Companies: AFN   

ADVFN shares hit a new year-high following further progress reported for the year to June by the online financial information provider. Turnover increased 38% to £2.3m, losses before tax fell from £2.5m to £1.2m and, 'more importantly' according to chairman Michael Hodges, the company reported its first annual 'EDITDA' profit, of £404,000. The group also received a welcome tax credit of £304,000 becuase of previously incurred losses. However, the best overall indication of ADVFN's growing financial health is the fact that its cash outflow fell from £2.4m to only £200,000 during the year, leaving a reasonably robust balance sheet showing net current assets of £704,000 - and with no long-term bank debt. It is an encouraging story, backed up by what is a strong brand within the UK financial scene. But the fact remains that the company's value on the market is demanding for a business with revenues of the size of ADVFN's and with no profits to report as yet. There is undoubted potential in the shares given that gross margins are almost 100% (normal for an e-tailer which ADVFN effectively is), but we would need much more proof that the current level of growth is sustainable in the long-term - and that profits will become an integral part of the story - before recommending the shares as a buy.