TIDMINVU
RNS Number : 8022A
Invu plc
15 October 2009
15 October 2009
Invu PLC
Interim Results for the six months ended 31 July 2009
Invu PLC (INVU.L, the 'Group' or the 'Company'), the document management
software provider, announces its interim results for the six months period ended
31 July 2009 (H1 2010).
Key Financial Points
* Revenue GBP1.2m (H1 2009: GBP2.5m)
*
* Sales through resellers into end users of GBP1.6m (H1 2009: GBP2.0m)
* Operating loss GBP1.6m (H1 2009: GBP0.7m) before exceptional cost of GBP1m
* Cash consumption GBP0.5m (H1 2009: GBP2.1m)
Commercial Highlights
* New CEO appointed in April 2009
* Focus on core competences
* Partner channel reorganised
* Restructuring of the sales team
* Increase in end user from 4,208 end user sites at 1 February 2009 to 4,406 end
user sites by 31 July 2009
* Launch of Invu for Accountants in April 2009
Post period-end Highlights
* GBP2m before expenses raised in August 2009
* New Finance Director appointed in August 2009
* GBP1.5m financing facility agreed in principle in October 2009
* Further board changes
Daniel Goldman, Non Executive Chairman of Invu, commented:
"The Board initiated several radical changes to the business during this period.
These have included operational, financial and management changes. The new
management team is executing on the programme set out to redress the business
and drive it forward. We are certainly not at the end of the recovery process
yet, but I am confident with the new team in place and a thorough review of all
aspects of the business completed that we are now able to start looking forward
again."
Colin Gallick, Chief Executive Officer of Invu, commented:
"The strategic and operational changes we have made to the business have put us
in a solid position to grow the business and improve profitability and cash
flow. Whilst there is still much work to be done I am particularly pleased with
the way the team at Invu has responded to the challenges during the last few
months."
+------------------------+------------------------+
| Enquiries: | 01604 859893 |
| Invu Plc | |
+------------------------+------------------------+
| Colin Gallick, CEO |
+-------------------------------------------------+
| Ian Smith, CFO |
| |
+-------------------------------------------------+
| Financial Dynamics | 020 7831 3113 |
+------------------------+------------------------+
| Juliet Clarke/Haya Herbert-Burns/Emma Appleton |
+------------------------+------------------------+
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 Invu's products have been sold to over 4,400 customers, representing
approximately 87,000 licensed users. Invu has a proven reseller business model
and has established a network of more than 40 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).
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
In the last annual report, the Board identified the strategic priorities
necessary to restore the Group to profitability and positive cash flow as well
as restoring stakeholder confidence in the business through management changes,
good governance and adequate funding of the business.
The results for the first half of this financial year carry the costs of the
necessary changes taken to rebuild sustainable profitability and positive cash
flow. The Board expects the benefits of the steps undertaken to be realised in
future financial years when the changes identified by the CEO in his statement
have had time to take effect.
The Board has implemented several management changes during and since the end of
the period to 31 July 2009. Principally, the recruitment of a new CEO (Colin
Gallick joined in April 2009) and Finance Director (Ian Smith joined at the end
of August 2009). These two executives respectively replace David Morgan who
stepped down as CEO in February 2009 and left the Group in April 2009, John
Agostini who resigned as Finance Director in July 2009 and left the Group in
September 2009 and Jon Halestrap, the Sales Director, who has recently resigned
and has now left the Group. The position of Sales Director will not be replaced
and this role will be fulfilled by Colin Gallick who is an experienced sales
professional.
The Board had identified the need for a new Senior Independent Director and in
August 2009 the Group announced the appointment of Mark Wells as a non-executive
director. Tom Maxfield resigned from the Board during that month following ten
years as a non-executive director.
The board has decided that it wishes to change the Company broker and has
informed Arbuthnot Securities that it will be appointing another broker and
NOMAD in due course. Arbuthnot Securities will continue to be the nominated
advisor and broker until such time as a replacement is appointed.
Invu's poor performance in the last financial year, the losses incurred during
the period and the expected losses for the full year have necessitated that the
Company seek additional ways to refinance the business. The current status on
this refinancing is as follows:
In May 2009, the Group announced that it had secured a loan facility of GBP0.5
million with one of its substantial shareholders, Tyne & Wear Holdings Limited
("Tyne & Wear").
In August 2009, the Group raised GBP2.0 million before expenses, through a
placing of 50 million new Ordinary Shares at a price of 2 pence per share, an
issue of GBP0.5 million of Convertible Loan Notes and a GBP0.5 million secured
loan with Shore Capital Limited, acting as the investment manager of the Puma
Venture Capital Trusts. The Puma loan notes will be repayable on 31 January 2011
and bear interest at 8 per cent per annum.
On 14 October 2009 the Group reached agreement in principle subject to final
negotiation and regulatory approval to a GBP1.5 million funding facility from
funding sources related to a major shareholder who is advised by Goldrock
Capital a firm in which I am a partner. Further details related to this facility
will be reported to shareholders as soon as possible.
All of the changes stated above have been achieved to better align Invu for the
next stage of its development and the additional financing will provide support
to the Company in order for it to execute its revised strategy.
