RNS Number : 2587U
Invu plc
13 May 2008
13 May 2008
Invu Plc
Preliminary Results for the Year Ended 31 January 2008
Invu plc, the document management software provider, announces its preliminary results for the year ended 31 January 2008.
Financial Highlights
* Revenues up 38% to £8.71m (2007 restated: £6.32m)
* Recognised recurring revenues from InvuCare increased by 24% to £1.47m (2007: £1.19m)
* Adjusted* operating margins of 31% (2007 restated: 28%)
* Adjusted* net profit before tax increased 50% to £2.72m (2007 restated: £1.82m)
* Earnings per share on a like for like basis** 2.93p (2007 restated: 1.85p)
* £4m equity fundraising completed in June 2007
* Completion of major corporate restructuring and simplification of share structure, 30% below budgeted cost.
Year ended Year ended
31 Jan 2008 31 Jan
2007
restated
Turnover £8.71m £6.32m
Profit before tax £1.72m £1.82m
Profit after tax £0.99m £1.83m
Adjusted* profit after tax £1.99m £1.83m
Earnings per share 1.07p 1.85p
* adjusted for £1m one-off costs relating to the corporate restructuring
** adjusted for £1m one-off costs relating to the corporate restructuring and notional zero tax charge in current year
Operational Highlights
* InvuCare renewal rate substantially strengthened in H2 to 77% for the year (H1 2007: 46%)
* Software sold to 727 new sites (2007: 970) and new end users included Starwood Hotels and Resorts (owners of Sheraton), Capita
Group Plc, MediaCom Limited, Fitness First and Lyon Sleeman Hoare.
* 17,365 new seats installed (2007: 16,418)
* Increase in repeat sales to 427 existing sites (2007: 324) which included Dawnay Day, Galliford Try, Lexis Nexis, Thomas Pink,
Close Fund Services and Towergate Partnership
* Release of Ergo* , Invu's new search, visualisation and collaboration software
* OEM agreement with WACOM announced on 9 May 2008
* Key new hires in various departments, including:
* CTO: Stuart Evans, formerly Principal Architect at Sage (UK) Limited
* Head of OEM Sales and Marketing: Justin Staines, formerly of Wacom
* Director of Marketing: Shaun Orpen, formerly head of corporate marketing at Microsoft UK and also marketing director for business
solutions at Orange UK
* Additional strategic distribution partners include Bell Micro, Centerprise and Hub Software
* Joint sales and marketing agreement with IRIS, leading supplier of software to accountants.
Daniel Goldman, Non Executive Chairman of Invu, said:
"I am pleased to report that Invu has developed considerably over the last 12 months, both structurally and operationally, with
investment in the business made at the same time as maintaining healthy profit margins. The continuing demand for Invu products and the
results of our investment in the business and its staff provide the Board with confidence in the future. This is further supported by the
successful launch of our new product Ergo*, which we believe has the potential to be an important component in Invu's future growth."
David Morgan, Chief Executive, said:
"This year has been a complex year for Invu, and I am pleased that trading in our core products has continued well despite some internal
challenges. We enter 2008 with a vastly improved corporate structure, completed at 30% under budget, which provides greater ease of trading
for our shareholders. A successful fundraising of £4m in June has allowed us to invest in both people and infrastructure, providing further
corporate stability and a strong foundation for future growth. Against this backdrop, we have overcome the early issues with Series 6, such
that InvuCare renewal rates are climbing back up to normal levels. In addition, we successfully launched Ergo*, which has received a very
positive response from potential partners and customers."
Enquiries:
Invu Inc 01604 859893
Daniel Goldman, Non Executive Chairman
David Morgan, CEO
John Agostini, CFO
Financial Dynamics 020 7831 3113
Juliet Clarke
Haya Chelhot
Arbuthnot Securities 020 7012 2000
Tom Griffiths
Ben Wells
About Invu
Invu [LSE, AIM, Symbol: INVU] 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 60 employees and operates in the UK, Ireland, The Netherlands, South East Asia, Australia, the
United States of America and Nigeria. Invu's products have been sold to nearly 3,700 customers, representing approximately 72,000 licensed
users. Invu has a proven reseller business model and has established a network of more than 166 Value Added Resellers, 14 of which are in
Benelux.
