TIDMAFN
RNS Number : 5355R
ADVFN PLC
29 October 2019
29 October 2019
For immediate release
ADVFN PLC
("ADVFN" or the "Company")
Audited Results for the Year Ended 30 June 2019
ADVFN, the global stocks and shares website, announces its
audited results for the year ended 30 June 2019.
Chief Executive's Statement
The financial year 2018/19 was a year of development that has
seen us adapt to a changing marketplace and begin to strengthen our
business by pushing forward with our US facing business. Work in
2017 was responsible for addressing negative developments in
equities, replacing revenue from equity-focused clients with
revenues from the growing Blockchain industry. We now have a strong
and comprehensive on-line Crypto information and data offering and
we expect that to lead to a range of opportunities going forward
providing us with additional revenue and a chance to grow the
website with new opportunities.
Thanks to these developments we hope to avoid both the effects
of Brexit but also the European Contracts and Markets Authority
(ESMA) which has had a significant impact on some of our customers
who focus on Contract for Difference (CFD) and spread betting. We
have therefore accelerated our investment in the future to try to
capitalise on the potential of a rebound for these clients
alongside the next phase of the blockchain development which is
recently showing a strong comeback.
Our US offering is now our largest audience and this year we
have spent significant time and money to build on our presence
there. We believe that this investment should start to bear fruit
in 2019 and significantly in 2020. We are very happy with progress
there and the product developments that will also begin to
impact.
Whilst it is hard to predict the future in such an uncertain
political business landscape, 2018/19 has been a significant year
for us in positioning ADVFN to grow. Although, in this year, the
overall market has shrunk, to compensate there is less competition.
We would prefer to be operating in a burgeoning market, but it
certainly helps to be one of the few places where a private
investor or Cryptocurrency trader can get real-time high-quality
information. We are one of a small number of destinations where
financial services companies can get access to a high value
audience for their offerings.
ADVFN and Investorshub has a large audience whose high aggregate
net worth, is at the core of our business and we have been working
hard to broaden our offering to take advantage of it.
At the end of this year we feel we are well positioned to
prosper in an environment many look at with trepidation and we are
looking forward to developments next year which we feel will
deliver a strong performance.
Clement Chambers
CEO
29 October 2019
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)
www.beaumontcornish.com
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.
We are assailed by a constant demand for price increases,
particularly in the costs for data licenses and exchange fees and
we continue to monitor this and adapt by deleting poor value
sources and bringing in new data in response.
Business Review
The website is the centre of ADVFN's business and it can be seen
at www.advfn.com. Our customer's demands on our website means we
must provide sophisticated, technically challenging material 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 for our business. The cost of provision of our kind of
service has proved prohibitive to many competitors over the
years.
Blockchain and Cryptocurrencies have allowed us to add new
information and create a whole new area to the website dedicated to
the needs of the growing global cryptocurrency audience for timely
and accurate data. This has enhanced the whole ADVFN/Investorshub
proposition.
In the UK our audience remains interested in Brexit and the
impact it may or may not have, which creates much interest in the
financial markets in the UK, which is to our advantage. ADVFN's
data / information sites are a very important window into the
world's financial markets that private investors in any part of the
globe can use to help manage their investing and trading
activities. We see opportunities for growth in many countries
around the world and we support markets in many of them, however,
at this time we are focused on developing audiences in the US, UK
and Brazil.
Operating Costs
Our main costs are relatively fixed, but licence and exchange
fees are continuing to rise which we monitor closely and have been
adapting our offering to compensate. We have removed some markets
and added others and have, up to now, seen no impact to our
business by rejecting exchanges that become too costly for their
profile. We have started to work closely with a select group of
markets to help them reach broader audiences and this is an
interesting opportunity for us.
Research and Development ("R&D")
Research and Development is what has allowed us to keep up with
a rapidly changing market. Technology is always changing,
competition appearing or disappearing, and we constantly strive to
be relevant by providing excellent services. It is this research
and development that is a key pillar for our future. The web and
mobile environments are also changing all the time and we have to
continue to move and evolve so that we can stay at the forefront of
what customers need.
