RNS Number:2649J
INVU, Inc.
21 September 2006
21st September 2006
Invu, Inc.
Interim Results for the Period Ended 31 July 2006
Invu, Inc., the document management software provider, announces its interim
results for the six month period ended 31 July 2006.
Financial Highlights
* Revenues up 23% on H1 2005
* Adjusted profit* up 29% on H1 2005
* Recurring revenues from INVUCare increased 36% to #0.62m (H1 2005: #0.45m)
* Deferred revenues and sales provisions up to #1.25m (H1 2005: #0.85m)
* Net cash inflow from operating activities increased to #0.28m
(H1 2005: #0.04m)
+------------------------------------------------------------------------------------------------------------+
| 6 months ended 6 months ended |
| 31 July 2006 31 July 2005 |
| |
| Turnover #2.07m #1.68m |
| Adjusted Profit* #0.06m #0.05m |
| Profit after tax after FRS 20 treatment #0.00m #0.06m |
| Earnings per Share 0.00p 0.06p |
| Adjusted Earnings Per Share* 0.06p 0.05p |
| |
| |
| *Adjusted for unrealised exchange gains and share option costs |
| |
+------------------------------------------------------------------------------------------------------------+
Operational Highlights
* Series 6 (.NET) version of Invu document management launched at the
end of the period
* Distribution contracts signed for South East Asia
* 319 new customer sites, including Siemens Financial Services Ltd,
British Standards Institute, Close Private Bank, Chelsea F.C.,
Iron Mountain.
* 129 repeat sales, including Persimmon Homes, Drive Assist, British
Waterways, Collins Stewart (CI) Ltd, Towergate Partnership
* 6,551 new end users, up 26% compared to H1 2005
* 25 new accredited partners recruited
Post period end
* OEM agreement signed with Sage, whereby Sage will sell Invu's document
management product to the accountancy and professional services markets
Daniel Goldman, Non Executive Chairman of Invu, commented:
"I am very pleased with the Group's performance in the first half, which has
grown in both revenues and profits. We have signed a number of significant
customer sites, strengthened our position in a number of vertical markets and
continued to build the number of new end users. The business continues to show
steady, solid growth.
"We were delighted to announce after the period end that following a rigorous
selection process Invu has been chosen as OEM partner for Sage's document
management offering for the professional services market in the UK. This is an
important recognition of the growing demand for document management solutions
alongside other mainstream business applications. This achievement has been
facilitated by the release of Series 6, which has created excitement within our
existing channel and is opening many new avenues for Invu to grow and develop.
Invu is uniquely positioned to leverage the platform for further significant and
profitable growth."
David Morgan, Chief Executive, added:
"Building on last year's launch of the "Invu Promise", which aims to provide
world class levels of customer support and service, Invu has continued to build
its brand awareness and to broaden its appeal to the SME and departmental
corporate markets. The recent agreement with Sage is testament to the quality of
the Invu product and the underlying professionalism of the Invu sales,
development and support teams."
Enquiries:
Invu, Inc. 01604 859893
Daniel Goldman, Non Executive Chairman
David Morgan, CEO
John Agostini, CFO
Financial Dynamics 020 7831 3113
Juliet Clarke
Hannah Sloane
About Invu
Invu (LSE, AIM, Symbol; NVUK) develops, markets and sells software (under the
brand name of Invu) for the electronic management of all types of information
and documents, such as forms, correspondence, literature, faxes, e-mail,
technical drawings, electronic files and web pages. Invu targets the
small-to-medium size enterprise ("SME") market and individual departments of
larger organisations with a range of products which the Directors believe
strongly adhere to Invu's brand values of ease of use, high quality and price
performance. Founded in 1997 and based in Northampton, Invu has 55 employees
and operates in the UK, Ireland and The Netherlands. Invu's products have been
sold to nearly 2,300 customers, representing approximately 45,000 licensed
users. It raised over #3.5 million following its flotation on the AIM stock
market in January 2004.