Invu is a Microsoft Gold Certified Partner and a member of the Business Application Software Developers Association (BASDA). Its version
5.4 and Series 6 software have been accredited by the Institute of Chartered Accountants in England & Wales (ICAEW). In January 2006 Invu
became the first EDM ISV to join SAP's portfolio and is certified for integration with SAP Business One. In September 2006, the Invu Series
6 product was selected by Sage to be marketed by them into the Professional Adviser market in the UK.
For further information on how Invu can benefit your business, please contact us on +44(0)1604 859893, or email us at info@invu.net.
Alternatively visit our website at www.invu.net.
CHAIRMAN'S STATEMENT
The past year has been crucial for the Group as it completed several important initiatives both at the corporate and operational level.
Crucial to our future growth has been the consolidation of our corporate structure allowing much greater transparency to our shareholders,
and enabling access to a wider base of potential investors. I am proud to consider this the completion of the process of "bringing the
company home" to Invu's management, employees, customers and shareholders.
In addition we have enhanced the middle and senior levels of management both within product development, product management and
marketing. The Board has made these investments to ensure that the Company is ready for continuing future growth. All this has been achieved
against the backdrop of the continuing growth in revenues and profit, and the previously announced teething problems with Series 6.
Turnover rose 38% year on year to £8.71m (2007 restated: £6.32m). This growth, with continued high gross margins, enabled the Group to
record a pre-tax profit of £1.72m. This figure includes £1m of one-off restructuring costs related to the corporate restructuring such
that adjusted pre-tax profit is £2.72m, an increase of 50%. I am very pleased to announce that the overall cost of the restructuring is
currently 30% less than our initial expectations, including the amount applied in acquiring the outstanding Invu Inc shares from our former
shareholders in the US and the direct costs.
Trading was affected during the early part of the year by issues relating to the Series 6 product line, released in March 2007. Despite
this we have increased sales to existing and new customers and have spent most of the second half catching up on the demand that we could
not originally fulfil. A key indicator that the Company has overcome the key product issues is the improvement in the InvuCare rates which
have grown substantially from 46% at the half year to 77% by the year end. Whilst this is still below our historically high levels, of 80%,
the Board expects the trend to return to those levels during the coming year.
The Company is still engaged in active dialogue with our partners and users as we continue to transition from Series 5 to Series 6. This
is an ongoing process, and although the bulk of the problem is behind us, we are continuing to catch up on delayed revenue opportunities.
The Group has extended its sales and marketing reach this year in a number of different ways. First, we have continued to invest in our
management and employees to increase the quantity and quality of the team. They form the cornerstone for our growth. Secondly, we have
broadened our marketing approach which now adds both regional and vertical distribution agreements to our more traditional reseller
approach, and, through the development and release of our new product Ergo*, potential major OEM channels. Thirdly, we are excited to have
added IRIS Software Group Limited as a key partner within the accountancy vertical. Started in January 2008, this relationship has got off
to a flying start.
In four years of being a public company we have managed to quadruple the Company's revenues, whilst during the same period only doubling
the number of employees. This is a testament to management's careful strategy of combining strong organic growth with a focus on increasing
operational leverage and significantly enhanced profitability.
The Board maintains its focus on continuing to expand Invu's marketing and sales reach still further and enriching the product offering,
expecting to demonstrate significant growth in all of the key areas of our business this year.
On behalf of the Group, I would like once again to thank our employees, accredited partners, shareholders and advisors, without whom
none of this success is possible. I look forward to yet another very exciting year.
Daniel Goldman
Non Executive Chairman
Chief Executive's Statement
Introduction
Invu software has now been installed at 3,700 customers, representing approximately 72,000 licensed users, up from the previous year's
2,973 and 54,574, respectively. Although this reflects significant growth year on year for the last several years, it still only represents
less than one per cent of our addressable market within the UK SME sector. Within these figures we have created a strong position as a
leading provider of document management software in certain key verticals, such as independent financial advisers and accountants.
There have been three areas of focus this year, namely: bedding Series 6 into the market, completing the much awaited corporate
restructuring and continuing the development of new market opportunities, through the opening of new channels to market and the launch of
our new and exciting Ergo* product.
Finally we have introduced several new key members of senior management to the Company, some of whom have taken up newly created
positions. This reflects our growth as a company and the maturing of the middle and higher levels of management within the Group.