Daniel Goldman
Non Executive Chairman
15 October 2009
Chief Executive's Statement
The trading performance of the business has continued to be disappointing in the
first half with sales of GBP1.2 million (H1 2009: GBP2.5 million). This result
is however an improvement on the second half of 2009 (H2 2009: GBP0.9 million).
The strategic issues faced by Invu in recent months coupled with a tough
economic environment have contributed to a weak financial performance. The
Company's well documented issues, are being addressed to help restore the
Company to profitability and positive cash flow. These issues were identified in
the preliminary results for the year ended 31 January 2009 and this half year
report provides an update on the progress achieved against the strategic aims
set out at that time.
At the time of the preliminary results we set ourselves some clear strategic
priorities namely 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. Our progress can be summarised as follows:
The Group is now focused on its core business, which is 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 target market remains small and medium sized business. The Group has
traditionally been very successful with small businesses and is now targeting a
larger share of medium sized businesses. To date and during the period, the
Group has therefore stopped all work on other activities (for example Ergo),
that do not focus on its core business and have redirected our efforts in
putting together a strong sales team to address amongst other things the
opportunity in the mid-market.
At the beginning of the period, the Group had a number of high quality resellers
who were not receiving the level of attention they warranted because of the
volume of resellers being supported across the Group. The Group is now focused
on the management and support of these channel partners who meet periodically as
a group and they have given input into the Group's product strategy, channel
management performance, policies and procedures.
The Group is now focused on managing the quality rather than the quantity of its
resellers. Going forward, the Group will be directly managing fewer resellers
who, in turn, will be able to manage the sale from prospect to order with less
direct involvement of Invu personnel. It is intended that the smaller resellers
will be managed by a distributor who will sit between the Company and the
smaller resellers. In order to achieve this, there has inevitably been some
turnover of employees in the sales team and the mix of skills in the team has
been changed towards management of channel partners rather than staff whose
skill sets were to carry out activities that a partner would reasonably be
expected to do. Though most of the initial work has been done to implement this
change, it remains at this stage work in progress which I would expect to be
completed by the end of the current financial year.
The Group has focused resources on verticals where it already has traction. Invu
for Accountants was launched in late April 2009 and the Group has recently
recruited an additional channel sales manager for the accountancy sector.
These changes have created a much more positive sentiment, as the successful
partners are now receiving more attention, both in quality and quantity.
Prior to the period, the development activity on the Series 6 product had been
limited by the amount of maintenance work required to support existing
installations. In the first half of the year and to date, the level of
maintenance work required has decreased significantly and the most recent
releases of the product have included additional features that have been well
received by customers and partners. The Series 5 customers are also being
supported with a new release of the product and the migration path from Series 5
to Series 6 is now stable.
The product road map can now focus on market driven innovation. The Group will
always seek to control the core intellectual property in its products but where
appropriate will licence its technology, which can add features and functions
that benefit customers or related software that will complement the product in a
solutions sale. In addition, the Group has recently licensed some add on
products for email and print capture which give our channel partners the
opportunity to offer enhancements to existing customers and greater
functionality to new customers.
The Group has significantly reduced its resources in the Netherlands and has
been managing the channel from the UK through Bell Micro. Trading in the
Netherlands in the first half of the year has been poor and the outlook for the
second half is no better. Accordingly, investment in this area will be minimal
and the Group is in the process of considering its strategic options with
respect to this activity.
One of the Group's major business assets is its customer base which increased
from 4,208 end user sites at 1 February 2009 to 4,406 end user sites with the
addition of 198 (H1 2009: 325) new customer sites in the period. The customer
base represents about 87,000 end users. The newly acquired customers represented
GBP0.6 million of software licence revenue (H1 2009: GBP0.9 million) at an
average revenue per customer of GBP3,100 (H1 2009: GBP2,976). Repeat sales were
made to the customer base of additional licences for seats at 165 sites (H1
2009: 215 sites) contributing GBP0.2 million to revenue in each period.
Whilst still not providing the levels of revenue that we would like, our
products are being well received by the channel and customers, and importantly
our renewals revenue for InvuCare has increased year on year, showing a high
level of loyalty within our customer base.
I would like to take this opportunity to thank the the team at Invu, as well as
all of our partners for their continued support. It is this which gives me
assured confidence that we can start to deliver on the aims that we have set out
for ourselves.
We have tried to create a much more transparent environment throughout the
Company. We attach great importance to our relationships with all the
stakeholders in the business. Whatever challenges we face within the business we
intend to communicate openly and directly with all of our stakeholders to keep
them abreast of our progress.
Outlook
It will take some time for the changes that have been implemented in the first
half of the year and to date to take effect and therefore the revenues for the
second half are expected to be at a similar level to those of the first half,
but I do believe with the changes we have made that we will see growth again in
the next financial year.
Colin Gallick
Chief Executive Officer
15 October 2009
Finance Review
The Consolidated Interim Income Statement shows an operating loss of GBP2.67
million compared to a loss for the same period last year of GBP0.70 million. The
loss for this half includes GBP1.05 million exceptional costs related to the
reorganisation of the business. The operating loss before exceptional costs was
GBP1.62 million. Though the performance in both these periods is poor, the
performance in the first half of this year does represent a significant
improvement on the performance in the second half of last year when losses of
GBP8.2 million were reported.
A review of the Group's sales strategy, resulted in eradicating the use of stock
at resellers which has effectively lead to revenue being recognised on sales to
resellers provided that shipment of product is for a specific end user order.
