Print   



23 July 2009

Invu Plc

Preliminary Results for the Year Ended 31 January 2009

Invu plc ('Invu' or the 'Company'), (INVU.L) the document management software provider, announces its unaudited preliminary results for the year ended 31 January 2009.

Key Financial Points

• Revenues of £3.4m (2008: £8.7m)
• Recognised recurring revenues from InvuCare increased by 12% to £1.64m (2008: £1.47m)
• Loss before tax of £9.6m, including £7.0m provision for trade debtors (2008: Profit £1.7m)
• Loss per share of 7.89p (2008: profit of 1.07p)
• Review and implementation of new sales procedures, leading to prospective change of accounting policy from 1 February 2009
• Secured £750,000 revolving working capital facility in September 2008
• Reduced overheads by 20% in Q4 to bring the business closer to cash break even position
• Maintained high gross margins of 92% (2008:96%)
• Announced today £1.5 million raised via a conditional placing of new shares and the issue of convertible loan notes

Operational Highlights

• Improvements to Series 6 strengthened InvuCare renewal rate to 82% for the year (2008: 77%) 
• Software sold to 508 new sites (2008: 727); new end users included Aberdeen Royal Infirmary, Institute of Chartered Accountants in Ireland, Diocese of Rochester, Iron Mountain and Makita Manufacturing
• 10,928 new seats installed (2008: 17,365)
• Repeat sales to 387 existing sites (2008: 427) including Starwood Hotels Group, Kier Building Services, Mansell Construction and Korn Ferry
• Colin Gallick appointed as CEO on 16 April 2009

Daniel Goldman, Non Executive Chairman, said:

'This year has been the most challenging of the Company's existence, leading the Board to take decisive action in order to secure Invu's future growth and profitability. It has been a very disappointing performance, and we are aware that we are on a path to rebuild our credibility with the key stakeholders of the business. The changes we have made will take time to produce a result, but we are already seeing the positive impact they are having. I have taken the opportunity to engage in close contact with our key employees, partners and investors and I am confident that we have a strong and loyal group which will continue to support us in future. As Chairman, I remain excited about the prospects for Invu as a leading vendor to the SME market for document management and know that major opportunities still exist for us to substantially grow as a brand and as a business.'

Colin Gallick, Chief Executive, said:

'I am very excited about the opportunities for Invu. Although much hard work is ahead of us, I have found a motivated and talented team capable of restoring profitable growth. The product is sound and we have a group of strong and loyal partners. Our installed base of customers is by far the largest of any document management vendor within the UK SME market, which forms a great platform to plot our course forward. More changes will be required, but the basic building blocks are in place to grow Invu into the dominant vendor of document management software in the UK.'

 Enquiries:

Invu Inc	01604 859893
Daniel Goldman, Non Executive Chairman
Colin Gallick, CEO
John Agostini, CFO
Financial Dynamics	020 7831 3113
Juliet Clarke/Haya Chelhot/Emma Appleton
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 48 employees and operates in the UK, Ireland and The Netherlands with some limited distribution in South East Asia, Australia, the United States of America. Invu's products have been sold to over 4,200 customers, representing approximately 83,000 licensed users. Invu has a proven reseller business model and has established a network of more than 180 Value Added Resellers, 8 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 DDM 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.

In January 2008, Invu announced a partnership agreement with IRIS, to integrate its Invu technology into the award winning IRIS Practice Management system, extending the IRIS systems' existing document functionality.

 

Invu achieved the ISO 9001 compliance, in March 2008. Used by over ¾ million organizations the accreditation sets the standard for quality and management systems, by helping companies to succeed through improved customer satisfaction, staff motivation and continual improvement.

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

This financial year has been extremely challenging and our performance has been disappointing, leading the Board to initiate a series of significant changes. The Group has struggled to resolve long-standing issues relating to its debtors, and has suffered from the knock on effects of this issue, the main one being a serious negative impact on operating cash flow.