Financial Performance
This is the first year that the Group has reported under IFRS, and we are pleased to announce that it has had little effect on the
reported figures for the year and the consolidated profit and loss account is readily comparable to the previous year. The consolidated
balance sheet, cashflow statement and notes are somewhat different, reflecting not only the new IFRS format, but also the Group
restructuring completed in December 2007.
Turnover for the period was £8.71m (2007 restated: £6.32m), an increase of 38% on the prior year. Recognised recurring revenues from
InvuCare increased to £1.47m in the year ended 31 January 2008, compared to £1.19m in the previous year, with total deferred revenues at
£2.51m (2007 restated: £1.94m). Furthermore, a potential bad debt provision of £0.70m has been included in the profit and loss account.
Gross profit margin again increased to 96.6% (2007 restated: 95.2%). This remains above our internal benchmark and is due to the mix of
revenues arising from pure software sales with virtually no hardware or subcontracted services. Moreover, the Group has reduced its third
party licence costs by embedding a cost free database within the Series 6 product.
Technical and support expenditure, which includes research and un-capitalised development, technical support and professional services,
was £0.89m for the year (2007: £0.64m). The significant increase reflects the Group's commitment outlined in May 2007 to increase
expenditure on this part of the business. The Group hired its first Chief Technical Officer, Head of Product Delivery and additional
developers during the year to resolve the teething problems of Series 6 and to develop the new Ergo* product. Development of Series 6 has
continued unabated throughout the year and the improvement in quality is demonstrated by the increasing number of sites adopting the
product. It remains the Group's policy to direct research and development according to the needs of the market and the Group's new search
and collaboration product, Ergo*, was launched at the Consumer Electronics Show (CES) in Las Vegas in January 2007 with significant acclaim.
As with all of Invu's products it adheres to our core brand values of ease of use, high quality and price performance.
Sales and marketing expenditure increased by 15% to £1.82m (2007: £1.58m), or 21% of turnover (2007 restated: 25%). Much of this
increase related to the marketing of Series 6, our investment in regional demonstration centres and the recruitment of key sales managers to
attack the further market opportunities that Series 6 provides. Again as signalled in May 2007 additional investment was also provided for
new product developments, like Ergo*, 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 corporate restructuring costs, were £3.03m (35% of turnover) compared with £2.03m (32%
of turnover) as restated for the previous year. This increase is mainly attributable to the inclusion of a potential bad debt provision of
£0.70m, costs associated with additional office space at our head office and the regional demonstration centres, increased staff costs,
depreciation and professional fees.
Profit before tax and restructuring costs for the year ended 31 January 2008 amounted to £2.72m (2007 restated: £1.82m), an increase
of 49%. Exceptional costs associated with the Group restructuring amounted to £1.0m giving a profit before tax of £1.72m. A full tax
charge has been incurred for the first time amounting to £0.73m resulting in a post tax profit of £0.99m and earnings per share of 1.07p
(2007 restated: 1.85p). Assuming a nil tax charge had been applied to this year and excluding the restructuring costs, then the earnings per
share figure would have been 2.93p per share.
The Group's balance sheet has been strengthened by the net profit for the year, and the additional fundraising in June of £4m, the
proceeds of which were applied for the restructuring costs and additional investment in product development, marketing and equipment.
Net cashflow on financing activities reflects the £4.0m fundraising completed in June. The Group expended £0.71m on capitalised
development costs and £0.28m on plant and equipment mainly for its new training, testing and demonstration suites.
Following the earlier issues with Series 6, the final quarter saw a marked increase in sales and therefore debtors at year end. The
delays in the deployment of Series 6 have also resulted in a net cash outflow from operating activities. Cash generation is expected to be
much stronger in the year to 31 January 2009, but the Board has taken the prudent step of significantly increasing debt provisions to
reflect the age and nature of certain debts. To date none of these provisions have been utilised.
The Group still remains relatively debt free at 31 January 2008. The Group intends to increase its investment in new product development
and sales and marketing during the current financial year, in order to maximise the potential of Ergo* and other exciting new products.
As a result of the levels of investment in the business, the Board will not be recommending the payment of a dividend this year.
However, the completion of the group restructuring has made future dividend policy much easier to administer than was possible with the
former US parent company.