Invu is a member of the Business Application Software Developers Association
(BASDA) and its version 5.4 software has recently been accredited by the
Institute of Chartered Accountants in England & Wales (ICAEW).
For more information on Invu see http://www.invu.net
Chairman's Statement
During the first half of the year the Group has continued to grow revenues both
with existing and new customers. In addition there has been further strong
growth in recurring revenues in the form of INVUCare, which continues to
underpin our future growth and profitability.
In addition to the reliably steady growth of the Group, there have been several
key strategic developments this year; central amongst them is the launch of the
Series 6 product, based on Microsoft's .Net. In addition to upgrading the
product features for our core markets, this new architecture allows the Group to
explore new marketing channels and strategies, aligning our product set with
other leading business applications.
A first implementation of this strategy is the OEM agreement signed with Sage.
This is an enormous testament to the product, but no less so to the Invu team,
who provided their full support from every area of the business in order to
ensure a successful launch. We look forward to similar relationships in the
future.
Looking further afield, the Group developed its international strategy, with an
excellent performance in Holland and the initiation of a market presence in
South East Asia. Whilst it is not expected to contribute significant revenues
immediately, this expansion is a first step towards building brand and presence
in these exciting emerging markets.
I remain confident about the business and look forward to a strong performance
in the second half.
I would like to thank all of the employees for their efforts during the first
half and congratulate them on their achievements. Thanks also to our partners,
advisors and shareholders for their continued support.
Daniel Goldman
Non Executive Chairman
Chief Executive's Statement
Introduction
Trading during the first half has been strong, demonstrating the growing
awareness of the Invu brand and recognition of its leading position in the
market. During the first half 6,551 seats were deployed at 448 customer sites.
We have seen early interest from the channel in anticipation of the release of
Series 6, which is likely to result in accelerated growth during the second
half. Since 31 January 2006, the total number of customer sites has increased by
16% to 2,322, with the total number of end users rising by 17% to 44,707.
We have also continued to consolidate our position within the SME channel, and
now have 132 resellers selling into key vertical markets, both established and
emerging (H1 2005: 127). Many of the partners accredited during 2005 have
started to mature into successful partners for Invu. This has resulted in a
larger number of more significant partners, with no single partner representing
more than 20% of turnover. This is part of our ongoing strategy to develop a
successful and sustainable channel for our products. 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 the
average number of sites buying software has remained consistent with the
previous year at an average of 75 per month.
Financial Performance
Turnover for the period was #2.07m (H1 2005: #1.68m), an increase of 23% on the
prior year. Recognised recurring revenues from InvuCare increased to #0.62m
during the first half, compared to #0.45m in the half-year ended 31 July 2005.
Gross profit margin during the first half was 92.5% of turnover (H1 2005:
93.5%). This is still in excess of our internal benchmark of 92%, and reflected
the provision of sub-contracted scanning services and hardware at a small number
of sites. Management expects gross margin to increase during the second half and
remain consistent with previous years.
Technical and support expenditure, which includes research and development,
technical support and professional services, was #0.40m in the first half (H1
2005: #0.29m), reflecting increased levels of investment in research and
development in anticipation of the launch of Series 6, a major technology
upgrade of the product. In addition there is natural growth within our support
team delivering InvuCare to our growing customer base. We will continue to
maintain an active development programme, covering upgrades of core products and
product innovations, although we do not foresee any further requirements to
significantly increase headcount in the near future. It continues to be 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
our policy is to write off research and development costs as and when they
occur.
Sales and marketing expenditure increased by 21% to #0.75m (H1 2005: #0.62m), or
36% of turnover (H1 2005: 37%), reflecting our determination to invest in sales
and marketing in order to build both turnover and brand recognition in the UK
and overseas.
General and administrative expenses, excluding exchange gains and share option
costs, were #0.72m during the first half compared with #0.63m for the first half
last year. This now represents 35% of turnover (H1 2005: 37%).
This period is the first time that the Group is required to report under FRS 20.