In the current period sales through resellers to end users was GBP1.6 million
compared to GBP2.0 million for the prior half year as shown in note 2 to the
accounts. The Board believes that sales through resellers to end users is a key
performance metric and therefore this metric has been used in this review.
Our strategy to better align the business resulted in reorganisation costs which
have been shown as exceptional costs of GBP1.05 million, covering severance
payments to former employees, a reduction in the value of stock, an impairment
to intangible fixed assets and the costs of terminating leases on property. At
the date of this report, further such actions will lead to additional costs of
GBP0.1 million, which will be reported as exceptional expenses in the second
half of the year.
Sales through resellers to end users year on year are down 20.7% (from GBP2.0
million to GBP1.6 million), due to a drop in software licences and related
services (from GBP1.1 million to GBP0.8 million) which led to a drop in InvuCare
revenue (from GBP0.83 million to GBP0.79 million). The board believes the
decrease in the UK of 14.7% (GBP0.27 million) can be attributed to the weaker UK
economy, whereas the decrease in Europe of GBP0.14 million, can be attributed to
poor sales practices in the Netherlands in prior years which have resulted in
credit notes this year. InvuCare renewals income remains strong and was up 13%
in the period compared to the same period last year. The renewal rate is 86%
(last year 89%) and at the period end the balance sheet included GBP0.9 million
of deferred income related to InvuCare.
The gross margin percentage is down from 94.6% to 84.4% this decrease is due to
the volume impact on a relatively fixed cost base and increased commission due
to software partners.
As part of our efforts to reduce costs, sales and marketing costs have been
reduced by 21.4% from GBP1.1million to GBP0.8 million and other administrative
expenses are down 12.4% (from GBP1.9 million to GBP1.7 million), contributing to
the overall decrease in operating overheads of GBP0.4 million (13.9%). Although
the Group announced in December that it was cutting its overheads by 20%, higher
professional fees relating to funding and governance have had an impact and
further savings will be seen in H2. The reduction in overheads has been achieved
through, headcount reductions (from 65 to 51 average heads employed) and a
reduction in property costs and other expenses.
Monthly interest expense has increased from GBP3,000 to GBP30,000 due to
interest on the bank overdraft and interest on the Tyne and Wear Loan.
The Balance Sheet shows total shareholders' equity as a deficit of GBP2.4
million at 31 July 2009. The balance sheet has subsequently been strengthened by
a mix of equity and long term debt funding (GBP2.0 million) in August 2009 and
is in negotiation for an additional funding facility of up to GBP1.5 million in
October 2009. During the period financing included a new loan from Tyne and Wear
of GBP0.5 million which is repayable 31 December 2010. An overdraft facility of
GBP0.75 million used to part fund the business in the period was paid off at the
time of the August fund raising.
The Group capitalises research and development expenditure (net book value
GBP0.6 million at 31 July 2009) in accordance with IFRS, in the period GBP0.2
million of development expenses were capitalised, an impairment of GBP0.3
million was made against the investment in Ergo and there was an amortisation
charge of GBP0.23 million (the capitalised R&D is amortised over 3 years).
The net book value of tangible fixed assets (GBP0.3 million) decreased by
GBP0.08 million as depreciation exceeded the capital expenditure in the period.
The most significant current asset is trade receivables which at GBP0.8 million
were considerably lower than the same period last year due to significant bad
debt provisions made at the end of the last financial year. The Days Sales
Outstanding at the end of the period were 103 days compared to 150 days at 31
January 2009.
Stock has been reduced from GBP0.2 million to GBP0.1 million to write down the
value of slow moving stock.
Other receivables include VAT recoverable which at the last year end was GBP0.7
million and has been offset against VAT payable in this report and is this is
main reason for the decrease of GBP0.8 million in other receivables (from GBP1.1
million to GBP0.2 million).
Current liabilities have increased by GBP1.0 million year on year. The main
reasons for this are the loan from Tyne and Wear of GBP0.5 million, which was a
current liability at 31 July 2009 but became a long term liability at the August
funding and a GBP0.5 million increase in accruals and other payables.
The cash consumed in the period was GBP0.54 million (H1 2009 GBP2.1 million)
funded by the loan from Tyne and Wear GBP0.5 million and an increase in the
overdraft of GBP0.04 million.
