Final Results

RUBICON SOFTWARE GROUP PLC

(AIM: RUBI)

Final results for the year ended 30 June 2010

30 November 2010

Rubicon Software Group plc ("Rubicon" or "the Group"; AIM: RUBI), a leading provider of smart customer relationship management IT solutions, announces its audited results for the year ended 30 June 2010.

Highlights

·; Total revenues up 32% to £1.15m (2009: £0.87m) after recognition of perpetual licence income of £625,000 from First Response Finance Limited

·; Earnings before interest, tax, depreciation and amortisation ("EBITDA") of £285,000 (2009: EBITDA loss £2,000)

·; Pre-tax profit for the year of £44,000 (2009: loss £194,000)

·; Achieved Microsoft Gold Certified Partner status

·; Launch of iAccel personal productivity tools

·; Business re-structuring now completed

For further information, please contact:

Chairman's statement

Financial results

In the year to 30 June 2010, Rubicon generated revenue of £1,147,000, 32% higher than the previous year of £874,000. This increase includes the one-time revenue associated with the conversion of a five year annual licence deal with First Response Finance Limited ("FRF") to a perpetual licence for a total consideration of £625,000 and reflects the maturing nature of the relationship with FRF. This non-recurring income item somewhat masks the low underlying revenue that has been generated in the year due, as reported in the interim statement, to both the strategic alliance with Information Systems Associates Inc ("ISA") and the consultancy project that was won in the early part of the year not delivering the levels of business that we had been led to believe would be forthcoming.

However, with this increased revenue we are pleased to announce an EBITDA profit of £285,000 (2009: EBITDA loss £2,000), a pre-tax profit of £44,000 (2009: Loss £194,000) and a retained profit for the year of £43,000 (2009: Loss £194,000).

Net cash inflow for the year was £61,000 (2009: outflow £32,000).

Operational review

Existing clients

On 29 June 2009 we announced a 5 year extension to the licence, support and maintenance agreement with First Response Finance Limited ("FRF") worth £1million. Subsequently, on 2 August 2010 we announced that, on 30 June 2010, we had agreed with FRF to convert the annual licence agreement to a perpetual licence. This enabled us to recognise fully the value of the sale relating to licence income of £625,000 in these accounts. The remaining £375,000 relates to support and maintenance income to be recognised in accordance with the revenue recognition policies contained in this report. FRF will continue to pay for the licence under the previous five year plan and have initiated further consultancy projects at the start of the new financial year.

We continue to enjoy excellent relationships with our clients, for whom our software plays an integral part in the success of their business operations.

Non-recurring items

Following the conversion of the FRF licence from annual to perpetual and the continued downturn in the economy, the Board considered the value of the intangible assets to be in excess of the economic benefits anticipated over the remaining economic life. As such the Board considered it prudent to write off the remaining value of the assets in the current financial year. The value of intangible assets written off in the year was £166,000.

In addition to this, the Board has considered the shape and size of the business and has executed a plan that reduces the on-going overheads of the business by 25% which should enable the business to operate profitably from a reduced revenue base following the FRF licence transaction. In order to deliver these savings it has been necessary to provide for restructuring costs totalling £91,000. 

New business

During the year we have focused on our relationship with Microsoft, obtaining Gold Certified Partner status for our Accelerator platform and accreditation as a SharePoint Deployment Planning Services ("SDPS") provider. By obtaining this benchmark accreditation we have been able to engage with a variety of businesses, all of whom are interested in deploying Microsoft SharePoint. Through these developing relationships we have also identified a number of personal productivity tools that are a logical evolution of Accelerator and we believe these will prove attractive to businesses in this time of austerity. We are branding this as the iAccel Productivity Suite and we are just launching a beta program at www.iAccel.com.

We have an improving sales pipeline based around SDPS consultancy, SharePoint development and our new iAccel product.

Management

As previously announced, David Webber, one of Rubicon's Non-executive Directors, resigned with effect from the Company's yearend having served a 4 year term since flotation. The Board wishes to record its appreciation to David for his contribution and counsel during that period.

Andrew Kirby, Rubicon's Group Finance Director, left the Group on 26 November 2010. The Board would like to thank Andrew wholeheartedly for his support and conscientious work through the difficult trading conditions of the last 3 years and wish him every success in the future.

On 19 April 2010, Nicklas Blanchard was appointed to the Board having been with Rubicon for over 15 years in a variety of software engineering and management roles.

Staff

On behalf of the Board, I would like to thank all of our staff for their loyalty, support and professionalism in what have continued to be very difficult trading conditions.

Dividends

The Directors do not propose to pay a dividend for the year (2009: £nil).

Current trading and outlook

With a growing sales pipeline, centred on Microsoft technology and our iAccel Productivity Suite, along with the re-structuring, the Board believes that Rubicon can trade profitably and grow its revenues.