Under this standard, share-based incentives provided to employees are assessed
by reference to fair value using an option pricing model which takes into
account expected future movements in the Group's share price. This fair value is
then amortised through the profit and loss account over the vesting period of
the options. The half year charge of #0.064m is based on the number of unvested
options as at 31 January 2006 (restated H1 2005: #0.01m). This charge does not
represent a cash cost to the Group. The full year charge is expected to be
#0.11m, which has not been reflected to date in analyst summaries.
Operating profit before unrealised exchange differences and share option costs
for the 6 month period ended 31 July 2006 amounted to #0.043m (H1 2005:
#0.034m). Net profit before unrealised exchange differences and share option
costs for the first half amounted to #0.058m (H1 2005: #0.045m).
The advent of FRS 20 has resulted in a net profit after tax of #Nil (restated H1
2005: #0.06m), giving earnings per share of 0.00p (restated H1 2005: 0.06p). As
ever, our second half weighting will have a disproportionately positive effect
on profits.
Net cash inflow from operations was #0.28m, a significant improvement when
compared to #0.04m for the corresponding period in 2005. Cash balances have
improved considerably since 31 January 2006 to #1.9m, although this does include
an erroneous tax refund of #0.86m. Debtor days remain a focus for improvement
but cash collections are encouraging and management initiatives are starting to
take effect.
Creditors (excluding accruals, and deferred revenue) of #1.76m (H1 2005: #0.61m)
were covered 3.4 times by current assets (H1 2005: 5.6 times covered). However,
if one excludes the tax rebate of #0.86m refunded in error which is included in
both creditors and cash, then creditors are covered 5.7 times by current assets.
At 31 July 2006 shareholders' funds were #3.54m compared to #2.29m at 31 July
2005.
The Group is virtually debt free and therefore effectively ungeared as at 31
July 2006.
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 2,322
with 44,707 end users of our software. 129 (2005: 67) existing customers
extended their use of Invu within their organisations during the first half.
Amongst the new customers acquired during the half are Siemens Financial
Services Ltd, British Standards Institute, Close Private Bank, Chelsea F.C., and
Iron Mountain.
Sales & Marketing
The first half has seen further maturation of a growing number of partners. We
have continued to recruit and train new partners in H1 and expect to see them
produce revenues in H2. In addition to the normal activity of joint lead
generation, we invested in technology in H1 to support the marketing efforts of
our partners. We have written and published an extranet which provides a full
range of materials to help our partners deliver the right messages to the market
to generate interest, end user pull, and brand awareness. In addition we have
given special attention to the potential of increasing sales of our software to
existing customers.
We expect the brand to be further strengthened by the OEM agreement signed with
Sage on 14th August 2006. This follows the accreditation received from SAP at
the end of 2005. Together these endorsements from leading business software
vendors will accelerate the process of brand recognition within the SME market.
We have invested a considerable amount of management time and effort in the
relationship during H1. Invu was selected by Sage after extensive comparison
with other products, and will be sold into the professional services market
under the title "Sage Document Management - Powered with Invu".
In addition to the potential revenues generated, we see this market as
strategically important. Sage has some 14,000 accountants as current customers,
and market research has shown that accountants, in turn, advise their own
clients on matters including the use of technology to increase business
efficiency. This is particularly prevalent within the SME market. Therefore, we
believe that the viral effect of Invu's advance into this market will be
beneficial. Lastly, we believe that our partner channel will benefit greatly
from the wider recognition of the brand and vindication of the product.
Nevertheless, we will review the effect on revenues only after we fully
understand the rate of take up and sales of the product in the market.
During H1 we established a sales academy, and recruited three people into a
formal sales apprentice scheme. This effectively puts the trainees through a
learning process on selling and marketing 'The Invu Way', and helps to ensure
that we have continuity in our sales team. It is anticipated that successful
graduates of the programme may eventually occupy senior sales roles within our
partner channel.
H2 will see the sales team reorganised to recognise the split in skills and
resources needed for managing large partners on the one hand, and formal
training and measurement of new partners on the other.
