TIDMINVU
RNS Number : 8301E
Invu plc
16 May 2013
16 May 2013
Invu Plc
Preliminary Results for the Year Ended 31 January 2013
Invu plc ("Invu" or the "Company"), (INVU.L) the document
management software provider, announces its preliminary results for
the year ended 31 January 2013.
Key Financial Highlights
-- Revenues of GBP2.7million (2012: GBP2.7million)
-- Profit before tax of GBP0.3 million (2012: loss: GBP0.3million)
o Adjusted EBITDA profit GBP0.4 million (2012: GBP0.1
million)
-- Net Cash (cash net of borrowings) GBP0.7 million (2012:GBP0.6 million)
Commercial Highlights
-- Continued strong recurring revenue from our customer base
-- Significant contracts wins in housing, finance, wealth and
resource management, social enterprise and the manufacturing and
related services
-- Continuing product innovation, including invoice processing functionality
Colin Gallick, Chief Executive Officer, said:
"What was a fragile and significant loss making business in 2009
has now been transformed into a profitable business with a sound
base for further development of the business"
Contacts:
Invu plc www.invu.net
Colin Gallick, Chief Executive +44 (0) 1604 859 893
Ian Smith, Finance Director
WH Ireland Limited www.wh-ireland.co.uk
Mike Coe +44 (0) 117 945 3470
About Invu
Invu [LSE, AIM, Symbol: INVU] develops software that
incorporates document management, content management, workflow,
automation and collaboration specialising in solutions for the
mid-market and smaller businesses. Invu typically gives a return on
investment in under six months, allowing companies to see
efficiency savings in terms of both money and time. Invu's Open
Search integration allows SharePoint users to utilise fully the
benefits of WSS or MOSS whilst retaining the functions of
specialist document and content management. Invu's solutions enable
automated scan, capture and management, processing and output
transformation. Invu also integrates with all major accounting
systems including ERP and CRM systems.
For more information about Invu: www.invu.net
Chairman's statement
I am pleased to report the achievement of a profit for the year
of GBP0.3 million. This resulted in earnings per share of 0.06
pence on both a basic and fully diluted basis.
This is the first profit we have reported in five years and
represents significant progress from the GBP8.8 million loss we
recorded in the financial year ending 31 January 2009.
Following that loss, during the year ending 31 January 2010, we
recruited our current executive directors and charged them with
developing a profitable, self sustaining and growing business.
The first part of this process was to achieve a positive
operating cash flow. I am pleased to report that the GBP0.2 million
operating cash flow represents the third consecutive year that the
company has been able to report positive operating cash flow. This
was initially achieved through sound cost control and much improved
working capital management.
The second part of this process was to achieve consistent
trading profits. I am pleased to report that the adjusted EBITDA
(earnings before interest, tax, depreciation, amortisation and
share option expenses) reported this year of GBP0.4 million,
represents the second consecutive year that the company has been
able to report an adjusted EBITDA profit. This was achieved through
a continuation of sound cost control and some revenue growth in the
financial year ending 31 January 2012.
The third part of this process has been to report a profit for
the year. As mentioned above the reported profit of GBP0.3 million
represents a first achievement of this goal. This has been
achieved, despite broadly flat revenues in this financial year, due
to improvement in the quality of business measured by gross margin,
continuation of sound cost control and the conversion of the
majority of the company's debt to equity, during the year ended 31
January 2012, which has resulted in a significant fall in financing
costs this year.
In the context of the performance of the UK economy, broadly
flat revenue for the year is a creditable performance. This year,
following last year's achievement of a trading profit, we set the
management team the task of growing the business without
jeopardising the bottom line. They were incentivised to do this and
they elected, given the economic environment, to steer a sensible
path towards profit rather than a risky one towards growth.
Accordingly some of the administrative expense cost saving,
compared to last year, has arisen because bonus incentives, related
to the growth targets we set, have not been earned. We remain
committed to growing the business without jeopardising the bottom
line.
The board notes that the share price has consistently fallen
over the last few year years despite the continuing improvement in
the trading performance of the company and the strengthening of the
Balance Sheet, which arose from the conversion of the majority of
debt to equity, during the year ended 31 January 2012. In the last
year alone the share price has fallen from 0.42 pence to 0.21
pence. The board continues to monitor the company's share price
performance and to consider on a regular basis steps that may be
taken by the company to redress this situation.