Robert Burnham

Chairman

29 November 2010

Report of the Directors

The Directors present their report and the financial statements of the Group for the year ended 30 June 2010.

Principal activity and business review

The Group is principally engaged in consultancy and design, development and provision of computer software. The Group's services and solutions are sold to customers in a variety of sectors to automate business processes relating to client interaction, workflow management, Internet, Intranet and Local Area Network based solutions.

During the year the Group continued to concentrate on the sale and distribution of its products whilst maintaining an appropriate level of product development to ensure the future success of the business.

Strategy

During the course of the year, we have continued to review our strategy in order to maximise our opportunities, researching new markets, products and services to enable the business to grow profitably.

Business review

A review of the Group's performance in the year to 30 June 2010 and its current trading and outlook is contained in the Chairman's Statement.

The Key Performance Indicators used by the Group during the year were:

Revenue

Revenue increased 32% from £874,000 in 2009 to £1,147,000 in 2010. As outlined in the Chairman's statement, the 2010 figure includes the one-time up front recognition of a £625,000 perpetual licence for FRF. Underlying revenue fell by 40% as a consequence of the continuing economic downturn.

Operating costs

Operating costs in the year, excluding depreciation, amortisation and re-structuring costs, were reduced by £105,000 (11%) to £784,000. This decrease was largely as a result of reduced headcount, consultancy and property costs. There was a total of £5,000 of bad debts expense in the year (2009: £17,000) arising from customers who were unable to pay for work undertaken.

Profit / (loss) for the year

The Group profit for the year ended 30 June 2010 was £44,000 (2009: loss £194,000) with the improvement relating to higher revenue, lower operating costs and a lower amortisation charge.

Intangible assets

During the year the Group capitalised £nil (2009: £39,000) of development costs. Furthermore, it was agreed that all intangible assets be fully impaired due to a permanent diminution in value.

Cash and treasury

The Group generated net cash outflows of £66,000 in the second half of 2010 having generated net inflows of £127,000 in the first half. The net inflow for the year was £61,000 (2009: outflow £32,000).

These inflows include the proceeds of the fundraising activities announced on 28 April 2010.

Results and dividends

The trading results for the year and the Group's and Company's financial position at the end of the year are shown in the attached financial statements.

The Directors do not propose the payment of a dividend, (2009: £nil).

Principal risks and uncertainties

The Directors consider the following to be the principal risks facing the business:

Financial risk management objectives and policies

The Group's financial risk management objectives are detailed in note 14.

Directors

The Directors who served the Company during the year were:

Robert Burnham (Non-executive Chairman)

Alistair Hancock (Chief Executive Officer)

Richard Blakesley (Non-executive Director)

David Webber (Non-executive Director) (resigned 28 July 2010)

Andrew Kirby (Finance Director) (resigned 26 November 2010)

Nicklas Blanchard (Operations Director) (appointed 19 April 2010)

Directors' interests

The beneficial interests of the Directors holding office at 30 June 2010 in the shares of the Company at that date are set out below, together with their holdings at 1 July 2009 or date of appointment if later.

Substantial shareholders

At 11 November 2010 the Company has been notified that the following held or were beneficially interested in three per cent of more of the issued share capital of the Company.

Employees

Where appropriate, the Directors keep all employees informed of strategic, commercial, financial and human resource matters.

In order to help align the aspirations of our employees to the objectives of the Group, the majority are either shareholders or have share options enabling them to benefit from long term equity growth.

The Group recognises its responsibility to ensure the fair treatment of all employees, regardless of any physical disability, gender, religion, race or nationality.

Payment policy and practice

It is the Group's policy to agree the terms of payment with suppliers when entering into a transaction and to pay suppliers within these terms. Average creditor days for the financial year were 66 days (2009: 58 days).

Environment

The Group aims to maintain good environmental practices in all of its activities. Although there are no formal environmental policies, all employees are encouraged to conduct themselves in an environmentally considerate manner.

Qualifying third party indemnity provision

During the financial year, a qualifying third party indemnity provision for the benefit of all of the Directors was in force.

Going concern

The Board has reviewed the performance for the current year and forecasts for future periods. These forecasts contain a number of new business assumptions that are dependent upon the finalisation of commercial terms, the completion of contracts and new business wins. Consequently an element of uncertainty surrounds the size and timing of certain cash inflows.

Based on current information, the Board has a reasonable expectation that these contracts will be signed as planned, but have also begun investigating funding options for spring 2011 in order to ensure that liabilities are met as they fall due.

The Directors have concluded that the combination of these circumstances represents a material uncertainty that might cast doubt upon the Group's ability to continue as a going concern and that, therefore, the Group may be unable to realise its assets and discharge its liabilities in the normal course of business. Nevertheless, after making enquiries and considering the uncertainties described above, the Directors have a reasonable expectation that the Group has adequate resources to continue in operational existence for the foreseeable future. For these reasons, they continue to adopt the going concern basis of accounting in preparing the financial statements.