Operations
Trading
During the past year we have seen further improvements in all areas of the business. Total sites grew to 3,700 and total seats deployed
were almost 72,000 at 31 January 2008. During the period the Group sold software to 727 new sites (2007: 970) installing a total of 17,365
new seats (2007: 16,418). Encouragingly, repeat sales were made at 427 sites (2007: 324 sites). Since its release, 11,866 seats of Series 6
had been deployed at 691 sites by 31 January 2008, with 13% of these sites already placing repeat orders.
The Group has accredited 47 new resellers (2007: 40) during the year and at 31 January 2008 our reseller base stood at 166 (2007: 132).
More significant, has been the introduction of major distributors such as Bell Micro in the Benelux countries and Centerprise in the UK.
InvuCare recurring revenue represents a significant proportion of invoiced sales, although the Group's revenue recognition policy means
that a high percentage is deferred to the following year. At 31 January 2008 the value of deferred revenues had increased to £2.51m (2007
restated: £1.94m). With the significant improvements to Series 6, we have managed to raise the InvuCare renewals rate from 46% at 31 July
2007 to 77% at the year end. Our historical levels have been over 80% which we expect to achieve again in the future, and in this respect
the year has started well.
Sales and Marketing
This year we have invested in several areas within sales and marketing. These efforts have been focused in two key areas. Within the
Company we have reviewed, and where necessary, refreshed some of our marketing messages and strategies. This includes the launch of our new
website in the latter part of the year. We have been helped immensely by the work carried out for us on a part time basis by Shaun Orpen,
Director of Marketing. Shaun's previous roles have included head of corporate marketing at Microsoft UK and also marketing director for
business solutions at Orange UK. His input has been invaluable, upgrading our marketing approach and developing, with other members of the
management team, a revised approach to our marketing processes. This has been particularly useful following the launch of Series 6 which
presents many new opportunities for the Company. We look forward to seeing the fruits of this work during the current year. In addition we
have appointed a full time head of marketing, once again upgrading that role within the management structure.
During the first half we opened several Invu Demo Centres located around the UK as a further support for our channel partners. The key
benefit of the demo suites is the ability for potential customers to take part in an interactive live demonstration of the product. This is
in a networked environment which much more closely mimics a working office, as opposed to a stand-alone demo, typically from a lap top. The
utilisation of the Demo Centres has increased and sales conversion rates have improved with double the number of orders being taken in the
last five months of the financial year compared to the previous three and a half months. In particular, new resellers have the comfort of
directing early opportunities towards highly professional and consistent presentations of the product whilst they are on their learning
programs.
The second key area of investment has been to broaden our channels to market. Traditionally we have relied exclusively on a network of
value added resellers. Whilst this has served the Company's growth very well over the years we have, where appropriate, added an additional
layer of distribution. Examples of this are Centerprise which operates in the education and public sector markets, and Bell Micro covering
the Benelux territories. In addition the Ergo* product allows us access to additional channels including many new OEM possibilities.
Ergo* has created a great deal of excitement since its launch at the Consumer Electronics Show (CES) in Las Vegas and the Company
continues to pursue multiple business opportunities exploiting this innovative development.
The plan for Ergo* is two-fold. It will be incorporated into the core product set over time, creating an alternative interface into the
type of searching Invu has enabled, with the added features that Ergo* offers. In addition there is a completely new market opportunity for
the Company with Ergo* through the OEM channel into various types of OEM partners, such as tablet PC manufacturers, lap-top and touch screen
PC manufacturers. To that effect, we announced on 9 May 2008 an agreement with WACOM, the market leading manufacturer of pen tablets,
whereby Ergo will be bundled with the high end range of pen tablets throughout Europe.
With the advent of multi-touch screens, the possibilities for applications like Ergo* become very exciting as the human interface to
computing becomes a much more instinctive experience when compared to existing mouse or single touch offerings.
Partnerships
The partnership agreement signed with IRIS Software in January 2008 has already benefited the Company. Through two of our existing
partners, Scan Worx and Linden House we have already sold systems to about 200 IRIS accountancy practice management customers. With other
specific joint marketing activities planned over the next couple of months, we expect that this will continue to accelerate and grow. Along
with the initial OEM agreement with Sage, this supports Invu's market leading position selling document management systems to accountancy
firms.
We also announced a partnership with Topaz whereby they would start marketing Invu's document management solutions alongside their
payroll and financial management solutions.
We continue to work with Sage through our OEM arrangements with them, although sales progress continues to be slow in this area.
