indication of our audience pool and the potential available for marketing our service. Whilst the number of registered users has increased, the drop in turnover we have experienced has resulted from the general fall in advertising business.
COVID-19
COVID-19 has caused many problems around the world. The UK has been badly affected in terms of the number of people that have died and in the earlier part of the year the shutdown of large parts of the economy. We acknowledge that the COVID-19 outbreak has posed significant challenges to business activities and introduced a high degree of uncertainty on the expected development of the pandemic and the associated knock-on effects to the economic and financial system, both at European and at international level. As such we are constantly looking at ways in which this could affect us. Fortunately, so far, while advertising sales have remained at low levels, we have not otherwise been adversely impacted by COVID-19 at an operating level since our staff were already working from home when the pandemic struck and our business model had already been adapted.
While not part of the financing strategy for the Group to carry loans, the Directors decided to take advantage of the short term finance offered under the Business Bounce Back loan scheme and the US equivalent to provide an additional source of funding whilst the economy rides out the effects of COVID-19. The loans are provided on advantageous terms with an interest and repayment free term. A total of £244,000 was drawn down during June 2020 and together with existing cash balances, total cash as at 30 June 2020 amounted to £915,000.
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 Company'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 Company'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 Company'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 Company.
.
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 company's employees;
• need to foster the company's business relationships with suppliers, customers and others;
• impact of the company's operations on the community and environment;
• desirability of the company maintaining a reputation for high standards of business conduct; and
• need to act fairly as between members of the company.
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 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 Company is entirely owned and controlled by the shareholders of ADVFN Plc and the shares of the company are traded on the Alternative Investment Market. The stakeholders of the Company 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 Company 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
23 October 2020
Consolidated income statement
30 June
30 June
2020
2019
£'000
£'000
Revenue
7,069
8,714
Cost of sales
(324)
(421)
Gross profit
6,745
8,293
Share based payment
-
(2)
Amortisation of intangible assets
(296)
(220)
Other administrative expenses
(6,769)
(8,546)
Total administrative expenses
(7,065)
(8,768)
Operating loss
(320)
(475)
Finance income/(expense)
(29)
(7)
Profit from sale of equity investment to a related party
-
47
Loss before tax
(349)
(435)
Taxation
124
24
Total loss for the period attributable to shareholders of the parent
(225)
(411)
Loss per share
Basic
(0.88 p)
(1.60 p)
Diluted
(0.88 p)
(1.60 p)
Consolidated statement of comprehensive income
30 June
30 June
2020
2019
£'000
£'000
Loss for the period
(225)
(411)
Other comprehensive income:
Items that will be reclassified subsequently to profit or loss:
Exchange differences on translation of foreign operations
23
37
Total other comprehensive income
23
37
Total comprehensive income for the year attributable to shareholders of the parent
(202)
(374)
Consolidated balance sheet
30 June
30 June
2020
2019
£'000
£'000
Assets
Non-current assets
Property, plant and equipment
365
145
Goodwill
1,002
978
Intangible assets
1,428
1,447
Trade and other receivables
-
108
2,795
2,678
Current assets
Trade and other receivables
574
693
Cash and cash equivalents
915
887
1,489
1,580
Total assets
4,284
4,258
Equity and liabilities
Equity
Issued capital
51
51
Share premium
167
167
Share based payment reserve
367
367
Foreign exchange reserve
305
282
Retained earnings
610
835
1,500
1,702
Non-current liabilities
Borrowing - bank loans
144
-
Borrowing - lease liabilities
94
-
238
-
Current liabilities
Trade and other payables
2,278
2,556
Borrowing - bank loans
80
-
Borrowing - lease liabilities
188
-
2,546
2,556
Total liabilities
2,784
2,556
Total equity and liabilities
4,284
4,258
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 2018 - as originally stated
51
145
365
245
1,277
2,083
Effect of the application of IFRS 9
-
-
-
-
(31)
(31)
51
145
365
245
1,246
2,052
Shares issued
-
22
-
-
-
22
Equity settled share options
-
-
2
-
-
2
Total transactions with owners
-
22
2
-
-
24
Loss for the period after tax
-
-
-
-
(411)
(411)
Other comprehensive income
Exchange differences on translation of foreign operations
-
-
-
37
-
37
Total other comprehensive income
-
-
-
37
-
37
Total comprehensive income
-
-
-
37
(411)
(374)
At 30 June 2019
51
167
367
282
835
1,702
Loss for the year 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
Consolidated cash flow statement
12 months to 30 June
12 months to 30 June
2020
2019
£'000
£'000
Cash flows from operating activities
Loss for the year
(225)
(411)
Taxation
(124)
(24)
Net finance income in the income statement
29
7
Depreciation of property, plant & equipment
177
81
Amortisation of intangible assets
296
220
Profit on disposal of equity investment to a related party
-
(47)
Loss on disposal of PPE
2
-
Share based payments - options/warrants
-
2
Decrease in trade and other receivables
227
134
(Decrease)/increase in trade and other payables
(278)
243
Net cash generated by continuing operations
104
205
Income tax receivable
124
2
Net cash generated by operating activities
228
207
Cash flows from financing activities
Issue of share capital
-
22
Drawdown loans
224
-
Interest paid
(29)
(7)
Net cash generated by financing activities
195
15
Cash flows from investing activities
Payments for property, plant and equipment
(117)
(90)
Purchase of intangibles
(277)
(360)
Receipt from sale of equity investment to a related party
-
50
Net cash used by investing activities
(394)
(400)
Net increase/(decrease) in cash and cash equivalents
29
(178)
Exchange differences
(1)
4
Net increase/(decrease) in cash and cash equivalents
28
(174)
Cash and cash equivalents at the start of the period
887
1,061
Cash and cash equivalents at the end of the period
915
887
1. Basis of preparation
The Group's financial statements have been prepared in accordance with IFRS as adopted by the European Union ('EU') and with those parts of the Companies Act 2006 that are relevant to the Group in preparing its accounts in accordance with EU adopted IFRS. While the financial information included in the announcement has been prepared in accordance with EU adopted IFRS, this announcement itself does not contain sufficient information to comply with EU adopted IFRS.