Annual General Meeting

The Notice convening the Annual General Meeting ("AGM") together with the proposed resolutions is contained in the document accompanying this report. The AGM will be held on 21 December 2010.

Auditor

A resolution to re-appoint Grant Thornton UK LLP as auditor for the ensuing year will be proposed at the AGM in accordance with section 489 of the Companies Act 2006.

BY ORDER OF THE BOARD

Nicklas Blanchard

Secretary

29 November 2010

Company registration number: 5701801

Statement of Directors' Responsibilities in respect of the Annual Report and financial statements

The Directors are responsible for preparing the Annual Report and the financial statements in accordance with applicable law and regulations.

Company law requires the Directors to prepare financial statements for each financial year. Under that law they are required to prepare Group financial statements in accordance with International Financial Reporting Standards as adopted by the European Union (IFRSs) and applicable law. The Directors have elected to prepare the Company financial statements in accordance with United Kingdom Accounting Standards (United Kingdom Generally Accepted Accounting Practice - UK GAAP).

The financial statements are required by law to give a true and fair view of the state of affairs of the Group and the Company and of the profit or loss of the Group for that period. In preparing these financial statements, the Directors are required to:

§ select suitable accounting policies and then apply them consistently;

§ make judgments and estimates that are reasonable and prudent;

§ for the Group financial statements, state whether they have been prepared in accordance with IFRSs as adopted by the EU, subject to any material departures disclosed and explained in the financial statements;

§ for the Company financial statements, state whether applicable UK Accounting Standards have been followed , subject to any material departures disclosed and explained in the financial statements; and

§ prepare the financial statements on the going concern basis unless it is inappropriate to presume that the Group and the Company will continue in business.

The Directors are responsible for keeping adequate accounting records which disclose with reasonable accuracy at any time the financial position of the Company and enable them to ensure that the financial statements comply with the Companies Act 2006. They have a general responsibility for taking such steps as are reasonably open to then to safeguarding the assets of the Group and to prevent and detect fraud and other irregularities.

The Directors are responsible for the maintenance and integrity of the corporate and financial information included on the Group's website. Legislation in the United Kingdom governing the preparation and dissemination of financial statements may differ from legislation in other jurisdictions.

In so far as each of the Directors are aware; there is no relevant audit information of which the Group's auditor is unaware; and the Directors have taken all the steps that they ought to have taken to make themselves aware of any relevant audit information and to establish that the auditor is aware of that information.

Corporate governance

The Directors recognise the importance of sound corporate governance, whilst taking into account the size and nature of the Company.

The Company has two Non-executive Directors. Richard Blakesley and Robert Burnham are considered to be 'independent' within the definition contained in the Combined Code. The Board retains full and effective control over the Company. The Company holds regular Board meetings at which financial, operational and other reports are considered and, where appropriate, voted on. Apart from regular meetings, additional meetings will be arranged when necessary to review strategy, planning, operations, financial performance, risk, capital expenditure, human resource and environmental management. The Board is also responsible for monitoring the activities of the executive management. To enable the Board to perform its duties, all Directors will have full access to all relevant information. If necessary the Non-executive Directors may take independent professional advice at the Group's expense.

The Board met on fifteen occasions in the current financial year including attendance by telephone.

The Directors have an audit committee and a remuneration committee with formally delegated duties and responsibilities. The Directors have not established a nominations committee as all new appointments will require the approval of all Directors.

The audit committee

The audit committee which comprises Robert Burnham and Richard Blakesley, is chaired by Robert Burnham and meets at least twice a year. The committee reviews the Group's annual and interim financial statements, including meeting with the auditor before submission to the Board for approval. The committee also reviews regular reports from management on accounting and internal control matters. Where appropriate, the committee monitors the progress of action taken in relation to such matters. The committee also recommends the appointment of, reviews the fees of, and monitors the independence of the external auditor and their provision of non-audit services.

The committee met twice during the year, all members were present.

The remuneration committee

The remuneration committee which comprises Richard Blakesley and Robert Burnham, is chaired by Richard Blakesley and usually meets twice a year. It is responsible for reviewing the performance of the Executive Directors and for setting the scale and structure of their remuneration, paying due regard to the interests of Shareholders as a whole and the performance of the Group. The remuneration committee also determines allocations of any warrants or options granted under any share option scheme adopted by the Company in the future and is responsible for setting any performance criteria relevant to such warrants or options.

The Directors comply with Rule 21 of the AIM Rules relating to Directors' dealings and take all reasonable steps to ensure compliance by the Company's applicable employees. The Company has adopted and operates a share dealing code for Directors and employees in accordance with the AIM Rules.