We have taken several steps to stabilise the Group's financial position, most of which we announced in December. They include the recruitment of Colin Gallick as CEO to replace David Morgan, the Group's founder; a strategic review of the sales and revenue recognition processes of the Group; and changes to the way in which the Group engages with its channel partners, including the complete eradication of the use of stock as part of our sales strategy. In addition, the Group has reduced overhead levels by about 20% to bring its operations in line with its current trading position. This has stemmed the significant cash outflows caused by a combination of the stagnation of our debtors, and a drop in the levels of new business experienced last autumn, as the macro-economic environment weakened.

These steps are the beginning of a process to restore the Group to profitability and to being cash flow positive. We expect that further changes will be made as the strategy of the business evolves.

On a more positive note, we have seen trading gradually improve over the last few months with consistent product and InvuCare deployments during the current financial year. Our market share in certain key verticals, such as accountancy, continues to grow steadily. These encouraging signs help to restore confidence in our ability to grow the business, and crucially we maintain a high renewal rate for InvuCare, our maintenance and software assurance. In addition, our Series 6 product which had been the source of some of our difficulties is now in good shape giving both our partners, and indeed our employees', greater confidence in the Group.

It is pleasing to be able to announce separately today that an aggregate of £1.5 million has been raised through the conditional placing of 50 million new shares at 2 pence per shares and £0.5 million by the issue of convertible loan notes. Further details are set out in a circular to be sent to shareholders later today.

Board changes

I would like to take this opportunity to thank Bernard Fisher who stepped into the role of interim CEO at short notice. Everyone connected with the Group has benefited from Bernard's positive contribution, stabilising the Group during this turbulent period. I would also like to thank David Morgan, who has recently left the Group and stepped down from the Board, and John Agostini who resigned in July and will leave the Group in September 2009.

In the last months we have taken steps to strengthen the management team and position Invu better for the next phase of its development. I am very pleased with our recent CEO appointment. Colin Gallick is an experienced channel executive having worked for companies ranging from an international leader such as Compaq, and also playing a leading role in various successful growth companies like Utopia, Witness Systems, and GuardedNet. The bulk of Colin's experience is in sales and marketing and I am pleased to say that our employees and business partners have responded positively to his appointment. 

The bedrock of the Group's survival has been its employees and I want to thank them for their continued support. Their loyalty has been a constant throughout and has given me the encouragement and confidence to remain excited about our long term prospects.

Daniel Goldman

Chairman

23 July 2009

CHIEF EXECUTIVE'S STATEMENT

Introduction

I am very excited at the opportunity to manage Invu and I have found employees, management and partners excited about the future of the Group. While I do not under-estimate the task ahead, I am very encouraged by the platform in place. I would like to thank current and past management and employees of the Group for their loyalty and dedication and look forward to the task ahead.

While still too early to make any real predictions, my ambitions for Invu are high, and what I have found so far suggests that a strong product and team are in place to help me realise the Group's goals.

The trading performance for the year ended 31 January 2009 was very disappointing; I am anticipating that the new revenue recognition policy implemented on 1 February 2009 will provide us with greater financial and operational clarity. My first task of getting to know all of the employees and partners is all but complete, and I will be making every effort to understand the expectations of all of our stakeholders, and in particular our investors.

Financial Performance 

The year to 3st January 2009 resulted in a reduction in turnover and significant losses incurred. In addition, the balance sheet was weakened as a result of a further deterioration in our debtor position. All of this led to the changes initiated by the Board in December, some of which are ongoing, and have been described in the Chairman's statement above. There are already signs that the new sales strategy and reduced operating costs are aiding the Group's recovery.

Turnover for the year was £3.36m (2008: £8.71m), and reflects the impact of the economy on our customer base and the continued problems with Series 6 in H1. The revenue recognised includes £0.9m, which was subsequently provided in full and was charged in administrative expenses. Recognised recurring revenues from InvuCare increased to £1.64m in the year ended 31 January 2009, compared to £1.47m in the previous year.