The leadership provided by the board and the management of
resources by the executive team are important elements in the
improvements in the business made to date, however these
improvements are ultimately the result of the hard work and
dedication of our employees and business partners. I would like to
register my thanks to them for another year of achievement.
Daniel Goldman
Non Executive Chairman
15 May 2013
Chief Executive Officer's statement
Financial performance
I am pleased to report a significant improvement in adjusted
EBITDA (earnings before interest, tax, depreciation, amortisation
and share option expenses) profit of GBP0.4 million (2012: GBP0.1
million) and a net profit of GBP0.3 million for the year (2012:
loss GBP0.2 million). These results were achieved on broadly flat
revenues of GBP2.7 million which reflect the tough trading economic
environment in the UK.
We exit the year having generated GBP0.2 million of cash with a
net cash balance of GBP0.7 million (2012: net cash of GBP0.6
million). The net cash balance represents, cash net of
borrowings.
Operations
During the year the business has continued to focus on, the
design, development and distribution of software that enables
customers to manage paper and electronic documents and information,
as well as business process workflow, in a simple and effective
way.
Our market
We have continued to carry out the great majority of our
business in the United Kingdom and have had a small amount of
legacy revenue from overseas, the majority of which arises from
business relationships established through our former Netherlands
office.
Our target market is small and medium sized businesses and the
departments of larger businesses. In particular businesses which
wish to improve the efficiency and control of their business
processes and businesses that have particular compliance
requirements related to the processing and retention of
documents.
Small and medium sized businesses
We continue to make progress in our goal to improve our sales
mix towards the larger companies in the small and medium sized
business sector. Over the last couple of years our new customer
business has tended to be with larger customers in the sector than
in the past. One measure of this is our annual average deal size
for new business which, compared to the year ending 31 January
2011, showed a 30% increase this year and a 43% increase last year.
We have also seen a number of existing customers adopt solutions
that involve our work flow and third party capture software
offerings.
This approach does mean that we focus our efforts on winning
higher value deals at new customer sites and consequently the
number of new customer sites acquired in the year has been lower
(93) than last year (148).
In common with many software vendors in the UK we have found
that new customers have lengthened their purchasing lead times to
conserve cash in these uncertain economic times. We have been able
to compensate for the impact of this on our business by selling
more software and services to existing customers. We have
maintained the level of our customer support revenue. We have a
customer retention rate of around 88% (by value) and closed the
year with 1,500 customers who had a customer support contract.
Sales model
Our primary route to market has traditionally been through our
reseller channel. In our financial year ending 31 January 2011 we
introduced one OEM in the accountancy sector, IRIS, and they have
now become our most significant partner in terms of revenue. At the
same time we began to make some direct sales. The reseller channel
has proven effective at winning business in the small business
sector. However, we have identified that we can more effectively
serve medium sized businesses by supplementing the reseller
approach with a direct approach. This year 31% of our new customer
wins by value (4% of the number of new customer sites) have come
through this direct approach. Our reseller channel remains the most
significant part of our revenue with 73% of our business being
transacted through the reseller channel.
Vertical markets
Invu document management software can yield significant business
benefits to any business in any sector and consequently our
reliance on any particular sector is limited.
The accountancy sector, remains our most significant vertical
market with most of our supply to this sector being via IRIS who
supply Invu software under its own brand.
The larger individual contract wins in the year have been in the
housing, finance, wealth and resource management, social enterprise
and the manufacturing and related services sectors.
The housing association market remains an important source of
recurring revenue both in terms of additional software sales to
existing customers and customer support revenue. In the year we
made two significant sales to existing customers who wanted to
extend their use of Invu software.
In the finance sector we made significant sales to three
different companies, from three different parts of the sector.
These sales were driven by the need to improve the efficiency and
control of business processes, with compliance concerning
regulatory and industry requirements also an important
consideration.
In the wealth and resource management sectors we made
significant sales to two customers whose primary concern was the
ability of the Invu software to effectively manage records with
effective capture, storage and retrieval which could then
facilitate process improvement through the use of workflow.
In the social enterprise sector we made a significant sale to a
Dutch enterprise supporting disabled people. This sale was
primarily driven by the need to improve efficiency and control of
document processing.
In the manufacturing and related services sectors we made sales
to four customers whose businesses were involved in oil and gas
exploration, food processing, automotive parts distribution and
construction services. These sales were primarily driven by the
need to improve efficiency and control of document processing.