The committee met twice during the year, all members were present.

Internal control

The Board is responsible for maintaining a sound system of internal control to safeguard Shareholders' investment and the Group's assets and for reviewing its effectiveness. Such a system is designed to manage, but not eliminate, the risk of failure to achieve business objectives. There are inherent limitations in any control system and accordingly even the most effective system can provide only reasonable, not absolute, assurance against material misstatement or loss.

The Board reviews the effectiveness of the Group's systems of internal control on an ongoing basis. Annual budgets are prepared and detailed monthly management reports are presented to the Board and used to monitor financial performance and compliance with the Group's policies and procedures. All controls are covered including financial, operational and controls to manage risk. The monthly Board meetings are also used to consider the Group's major risks.

Internal audit

The Board reviews from time to time the need for an internal audit function and remains of the opinion that the systems of internal financial control are appropriate to the Group's size and present activities and an internal audit function is not necessary.

Going concern

The Board has reviewed the performance for the current year and forecasts for future periods. Based on this current information, the Board believes that the Group will continue in operational existence for the foreseeable future. On these grounds, the Board has continued to adopt the going concern basis for the preparation of the financial statements. Further details can be found in the Report of the Directors.

Report of the independent auditor to the members of Rubicon Software Group plc.

We have audited the Group financial statements of Rubicon Software Group plc for the year ended 30 June 2010 which comprise the principal accounting policies, the consolidated statement of comprehensive income, the consolidated balance sheet, the consolidated cash flow statement, the consolidated statement of changes in equity and the related notes. The financial reporting framework that has been applied in their preparation is applicable law and International Financial Reporting Standards (IFRSs) as adopted by the European Union.

This report is made solely to the Group's members, as a body, in accordance with Chapter 3 of Part 16 of the Companies Act 2006. Our audit work has been undertaken so that we might state to the Group's members those matters we are required to state to them in an auditor's report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the Group and the Group's members as a body, for our audit work, for this report, or for the opinions we have formed.

Respective responsibilities of directors and auditor

As explained more fully in the Statement of Directors' Responsibilities on page 10 the Directors are responsible for the preparation of the Group financial statements and for being satisfied that they give a true and fair view. Our responsibility is to audit the Group financial statements in accordance with applicable law and International Standards on Auditing (UK and Ireland). Those standards require us to comply with the Auditing Practices Board's (APB) Ethical Standards for Auditors.

Scope of the audit of the financial statements

A description of the scope of an audit of financial statements is provided on the APB's website at www.frc.org.uk/apb/scope/UKNP.

Opinion on financial statements

In our opinion the group financial statements:

§ give a true and fair view of the state of the Group's affairs as at 30 June 2010 and of its profit for the year then ended;

§ have been properly prepared in accordance with United Kingdom Generally Accepted Accounting Practice; and

§ have been prepared in accordance with the requirements of the Companies Act 2006.

Emphasis of matter - Going concern

In forming our opinion, which is not qualified, we have considered the adequacy of the disclosure made in the principal accounting policies concerning the company's ability to continue as a going concern.

As explained in the principal accounting policies there are factors that indicate the existence of a material uncertainty which may cast significant doubt about the group's ability to continue as a going concern. The financial statements do not include the adjustments that would result if the group was unable to continue as a going concern.

Opinion on other matter prescribed by the Companies Act 2006

In our opinion the information given in the Report of the Directors for the financial year for which the Group financial statements are prepared is consistent with the Group financial statements.

Matters on which we are required to report by exception

We have nothing to report in respect of the following matters where the Companies Act 2006 requires us to report to you if, in our opinion:

§ certain disclosures of Directors' remuneration specified by law are not made; or

§ we have not received all the information and explanations we require for our audit.

Other matter

We have reported separately on the parent company financial statements of Rubicon Software Group plc for the year ended 30 June 2010.

James Rogers

Senior Statutory Auditor

for and on behalf of Grant Thornton UK LLP

Statutory Auditor, Chartered Accountants

Slough

29 November 2010

Principal accounting policies

General information

Rubicon Software Group plc is the Group's ultimate parent company. It is incorporated and domiciled in England and Wales. Rubicon Software Group plc's shares are quoted on the AIM Market of the London Stock Exchange. The address of the registered office and principal place of business is found on page 45 of this report.

Basis of Group accounting

The consolidated financial statements have been prepared in accordance with applicable International Financial Reporting Standards (IFRS) as issued by the International Accounting Standards Board (IASB) as adopted by the EU.

The financial statements have been prepared under the historical cost convention. The measurement bases and principal accounting policies of the Group are set out below.

The accounting policies that have been applied in the opening balance sheet have also been applied throughout all periods presented in these financial statements. These accounting policies comply with each IFRS that is mandatory for accounting periods ending on 30 June 2010.