Gross profit margin was 91.4% (2008: 96.6%). The reduction is purely attributable to the fixed element of cost of sales being a much higher percentage of the reduced turnover in the year. As turnover increases (even modestly), we would expect the gross margin to approach previous levels.

Technical and support expenditure, which includes research and un-capitalised development, technical support and professional services, was £1.38m for the year (2008: £0.89m). It remains the Group's policy to direct research and development according to the needs of the market. After a period of difficulties from the initial release of Series 6, significant investment has brought the product to a position where it is robust and reliable and has now been strongly welcomed into the market as a leading document management product. As a result, the development team can now devote significantly more effort on specific market orientated projects such as 'Invu for Accountants' and 'Invu for Enterprise'. The foundations for the next generation of Invu software are also being laid.

Sales and marketing expenditure increased by 6% to £1.93m (2008: £1.82m). The significant reduction in turnover for the year meant that sales costs rose to 54% of turnover (2008: 21%). Approximately half of this increase is attributable to the strategies relating to Ergo, in addition to various marketing activities relating to our core products. Going forward all of the sales and marketing activities will be directed to our core products and the support of our partner channel. As recently announced, David Morgan is pursuing a new venture focused on developing the opportunities around Invu's Ergo technology, and as a result will be licensing the technology from Invu, including a royalty arrangement, as well as supporting Ergo customers on an ongoing basis. As with every area of the business, future costs will be commensurate with anticipated turnover levels. 

General and administrative expenses, excluding debt provisions were £2.10m (62% of turnover). This compares with £2.33m (27% of turnover) excluding restructuring costs and debt provisions for the previous year. 

Loss before tax excluding exceptional items for the year ended 31 January 2009 amounted to £2.55m (2008 profit of £3.42m). This figure is extremely disappointing and relates to operating losses incurred as a result of lower than expected turnover due to continued problems with Series 6 in the first half and the effects of the global slowdown in the second half. Most significantly, the £7.04m of debt provisions has resulted in a loss before tax of £9.59m. The post tax loss for the year is £8.83m (2008: profit £0.99m) and loss per share is (7.89)p (2008: earnings per share 1.07p). 

The Group's balance sheet was weakened by significant cash out flows, particularly in the second half. The Group secured a revolving working capital facility of £750,000 from its bankers in September 2008 which has provided the Group with the cash to work through this difficult period. On 26 May 2009, the Company announced that it had entered into an agreement with one of its substantial shareholders, Tyne & Wear Holdings Limited ('Tyne & Wear'), pursuant to which Tyne & Wear has agreed to provide a term loan facility of up to £0.5 million. In addition, Invu has announced separately today that, subject to shareholder approval, it proposes to raise an aggregate of £1.5 million through a placing of 50 million new Ordinary Shares at a price of 2 pence per share and the issue of Convertible Loan Notes, Furthermore, the Company has agreed in principle, the terms of a £0.5 million secured loan with Shore Capital Limited, acting as the investment manager of the Puma Venture Capital Trusts. Further details relating of the fundraising are set out in a circular being sent to shareholders later today..

Net cash outflow from operating activities was £2.25m (2008: £2.34) and closely resembles the pre tax loss for the year before depreciation and exceptional debt provisions. Purchase of intangible assets of £0.54m, taxation payments of £0.20m and repayments to US shareholders of £0.14m contributed to a net decrease in cash and cash equivalents of £3.21m (2008: increase of £0.40m).

The debtor position has been substantially reduced through the provisioning of debts that were either old or deemed to be in doubt. This has given rise to a trade debtor position as at January 31st 2009 of £1.01m (2008: £10.80m), which we believe better reflects current trading and intended revenue recognition policy of the Group. The Group has undertaken a review of its sales processes, leading to a change in the revenue recognition as at 1st February 2009.

The Board will not be recommending the payment of a final dividend.

Operations 

Trading

This has been a very challenging year for trading. Total sites grew to 4,208 and total seats deployed were almost 83,000 at 31 January 2009. During the year, the Group sold software to 508 new sites (2008: 727) installing a total of 10,928 new seats (2008: 17,635). Repeat sales continue to be an important source of revenue with sales to 387 existing customer sites (2008: 427 sites). 