Overseas Markets
Our main overseas market is still the Netherlands where we have added Bell Micro as the senior distributor during the second half of
2007. Bell Micro has signed a number of resellers and sales have been recorded.
Product Development
This year has been very busy for the research and development team. During the past year we have carried out a major overhaul of the
development department, with the key change coming in the form of a first time appointment for the Company of a Chief Technical Officer.
Stuart Evans joined as CTO from Sage where he was Principal Architect, working to design and develop online and desktop offerings. He served
in this capacity from July 2003, prior to which he was a consultant for Instant Consulting. In 2002 he helped form a mobile applications
company in the USA focusing on product innovation, design, product strategy and supporting the sales team.
Stuart has brought significant value to development, both in terms of resolving some of the immediate issues relating to Series 6 and
creating a long term technology and product road map for the Company. In addition to the CTO we have appointed a Chief Architect and a Head
of Product Delivery.
On the development side there have been two major efforts. As previously announced, we had some early problems with the Series 6
release. This has been a key focus. The particular area of difficulty was the integration of our product with other complimentary
applications at our clients that had historically worked with version 5.4. This and other problems have now been resolved, resulting in a
much higher level of customer satisfaction, which is also reflected by a much increased renewal rate for InvuCare, our maintenance and
upgrade contract, during the second half of 2007.
The other key development has been the creation of Ergo*. Ergo* is Invu's next generation search, visualization and collaboration tool,
which works both within Microsoft's XP environment, but really comes into its own with the Vista operating system.
Outlook
With Series 6 approaching maturity, a loyal and talented reseller channel, and Ergo* opening up new global opportunities, the coming
year will be exciting. We have prepared the Group for growth with an injection of expert management and an investment in recruitment and
selection best practice. I am confident that we have the structure, products and people to take the Group from a small entrepreneurial
company to a world class software vendor.
David Morgan
Chief Executive Officer
Unaudited consolidated income statement
For the year ended 31 January 2008
2008 2007
£'000 £'000
restated
Continuing operations
Revenue 8,712 6,319
Cost of sales (297) (302)
***** *****
Gross profit 8,415 6,017
Distribution costs (416) (336)
Administration expenses (6,325) (3,917)
***** *****
Operating profit 1,674 1,764
Finance income 157 54
Finance costs (109) (3)
***** *****
Profit before income tax 1,722 1,815
Income tax (expense)/income (728) 10
***** *****
Profit for the year 994 1,825
***** *****
Attributable to:
Equity holders of the company 994 1,825
***** *****
Earnings per share
Basic (pence per share) 1.07 1.85
***** *****
Diluted (pence per share) 1.07 1.85
***** *****
Unaudited consolidated statement of recognised income and expense
For the year ended 31 January 2008
2008 2007
£'000 £'000
restated
Profit for the year 994 1,825
***** *****
Exchange differences arising on translation of foreign (55) (6)
currency net investments
Reversal of deferred tax asset previously recognised (111) -
***** *****
Net loss recognised directly in equity (166) (6)
***** *****
Total recognised income for the year 828 1,819
***** *****
Attributable to:
Equity holders of the company 828 1,819
***** *****
Unaudited consolidated balance sheet
As at 31 January 2008
2008 2007
£'000 £'000
Non-current assets restated
Other intangible assets 835 311
Property, plant and equipment 468 229
Deferred tax asset 279 170
***** *****
1,582 710
Current assets ***** *****
Inventories 258 220
Trade and other receivables 11,032 6,141
Cash and cash equivalents 2,569 2,168
***** *****
13,859 8,529
***** *****
Total assets 15,441 9,239
***** *****
Current liabilities
Trade and other payables 6,426 4,664
Obligations under finance leases 41 20
***** *****
6,467 4,684
***** *****
Net current assets 7,392 3,845
***** *****
Non-current liabilities
Obligations under finance leases 42 28
Deferred tax 245 -
***** *****
287 28
***** *****
Total liabilities 6,754 4,712
***** *****
Net assets 8,687 4,527
***** *****
Equity
Share capital 1,068 -
Shares to be issued 1,466 -
Share premium 5,354 6,289
Merger reserve 22,185 -
Share option reserve 315 197
Reverse acquisition reserve (20,570) -
Retained earnings (1,070) (1,953)
Foreign currency translation reserve (61) (6)
***** *****
Total equity 8,687 4,527
***** *****
Attributable to:
Equity holders of the company 8,687 4,527
***** *****
2008 2007
£'000 £'000
restated
Net cash from operating activities (2,458) 1,713
Cash flows from investing activities
Interest received 117 54
