RNS Number:2335R
INVU, Inc.
14 September 2005
Embargoed for release at 7am, 14th September 2005
Invu, Inc.
Interim Results for the Period Ended 31 July 2005
Invu, Inc., the document management software provider, announces its interim
results for the six month period ended 31 July 2005.
Financial Highlights
* Revenues up 65% compared to H1 2004
* Recurring revenues from INVUCare increased 137% to #0.45m (H1 2004:
#0.19m)
* Deferred revenues and sales provisions up to #0.85m (H1 2004: #0.63m)
* Maiden H1 profits recorded
* Overheads at 90% of turnover (H1 2004: 149%), demonstrating emerging
operational gearing
6 months ended 6 months ended
31 July 2005 31 July 2004
Turnover #1.68m #1.02m
Profit / (loss) for the period #0.07m #(0.58)m
Unrealised exchange (gain)/loss #(0.02)m #0.30m
Adjusted profit / (loss) #0.05m #(0.28)m
Earnings / (loss) per share 0.07p (0.61p)
Adjusted earnings / (loss) per share 0.05p (0.30p)
Operational Highlights
* 379 new customer sites, up 37% compared to H1 2004, including R K
Harrison, Sweet & Maxwell Group, Close Credit Management, Robert Brett
& Sons
* 5,198 new end users, up 35% compared to H1 2004
* 16 additional accredited partners recruited
* Repeat sales recorded from Persimmon Homes, Balfour Beatty, Power
Networks, Connaught Plc, Severn Trent Water, Collins Stewart (CI) Ltd,
Wincanton, London Merchant Securities and 59 other sites.
Daniel Goldman, Non Executive Chairman of Invu, commented:
"This has been an excellent half year's trading for Invu, with sustained revenue
growth and maiden first half profits. Invu continues to meet market
expectations. Beneath the headline performance there has been continued growth
in recurring revenues, and repeat orders from existing sites, which remain
central to our strategy for long-term profitable growth and increases my
confidence in Invu's future."
David Morgan, Chief Executive, added:
"We have continued to build on the foundations that were laid last year: further
expanding our sales and marketing team, launching the "Invu Promise" which aims
to provide world class levels of customer support and service, investing further
in the development of new products, and inexorably building our brand
recognition. The demand for our products grows strongly, and we continue to
demonstrate our ability to accelerate away from any competition."
Enquiries:
Invu, Inc. 01604 859893
Daniel Goldman, Non Executive Chairman
David Morgan, CEO
John Agostini, CFO
Financial Dynamics 020 7831 3113
James Melville-Ross
Hannah Sloane
Chairman's Statement
The first half of our financial year has seen further strong revenue growth
accompanied by maiden first half profits. During the period the Group launched
its new customer support programme, Invu Promises, an initiative which has been
warmly welcomed by our partners and customers. In addition further progress has
been made in developing the partner channel. This channel will benefit greatly
from the release of Version 6, expected during the second half of the year. None
of this activity has distracted us from the core of the business, which
continues to grow strongly. We look forward with optimism to the second half.
Turnover rose 65% during the first half, year on year. This growth, with the
continued high gross margins, enabled the Group to record its maiden first half
profit. Trading continues to be strong both from new and existing customers.
InvuCare revenues (annual maintenance contracts) have risen by 137% to #0.45m.
These figures include a 73% renewal rate for InvuCare contracts beyond the first
year. Deferred revenues and provisions have increased by 35% to #0.85m.
At the core of our strategy remains the building of a successful brand.
Recognition that Invu is becoming the vendor of choice amongst the SME market is
the result of this strategy and will underpin our growth in the years to come.
Following our initial investments last year which included the Invu Partner day
and public relations campaign, we have followed this up with further significant
press coverage and partner marketing programmes with our dealers.
Building on the success of last year, we expect this year to be equally
exciting, with continued strong growth in all of the key areas of our business.
As usual, we would expect a strong weighting to the second half.
On behalf of the Group, I would like once again, to thank our employees,
accredited partners, shareholders and advisors, without whom none of the success
is possible.