The Group has accredited 32 new resellers (2008: 47) during the year and at 31 January 2009 our reseller base stood at 188 (2008: 166). We are currently reviewing the entire channel strategy with a view to focusing more closely on our most successful partners, and also introducing additional partners in specific vertical sectors.

InvuCare recurring revenue represents a significant proportion of invoiced sales, and increased during the year ended 31 January 2009 by nearly 12% to £1.64m (2008: £1.47m). This equates to an 82% renewal rate (2008: 77%) and is directly attributable to the significant improvements to Series 6 during the year.

As a result of the downturn in trading and the level of debtors, we initiated a cost reduction programme across all departments in the fourth quarter of the year. This exercise resulted in a 20% reduction in overheads. Most of these savings were achieved through staff redundancies and a thorough review of all other costs. We are closely looking at all areas of the business to make sure that we are investing only in our core business activities which can form the base of our future growth and return to profitability. The anticipated influx of funds from the various fundraising announcements mentioned above will be key to the Group's recovery and growth plans.

Sales and Marketing and Channel Management 

There have been several changes to sales and marketing processes during the year. The most key of these has been to stop any forms of stock sales to the channel. This form of business had in the early years proved a successful method for developing new partners, giving them strong incentives to sell the product by selling amounts of stock at larger discounts, and then actively helping them to sell this on to their customers. Over the last two years this has become a much larger part of our business, and, in particular, immediately prior to, and following, the launch of Series 6. 

The well documented problems following the release of Series 6 led to a position that had become unmanageable, leaving the Group with a very high level of debtors across a number of our channel partners. In spite of attempts to do so, the Group was unable to reduce this and consequently this has created severe knock-on effects within the Group, the key one being significant cash out flow weakening its balance sheet.

Radical action has now been taken with the Group eradicating this policy totally, and also making a prospective change to the accounting policy in recognition of this change as from 1 February 2009. In addition, the remuneration policy with regards to both our sales executives and also our channel partners has been changed to incentivise purely against sales by our partners to their customers, rather than sales made by Invu to its channel partners. This has had a dramatic affect on the number of recognised sales in the financial year, and is coupled with a broader review of the relationship we have with our partners. The results of that review have led to a series of actions that are being introduced gradually to our partners, facilitated by a period of dialogue, both inside the Group, but crucially also with our key partners.

We have also restructured the channel to allow for our senior partners to be more differentiated in the market, based on their technical and vertical skill set. To that end, we have recently launched Invu for Accountants, which is a more specific version of our core product with integration into the IRIS Practice Management suite. This is the first of several similar initiatives looking to consolidate the various verticals where we already have a strong position, and extend into new verticals where we feel we have a compelling market proposition. In addition, where appropriate we are hiring selectively in order to address the geographic gaps in our sales team.

I will be working on a more detailed sales and marketing plan, integrated with our product road map in the coming weeks, and expect to give a more in depth presentation by the time of our interim results.

Our main overseas market is still the Netherlands where we continue to work through Bell Micro as the senior distributor. We are reviewing the structure of the Dutch sales operation and expect to make further announcements about this later in the year.

Product Development

During the year we have continued to solve problems relating to Series 6, and the majority of these have been resolved to the satisfaction of the channel and the customers. There remain some open issues relating to the migration from version 5.4 to 6, but these are also gradually being mitigated.

During the year the team continued to develop the Ergo products, although this has now been discontinued as part of the change in focus allowing the team to create a roadmap solely in support of the core product set around Series 6. 

I have made some changes to the processes relating to product management and development, creating a team consisting of our CTO, Stuart Evans, Product Manager, Mark Palmer, and Chief Architect John Rippington, who now take full responsibility for the execution of the Group's strategy with respect to future developments of the product.

Strategy

Having undertaken a review of the business and its opportunities, I now have some clear strategic priorities. These are to re-engage with existing successful partners, dominate existing verticals, attack new verticals, extend into the 'M' of SME and return to market-driven innovation.