Our R & D investment this year has been GBP360,000 (2018:
GBP353,000) and a substantial part 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
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
The last two decades have taught us that we must keep abreast of
an ever-changing market. Blockchain and Crypto Currencies are very
much part of this and our future. They are new areas in which new
business opportunities could open up where we can take the business
forward. We are also developing other products that broaden our
offering to both our users and our advertising customers and with a
stable revenue platform we look towards meaningful growth.
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:
2019 2019 2018 2018
Actual Target Actual Target
-------- -------- -------- --------
Turnover GBP8.7M GBP8.8M GBP9.2M GBP8.5M
-------- --------
Average head count 46 44 46 40
-------- -------- --------
ADVFN registered users 4.7M 4.6M 4.5M 4.2M
-------- -------- -------- --------
Turnover - is of vital importance as it gives the sales
department a goal and measures the financial success of the Group's
services. The target for 2019 was set so as to show a steady
improvement over the target for 2018 where the actual for 2018 had
been unexpectedly high.
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.
Principal risks and uncertainties
In addition to the principal risks summarised above, the
following are also considered to be principal risks and
uncertainties.
Economic downturn
We constantly face rapid change and may face many new potential
issues, including the outcome and impact of the Brexit negotiations
and the leaving process itself. This, mixed with many emerging
global economic pressures such as the US/China trade war, makes for
an abundance of uncertainty. Uncertainty is a driver of our
audience's engagement, so our future is somewhat hedged by this
against negative outcomes beyond our control.
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
The systems and technology that we use are always in development
and constantly requiring changes and upgrading. All our technology
and products are subject to technological evolution and could
become obsolete.
We constantly innovate and adopt new developments to keep up
with this inevitable change.
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 24 hours a day.
ON BEHALF OF THE BOARD
Clement Chambers
CEO
29 October 2019
Consolidated income statement
30 June 30 June
2019 2018
GBP'000 GBP'000
Revenue 8,714 9,201
Cost of sales (421) (392)
--------- --------
Gross profit 8,293 8,809
Share based payment (2) (21)
Amortisation of intangible assets (220) (202)
Other administrative expenses (8,546) (8,202)
--------- --------
Total administrative expenses (8,768) (8,425)
Operating (loss)/profit (475) 384
Finance income and expense (7) -
Income from related parties 5 - 58
Profit from sale of equity investment to
a related party 5 47 -
(Loss)/profit before tax (435) 442
Taxation 24 (49)
--------- --------
Total (loss)/profit for the period attributable
to shareholders of the parent (411) 393
Profit per share
Basic 4 (1.60 p) 1.53 p
Diluted 4 (1.60 p) 1.53 p
Consolidated statement of comprehensive
income
30 June 30 June
2019 2018
GBP'000 GBP'000
(Loss)/profit for the period (411) 393
Other comprehensive income:
Items that will be reclassified subsequently
to profit or loss:
Exchange differences on translation of
foreign operations 37 (33)
Total other comprehensive income 37 (33)
Total comprehensive income for the year
attributable to shareholders of the parent (374) 360
======== ========
Consolidated balance sheet
30 June 30 June
2019 2018
GBP'000 GBP'000
Assets
Non-current assets
Property, plant and equipment 145 136
Goodwill 978 941
Intangible assets 1,447 1,307
Investments - 3
Deferred tax - 4
Trade and other receivables 108 111
2,678 2,502
Current assets
Trade and other receivables 693 855
Cash and cash equivalents 887 1,061
-------- --------
1,580 1,916
Total assets 4,258 4,418
Equity and liabilities
Equity
Issued capital 51 51
Share premium 167 145
Share based payment reserve 367 365
Foreign exchange reserve 282 245
Retained earnings 835 1,277
-------- --------
1,702 2,083
Current liabilities
Trade and other payables 2,556 2,313
Current tax - 22
2,556 2,335
Total liabilities 2,556 2,335
-------- --------
Total equity and liabilities 4,258 4,418
======== ========
Consolidated statement of changes in equity