Ian Smith
Finance Director
15 October 2009 CONSOLIDATED INTERIM INCOME STATEMENT (Unaudited)
FOR THE SIX MONTHS ENDED 31 JULY 2009
+----------------------------------------+----------+------------------------------------------------+---------------+
| | | For the six months ended |
+----------------------------------------+----------+----------------------------------------------------------------+
| | | July 31, | July 31, |
+----------------------------------------+----------+------------------------------------------------+---------------+
| Continuing operations | Notes | 2009 | 2008 |
+----------------------------------------+----------+------------------------------------------------+---------------+
| | | GBP'000 | GBP'000 |
+----------------------------------------+----------+------------------------------------------------+---------------+
| | | | |
+----------------------------------------+----------+------------------------------------------------+---------------+
| | | | |
+----------------------------------------+----------+------------------------------------------------+---------------+
| Revenue | 2 | 1,176 | 2,479 |
+----------------------------------------+----------+------------------------------------------------+---------------+
| | | | |
+----------------------------------------+----------+------------------------------------------------+---------------+
| Cost of sales | | (183) | (135) |
+----------------------------------------+----------+------------------------------------------------+---------------+
| | | | |
+----------------------------------------+----------+------------------------------------------------+---------------+
| Gross profit | | 993 | 2,344 |
+----------------------------------------+----------+------------------------------------------------+---------------+
| | | | |
+----------------------------------------+----------+------------------------------------------------+---------------+
| Sales and marketing costs | | (836) | (1,063) |
+----------------------------------------+----------+------------------------------------------------+---------------+
| Bad debts written off | | (51) | (119) |
+----------------------------------------+----------+------------------------------------------------+---------------+
| Exceptional costs | | (1,046) | - |
+----------------------------------------+----------+------------------------------------------------+---------------+
| Other Administration expenses | | (1,730) | (1,857) |
+----------------------------------------+----------+------------------------------------------------+---------------+
| Total Administration expenses | | (3,663) | (3,039) |
+----------------------------------------+----------+------------------------------------------------+---------------+
| | | | |
+----------------------------------------+----------+------------------------------------------------+---------------+
| Loss from operations | | (2,670) | (695) |
+----------------------------------------+----------+------------------------------------------------+---------------+
| | | | |
+----------------------------------------+----------+------------------------------------------------+---------------+
| Finance costs | | (30) | (3) |
+----------------------------------------+----------+------------------------------------------------+---------------+
| Finance income | | - | 13 |
+----------------------------------------+----------+------------------------------------------------+---------------+
| | | | |
+----------------------------------------+----------+------------------------------------------------+---------------+
| | | | |
+----------------------------------------+----------+------------------------------------------------+---------------+
| Loss before income tax | 2 | (2,700) | (685) |
+----------------------------------------+----------+------------------------------------------------+---------------+
| | | | |
+----------------------------------------+----------+------------------------------------------------+---------------+
| Income tax expense | | - | 25 |
+----------------------------------------+----------+------------------------------------------------+---------------+
| | | | |
+----------------------------------------+----------+------------------------------------------------+---------------+
| | | | |
+----------------------------------------+----------+------------------------------------------------+---------------+
| Loss for the period | 2 | (2,700) | (660) |
+----------------------------------------+----------+------------------------------------------------+---------------+
| | | | |
+----------------------------------------+----------+------------------------------------------------+---------------+
| Attributable to: | | | |
+----------------------------------------+----------+------------------------------------------------+---------------+
| Equity holders of the Company | | (2,700) | (660) |
+----------------------------------------+----------+------------------------------------------------+---------------+
| | | | |
+----------------------------------------+----------+------------------------------------------------+---------------+
| | | | |
+----------------------------------------+----------+------------------------------------------------+---------------+
| | | | |
+----------------------------------------+----------+------------------------------------------------+---------------+
| Loss per share | | | |
+----------------------------------------+----------+------------------------------------------------+---------------+
| Basic | 3 | (2.379)p | (0.597)p |
+----------------------------------------+----------+------------------------------------------------+---------------+
| | | | |
+----------------------------------------+----------+------------------------------------------------+---------------+
| Diluted | 3 | (2.379)p | (0.597)p |
| | | | |
+----------------------------------------+----------+------------------------------------------------+---------------+
| | | | |
+----------------------------------------+----------+------------------------------------------------+---------------+
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME (Unaudited)
FOR THE SIX MONTHS ENDED 31 JULY 2009
+----------------------------------------------------+---------------------------------+-------------------------+
| For the six months ended |
+----------------------------------------------------------------------------------------------------------------+
| | July | July |
| | 31, | 31, |
+----------------------------------------------------+---------------------------------+-------------------------+
| | 2009 | 2008 |
+----------------------------------------------------+---------------------------------+-------------------------+
| | GBP'000 | GBP'000 |
+----------------------------------------------------+---------------------------------+-------------------------+
| | | |