Purchases of property, plant and equipment (279) (109)
Purchases of intangible assets (709) (306)
***** *****
Net cash used in investing activities (871) (361)
Cash flows from financing activities
Proceeds from the issue of shares 4,192 14
Payment of issue costs paid (132) -
Repayment of shareholders (276) -
Repayment of obligations under finance leases (48) (25)
Interest paid (6) (3)
***** *****
Net cash flow on financing activities 3,730 (14)
***** *****
Net increase in cash and cash equivalents 401 1,338
Cash and cash equivalents
At the beginning of the year 2,168 830
***** *****
At the end of the year 2,569 2,168
***** *****
* Principal accounting policies
The financial information set out in the announcement does not constitute the company's statutory accounts for the years ended 31
January 2008 or 2007. The financial information for the year ended 31 January 2007 is derived from the statutory accounts for that year
which have been delivered to the Registrar of Companies. The auditors reported on those accounts; their report was unqualified and did not
contain a statement under s237(2) or (3) Companies Act 1985. The audit of the statutory accounts for the year ended 31 January 2008 is not
yet complete. These accounts will be finalised on the basis of the financial information presented by the directors in this preliminary
announcement and will be delivered to the Registrar of Companies following the company's annual general meeting.
While the financial information included in this preliminary announcement has been prepared in accordance with the recognition and
measurement criteria of International Financial Reporting Standards (IFRSs), this announcement does not itself contain sufficient
information to comply with IFRSs. The Company expects to publish full financial statements that comply with IFRSs in June 2008.
First time adoption of International Financial Reporting Standards
As this report is the Group's first IFRS report, IFRS1, First-time Adoption of International Financial Reporting Standards, has been
applied. The financial statements should be read in conjunction with note 5 which shows an explanation of how the transition to IFRS has
affected the reported financial position of the Group. This statement includes reconciliations of the balance sheets and profit for
comparative periods under UK GAAP to those reported for those periods under IFRS.
The Group has adopted all of the standards and interpretations that were mandatory for accounting periods beginning on or after 1
February 2007 that are relevant to the operations of the Group.
Basis of consolidation
On 6 December 2007 the company, INVU Plc, became the legal parent company of INVU Inc in a share-for-share transaction. Due to the
relative values of the companies, the former INVU Inc shareholders became the majority shareholders of INVU Plc. Further, the group's
continuing operations and executive management were those of INVU Inc. Accordingly, the substance of the combination was that INVU Inc
acquired INVU Plc in a reverse acquisition.
* The assets and liabilities of the legal subsidiary, INVU Inc, and its subsidiaries (the "INVU Inc Group") are recognised and
measured in the consolidated financial statements at the pre-combination carrying amounts, without restatement to fair value;
* The retained earnings recognised in the consolidated financial statements represents those of INVU Inc Group to date of the
combination, 6 December 2007, and from this date to the year end represent those of INVU Inc Group and INVU Plc;
* The equity structure appearing in the consolidated financial statements reflects the equity structure of the legal parent, INVU
Plc, including the equity instruments issued as part of the acquisition of INVU Inc Group;
* Comparative numbers presented in the consolidated financial statements are those reported in the financial statements of the legal
subsidiary, INVU Inc Group, for the year ended 31 January 2007; and
* The assets and liabilities of the legal parent, INVU Plc, are recognised on combination at fair value.
Under the requirements of the Companies Act 1985 it would normally be necessary for the Group's consolidated accounts to follow the
legal form of the business combination. In that case the pre-combination results would be those of INVU Plc and its subsidiary undertakings,
which would exclude INVU Inc Group. INVU Inc Group would then be brought into the Group from 6 December 2007. However, this would portray
the combination as an acquisition of INVU Inc Group by INVU Plc and would, in the opinion of the directors, fail to give a true and fair
view of the substance of the business combination. Accordingly, the directors have adopted reverse acquisition accounting as the basis of
consolidation in order to give a true and fair view.
Under IFRS 3, "Business Combinations", the acquisition of INVU Inc Group by INVU Plc has been accounted for as a reverse acquisition,
although the consolidated financial statements have been prepared in the name of the legal parent, INVU Plc.