The consolidated and company financial statements have been prepared under the historical cost convention and are presented in Sterling rounded to the nearest thousand except where indicated otherwise.
Standards and amendments to existing standards adopted in these accounts
IFRS 16 Leases
The standard is effective for periods commencing on or after 1 January 2019 and has therefore been adopted for the period commencing 1 July 2019. The standard replaces IAS 17 and introduces a single lessee accounting model. Under the provisions of the new standard most leases, including the majority of those previously classified as operating leases, will be brought onto the financial position statement as a right-of-use asset and as an offsetting lease liability. Both asset and liability are based on present values of the lease payments due over the term of the lease with the asset being depreciated in accordance with IAS 16 'Property, plant and equipment' and the liability increased by the addition of interest and reduced as lease payments are made.
The result of the changes brought about by the standard means that the lease payment, which under the old standard appeared as an expense in the income statement, is now replaced by an interest charge and a depreciation charge. These will now be the amount of the expense in the income statement and will appear in the finance charge and administrative charges respectively.
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 2020 financial statements
IAS 1 Presentation of Financial Statements and IAS 8 Accounting policies, Changes in Accounting Estimates and Errors (Amendment - Definition of Material)
IFRS 3 Business Combinations (Amendment - Definition of Business)
Revised Conceptual Framework for Financial Reporting
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:
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
2019
Provision of financial information
Other
Total
£'000
£'000
£'000
Revenue from external customers
8,490
224
8,714
Depreciation and amortisation
(360)
60
(300)
Other operating expenses - restated see page 28
(8,321)
(568)
(8,889)
Segment operating (loss)/profit
(191)
(284)
(475)
Interest income
-
-
-
Interest expense
(7)
-
(7)
Segment assets - restated see page 28
3,740
518
4,258
Segment liabilities
(2,559)
3
(2,556)
Purchases of non-current assets
340
110
450
Revenue recognition per IFRS 15
Point in time
Over time
Total
£'000
£'000
£'000
Revenue during 2019
5,578
3,136
8,714
Revenue during 2020
3,697
3,354
7,051
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
2020
2020
2019
2019
UK (domicile)
3,111
1,625
2,925
1,679
USA
3,746
1,286
5,532
999
Other
212
-
257
-
7,069
2,911
8,714
2,678
Revenues are allocated to the country in which the customer resides. During both 2020 and 2019 no single customer accounted for more than 10% of the Group's total revenues.
3. Profit per share
12 months to 30 June
12 months to 30 June
2020
2019
£'000
£'000
Loss for the year attributable to equity shareholders
(225)
(411)
Total loss per share - basic and diluted
Basic
(0.88 p)
(1.60 p)
Diluted
(0.88 p)
(1.60 p)
Shares
Shares
Weighted average number of shares in issue for the year
25,703,845
25,657,927
Dilutive effect of options
-
-
Weighted average shares for diluted earnings per share
25,703,845
25,657,927
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 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 is over 2 years at 1% interest with a payment free period whilst the UK loan is at 2.5% over 6 years with an interest and payment free period. A total of £224,000 was drawn down during June 2020.
Lease liabilities
The new standard IFRS 16 Leases is effective for periods commencing on or after 1 January 2019 and has therefore been adopted for the period commencing 1 July 2019. The standard replaces IAS 17 and introduces a single lessee accounting model. Under the provisions of the new standard most leases, including the majority of those previously classified as operating leases, will be brought onto the financial position statement as a right-of-use asset and as an offsetting lease liability. Both asset and liability are based on present values of the lease payments due over the term of the lease with the asset being depreciated in accordance with IAS 16 'Property, plant and equipment' and the liability increased by the addition of interest and reduced as lease payments are made.
The result of the changes brought about by the standard means that the lease payment, which under the old standard appeared as an expense in the income statement, is now replaced by an interest charge and a depreciation charge. These will now be the amount of the expense in the income statement and will appear in the finance charge and administrative charges respectively.
The carrying value of the lease liabilities is included in the borrowing classification. There are no leases carried in the Company.
GROUP
2020
2019
£'000
£'000
Non-current
Bank loans
144
-
Lease liability
94
-
238
-
Brought forward
-
-
Cash flows
230
-
Interest and fees
8
-
As at 30 June
238
-
Current
Bank loans
80
-
Lease liability
188
-
268
-
Brought forward
-
-
Cash flows
255
-
Interest and fees
13
-
As at 30 June
268
-
5. Events after the balance sheet date
There are no 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 2020 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 2020 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
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