+----------------------------------------------------+---------------------------------+-------------------------+
| | | |
+----------------------------------------------------+---------------------------------+-------------------------+
| Loss for the period | (2,700) | (660) |
+----------------------------------------------------+---------------------------------+-------------------------+
| | | |
+----------------------------------------------------+---------------------------------+-------------------------+
| Other comprehensive income | | |
| Exchange differences arising on translation of | | |
+----------------------------------------------------+---------------------------------+-------------------------+
| Foreign currency net investments | (3) | 65 |
+----------------------------------------------------+---------------------------------+-------------------------+
| | | |
+----------------------------------------------------+---------------------------------+-------------------------+
| | | |
+----------------------------------------------------+---------------------------------+-------------------------+
| | | |
+----------------------------------------------------+---------------------------------+-------------------------+
| | | |
+----------------------------------------------------+---------------------------------+-------------------------+
| | | |
+----------------------------------------------------+---------------------------------+-------------------------+
| Total comprehensive expense for the period net of | (2,703) | (595) |
| tax | | |
+----------------------------------------------------+---------------------------------+-------------------------+
| | | |
+----------------------------------------------------+---------------------------------+-------------------------+
| | | |
+----------------------------------------------------+---------------------------------+-------------------------+
| Attributable to: | | |
+----------------------------------------------------+---------------------------------+-------------------------+
| | | |
+----------------------------------------------------+---------------------------------+-------------------------+
| Equity holders of the Company | (2,703) | (595) |
+----------------------------------------------------+---------------------------------+-------------------------+
| | | |
+----------------------------------------------------+---------------------------------+-------------------------+
CONSOLIDATED BALANCE SHEET AT 31 JULY 2009 (Unaudited)
+------------------------------------+-------+--------------+------------------------------------+------------------------------+
| | | | | |
+------------------------------------+-------+--------------+------------------------------------+------------------------------+
| | | July 31, | January | July |
| | | | 31, | 31, |
+------------------------------------+-------+--------------+------------------------------------+------------------------------+
| | | 2009 | 2009 | 2008 |
+------------------------------------+-------+--------------+------------------------------------+------------------------------+
| | | GBP'000 | GBP'000 | GBP'000 |
+------------------------------------+-------+--------------+------------------------------------+------------------------------+
| Assets | | | | |
+------------------------------------+-------+--------------+------------------------------------+------------------------------+
| Non-current assets | | | | |
+------------------------------------+-------+--------------+------------------------------------+------------------------------+
| Intangible assets | | 610 | 951 | 974 |
| | | | | |
+------------------------------------+-------+--------------+------------------------------------+------------------------------+
| Property, plant and equipment | | 299 | 377 | 456 |
+------------------------------------+-------+--------------+------------------------------------+------------------------------+
| Deferred tax asset | | 244 | 244 | 331 |
+------------------------------------+-------+--------------+------------------------------------+------------------------------+
| | | | | |
+------------------------------------+-------+--------------+------------------------------------+------------------------------+
| | | 1,153 | 1,572 | 1,761 |
+------------------------------------+-------+--------------+------------------------------------+------------------------------+
| | | | | |
+------------------------------------+-------+--------------+------------------------------------+------------------------------+
| Current assets | | | | |
+------------------------------------+-------+--------------+------------------------------------+------------------------------+
| Inventories | | 63 | 184 | 267 |
+------------------------------------+-------+--------------+------------------------------------+------------------------------+
| Trade receivables | | 776 | 1,014 | 10,014 |
+------------------------------------+-------+--------------+------------------------------------+------------------------------+
| Other receivables | | 183 | 1,084 | 202 |
+------------------------------------+-------+--------------+------------------------------------+------------------------------+
| Trade and other receivables | | 959 | 2,098 | 10,316 |
+------------------------------------+-------+--------------+------------------------------------+------------------------------+
| Cash and cash equivalents | | - | - | 466 |
+------------------------------------+-------+--------------+------------------------------------+------------------------------+
| | | | | |
+------------------------------------+-------+--------------+------------------------------------+------------------------------+
| | | 1,022 | 2,282 | 11,049 |
+------------------------------------+-------+--------------+------------------------------------+------------------------------+
| | | | | |
+------------------------------------+-------+--------------+------------------------------------+------------------------------+
| Total assets | | 2,175 | 3,854 | 12,810 |
+------------------------------------+-------+--------------+------------------------------------+------------------------------+
| | | | | |
+------------------------------------+-------+--------------+------------------------------------+------------------------------+
| Liabilities | | | | |
+------------------------------------+-------+--------------+------------------------------------+------------------------------+
| Current liabilities | | | | |
+------------------------------------+-------+--------------+------------------------------------+------------------------------+
| Trade and other payables | | 3,084 | 2,601 | 2,727 |
+------------------------------------+-------+--------------+------------------------------------+------------------------------+
| Obligations under finance leases | | 25 | 31 | 13 |
+------------------------------------+-------+--------------+------------------------------------+------------------------------+