Daniel Goldman
Non Executive Chairman
Chief Executive's Statement
Introduction
Trading during the first half has been strong. Once again, all of Invu's key
performance indicators have improved during the period, including a 53% increase
in total customer sites to 1,662 (H1 2004: 1,087), and a 66% increase in the
total number of end users to 29,286 (H1 2004: 17,658).
We have also continued to consolidate our position within the SME channel. Many
of the partners accredited during 2004 have started to mature into successful
partners for Invu. As usual, the Group has taken an objective stance regarding
non-performing partners, resulting in the termination of agreements so that our
sales team can concentrate on those that are more successful.
Demand for our products remains strong and during the first six months on
average over 60 new customers have installed products each month in comparison
to 40 per month during 2004.
Financial Performance
Turnover for the period was #1.68m (2004: #1.02m), an increase of 65% on the
prior year. Recognised recurring revenues from InvuCare increased to #0.45m
during the first half as compared to #0.19m in the half-year ended 31 July 2004.
Gross profit margin during the first half improved slightly to 93.5% of turnover
(H1 2004: 92.9%). This is well in excess of our internal benchmark of 92%, and
reflected a slight change in product mix.
Technical and support expenditure, which includes research and development, was
#0.29m for the year (H1 2004: #0.26m). We continue to maintain an active
development programme, covering upgrades of core products and product
innovations. It is the Group's policy to direct research and development
according to the needs of the market, and to ensure that every new product
adheres to our core brand values of ease of use, high quality and price
performance. It is important to note that we adopt the policy of writing off
research and development costs as and when they occur.
Sales and marketing expenditure increased by 48% to #0.62m (H1 2004: #0.42m), or
37% of turnover (H1 2004: 41%), reflecting our determination to invest in sales
and marketing in order to build both turnover and brand recognition.
General and administrative expenses (excluding exchange gains) were #0.63m
during the first half compared with #0.54m for the first half last year. This
now represents 37% of turnover (H1 2004: 53%).
Operating profit for the 6 month period ended 31 July 2005 amounted to #0.06m
(H1 2004: loss #0.57m). As ever, our second half weighting will have a
disproportionately positive effect on profits.
The net profit after tax amounted to #0.07m (H1 2004: loss #0.58m), giving
earnings per share of 0.07p (H1 2004: loss 0.61p). Net profit after tax adjusted
for the unrealised exchange gain is #0.05m (H1 2004: loss #0.28m).
Cash flow from operations has improved significantly as compared to the
corresponding period in 2004. Cash balances have remained consistent with the
amount held at 31 January 2005. Debtor days have fluctuated during the period
between 86 and 181 days but despite these fluctuations the group recorded cash
receipts of over #2.2m during the first half (H1 2004: #1.2m). Debtor days now
stand at 106 days and credit control remains a constant area for close
management attention.
Creditors (excluding accruals and deferred revenue) of #0.61m (H1 2004: #0.72m)
were covered 5.6 times by current assets (H1 2004: 2.8 times covered). At 31
July 2005 shareholders funds were #2.29m compared to #0.9m at 31 July 2004.
The Group is virtually debt free and therefore effectively ungeared as at 31
July 2005.
Taking into account the ongoing investment in the business and accumulated
losses to date, the Board is not proposing the payment of an interim dividend.
Operations
Trading
Trading during the first half has been strong as reflected by the number of new
customers and partners. We now have an installed customer base of over 1,650
with almost 30,000 end users of our software. 66 existing customers extended
their use of Invu within their organisations during the half.
Amongst the new customers acquired during the half are RK Harrison, a leading
insurance brokerage, Close Credit Management, Sweet & Maxwell, a leading legal
and regulatory publisher and Robert Brett & Sons, a large construction materials
company. I am very pleased with the rate of new customer acquisition which
continues to be a key growth driver for the business.
Marketing
The company has launched several new initiatives during the year including Invu
Promises and most recently Invu Finance, in addition to Partner marketing
programmes for lead generation and PR.