Delivering market-driven innovation
In the first quarter we made available to all customers a new
software release which continued the theme of making documents and
workflow available anywhere. This release, as well as supporting
the latest platforms and using the latest technology (.Net4),
offered invoice processing functionality applicable to small and
medium size business, provided simple records management and
enabled portals for the accountancy sector.
In the fourth quarter we made available our latest software
release which included, performance improvements for indexing,
improvements to drag and drop usability, improved capability in
search and explore functionality where a large number of documents
are being returned, SQL Server 2012 support, Windows 8 support for
client installations, custom barcode splitting and improvements to
PDF handling.
Outlook
The UK economy is expected to continue to perform weakly in our
next financial year to 31 January 2014. As the majority of our
business comes from UK customers, we are anticipating this will be
another demanding year. Our first quarter performance has been
consistent with our expectations. Over the full financial year we
intend to continue to build on the stable base we have created
during last three financial years.
Colin Gallick
Chief Executive Officer
15 May 2013
Financial Review
Revenue generated in the year was broadly flat at GBP2.7
million. Revenue comprises the sale of software and related
implementation and installation services (37.2%: last year 38.7%)
and the sale of annual software support contracts (62.8%: last year
61.3%). The revenue arising from the sale of support contracts is
recognised evenly over the life of the contract and revenue, the
key performance metric is the renewal rate which was 88% (last year
90%).
The gross profit has increased to GBP2.3 million from GBP2.2
million. This represents an improvement in the gross margin
percentage from 81.9% to 84.7%. This improvement is the result of
favourable sales mix in both the distribution channel and the mix
of software and services sold.
Administrative expenses decreased from GBP2.3 million to GBP2.0
million. Headcount related costs are the major constituent of
administrative expenses and these decreased by GBP0.2 million due
to a combination of lower headcount; average headcount was 28
compared to 32 last year, and lower incentive payments. The other
major contributor to the decrease was a GBP0.1m decrease in
depreciation and amortisation expense.
Finance costs were GBP0.2 million lower than last year as a
result of the first full year of benefit of the conversion of
GBP2.4 million of borrowings to equity in July 2011 and the
subsequent repayment of GBP0.5 million of borrowings in August
2011, which were both enabled by the issue of shares in July
2011.
The net profit of GBP0.3 million (2012: loss GBP0.2 million)
results in an earnings per share of 0.06 pence compared to a loss
per share of 0.07 pence in the previous year.
The operating cash generation was GBP0.2 million (2012: GBP0.1
million). This arose from an adjusted EBITDA profit of GBP0.4
million (2012: GBP0.1 million) and cash consumption from working
capital of GBP0.2 million. An improvement in debtor days sales
outstanding from 71 days to 42 days, helped reduce debtors by
GBP0.1 million. This improvement in debtors was more than offset by
payments made to reduce trade and other payables of GBP0.3
million.
An important part of working capital is the deferred service
revenue related to customer care and other services and this
remained stable at GBP1.1 million.
Net cash generation in the period was at the same level as last
year GBP0.2 million and this resulted in a closing cash balance of
GBP0.8 million (2012: GBP0.6 million).
The consolidated balance sheet, following the net profit of
GBP0.3 million, shows a shareholders' deficit of GBP0.5 million
compared to a GBP0.8 million deficit last year.
The Company balance sheet shows shareholders' funds of GBP1.1
million compared to GBP2.0 million last year. This decrease arises
from the loss in the company which is primarily caused by a
provision of GBP1 million against the value of the investment in
subsidiaries which now have a net book value of GBP1 million. This
provision is the result of marking the investment in subsidiaries
to market based on a valuation metric related to the company share
price. The share price had declined from 0.42 pence at the end of
last year to 0.21 pence at the end of the year.