Note 14 to the financial statements include details of the financial instruments and exposure to credit risk and liquidity risk.

Going concern

The Board has reviewed the performance for the current year and forecasts for future periods. These forecasts contain a number of new business assumptions that are dependent upon the finalisation of commercial terms, the completion of contracts and new business wins. Consequently an element of uncertainty surrounds the size and timing of certain cash inflows.

Based on current information, the Board has a reasonable expectation that these contracts will be signed as planned, but have also begun investigating funding options for spring 2011 in order to ensure that liabilities are met as they fall due.

The Directors have concluded that the combination of these circumstances represents a material uncertainty that might cast doubt upon the Group's ability to continue as a going concern and that, therefore, the Group may be unable to realise its assets and discharge its liabilities in the normal course of business. Nevertheless, after making enquiries and considering the uncertainties described above, the Directors have a reasonable expectation that the Group has adequate resources to continue in operational existence for the foreseeable future. For these reasons, they continue to adopt the going concern basis of accounting in preparing the financial statements.

New standards, interpretations and amendments having an impact on the Consolidated Financial Statements

IAS 1:"Presentation of Financial Statements" (Revised 2007) is mandatory for accounting periods commencing on or after 1 January 2009. IAS 1 permits the components of the income statement to continue to be presented in a separate income statement. As there are not considered to be any items of other comprehensive income a separate statement of comprehensive income has been included which also reflects the income statement for the year. Additionally, IAS 1 now requires the presentation of the statement of changes in equity within a separate primary statement.

IAS 1 requires two comparative periods to be presented for the statement of financial position when the Group:

1. applies an accounting policy retrospectively,

2. makes a retrospective restatement of items in its financial statements, or

3. re-classifies items in the financial statements.

As none of the above apply the directors have not included a balance sheet for the year ended 30 June 2008.

IFRS 8:"Operating segments" (effective from 1 January 2009) requires an entity to adopt a "management approach" to segment reporting such that segmental information is in the form which management uses internally for assessing segment performance and deciding how to allocate resources to operating segments. This information may be different from that used to prepare the statement of comprehensive income and statement of financial position. The adoption of this standard has not affected the identified operating segments for the Group.

IFRS 7:"Financial instruments: disclosures" (Amendment), (effective from 1 January 2009) requires all financial instruments that are measured at fair value in the balance sheet to be classified into a three-level fair value hierarchy. The amendments are designed to assist understanding of the determination of fair value measurements. The revised standard has no impact on the Group as there are no financial assets or liabilities measured at fair value.

Basis of consolidation

The Group financial statements consolidate those of the Company and its subsidiary companies drawn up to 30 June 2010. Subsidiaries are entities over which the Group has the power to control the financial and operating policies so as to obtain benefits from its activities. The Group obtains and exercises control through voting rights.

Unrealised gains on transactions between Group companies are eliminated. Unrealised losses are also eliminated unless the transaction provides evidence of an impairment of the asset transferred. Amounts reported in the financial statements of subsidiaries have been adjusted where necessary to ensure consistency with the accounting policies adopted by the Group.

The results and net assets of subsidiary companies acquired in June 2006 are included in the consolidated statement of comprehensive income and consolidated balance sheet using the merger method of accounting, as explained subsequently in the principal accounting policies.

Reverse acquisition accounting

In June 2006 the Company became the legal parent of Rubicon Software Limited and its subsidiaries in a share for share transaction. The Company's continuing operations and executive management were those of Rubicon Software Limited. Accordingly, the substance of the combination was that Rubicon Software Limited had acquired Rubicon Software Group plc in a reverse acquisition.

Under reverse acquisition accounting an adjustment within shareholders funds is required to eliminate the cost of acquisition in the issuing company's books, and introduce a notional cost of acquiring the smaller issuing company based on the fair value of its shares. A further adjustment is required to show the share capital of the legal parent in the consolidated balance sheet rather than that of the acquirer. The resulting differences have been debited to the Merger Reserve.

Revenue

Revenue is measured by reference to the fair value of consideration received or receivable by the Group for goods supplied and services provided, excluding VAT and trade discounts.

Revenue is recognised as set out below:

Consultancy and software development contracts

Consultancy and software development contracts are recognised in line with the performance of the contract, typically:

·; For time and materials contracts, the number of days worked in the period at the contracted rates and any materials consumed in the period.

·; Where a contract involves delivery of several different elements and is not fully delivered or performed by the year end, revenue is recognised based on the proportion of the fair value of the elements delivered to the fair value of the overall contract.

Licence income - perpetual

If the sale is unconditional and the revenue earned is non-refundable, the value of software licence income is taken to the statement of comprehensive income in full upon delivery of the software to the client as this point represents full performance of the sale. If the sale is conditional then the value of the software licence income is taken to the statement of comprehensive income once user acceptance has been achieved, which binds the transaction as non-refundable.