| Borrowings | | 1,183 | 642 | - |
+------------------------------------+-------+--------------+------------------------------------+------------------------------+
| Current Taxation | | - | - | 490 |
+------------------------------------+-------+--------------+------------------------------------+------------------------------+
| | | | | |
+------------------------------------+-------+--------------+------------------------------------+------------------------------+
| | | 4,292 | 3,274 | 4,001 |
+------------------------------------+-------+--------------+------------------------------------+------------------------------+
| | | | | |
+------------------------------------+-------+--------------+------------------------------------+------------------------------+
| Non-current liabilities | | | | |
+------------------------------------+-------+--------------+------------------------------------+------------------------------+
| Obligations under finance leases | | 20 | 32 | 52 |
+------------------------------------+-------+--------------+------------------------------------+------------------------------+
| Deferred tax liability | | 244 | 244 | 272 |
+------------------------------------+-------+--------------+------------------------------------+------------------------------+
| | | | | |
+------------------------------------+-------+--------------+------------------------------------+------------------------------+
| | | 264 | 276 | 324 |
+------------------------------------+-------+--------------+------------------------------------+------------------------------+
| Total liabilities | | 4,556 | 3,550 | 4,325 |
+------------------------------------+-------+--------------+------------------------------------+------------------------------+
| Total net (liabilities)/assets | | (2,381) | 304 | 8,485 |
+------------------------------------+-------+--------------+------------------------------------+------------------------------+
| | | | | |
+------------------------------------+-------+--------------+------------------------------------+------------------------------+
| Capital and reserves attributable | | | | |
| to equity holders of the company | | | | |
+------------------------------------+-------+--------------+------------------------------------+------------------------------+
| | | | | |
+------------------------------------+-------+--------------+------------------------------------+------------------------------+
| Share capital | | 1,135 | 1,135 | 1,130 |
+------------------------------------+-------+--------------+------------------------------------+------------------------------+
| Share to be issued | | 29 | 29 | 145 |
+------------------------------------+-------+--------------+------------------------------------+------------------------------+
| Merger reserve | | 29,260 | 29,260 | 29,151 |
+------------------------------------+-------+--------------+------------------------------------+------------------------------+
| Reverse acquisition reserve | | (20,570) | (20,570) | (20,570) |
+------------------------------------+-------+--------------+------------------------------------+------------------------------+
| Share option reserve | | 295 | 283 | 356 |
+------------------------------------+-------+--------------+------------------------------------+------------------------------+
| Retained earnings | | (12,597) | (9,897) | (1,731) |
+------------------------------------+-------+--------------+------------------------------------+------------------------------+
| Foreign currency translation | | 67 | 64 | 4 |
| reserve | | | | |
+------------------------------------+-------+--------------+------------------------------------+------------------------------+
| | | | | |
+------------------------------------+-------+--------------+------------------------------------+------------------------------+
| Total equity | | (2,381) | 304 | 8,485 |
+------------------------------------+-------+--------------+------------------------------------+------------------------------+
| | | | | |
+------------------------------------+-------+--------------+------------------------------------+------------------------------+
CONSOLIDATED STATEMENT OF CASHFLOWS (Unaudited)
FOR THE SIX MONTHS ENDED 31 JULY 2009
+---------------------------------------------------+--------+-----------+------------+
| | | For the six months |
| | | ended |
+---------------------------------------------------+--------+------------------------+
| | | July 31, | July 31, |
+---------------------------------------------------+--------+-----------+------------+
| | Notes | 2009 | 2008 |
+---------------------------------------------------+--------+-----------+------------+
| | | GBP'000 | GBP'000 |
+---------------------------------------------------+--------+-----------+------------+
| | | | |
+---------------------------------------------------+--------+-----------+------------+
| | | | |
+---------------------------------------------------+--------+-----------+------------+
| Net Cash flows from operating activities | 4 | (541) | (1,337) |
+---------------------------------------------------+--------+-----------+------------+
| | | | |
+---------------------------------------------------+--------+-----------+------------+
| Investing activities | | | |
+---------------------------------------------------+--------+-----------+------------+
| Interest received | | - | 10 |
+---------------------------------------------------+--------+-----------+------------+
| Purchases of property, plant and equipment | | (9) | (57) |
+---------------------------------------------------+--------+-----------+------------+
| Sales of property, plant and equipment | | - | 41 |
+---------------------------------------------------+--------+-----------+------------+
| Expenditure on internally developed intangible | | (204) | (352) |
| assets | | | |
+---------------------------------------------------+--------+-----------+------------+
| | | | |
+---------------------------------------------------+--------+-----------+------------+
| Net cash used in investing activities | | (213) | (358) |
+---------------------------------------------------+--------+-----------+------------+
| | | | |
+---------------------------------------------------+--------+-----------+------------+
| Taxation | | 231 | (140) |
+---------------------------------------------------+--------+-----------+------------+
| | | | |
+---------------------------------------------------+--------+-----------+------------+
| Financing activities | | | |
+---------------------------------------------------+--------+-----------+------------+
| Proceeds from issue of shares | | - | - |
+---------------------------------------------------+--------+-----------+------------+
| Repurchase of own shares | | - | (237) |
+---------------------------------------------------+--------+-----------+------------+
| Repayment of obligations under finance leases | | (18) | (31) |