Ian Smith
Finance Director
15 May 2013
INVU PLC
Consolidated Statement of Comprehensive Income
For the year ended 31 January 2013
Notes 2013 2012
GBP'000 GBP'000
Revenue 2 2,668 2,684
Cost of sales (409) (487)
---------- ----------
Gross profit 2 2,259 2,197
Administration expenses (1,971) (2,298)
---------- ----------
Profit/(Loss) from operations 2 288 (101)
Finance costs (9) (167)
---------- ----------
Profit/(Loss) before income tax 2 279 (268)
Income tax credit 3 26 42
---------- ----------
Profit/(Loss) for the year attributable
to:
Equity holders of the parent
company 2 305 (226)
Total comprehensive income for
the year attributable to:
Equity holders of the Company 305 (226)
Profit/(Loss) per share
Basic and diluted (pence per
share) 4 0.06 (0.07)
---------- ----------
INVU PLC
Consolidated Balance Sheet
As at 31 January 2013
Notes 2013 2012
GBP'000 GBP'000
Non-current assets
Intangible assets 122 137
Property, plant and equipment 18 24
------------ ------------
140 161
Current assets ------------ ------------
Trade and other receivables 549 634
Cash and cash equivalents 5 791 641
------------ ------------
1,340 1,275
------------ ------------
Total assets 1,480 1,436
Current liabilities
Trade and other payables 1,895 2,181
Borrowings 30 26
------------ ------------
1,925 2,207
------------ ------------
Net current liabilities (585) (932)
------------ ------------
Non-current liabilities
Borrowings 34 64
------------ ------------
34 64
------------ ------------
Total liabilities 1,959 2,271
Net liabilities (479) (835)
Equity
Share capital 4,738 4,738
Equity components of convertible loan
notes 375 375
Shares to be issued 29 29
Share premium 412 412
Merger reserve 361 361
Share option reserve 297 246
Reverse acquisition reserve (20,570) (20,570)
Retained earnings 13,816 13,511
Foreign currency translation reserve 63 63
------------ ------------
Total deficit attributable to:
Equity holders of the Company (479) (835)
Consolidated statement of changes in equity
For the year ended 31 January 2013
Equity
Components Shares Foreign
of to Share Reverse Currency
Share Convertible be Share Merger option acquisition Retained Translation
Capital loan notes issued premium reserve reserve reserve earnings reserve Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
At 1 February
2011 1,635 375 29 412 29,260 233 (20,570) (15,090) 63 (3,653)
Total
comprehensive
income - - - - - - - (226) - (226)
Transfer
between
reserves - - - - (28,899) - - 28,899 - -
Movement on
share
option
reserve - - - - - 13 - - - 13
Issue of
shares 3,103 - - - - - - (72) - 3,031
At 31 January
2012 4,738 375 29 412 361 246 (20,570) 13,511 63 (835)
Equity
Components Shares Foreign
of to Share Reverse Currency
Share Convertible be Share Merger option acquisition Retained Translation
Capital loan notes issued premium reserve reserve reserve earnings reserve Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
At 1 February
2012 4,738 375 29 412 361 246 (20,570) 13,511 63 (835)
Total
comprehensive
income - - - - - - - 305 - 305
Movement on
share
option
reserve - - - - - 51 - - - 51
At 31 January
2013 4,738 375 29 412 361 297 (20,570) 13,816 63 (479)
INVU PLC
Consolidated cash flow statement
For the year ended 31 January 2013
Notes 2013 2012
GBP'000 GBP'000
Net cash inflows from operating activities 6 228 140
Taxation 26 77
Investing activities
Purchases of property, plant and equipment
and intangibles (8) (35)
Sales of property, plant and equipment - 1
Expenditure on internally developed intangible
assets (61) (54)
------------ ------------
Net cash used in investing activities (69) (88)
Financing activities
Net proceeds from the issue of shares - 677
Borrowings (repaid) (26) (535)
Interest paid (9) (100)
------------ ------------
Net cash (used in)/generated by financing
activities (35) 42
------------ ------------
Net increase in cash and cash equivalents 150 171
Cash and cash equivalents at the beginning
of the year 641 470
Cash and cash equivalents at the end
of the year 5 791 641
-------------------- ------------------
INVU PLC
Notes to the preliminary announcement
For the year ended 31 January 2013
1. ANNUAL REPORT
The financial information set out above/ below does not
constitute the company's statutory accounts for 2012 or 2013.
Statutory accounts for the years ended 31 January 2013 and 31
January 2012 have been reported on by the Independent Auditors. The
Independent Auditor's report on the Annual Report and Financial
Statements for 2013 and 2012 were unqualified and did not contain a
statement under 498 (2) or (498 (3) of the Companies Act 2006.