Licence income - Annual or any other term

The value of software licence income is recognised evenly over the contracted licence period.

Support and maintenance

Support and maintenance income is recognised evenly over the contract term.

Deferred income

Deferred income represents work performed in respect of customers not yet billed.

Share-based payment

The Company operates equity-settled share-based remuneration plans for certain employees (including Directors). Equity-settled share-based payments are measured at fair value at the date of grant. The fair value determined at the grant date of the equity-settled share-based payments is expensed to the statement of comprehensive income on a straight-line basis over the vesting period, together with a corresponding increase in equity (via a credit to the share option reserve), based upon the Company's estimate of the shares that will eventually vest.

Fair value is measured using the Black-Scholes pricing model. The expected life used in the model has been adjusted, based on management's best estimate, for the effects of non-transferability, exercise restrictions and behavioural considerations. Where employees are rewarded using share-based payments, the fair values of employees' services are determined indirectly by reference to the fair value of the instrument granted to the employee.

Upon exercise of share options, the proceeds received net of attributable transaction costs are credited to share capital, and where appropriate to share premium.

Property, plant and equipment

Property, plant and equipment are stated at cost, net of accumulated depreciation and any provision for impairment.

Depreciation

Depreciation is calculated so as to write off the cost of an asset, less its estimated residual value, over the useful economic life of that asset as follows:

Leasehold improvements 10%

Office equipment 25%

Material residual value estimates are updated as required, but at least annually, whether or not the asset is revalued. The useful economic life of the asset is also reviewed regularly.

Software research and development costs

Expenditure on research (or the research phase of an internal project) is recognised as an expense in the period in which it is incurred.

Development costs incurred on specific projects are capitalised when they can be reliably measured and the projects to which they are attributable are separately identifiable, are technically feasible, demonstrate future economic benefit, and will be used or sold by the Group once completed. Development costs not meeting the criteria for capitalisation are expensed as incurred. Following completion of the development the capitalised cost is amortised on a straight line basis over the period during which the Group is expected to benefit, typically three years. This is shown separately in the statement of comprehensive income.

The cost of internally generated software comprises all directly attributable costs necessary to create, produce, and prepare the asset to be capable of operating in the manner intended by management. Directly attributable costs include; third party costs and employee costs incurred on software development, along with an appropriate portion of relevant overheads.

Impairment of goodwill, other intangible assets and property, plant and equipment

For the purposes of assessing impairment, assets are grouped at the lowest levels for which there are largely independent cash inflows (cash-generating units). As a result, some assets are tested individually for impairment and some are tested at cash-generating unit level.

All individual assets or cash-generating units are tested for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable.

An impairment loss is recognised for the amount by which the asset's or cash-generating unit's carrying amount exceeds its recoverable amount. To determine the recoverable amount, management estimates expected future cash flows from each cash-generating unit and determines a suitable interest rate in order to calculate the present value of those cash flows. The data used for impairment testing procedures are directly linked to the Group's latest approved budget, adjusted as necessary to exclude the effects of future reorganisations and asset enhancements. Discount factors are determined individually for each cash-generating unit and reflect their respective risk profiles as assessed by management.

Impairment losses for cash-generating units reduce the assets in the cash-generating unit. All assets are subsequently reassessed for indications that an impairment loss previously recognised may no longer exist. An impairment charge is reversed if the cash-generating unit's recoverable amount exceeds its carrying amount.

Leased assets

The economic ownership of a leased asset is transferred to the lessee if the lessee bears substantially all the risks and rewards related to the ownership of the leased asset. The related asset is recognised at the inception of the lease at the fair value of the leased asset or, if lower, the present value of the minimum lease payments plus incidental payments, if any, to be borne by the lessee. A corresponding amount is recognised as a finance leasing liability.

The interest element of leasing payments represents a constant proportion of the capital balance outstanding and is charged to the statement of comprehensive income over the period of the lease.

All other leases are regarded as operating leases and the payments made under them are charged to the statement of comprehensive income on a straight line basis over the lease term. Lease incentives are spread over the term of the lease.

Rental income in respect of operating leases is recognised on a straight line basis over the lease term.

Pension costs

The Group provides a defined contribution pension scheme for all Directors and employees.

A defined contribution scheme is a pension scheme under which the Group pays fixed contributions to an independent entity. The Group has no legal or constructive obligations to pay further contributions after its payment of the fixed contribution.

The assets of the scheme are held separately from those of the Group. The annual contributions payable are charged to the statement of comprehensive income.

Taxation

Current tax is the tax currently payable or receivable based on the result for the period.

