INVU Invu

    RNS Number : 5663K
  Invu plc
  22 December 2008
   

    22 December 2008 
    Invu plc

    Trading Update 

    The Board of Invu plc (LSE, AIM: INVU) provides the following statement on trading for the full year to 31 January 2009.  

    Trading update 

    The effects of the economic downturn have led to Invu's sales cycles lengthening significantly, impacting revenue generation in the
second half of the year; Series 6 has seen a general slowing in orders and a number of deals for Ergo which were expected to be signed
before the year end now look likely to arrive in the next financial year.   In addition, at the time of our interim results in September we
explained that debtor days were running at an unacceptably high level and that we were taking steps to reduce them. Although cash collection
has improved since the release of the interim results statement, the improvements have not been sufficient to meet the market's full year
expectations.  

    The Board has reacted quickly and reduced group overheads by 20%, which represents a monthly saving of �100,000. This includes a 15%
salary reduction for Invu's three executive directors, David Morgan, John Agostini and Jon Halestrap, while the Chairman, Daniel Goldman,
has foregone his director's fees. Furthermore a �750,000 credit facility has been obtained from the Company's bankers to further support
short term cashflow.

    Despite the above issues, the Board confirms that the fundamentals of the business remain intact.  The integration issues of Series 6 as
announced at the interim results have been overcome and we have recorded high levels of satisfaction among our reseller and customer base
with the product. Invu remains a trusted provider of document management software to SMEs and has built up a solid customer base which
continues to appreciate the savings and benefits which the products provide. Furthermore, the Series 6 sales pipeline is at a record level
of �9m and provides support for future growth.  During the first half of the year 325 new customers were acquired, and during the third
quarter this number was 114. Repeat sales to existing sites were 215 in H1 compared to 80 in Q3. 

    Accounting Policy

    As a small software business looking to grow in scale in an accelerated fashion, Invu has benefited from the reseller channel model
which it uses.  However, as the Company has grown and its reseller channel has increased, the revenue recognition policy associated with
this model has exacerbated issues with cash collection and debtor days have steadily risen to an unacceptable level.  

    The Board recognises that it is now time for Invu's revenue recognition policy and cash generation to be more closely aligned, and with
this in mind the Board is reviewing thoroughly its business processes, debt position and its accounting policies.  This detailed review will
be carried out with the support and cooperation of our auditors and the Audit Committee of the Board.  

    The findings of this review are likely to lead to a number of changes and the preliminary view is that Invu will recognise revenue in
such a way that the deployment of the product with the end user and the resulting credit period will be much closer.  The Board believes
that this revenue recognition policy is likely to bring greater visibility of the performance of its reseller channel, thereby giving a more
transparent view of trading.  

    We intend to update the market with the findings of the review and the new revenue recognition policy, , in the full year period end
trading update. The new policy will be applied from 1st February 2009 and we intend to include pro forma numbers for the years ended 31
January 2008 and 2009 under the new policy with the results for the year ending 31 January 2009.

    Position at the year end

    The Board has decided to halt any further "stock deals", which typically have taken place in January and in previous years have
contributed a significant proportion of the year's revenues. Combined with the trading issues mentioned above, the Board expects that the
Company's results will be materially below market expectations for the year to 31 January 2009. Invu's latest unaudited management accounts
for the 10 months ended 30 November 2008 show revenues of �3.3m and net loss before tax of �1.9m.

    Board change

    The Board also announces that David Morgan, Chief Executive Officer, will be stepping down as CEO with effect from 31 January 2009, and
will be replaced on an interim basis by Non-Executive Director, Bernard Fisher, pending the appointment of a permanent replacement.  During
this period Bernard will be employed on a full-time basis.  David will remain on the Board as an Executive Director, and will take
responsibility for the strategic development of Ergo and other new products, which will form a separate business unit within Invu. 

    Bernard, who joined the Invu Board in June 2005, has over 30 years' experience in the IT sector, including roles within the industry and
as an external advisor. Bernard is currently non-Executive Chairman of Chemistry Communications plc, the UK's largest independent customer
relationship marketing and direct marketing company, and Chairman of ITIM Limited, a leading supplier of software solutions to retailers. 
Previous roles include being an independent Non-Executive Director of The Sage Group plc between 1989 and 1996 and representing 3i on the
Board of Adaytum, which was sold to Cognos for $160m in 2002. 

    The Board would like to thank David for his significant contribution to growing the business since founding the Company. David has
created a strong platform on which the Board intends to build and established Invu's brand as the leading document management supplier
within the SME market. 

    Outlook

    Whilst there have been continuing issues surrounding conversion of debtors into cash, the Board remains confident of the underlying
strength of Invu's products and its brand. With its broad installed base of customers and resellers we are confident of bringing the Company
back to strong growth and profitability.

    Daniel Goldman, Invu Chairman, said, 

    "The Board and I agree that the Company's recent performance has been disappointing. However, we have recognised the issues and taken
steps to solve the problems, with a view to building for the long-term potential of the business."  

    -ends-

    Enquiries:

 Invu plc                                01604 859893
 Daniel Goldman, Non Executive Chairman
 Bernard Fisher, Acting CEO
 John Agostini, CFO

 Financial Dynamics                      020 7831 3113
 Juliet Clarke
 Emma Appleton 

 Arbuthnot (NOMAD)                       020 7012 2000
 Tom Griffiths 
 Ben Wells 


This information is provided by RNS
The company news service from the London Stock Exchange
 
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