Revenue recognition
Revenue is measured at the fair value of the consideration received or receivable and represents amounts receivable in accordance with
the Group's principal activities, net of VAT and trade discounts.
Fees for services and maintenance are charged to resellers separately from the sale of software. Revenues from the sale of software to
resellers are recognised upon product shipment when fees are fixed, collectability is probable and the Group has no significant obligations
remaining under the sale agreement. In instances where a significant vendor obligation exists, revenue recognition is delayed until such
obligation has been satisfied.
For those sale agreements to resellers which provide the resellers with the right to multiple copies in exchange for guaranteed amounts,
software revenues are recognised at delivery of the product master of the first copy as the reseller has no recourse to the Group after this
point. Per copy royalties on sales which exceed the guarantee are recognised as earned. Resellers are charged an accreditation fee each
year for training and consulting to be provided by the Group to the resellers and this fee is recognised evenly over each accreditation
period.
The Group's resellers provide primary maintenance and ongoing support to the end users. The Group provides secondary support to the end
users via the resellers and charges the reseller an annual fee for this support. The fees charged by the Group to the resellers are
recognised over a twelve month period. Where the end user no longer has an accredited reseller, support fees are charged by the Group to the
end user and recognised over a twelve month period.
Interest income is accrued on a time basis, by reference to the principle outstanding and at the effective interest rate applicable.
Other intangible assets - research and development expenditure
Expenditure on research activities is recognised as an expense in the year in which it is incurred.
An internally-generated intangible asset arising from the Group's software development is recognised
only if all of the following conditions are met:
* an asset is created that can be identified (such as software and new processes);
* it is probable that the asset created will generate future economic benefits; and
* the development cost of the asset can be measured reliably.
Internally-generated intangible assets are amortised on a straight line basis over their useful lives. Where no internally-generated
intangible asset can be recognised, development expenditure is recognised as an expense in the year in which it is incurred.
The useful economic lives of internally-generated intangible assets is considered by the directors to be a period of 3 years.
2. Segmental analysis
Geographical segmental information
Unaudited Unaudited
An analysis of revenue is given below: 2008 2007
£'000 £'000
restated
United Kingdom 7,872 5,698
Europe 840 621
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8,712 6,319
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3. Taxation
Unaudited Unaudited
2008 2007
£'000 £'000
restated
Current taxation
- Current tax charge for the year 690 -
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Deferred taxation
- Current year charge/(credit) 38 (10)
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Total tax charge/(credit) 728 (10)
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The tax rate used for the reconciliations above is the corporate tax rate of 30% payable by corporate entities in the United Kingdom on
taxable profits under tax law in that jurisdiction. The difference between the actual tax and standard rate of tax in the UK applied to
profits in the year is accounted for as follows:
Unaudited Unaudited
2008 2007
£'000 £'000
restated
Profit before taxation 1,722 1,815
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Profit multiplied by standard rate of corporation tax 517 545
in the UK of 30% (2007: 30%)
Effect of:
Permanent differences 358 (51)
Unrecognised losses utilised in the year 81 (485)
Other (266) (9)
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Total tax charge for the year 690 -
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4. Earnings per share
Unaudited Unaudited
2008 2007
£'000 £'000
restated
Basic earnings per share
Profit for the financial year 994 1,825
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Unaudited Unaudited
2008 2007
Number Number
restated
Weighted average number of common shares in issue
during the year 92,937,782 98,893,128
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Basic earnings per share 1.07p 1.85p
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Diluted earnings per share 1.07p 1.85p
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The basic earnings per share is based on the profit after taxation of £994,000 (2007: £1,825,000) and on the weighted average number
of shares in issue during the year of 92,937,782 (2007: 98,893,128).