Deferred income taxes are calculated using the liability method on temporary differences. Deferred tax is generally provided on the difference between the carrying amounts of assets and liabilities and their tax bases. However, deferred tax is not provided on the initial recognition of goodwill, nor on the initial recognition of an asset or liability unless the related transaction is a business combination or affects tax or accounting profit. Deferred tax on temporary differences associated with shares in subsidiaries is not provided if reversal of these temporary differences can be controlled by the Group and it is probable that reversal will not occur in the foreseeable future. In addition, tax losses available to be carried forward as well as other income tax credits to the Group are assessed for recognition as deferred tax assets.

Deferred tax liabilities are provided in full, with no discounting. Deferred tax assets are recognised to the extent that it is probable that the underlying deductible temporary differences will be able to be offset against future taxable income. Current and deferred tax assets and liabilities are calculated at tax rates that are expected to apply to their respective period of realisation, provided they are enacted or substantively enacted at the balance sheet date.

Changes in deferred tax assets or liabilities are recognised as a component of tax expense in the statement of comprehensive income, except where they relate to items that are charged or credited directly to equity in which case the related deferred tax is also charged or credited directly to equity.

Cash and cash equivalents

Cash and cash equivalents comprise cash on hand and demand deposits.

Equity

Equity comprises the following:

§ "Share capital" represents the nominal value of equity shares that have been issued.

§ "Share premium" represents the excess over nominal value of the fair value of consideration received for equity shares, net of expenses of the share issue.

§ "Share options reserve" represents equity-settled share-based employee remuneration until such share options are exercised.

§ "Merger reserve" represents the difference between the nominal and fair value of shares issued for the acquisition of subsidiary undertakings in June 2006, in accordance with the Companies Act 1985.

§ "Retained earnings" include all current and prior period results as disclosed in the statement of comprehensive income.

Financial assets

All financial assets are recognised when the Group becomes a party to the contractual provisions of the instrument. The Group currently only has loans and receivables in these financial statements.

Loans and receivables are initially measured at fair value. Loans receivable are measured subsequent to initial recognition at amortised cost using the effective interest method, less provision for impairment. Any change in their value through impairment or reversal of impairment is recognised in the statement of comprehensive income.

Provision against trade receivables is made when there is objective evidence that the Group will not be able to collect all amounts due to it in accordance with the original terms of those receivables. The amount of the write-down is determined as the difference between the assets' carrying amount and the present value of estimated future cash flows.

An assessment for impairment is undertaken on each financial asset at least at each balance sheet date.

Financial liabilities

Financial liabilities are obligations to pay cash or other financial assets and are recognised when the Group becomes a party to the contractual provisions of the instrument. Financial liabilities are categorised as at 'fair value' through profit or loss and 'amortised cost'. The Group currently has no liabilities categorised as 'fair value' through profit or loss.

Other financial liabilities are initially recognised at fair value, net of transaction costs, and are subsequently recorded at amortised cost using the effective interest method, with interest-related charges recognised as an expense in financial cost in the statement of comprehensive income. Finance charges, including premiums payable on settlement or redemption and direct issue costs, are charged to the statement of comprehensive income on the accruals basis using the effective interest method and are added to the carrying amount of the instrument to the extent that they are not settled in the period in which they arise.

A financial liability is derecognised only when the obligation is extinguished, that is, when the obligation is discharged or cancelled or expires.

The Group's financial liabilities include borrowings, trade and other payables.

Management of capital

The Group's objectives when managing capital are:

·; to safeguard the entity's ability to continue as a going concern, so that it can continue to provide returns for shareholders and benefits for other stakeholders, and

·; to provide an adequate return to shareholders by pricing products and services commensurately with the level of risk.

The Group sets the level of capital in proportion to risk. The Group manages the capital structure and makes adjustments to it in the light of changes in economic conditions and the risk characteristics of the underlying assets.

Significant judgements and estimates

·; The Directors have considered the recent trading activity of the Group in conjunction with detailed forecasts for the 12 month period following the date of these accounts. The financial statements are being prepared on a going concern basis which the Directors believe to be appropriate. Further details can be found in the Report of the Directors.

·; The useful life assumption of intangible assets is disclosed in the software development accounting policy.

·; Revenue is recognised in accordance with the accounting policy noted previously

·; Careful judgement by the Directors is applied when deciding whether the recognition requirements for development costs have been met. This is necessary as the economic success of any product development is uncertain and may be subject to future technical problems at the time of recognition. Judgments are based on the information available at each balance sheet date. In addition, all internal activities related to the research and development of new software products are continuously monitored by the Directors.