Overseas Markets
During the first half the Group initiated distribution agreements within several
Asian territories, including Malaysia and Singapore. This is an initial step to
create a presence within these and other exciting Asian markets, and affords
long term growth opportunities for the Group. We expect to see some early wins
in H2.
In addition to the above our subsidiary in Holland has made good progress during
the first half and again represents about 10% of Group turnover.
Research & Development
Inevitably, following the release of a major new piece of technology like Series
6 (produced on the .NET platform), there is a flurry of activity in collecting
and collating feedback from our partners and users. This takes the form of a
wish list which Invu will then prioritise and schedule the release of service
packs (regular functional upgrades) in response to the market.
I am pleased to report that the launch of Series 6 has been successful, with
customers and partners alike. H1 witnessed a major team effort by our
development and support staff in order to bring the product to successful launch
and H2 will see the same team training partners and producing upgrades to Series
6, satisfying market demand.
The .NET platform has added power, flexibility and functionality, and the
ability to explore translation and localisation into foreign languages. During
H2 we will embark on the initial work to prepare the product for such
translation.
After piloting Invu IPE (Intelligent Processing Engine) during the last twelve
months, the product will be integrated into Series 6 over the course of H2 and
we expect this to become core functionality in 2007. This will add significant
benefits to the product, providing the ability to intelligently recognise words
and phrases on documents for automatic indexing and workflows.
Outlook
I am pleased to report that the growth of the Group continues steadily. We will
continue to address our key verticals and believe that the opportunities within
the SME market remain as strong as ever.
The importance of the release of Series 6 and signing of the OEM agreement with
Sage cannot be underestimated. Both of these events will help to secure our
position as market leader for document management software and move the Invu
product suite towards mainstream credibility within the UK SME market.
I am very excited about the prospects of the Group and look forward to further
success in the second half of the year.
David Morgan
Chief Executive Officer
CONSOLIDATED PROFIT AND LOSS ACCOUNT
For the 26 weeks ended 31 July 2006
26 weeks 26 weeks 52 weeks
ended ended ended
31 July 31 July 31 January
2006 2005 2006
Restated Restated
(unaudited) (unaudited) (audited)
#'000 #'000 #'000
Turnover 2,065 1,680 4,775
Cost of sales (155) (109) (275)
-------- ------- --------
Gross profit 1,910 1,571 4,500
Operating expenses before exchange differences and
share option costs 1,867 1,537 3,288
-------- ------- --------
Operating profit before exchange differences
and share option costs 43 34 1,212
Exchange gains 3 25 12
Share option costs (64) (10) (68)
-------- ------- --------
Operating (loss)/profit (18) 49 1,156
Net interest 15 11 24
-------- ------- --------
(Loss)/profit on ordinary activities before taxation (3) 60 1,180
Taxation on (loss)/profit on ordinary activities - - -
-------- ------- --------
(Loss)/profit for the period transferred from reserves (3) 60 1,180
======== ======= ========
(Loss)/earnings per ordinary share
Basic (0.003)p 0.06p 1.18p
Diluted (0.003)p 0.06p 1.16p
CONSOLIDATED BALANCE SHEET AT 31 JULY 2006
As at As at As at
31 July 31 July 31 January
2006 2005 2006
Restated Restated
(unaudited) (unaudited) (audited)
#'000 #'000 #'000
Fixed assets
Tangible assets 280 178 176
-------- ------- --------
Current assets
Stocks 95 211 138
Debtors 4,063 2,337 4,441
Cash at bank and in hand 1,863 902 830
-------- ------- --------
6,021 3,450 5,409
Creditors: amounts falling due within one year (2,740) (1,329) (2,092)
-------- ------- --------
Net current assets 3,281 2,121 3,317
-------- ------- --------
Total assets less current liabilities 3,561 2,299 3,493
Creditors: amounts falling due after more than one year (25) (14) (13)