Share Share Share Foreign Retained Total
capital premium based exchange earnings equity
payment reserve
reserve
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
At 1 July 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 - 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 year 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
========= ========= ========= ========== ========== ========
Consolidated cash flow statement
12 months 12 months
to to
30 June 30 June
2019 2018
GBP'000 GBP'000
Cash flows from operating activities
Profit for the year (411) 393
Taxation (24) 49
Net finance income in the income statement 7 -
Depreciation of property, plant & equipment 81 68
Amortisation of intangible assets 220 202
Profit on disposal of equity investment
to a related party 5 (47) -
Profit on disposal of Equity Holdings
to a related party 5 - (53)
Share based payments - options/warrants 2 21
Decrease in trade and other receivables 134 74
Increase/(decrease) in trade and other
payables 243 (151)
Net cash generated by continuing operations 205 603
Income tax receivable/(payable) 2 (27)
---------- ----------
Net cash generated by operating activities 207 576
Cash flows from financing activities
Issue of share capital 22 -
Interest paid (7) -
Net cash generated by financing activities 15 -
Cash flows from investing activities
Payments for property, plant and equipment (90) (151)
Purchase of intangibles (360) (353)
Receipt from sale of equity investment
to a related party 50 50
Net cash used by investing activities (400) (454)
Net (decrease)/increase in cash and cash
equivalents (178) 122
Exchange differences 4 (24)
---------- ----------
Net (decrease)/increase in cash and cash
equivalents (174) 98
Cash and cash equivalents at the start
of the period 1,061 963
---------- ----------
Cash and cash equivalents at the end of
the period 887 1,061
========== ==========
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
Two additional standards have been adopted in these accounts,
the details of their application and the impact they have had on
the financial statement is as follow:
-- IFRS 15 - Revenue
The standard defines a new five step model to recognise revenue
from customers and replaces IAS 18 'Revenue', IAS 11 'Construction
contracts', IFRIC 13 'Customer loyalty programmes', IFRIC 15
'Agreements for the construction of real estate'. IFRIC 18
'Transfer of assets from customers' and SIC-3 'Revenue - Barter
transactions involving advertising services'.
The group has a number of income streams and the Directors have
examined the Group's revenue policy in detail as follows:
Subscriptions - both monthly and annual subscriptions are
offered and annual subscriptions are deferred on a time basis with
equal monthly transfers to the income statement.
Events - revenue from events is recognised at the time of the
event. There are no circumstances when the early payment of
entrance or stand fees entirely non-refundable.
Advertising - fees for advertising are recognised when the
service obligations are fulfilled. Where there are multiple
obligations amounts specific to that obligation are transferred to
the income statement.
The Directors have reviewed the standard and its effects in the
context of the Group's policy described above and the result is
that there will not be a significant impact on the Group's
revenue.
-- IFRS 9 Financial Instruments
The standard is a replacement for IAS 39 'Financial
Instruments'. The Group's financial assets consist of receivables
and the liabilities consist of payables. There are no material
borrowings.
Under the provisions of the standard the treatment of any
doubtful receivables will change to reflect an expected credit loss
rather than an incurred credit loss. The group will need to apply
an expected credit loss model when calculating impairment losses on
its trade and other receivables (both current and non-current).
This will result in increased impairment provisions and greater
judgement due to the need to factor in forward looking information
when estimating the appropriate amount of provisions. In applying
IFRS 9 the group must consider the probability of a default
occurring over the contractual life of its trade receivables and
contracts asset balances on initial recognition of those
assets.
The directors have reviewed the effects of adopting this
standard and the current year provision on an expected credit loss
basis is GBP70,000.