Invu Promises is Invu's customer service and support programme, which aims to
provide an exemplary standard of support within the software industry. This year
we have launched and maintained new levels of dialogue with our customers and
partners, with bulletins, satisfaction surveys, random support call reviews and
distribution of a regular customer magazine. In addition to these, Promises is
an initiative designed to affect every aspect of Invu's relationship with its
customers, during the sales process, after-sales care and of course ongoing
support and maintenance. The initiative allows Invu to remain close to its
customers and partners ensuring that we maintain an intimate knowledge of their
current and future needs.
Invu Finance has just been launched in partnership with Syscap, the UK's leading
independent IT finance provider. This will give partners and customers access to
pre-credit cleared finance to make Invu even easier to purchase and deliver
faster returns on investment. This will be Invu branded with on-line finance
agreements ready to download for easy purchase process.
Both Invu Finance and Promises have been designed to fit with and support Invu's
core branding, which is built on ease of use, high quality and price
performance.
Invu continues to grow the partner channel successfully and has become the
dominant UK channel player for document management products in the SME market.
We have launched a new initiative this year partnering with business solutions
partners in key application areas. These have included Draycir and CGA. Draycir
was awarded Sage Developer of the Year in 2004 and has a range of add-on
products for Sage. CGA is a provider of business and financial solutions and is
working strongly with the SAP channel in the UK. Both Draycir and CGA have
completed initial testing of joint product offerings for the Sage and SAP
channel. We would expect further partnerships of this type to come on stream in
the coming months, giving us access into these significant markets.
Overseas Markets
Holland continues to be the only foreign market in which the Group is active.
Growth in Holland was in line with the growth of the Group. In particular, our
new relationship with Panasonic Netherlands has shown early promise with a
number of customer wins and implementations.
Following the introduction of Version 6 of the core Invu product, the Group can
start planning the penetration of further overseas markets including other
territories within continental Europe, as localisation becomes an inexpensive
and simpler process. This will be on an opportunistic basis in the first
instance, where we feel that the local partner can add significant value over
time.
Research & Development
The key goals for the rest of 2005 are the completed development of Version 6 of
the core products and the first commercialised product in the IPE range (IPE
stands for "Intelligent Processing Engine" and this technology recognises words,
numbers and layout of documents, automates indexing and launches routing of
documents with minimum human activity). Our expectation is for both of these
events to take place in the second half with a soft commercial launch at the
beginning of 2006. Both of these products have strategic importance for the
Group in the coming years and we will complete the strategic planning process
during the course of the second half. The impact of these products will start to
be felt during the 2006/7 financial year.
Outlook
This has been our strongest first half ever and we have experienced growth in
all areas of the business. The second half has started well and I am
particularly pleased with our improving cash generation.
Invu is now the lead brand for document management software in the UK's SME
market and it is our intention to consolidate and leverage this position during
the coming months and years. We have a strong, loyal and growing customer base,
and they are serviced and supported by Invu's stable, intelligent and highly
motivated team.
Given the strong progress that the Group has made during the first half, I am
confident that this will be another very successful year for the Group.