5. First-time adoption of International Financial Reporting Standards (IFRS) (Unaudited)
Reconciliations and explanatory notes on how the transition to IFRS has affected the profit and balance sheets previously reported
under UK Generally Accepted Accounting Principles (UK GAAP) are given below:
Consolidated income statement - reconciliation of UK GAAP to IFRS for the year ended 31 January 2007
Note 2007
£'000
Profit for the year previously reported under UK GAAP 2,016
Adjustment for deferred revenue on InvuCare maintenance
contracts (d) (168)
Deferred tax adjustment (b) (23)
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Profit for the year reported under IFRS 1,825
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Consolidated balance sheet - reconciliation of UK GAAP to IFRS as at 31 January 2006
UK GAAP IFRS
Notes 2006 Adjustments 2006
£'000 £'000 £'000
Non-current assets restated
Goodwill - -
Other intangible assets (a) - 40 40
Property, plant and equipment (a) 176 (40) 136
-
Deferred tax asset (b) - 26 26
****** ******
176 202
Current assets ****** ******
Inventories 138 138
Trade and other receivables (b) 4,467 (26) 4,441
Cash and cash equivalents 830 830
****** ******
5,435 5,409
****** ******
Total assets 5,611 5,611
****** ******
Current liabilities
Trade and other payables (d) 2,088 1,057 3,145
Obligations under finance leases 4 4
****** ******
2,092 3,149
****** ******
Net current assets 3,343 2,260
****** ******
Non-current liabilities
Obligations under finance leases 13 13
****** ******
Total liabilities 2,105 3,162
****** ******
Net assets 3,506 2,449
****** ******
Equity
Share premium 6,275 6,275
Share option reserve 86 86
Retained earnings (d) (2,855) (1,057) (3,912)
Foreign currency translation reserve - -
****** ******
Total equity 3,506 2,449
****** ******
Attributable to:
Equity holders of the company 3,506 2,449
Consolidated balance sheet - reconciliation of UK GAAP to IFRS as at 31 January 2007
UK GAAP IFRS
Notes 2007 Adjustments 2007
£'000 £'000 £'000
Non-current assets restated
Goodwill - -
Other intangible assets (a) 266 45 311
Property, plant and equipment (a) 274 (45) 229
-
Deferred tax asset (b) - 170 170
****** ******
540 710
Current assets ****** ******
Inventories 220 220
Trade and other receivables (b),(d) 6,200 (59) 6,141
Cash and cash equivalents 2,168 2,168
****** ******
8,588 8,529
****** ******
Total assets 9,128 9,239
****** ******
Current liabilities
Trade and other payables (d) 3,439 1,225 4,664
Obligations under finance leases 20 20
****** ******
3,459 4,684
****** ******
Net current assets 5,129 3,845
****** ******
Non-current liabilities
Obligations under finance leases 28 28
****** ******
Total liabilities 3,487 4,712
****** ******
Net assets 5,641 4,527
****** ******
Equity
Share premium 6,289 6,289
Share option reserve 197 197
Retained earnings (c),(d) (845) (1,108) (1,953)
Foreign currency translation reserve (c) - (6) (6)
****** ******
Total equity 5,641 4,527
****** ******
Attributable to:
Equity holders of the company 5,641 4,527
Explanations of reconciliations between UK GAAP and IFRS
(a) Computer Software (IAS38)
It has been necessary to re-analyse software originally included in computer equipment to intangible assets. When an intangible asset is
contained in or on a physical substance, such as computer software on a compact disc, management must assess which element is more
significant. For example, software that controls machinery would normally be considered an integral part of the machinery and therefore
would be treated as property, plant and equipment rather than as an intangible asset. The same would normally be true for the operating
system of a computer. Where the software does not form an integral part of the machinery or computer hardware to which it relates, it is
separately accounted for under IAS 38.
(b) Deferred tax (IAS12)
Under IAS 12 we are required to show deferred tax as non-current, the balance as reported under UK GAAP has therefore been reallocated.
Deferred tax has also been re-assessed in accordance with IAS 12 in relation to the tax charge on share options.
(c) Foreign exchange reserve
The foreign exchange reserve has been shown separately from retained earnings and has been re-set to zero at the date of transition.
(d) Deferred revenue on InvuCare maintenance contracts
Revenue recognition has been reconsidered to ensure that the accounting of the Group's policy for deferring revenue in relation to
InvuCare maintenance, which is provided free of charge in the first year, is in line with IAS 18.
Cautionary statement
Invu Plc has made forward looking statements in this press release, including: statements about the market for and benefits of its
products and services; financial results; product development plans; the potential benefits of business relationships with third parties;
and business strategies. These statements about future events are subject to risks and uncertainties that could cause Invu Plc's actual
results to differ materially from those that might be inferred from the forward-looking statements. Invu Plc can make no assurance that any
forward-looking statements will prove correct.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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