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 2019 financial statements
-- IFRS 16 Leases
The standard is effective for periods commencing on or after 1
January 2019 and will therefore be adopted no later than 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 directors continue to monitor the likely impact of the new
standard on the Group. If the standard were to be adopted during
the current financial period and applied to the operating leases
currently in the Group, the value of leases recognised as 'right of
use' assets on the balance sheet at 30 June 2019 would be in the
range GBP230,000 to GBP270,000. The impact on profit or loss will
be minimal as the operating lease charge will be replaced by an
interest expense on the lease liability and a depreciation charge
in administrative expense which together will approximate the
operating lease charge. There is a tendency for this method to
front load the expense but this is minimal in ADVFN's case.
Effects of changes in accounting policies
During the year the Group has adopted IFRS 9 "Financial
Instruments" and IFRS 15 "Revenue from contracts with
customers".
The adoption of IFRS 15 has not led to the need to restate prior
period figures. However the Company and Group has financial assets
at amortised cost that are subject to IFRS 9's new expected credit
loss model and was required to revise its impairment methodology
under IFRS 9 for this class of asset. As permitted by the
transitional provisions of IFRS 9, the Company elected not to
restate comparative figures. Any adjustments to the carrying
amounts of the financial assets were recognised in the opening
retaining earnings of the current period. The identified impairment
loss for the Company and the Group was immaterial. Applying the
expected credit risk model resulted in the recognition of a loss
allowance of GBP12,000 and GBP31,000 in the Company and Group
respectively in the year ended 30 June 2018.
All other accounting policies remain unchanged since the year
ended 30 June 2019.
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:
2019 Provision Other Total
of financial
information
GBP'000 GBP'000 GBP'000
Revenue from external customers 8,490 224 8,714
Depreciation and amortisation (360) 60 (300)
Other operating expenses (8,321) (568) (8,889)
-------------- -------- --------
Segment operating (loss)/profit (191) (284) (475)
Interest income - - -
Interest expense (7) - (7)
============== ======== ========
Segment assets 3,740 518 4,258
Segment liabilities (2,559) 3 (2,556)
Purchases of non-current assets 340 110 450
============== ======== ========
2018 Provision Other Total
of financial
information
GBP'000 GBP'000 GBP'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
============== ======== ========
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 Revenue Non-current
assets assets
2019 2019 2018 2018
UK (domicile) 2,925 1,679 3,466 1,547
USA 5,532 999 5,259 955
Other 257 - 476 -
8,714 2,678 9,201 2,502
======== ============ ======== ============
Revenues are allocated to the country in which the customer
resides. During both 2019 and 2018 no single customer accounted for
more than 10% of the Group's total revenues.
3. Profit per share
12 months 12 months
to to
30 June 30 June
2018 2017
GBP'000 GBP'000
(Loss)/profit for the year attributable to equity
shareholders (411) 393
Total loss per share - basic and diluted
Basic (1.60 p) 1.53 p
Diluted (1.60 p) 1.53 p
Shares Shares
Weighted average number of shares in issue for
the year 25,657,927 25,623,845
Dilutive effect of options - 100,000
----------- -----------
Weighted average shares for diluted earnings
per share 25,657,927 25,723,845
=========== ===========
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
dilutive.
4. Disposal of Equity Holdings Ltd and Equity Developments Ltd
GROUP AND COMPANY
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 during the year to 30 June 2018,
it was agreed between the parties that a payment be made by Bashco
Ltd to ADVFN Plc amounting to a cash payment of GBP50,000 plus the
issue to ADVFN Plc of shares amounting to a 30% stake in the
disposed companies. These payments were received and the parties
consider the transaction complete. The shareholding was therefore
recognised at fair value through profit or loss within investments
on the balance sheet at GBP3,000. On 15 June 2019 the investment
was sold back to Brian Basham, the owner of Equity Holdings Limited
and Equity Development Limited (a related party resulting from a
joint directorship) for GBP50,000 thus creating a profit the
Company of GBP47,000.
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 2019 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.
END
FR CKCDBOBDDQKB
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