David Morgan
Chief Executive Officer
CONSOLIDATED PROFIT AND LOSS ACCOUNT
For the 26 weeks ended 31 July 2005
26 weeks 26 weeks 52 weeks
ended ended ended
31 July 31 July 31 January
2005 2004 2005
(unaudited) (unaudited) (audited)
#'000 #'000 #'000
Turnover 1,680 1,015 3,149
Cost of sales (109) (72) (165)
Gross profit 1,571 943 2,984
Distribution costs (151) (114) (223)
Administrative expenses (1,361) (1,397) (2,149)
Operating profit/(loss) on ordinary
activities before interest 59 (568) 612
Net interest 11 (8) (4)
Profit/(loss) on ordinary activities before taxation 70 (576) 608
Taxation on profit/(loss) on ordinary activities - - -
Profit/(loss) for the period transferred from reserves 70 (576) 608
Earnings/(loss) per ordinary share
Basic 0.07p (0.61p) 0.64p
Diluted 0.07p (0.61p) 0.64p
CONSOLIDATED BALANCE SHEET AT 31 JULY 2005
As at As at As at
31 July 31 July 31 January
2005 2004 2005
(unaudited) (unaudited) (audited)
#'000 #'000 #'000
Fixed assets
Tangible assets 178 120 152
Current assets
Stocks 211 168 151
Debtors 2,337 1,409 2,678
Short term deposits - 125 -
Cash at bank and in hand 902 324 894
3,450 2,026 3,723
Creditors: amounts falling due within one year (1,329) (1,241) (1,635)
Net current assets 2,121 785 2,088
Total assets less current liabilities 2,299 905 2,240
Creditors: amounts falling due after more than one year (14) (1) -
Net assets 2,285 904 2,240
Capital and reserves
Called up share capital - - -
Share premium account 6,269 5,562 6,269
Profit and loss account (3,984) (4,658) (4,029)
Shareholders' funds 2,285 904 2,240
CONSOLIDATED CASH FLOW STATEMENT
For the 26 weeks ended 31 July 2005
26 weeks 26 weeks 52 weeks
ended ended ended
31 July 31 July 31 January
2005 2004 2005
(unaudited) (unaudited) (audited)
#'000 #'000 #'000
Net cash inflow/(outflow) from operating activities 41 (279) (254)
Returns on investments and servicing of finance
Interest received 14 10 22
Interest paid (3) (17) (25)
Hire purchase contract interest paid - (1) (1)
Net cash inflow/(outflow) from returns on investments and
servicing of finance 11 (8) (4)
Capital expenditure and financial investment
Purchase of tangible fixed assets (39) (16) (83)
Sale of tangible fixed assets 5 - -
Net cash outflow from capital expenditure
and financial investment (34) (16) (83)
Management of liquid resources
Sale of short term deposits - 300 425
Net cash inflow from management of liquid resources - 300 425
Financing
Issue of share capital - - 736
Issue costs - - (29)
Repayments of borrowings (2) (790) (1,005)
Capital element of hire purchase contracts (8) (5) (14)
Net cash outflow from financing (10) (795) (312)
Increase/(decrease) in cash 8 (798) (228)
Reconciliation of net cash flow to movements in net funds
Increase/(decrease) in cash 8 (798) (228)
Net cash outflow from financing 2 790 1,005
Net cash outflow from hire purchase contracts 8 5 14
Net cash inflow from decrease in liquid resources - (300) (425)
Change in net funds from cash flows 18 (303) 366
Inception of hire purchase contracts (24) - -
Movement in net funds in the period (6) (303) 366
Net funds at beginning of period 885 519 519
Net funds at end of period 879 216 885
CONSOLIDATED STATEMENT OF TOTAL RECOGNISED GAINS AND LOSSES
For the 26 weeks ended 31 July 2005
26 weeks 26 weeks 52 weeks
ended ended ended
31 July 31 July 31 January
2005 2004 2005
(unaudited) (unaudited) (audited)
#'000 #'000 #'000
Profit/(loss) for the financial period 70 (576) 608
Currency differences on foreign currency net investments (25) 298 (257)
Total recognised gains and losses for the period 45 (278) 351
NOTES TO THE INTERIM FINANCIAL STATEMENTS
For the 26 weeks ended 31 July 2005
i The interim results have been prepared on the basis of the accounting
policies set out in the audited financial statements for the 52 weeks
ended 31 January 2005.
ii The calculation of earnings per share is based on the profit after
taxation for the period divided by 99,999,999 (31 July 2004:
93,994,595, 31 January 2005: 95,228,582) shares being the weighted
average number of shares in issue during the period.
iii The financial information set out above does not constitute financial
statements. The statutory financial statements for the year ended
31 January 2005 have been delivered to AIM and the auditor's report
on those financial statements was unqualified. The figures for the
year ended 31 January 2005 have been extracted from the statutory
financial statements for that year. The financial information for the
26 weeks ended 31 July 2005 and 31 July 2004 are unaudited.
iv This interim report is being sent to all shareholders and is available
to the public from the company's registered office.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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