Current trading

Product deployments for the first quarter of the current year are broadly in line with expectations with 2,532 seats deployed (Q1 2008: 2,463). The improvements to Series 6 have contributed to InvuCare renewals also being at anticipated levels. The overhead reductions made in the fourth quarter of the year ended 31 January 2009 now provide a stable cost base from which to grow the business in line with the strategy outlined above. Following the provisions made at the year end, the changes to our sales processes, and the revised revenue recognition policy, debtor days have been reduced significantly.

Outlook

Much work remains to be done to complete a fuller business plan, although certain things are already clear. 

We must re-engage more positively with our channel partners to give them fuller support in their efforts to grow their businesses. Some of the other problems in the business have side-tracked us away from this primary role.

We must focus on our core mission which is a document management Group selling to SMEs through partner channels.  

We must continue to improve the quality of our partner base, looking towards larger partners with more of a 'business solution' focus. This is not to replace our existing base of partners, who do a great job for us, but will allow us to penetrate markets currently closed to the Group.

Finally, I will continue the work initiated by Bernard Fisher, the interim CEO, in rebuilding the confidence of all our stakeholders in the business, as our success will rely upon the motivation and satisfaction of our employees and partners.

I am excited about the opportunities ahead of us and look forward to reporting on our continued progress in due course.

Colin Gallick 

Chief Executive Officer

23 July 2009  Invu PLC

Consolidated income statement

For the year ended 31 January 2009

		Unaudited 2009	Audited 2008
		£'000	£'000
Continuing operations
Revenue		3,362	8,711
Cost of sales		(290)	(297)
		─────	─────
Gross profit		3,072	8,414
Distribution costs		(428)	(416)
Administration expenses		(12,242)	(6,324)
		─────	─────
Operating (loss)/profit		(9,598)	1,674
Finance income		21	157
Finance costs		(13)	(109)
		─────	─────
(Loss)/Profit before income tax		(9,590)	1,722
Income tax credit/(expense)		762	(728)
		─────	─────
(Loss)/Profit for the year		(8,828)	994
		═════	═════
Attributable to:
Equity holders of the company		(8,828)	994
		═════	═════
Earnings per share
Basic (pence per share)		(7.89)	1.07
		─────	─────
Diluted (pence per share)		(7.89)	1.07
		─────	─────

 

Invu PLC

Consolidated statement of recognised income and expense

For the year ended 31 January 2009

		Unaudited 2009	Audited 2008
		£'000	£'000
(Loss)/Profit for the year		(8,828)	994
		─────	─────
Exchange differences arising on translation of foreign currency net investments		124	(55)
Reversal of deferred tax asset previously recognised		-	(111)
		─────
Net profit/(loss) recognised directly in equity		124	(166)
Total recognised (loss)/income for the year		(8,704)	828
		═════	═════
Attributable to:
Equity holders of the company		(8,704)	828
		═════	═════

  Invu PLC

Consolidated balance sheet

As at 31 January 2009

 

		Unaudited 2009	Audited 2008
		£'000	£'000
Non-current assets
Goodwill		-	-
Other intangible assets		951	835
Property, plant and equipment		376	468
Deferred tax asset		244	279
		─────	─────
		1,571	1,582
Current assets		─────	─────
Inventories		184	258
Trade and other receivables		2,099	11,032
Cash and cash equivalents		-	2,569
		─────	─────
		2,283	13,859
		─────	─────
Total assets		3,854	15,441
		═════	═════
Current liabilities
Trade and other payables		2,602	5,736
Cash and cash equivalent		641	-
Obligations under finance leases		31	41
Current taxation		-	690
		─────	─────
		3,274	6,467
		─────	─────
Net current (liabilities)/assets		(991)	7,392
		─────	─────
Non-current liabilities
Obligations under finance leases		32	42
Deferred tax		244	245
		─────	─────
		276	287
		─────	─────
Total liabilities		3,550	6,754
		═════	═════
Net assets		304	8,687
		═════	═════
Equity
Share capital		1,135	1,068
Shares to be issued		29	1,466
Merger reserve		29,260	27,539
Share option reserve		283	315
Reverse acquisition reserve		(20,570)	(20,570)
Retained earnings		(9,897)	(1,070)
Foreign currency translation reserve		64	(61)
		─────	─────
Total equity		304	8,687
		═════	═════
Attributable to:
Equity holders of the company		304	8,687
		═════	═════