======== ======= ========
Net assets 3,536 2,285 3,480
======== ======= ========
Capital and reserves
Called up share capital - - -
Share premium account 6,275 6,269 6,275
Profit and loss account (2,889) (4,012) (2,881)
Stock option reserve 150 28 86
======== ======= ========
Shareholders' funds 3,536 2,285 3,480
======== ======= ========
CONSOLIDATED CASH FLOW STATEMENT
For the 26 weeks ended 31 July 2006
26 weeks 26 weeks 52 weeks
ended ended ended
31 July 31 July 31 January
2006 2005 2006
(unaudited) (unaudited) (audited)
#'000 #'000 #'000
Net cash inflow/(outflow) from operating activities 283 41 (2)
-------- ------- --------
Returns on investments and servicing of finance
Interest received 15 14 29
Interest paid (1) (3) (4)
Hire purchase interest paid (1) - (1)
-------- ------- --------
Net cash inflow from returns on investments and
servicing of finance 13 11 24
-------- ------- --------
Taxation 859 - -
-------- ------- --------
Capital expenditure and financial investment
Purchase of tangible fixed assets (117) (39) (76)
Sale of tangible fixed assets - 5 -
-------- ------- --------
Net cash outflow from capital expenditure
and financial investment (117) (34) (76)
-------- ------- --------
Financing
Issue of share capital - - 6
Repayments of borrowings - (2) (5)
Capital element of hire purchase contracts (5) (8) (11)
-------- ------- --------
Net cash outflow from financing (5) (10) (10)
-------- ------- --------
Increase/(decrease) in cash 1,033 8 (64)
======== ======= ========
Reconciliation of net cash flow to movements in
net funds
Increase/(decrease) in cash 1,033 8 (64)
Net cash outflow from financing - 2 5
Net cash outflow from hire purchase contracts 5 8 11
-------- ------- --------
Change in net funds from cash flows 1,038 18 (48)
Inception of hire purchase contracts (26) (24) (24)
-------- ------- --------
Movement in net funds in the period 1,012 (6) (72)
Net funds at beginning of period 813 885 885
-------- ------- --------
Net funds at end of period 1,825 879 813
======== ======= ========
CONSOLIDATED STATEMENT OF TOTAL RECOGNISED GAINS AND LOSSES
For the 26 weeks ended 31 July 2006
26 weeks 26 weeks 52 weeks
ended ended ended
31 July 31 July 31 January
2006 2005 2006
Restated Restated
(unaudited) (unaudited) (audited)
#'000 #'000 #'000
(Loss)/Profit for the financial period (3) 60 1,180
Currency differences on foreign currency net investments (5) (25) (14)
-------- ------- --------
Total recognised gains and losses for the period (8) 35 1,166
======== ======= ========
NOTES TO THE INTERIM RESULTS
For the 26 weeks ended 31 July 2006
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 2006 with the exception of FRS 20 - share based payments,
which has been adopted in the period under review as detailed in note
iii below.
ii The calculation of earnings per share is based on the profit after
taxation for the period divided by 100,054,752 (31 July 2005:
99,999,999, 31 January 2006: 100,009,123) shares being the weighted average
number of shares in issue during the period.
iii The fair value of the share options granted is recognised as an employee
expense with corresponding increase in equity. Fair value has been
determined using the Binomial model, taking into account the terms and
conditions upon which the options were granted. The amount recognised
as an expense in the period, #64,000, is adjusted to reflect the number of
options that had not vested as at 31 January 2006. Prior year comparatives
have been adjusted accordingly, the result of this has been to reduce the
profit for the financial periods ended 31 July 2005 and 31 January 2006 by
#10,000 and #68,000 respectively.
iv The financial information set out above does not constitute financial
statements. The statutory financial statements for the year ended
31 January 2006 have been delivered to AIM and the auditor's report
on those financial statements was unqualified. The figures for the year
ended 31 January 2006 have been extracted from the statutory financial
statement for that year. The financial information for the 26 weeks
ended 31 July 2006 and 31 July 2005 are unaudited.
v 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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