+---------------------------------------------------+--------+-----------+------------+
| | | | |
+---------------------------------------------------+--------+-----------+------------+
| Net cash from financing activities | | (18) | (268) |
+---------------------------------------------------+--------+-----------+------------+
| | | | |
+---------------------------------------------------+--------+-----------+------------+
| | | | |
+---------------------------------------------------+--------+-----------+------------+
| | | | |
+---------------------------------------------------+--------+-----------+------------+
| Net decrease in cash and cash equivalents | | (541) | (2,103) |
+---------------------------------------------------+--------+-----------+------------+
| | | | |
+---------------------------------------------------+--------+-----------+------------+
| | | | |
+---------------------------------------------------+--------+-----------+------------+
| Borrowings/cash and cash equivalents at the | | (642) | 2,569 |
| beginning of the period | | | |
+---------------------------------------------------+--------+-----------+------------+
| | | | |
+---------------------------------------------------+--------+-----------+------------+
| Borrowings/cash and cash equivalents at the end | | (1,183) | 466 |
| of the period | | | |
+---------------------------------------------------+--------+-----------+------------+
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY (Unaudited)
FOR THE SIX MONTHS ENDED 31 JULY 2009
+----------------+---------+---------+---------+-------------+----------+----------+-------------+---------+
| | Share | Shares | Merger | Reverse | Share | Retained | Translation | Total |
| | Capital | to be | reserve | acquisition | option | earnings | reserve | |
| | | issued | | reserve | reserve | | | |
+----------------+---------+---------+---------+-------------+----------+----------+-------------+---------+
| | GBP'000 | GBP'000 | GBP'000 | GBP'000 | GBP'000 | GBP'000 | GBP'000 | GBP'000 |
+----------------+---------+---------+---------+-------------+----------+----------+-------------+---------+
| At 1 February | 1,068 | 1,466 | 27,539 | (20,570) | 315 | (1,070) | (61) | 8,687 |
| 2008 | | | | | | | | |
+----------------+---------+---------+---------+-------------+----------+----------+-------------+---------+
| Movement | - | - | - | - | 41 | (661) | 65 | (555) |
+----------------+---------+---------+---------+-------------+----------+----------+-------------+---------+
| Issue of | 62 | (1,321) | 1,612 | - | - | - | - | 353 |
| shares | | | | | | | | |
+----------------+---------+---------+---------+-------------+----------+----------+-------------+---------+
| At 31 July | 1,130 | 145 | 29,151 | (20,570) | 356 | (1,731) | 4 | 8,485 |
| 2008 | | | | | | | | |
+----------------+---------+---------+---------+-------------+----------+----------+-------------+---------+
| | Share | Shares | Merger | Reverse | Share | Retained | Translation | Total |
| | Capital | to be | reserve | acquisition | option | earnings | reserve | |
| | | issued | | reserve | reserve | | | |
+----------------+---------+---------+---------+-------------+----------+----------+-------------+---------+
| | GBP'000 | GBP'000 | GBP'000 | GBP'000 | GBP'000 | GBP'000 | GBP'000 | GBP'000 |
+----------------+---------+---------+---------+-------------+----------+----------+-------------+---------+
| At 1 February | 1,135 | 29 | 29,260 | (20,570) | 283 | (9,897) | 64 | 304 |
| 2009 | | | | | | | | |
+----------------+---------+---------+---------+-------------+----------+----------+-------------+---------+
| Movement | - | - | - | - | 12 | (2,700) | 3 | (2,685) |
+----------------+---------+---------+---------+-------------+----------+----------+-------------+---------+
| Issue of | - | - | - | - | - | - | - | - |
| shares | | | | | | | | |
+----------------+---------+---------+---------+-------------+----------+----------+-------------+---------+
| At 31 July | 1,135 | 29 | 29,260 | (20,570) | 295 | (12,597) | 67 | (2,381) |
| 2009 | | | | | | | | |
+----------------+---------+---------+---------+-------------+----------+----------+-------------+---------+
1. ACCOUNTING POLICIES
Basis of preparation
The financial information in these interim results is that of the holding
company and all of its subsidiaries (the Group). It has been prepared in
accordance with the recognition and measurement requirements of International
Financial Reporting Standards as adopted for use in the EU (IFRSs). The
accounting policies applied by the Group in this financial information are the
same as those applied by the Group in its financial statements for the year
ended 31 January 2009 and which will form the basis of the 2009/10 financial
statements, except for greater clarification of the group's revenue recognition
policy which is described below.
* 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.
* Revenues from the sale of licenses of software products to resellers are
recognised upon shipment of the licensed product provided the licensed software
product is to be deployed to a named end user and that fees are fixed,
collectability is probable and the Group has no significant obligations
remaining under the sale agreement.
* Where 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.
Standards, interpretations and amendments to published standards that are not
yet effective
A number of new and amended standards become effective for periods beginning on
or after 1 January 2009. The principal changes that are relevant to the Group
are:
* IFRS 8 - Operating Segments
IFRS 8 is a disclosure standard only; there has been no effect on the reported
results or previous financial position of the Group. The Group's reportable
segments as reported under IAS 14 have remained unchanged following the adoption
of this standard.
* IAS 1 (revised 2007) - Presentation of Financial Statements
The revised standard has introduced a number of terminology changes (including
revised titles for the condensed financial statements) and has resulted in a
number of changes in presentation and disclosure. There has been no effect on
the reported results or previous financial position of the Group.
None of
the other new standards and amendments are expected to materially effect the
Group.
The comparative financial information presented herein for the
year ended 31 January 2009 does not constitute full statutory accounts for that
period. The Group's Annual Report for the year ended 31 January has been
delivered to the Registrar of Companies. The Group's Independent Auditors'
report on those accounts was unqualified, did not include references to any
matters to which the auditors drew attention by way of emphasis without
qualifying their report and did not contain a statement under section 237(2) or
237(3) of the Companies Act 1985. The financial information for the half years
ended 31 July 2009 and 31 July 2008 have neither been audited nor reviewed
pursuant to guidance issued by the Auditing Practices Board.