 

 

 

Invu PLC

Consolidated cash flow statement

For the year ended 31 January 2009

		Unaudited 2009	Audited 2008
		£'000	£'000
Net cash from operating activities		(2,252)	(2,339)
Cash flows from investing activities
Interest received		21	117
Purchases of property, plant and equipment		(35)	(279)
Purchases of intangible assets		(543)	(709)
		─────	─────
Net cash used in investing activities		(557)	(871)
Taxation		(200)	-
Cash flows from financing activities
Proceeds from the issue of shares		-	4,176
Payment of issue costs paid		-	(132)
Repayment of shareholders		(136)	(276)
Repayment of obligations under finance leases		(52)	(48)
Interest paid		(13)	(109)
		─────	─────
Net cash flow on financing activities		(201)	3,611
		─────	─────
Net (decrease)/increase in cash and cash equivalents		(3,210)	401

Cash and cash equivalents
At the beginning of the year		2,569	2,168
		─────	─────
At the end of the year		(641)	2,569
		═════	═════

 

 

 

Notes forming part of the financial statement for year ended 31 January 2009

 

 

            1.         Annual Report 

The financial information set out in this announcement does not constitute the company's statutory accounts for the years ended 31 January 2009 or 2008. The financial information for the year ended 31 January 2008 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 2009 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 on any relevant events which take place between the date of this preliminary announcement and the date of finalising the financial statements and will be delivered to the Registrar of Companies following the company's Annual General Meeting.

It is anticipated that the Annual Report will be prepared on a going concern basis. The directors are currently seeking additional funding for the business, some of which has already been announced and are confident that the necessary funds will be available for the company to achieve its future plans and growth strategy.

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 in July 2009.

The consolidated financial statements for the year ended 31 January 2009 comprise the consolidated financial information for Invu plc ('the company') and its subsidiaries.

            2.         Principal accounting policies

            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 2008; 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.

3.    Segmental analysis 

Geographical segmental information

	Unaudited	Audited
An analysis of revenue is given below:	2009	2008
	£'000	£'000
United Kingdom	2,364	7,871
Europe	998	840
	─────	─────
	3,362	8,711
	═════	═════

 

The unaudited 2009 revenue recognised includes £846k, which was subsequently provided in full and was changed through administrative expenses.    

  4.    Taxation

 

	Unaudited	Audited
	2009	2008
	£’000	£’000
Current taxation
- Current tax (credit)/charge for the year	(795)	690
	─────	─────
Deferred taxation
- Current year (credit)/charge	33	38
	─────	─────
Total tax charge/(credit)	(762)	728
	═════	═════

 

 

             5.    Earnings per share

	Unaudited	Audited
	2009	2008
	£'000	£'000
Basic earnings per share
Profit for the financial year	(8,828)	994
	═════	═════

	Unaudited	Audited
	2009	2008
	Number	Number
Weighted average number of common shares in issue during the year	111,899,731	92,937,782
	═════	═════
Basic earnings per share	(7.89)p	1.07p
	═════	═════
Diluted earnings per share	(7.89)p	1.07p
	═════	═════

 

The basic earnings per share is based on the loss after taxation of £8,828,000 (2008: profit of £994,000) and on the weighted average number of shares in issue during the year of 111,899,731 (2008: 92,937,782).

6.    Availability of this announcement

Copies of this announcement will be available from the Company's registered office: The Beren, Blisworth Farm, Stoke Road, Blisworth, Northampton, Northamptonshire NN7 3DB, and on the Company's website, www.invu.net.

           7.    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.

ENDFR UORORKARBUAR