Statutory accounts for the year ended 31 January 2012 have been
filed with the Registrar of Companies. The statutory accounts for
the year ended 31 January 2013 will be delivered to the Registrar
in due course and will be posted to shareholders shortly and
thereafter will be available from the Company's registered office
at Blisworth Hill Farm, Stoke Road, Blisworth, Northampton,
Northamptonshire NN7 3DB and from the Company's website
www.invu.net.
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 consolidated financial statements for the year ended 31
January 2013 comprise the consolidated financial information for
Invu plc ("the company") and its subsidiaries.
2. SEGMENTAL ANALYSIS
The board is the chief operating decision maker and they review
the group results together with the gross margin and other measures
for decision making purposes. On this basis it is considered that
as the group's activities are operated largely through a common
infrastructure and support function its activities constitute one
operating segment.
The segment results are as follows:
2013 2012
GBP'000 GBP'000
Revenue by service:
Sale of software licences and
related services 992 1,040
Sale of software maintenance contracts 1,676 1,644
------------ ------------
Revenue 2,668 2,684
Gross profit 2,259 2,197
Profit/(Loss) from operations 288 (101)
Profit/(Loss) before income tax 279 (268)
Profit/(Loss) for the year 305 (226)
Included in revenue above are GBP0.084 million (2012: GBP0.086
million) related to sales in Europe. All other revenue relates to
the UK.
All non-current assets and liabilities are held within the
UK.
The Group had one reseller who was responsible for 14% (2012:
7%) and another reseller who was responsible for 12% (2012: 17%) of
the Group's sales through resellers to end users. No other reseller
was responsible for more than ten percent of the Group's sales
through resellers to end users.
3. TAXATION
2013 2012
GBP'000 GBP'000
Current taxation
- Adjustment in respect of prior years (26) (42)
- Current tax charge - -
Total tax credit (26) (42)
============ ============
The tax rate used for the reconciliations below is the corporate
tax rate of 24% (2012: 26%) payable by corporate entities in the
United Kingdom on taxable profits under tax law in that
jurisdiction.
The charge for the year can be reconciled to the profit/(loss)
per the income statement as follows:
2013 2012
GBP'000 GBP'000
Profit/(Loss) before taxation 279 (268)
============ ============
Profit/(loss) multiplied by standard rate
of corporation tax in the UK of 24% (2012:
26%) 67 (70)
Tax effect of:
Expenses not deductable 2 47
Enhanced relief on research and development (3) (14)
Tax effect of share options 12 3
Fixed asset temporary differences 1 13
(Utilisation of)/unutilised losses carried
forward (79) 21
Research and development tax (credit) (26) (42)
Total tax (credit) for the year (26) (42)
============ ============
4. EARNINGS PER SHARE
2013 2012
Number Number
Weighted average number of common shares in
issue during the year 473,752,662 320,083,512
================ ================
Basic profit per share 0.06 p (0.07)p
================ ================
Diluted profit per share 0.06 p (0.07)p
================ ================
The basic loss per share is based on the profit after taxation
of GBP305,000 (2012: loss GBP226,000) and on the weighted average
number of shares in issue during the year of 473,752,662 (2012:
320,083,512). The deferred shares are excluded from this
computation as they have no dividend rights.
In accordance with IAS 33, there is no difference calculated
between the basic and diluted earnings per share figures on the
basis of the average market value and exercise prices prevailing
during the period. The convertible loan notes have no impact on
diluted earnings per share because the exercise of conversion
rights would have the effect of increasing the profit per share by
virtue of saving of loan stock interest which would otherwise be
payable.
5. CASH AND CASH EQUIVALENTS
2013 2012
GBP'000 GBP'000
Cash at bank and in hand 791 641
6. CASH GENERATED FROM OPERATIONS
2013 2012
GBP'000 GBP'000
Profit/(Loss) for the year 305 (226)
Adjustments for:
Tax (26) (42)
Depreciation 13 35
Amortisation 77 145
(Profit)/Loss on disposal of property,
plant and equipment - (1)
Employee share scheme expense 51 13
Interest expense 9 167
Changes in working capital:
Trade and other receivables 85 (98)
Trade and other payables (286) 147
Net cash generated by operating activities 228 140
========== ===========
7. AVAILABILITY OF THIS ANNOUNCEMENT
Copies of this announcement will be available from the Company's
registered office: Blisworth Hill Farm, Stoke Road, Blisworth,
Northampton, Northamptonshire NN7 3DB, and on the Company's
website, www.invu.net.
8. 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
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