2. SEGMENT INFORMATION
Primary reporting format- geographical segments
The segment results for the 6 months ended 31 July 2009 are as follows:
+----------------------------------------+----------+----------+----------+
| | United | Europe | Total |
+----------------------------------------+----------+----------+----------+
| | Kingdom | | |
+----------------------------------------+----------+----------+----------+
| | GBP'000 | GBP'000 | GBP'000 |
+----------------------------------------+----------+----------+----------+
| | | | |
+----------------------------------------+----------+----------+----------+
| Sales through resellers to end users | 1,557 | 6 | 1,563 |
+----------------------------------------+----------+----------+----------+
| Net effect of stock deployed | (366) | (21) | (387) |
+----------------------------------------+----------+----------+----------+
| | | | |
+----------------------------------------+----------+----------+----------+
| Revenue | 1,191 | (15) | 1,176 |
+----------------------------------------+----------+----------+----------+
| | | | |
+----------------------------------------+----------+----------+----------+
| Loss before income tax | (2,633) | (77) | (2,700) |
+----------------------------------------+----------+----------+----------+
| Losst for the period | (2,633) | (77) | (2,700) |
+----------------------------------------+----------+----------+----------+
| | | | |
+----------------------------------------+----------+----------+----------+
| | | | |
+----------------------------------------+----------+----------+----------+
| The segment results for the 6 months | | | |
| ended 31 July 2008 are as follows: | | | |
+----------------------------------------+----------+----------+----------+
| | United | Europe | Total |
+----------------------------------------+----------+----------+----------+
| | Kingdom | | |
+----------------------------------------+----------+----------+----------+
| | GBP'000 | GBP'000 | GBP'000 |
+----------------------------------------+----------+----------+----------+
| | | | |
+----------------------------------------+----------+----------+----------+
| Sales through resellers to end users | 1,826 | 145 | 1,971 |
+----------------------------------------+----------+----------+----------+
| Net effect of stock (deployment)/sales | (236) | 744 | 508 |
+----------------------------------------+----------+----------+----------+
| | | | |
+----------------------------------------+----------+----------+----------+
| Revenue | 1,590 | 889 | 2,479 |
+----------------------------------------+----------+----------+----------+
| | | | |
+----------------------------------------+----------+----------+----------+
| (Loss) / profit before income tax | (1,518) | 833 | (685) |
+----------------------------------------+----------+----------+----------+
| (Loss) / profit for the period | (1,493) | 833 | (660) |
+----------------------------------------+----------+----------+----------+
3. LOSS PER SHARE
+---------------------------------------------+-------------+-------------+
| | For the six months ended |
+---------------------------------------------+---------------------------+
| | July 31, | July 31, |
+---------------------------------------------+-------------+-------------+
| | 2009 | 2008 |
+---------------------------------------------+-------------+-------------+
| | GBP'000 | GBP'000 |
+---------------------------------------------+-------------+-------------+
| | | restated |
+---------------------------------------------+-------------+-------------+
| | | |
+---------------------------------------------+-------------+-------------+
| Loss for the period | (2,700) | (660) |
+---------------------------------------------+-------------+-------------+
| | | |
+---------------------------------------------+-------------+-------------+
| | | |
+---------------------------------------------+-------------+-------------+
| Basic loss per share | (2.379)p | (0.597)p |
+---------------------------------------------+-------------+-------------+
| | | |
+---------------------------------------------+-------------+-------------+
| Diluted loss per share | (2.379)p | (0.597)p |
+---------------------------------------------+-------------+-------------+
| | | |
+---------------------------------------------+-------------+-------------+
| | | |
+---------------------------------------------+-------------+-------------+
| | | |
+---------------------------------------------+-------------+-------------+
| Weighted average number of common share | 113,472,662 | 110,674,761 |
| outstanding | | |
+---------------------------------------------+-------------+-------------+
| | | |
+---------------------------------------------+-------------+-------------+
| Diluted weighted average number of common | 113,472,662 | 110,674,761 |
| share outstanding | | |
+---------------------------------------------+-------------+-------------+
| | | |
+---------------------------------------------+-------------+-------------+
The diluted weighted average number of common shares outstanding results from
share options. The effect of the share options has not been included in the
calculation of the diluted earnings per share because of their antidilutive
effect.
4. CASH GENERATED FROM OPERATIONS
+---------------------------------------------+------------+-------------+
| |For the six months ended |
+---------------------------------------------+--------------------------+
| | July 31, | July 31, |
+---------------------------------------------+------------+-------------+
| | 2009 | 2008 |
+---------------------------------------------+------------+-------------+
| | GBP'000 | GBP'000 |
+---------------------------------------------+------------+-------------+
| | | |
+---------------------------------------------+------------+-------------+
| | | |
+---------------------------------------------+------------+-------------+
| Loss for the period | (2,700) | (685) |
+---------------------------------------------+------------+-------------+
| | | |
+---------------------------------------------+------------+-------------+
| Adjustments for: | | |
+---------------------------------------------+------------+-------------+
| Tax | - | (25) |
+---------------------------------------------+------------+-------------+
| Depreciation | 87 | 49 |
+---------------------------------------------+------------+-------------+
| Amortisation | 545 | 213 |
+---------------------------------------------+------------+-------------+
| Foreign currency translation | 3 | 4 |
+---------------------------------------------+------------+-------------+
| Employee share scheme | 12 | 41 |
+---------------------------------------------+------------+-------------+
| Interest income | - | (13) |
+---------------------------------------------+------------+-------------+
| Interest expense | 3 | 3 |
+---------------------------------------------+------------+-------------+
| | | |
+---------------------------------------------+------------+-------------+
| Changes in working capital: | | |
+---------------------------------------------+------------+-------------+
| Inventories | 119 | (10) |
+---------------------------------------------+------------+-------------+
| Trade and other receivables | 907 | (262) |
+---------------------------------------------+------------+-------------+
| Trade and other payables | 483 | (652) |
+---------------------------------------------+------------+-------------+
| | | |
+---------------------------------------------+------------+-------------+
| Net cash used in operating activities | (541) | (1,337) |
+---------------------------------------------+------------+-------------+
| | | |
+---------------------------------------------+------------+-------------+
This information is provided by RNS
The company news service from the London Stock Exchange
END
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