Standards in issue but not yet effective

New standards and interpretations currently in issue but not effective for accounting periods commencing on 1 July 2010 are:

·; IFRS 9 Financial Instruments (effective 1 January 2013)

·; IAS 24 (Revised 2009) Related Party Disclosures (effective 1 January 2011)

·; Prepayments of a Minimum Funding Requirement - Amendments to IFRIC 14 (effective 1 January 2011)

·; Improvements to IFRS issued May 2010

·; Disclosures - Transfers of Financial Assets - Amendments to IFRS 7 (effective 1 July 2011)

The above new standards and interpretations are not considered to have a material impact on the financial statements

Consolidated statement of comprehensive income

All of the activities of the Group are classed as continuing.

The accompanying accounting policies and notes form part of these financial statements.

Consolidated balance sheet

Assets

Non-current assets

Current assets

Equity

These financial statements were approved and authorised by the Directors on 29 November 2010and are signed on their behalf by:

A Hancock

Director

The accompanying accounting policies and notes form part of these financial statements.

The accompanying accounting policies and notes form part of these financial statements.

Consolidated statement of changes in equity

The accompanying accounting policies and notes form part of these financial statements.

Notes to the financial statements

1 Segment reporting

The revenue and profit / (loss) before tax are attributable to the one principal activity of the Group being software development in the United Kingdom. An analysis of revenue is given below:

Of this figure, £746,000 relates to customers who individually contribute more than 10% of total revenue (2009: £594,000).

2 Other operating income

Other operating income consists of £15,000 of rent receivable in respect of operating leases. This agreement commenced in September 2009. There was no tenant during the year ended 30 June 2009, so there is no other operating income shown in that period.

3 Operating result

Operating lease costs:

4 Directors and employees

5 Directors and key management

Details of share options held by the Directors can be found in the Report of the Directors.

6 Finance charges

7 Income tax

Factors affecting current tax charge

8 Profit / (loss) per share

At 30 June 2010, the Company had 1,513,750 share options and 2,000,000 warrants outstanding. No options or warrants were exercised in the period.

Amortisation charged on intangible assets is included within depreciation and amortisation in the consolidated statement of comprehensive income.

On 30 June 2010, Rubicon agreed to convert the annual licence agreement with First Response Finance Limited to a perpetual licence. With the increase in near term, and reduction of future, Accelerator licence revenue, the Board recognised a permanent diminution in value of this asset and have therefore impaired its value.

Included within the net book value of £9,000 is £4,000 (2009: £5,000) relating to assets held under finance leases and hire purchase agreements. The depreciation charged to the financial statements in the year in respect of such assets amounted to £3,000 (2009: £3,000).

11 Trade and other receivables

Some of the unimpaired trade receivables are past due as at the reporting date. Financial assets past due but not impaired can be shown as follows:

All amounts are short term. The carrying value of trade receivables is considered a reasonable approximation of fair value.

The Directors consider all receivables to be recoverable, except for an amount of £5,237 which has been provided for in the current year for specific work that has been completed but remains unpaid (2009: £4,100).

12 Trade and other payables - current

The other payables of £61,000 (2009: £nil) were secured by a floating charge over the assets of the Group. The loan was repaid in full on 23 July 2010 at which point the security was extinguished. The loan carried a rate of interest of 1% per calendar month.

13 Trade and other payables - Non current

14 Financial instruments and derivatives

The Group's principal financial instruments comprise cash and bank overdrafts. The purpose of these financial instruments is to finance the Group's operations. The Group has other financial assets and liabilities that arise directly from its operations, such as trade and other receivables and payables.

The Group does not enter into derivative transactions such as forward foreign currency contracts.

The main risks arising from the Group's financial instruments are credit risk and liquidity risk. The Board reviews and agrees policies for managing each of these risks and they are summarised below.

Credit risk

The credit risk is the carrying amount of the financial assets as shown in note 11.

The Group's trade and other receivables are actively monitored to avoid a significant concentration of credit risk.

Liquidity risk

The Group monitors its liquidity position actively to ensure the business has sufficient resources to meet its requirements and to invest cash assets safely and profitably.

Market risk

The Group considers its exposure to interest rate and foreign exchange to be immaterial.

Fair values

The Directors consider that the fair value of all the financial assets and liabilities is the same as the carrying value in the financial statements.

The financial asset categorisation is presented as follows:

The disclosure of the carrying value in respect of IAS39 categorisation of financial liabilities is as follows:

Contractual un-discounted cash flows in respect of financial liabilities are as follows:

15 Commitments under finance leases and hire purchase agreements

The total minimum finance lease payments equal their present value.

Amounts due under finance leases and hire purchase agreements are secured on the assets to which they relate.

16 Leasing commitments

At 30 June 2010 the Group had commitments under non-cancellable operating leases as set out below:

17 Deferred taxation

The amounts unprovided for deferred taxation are set out below:

On 27 November 2009, the Company issued 195,000 new ordinary shares to Andrew Kirby at a price of 3p per share. Proceeds received in excess of the nominal value of the shares, net of associated issue expenses totalling £3,900, are included in share premium.

On 1 June 2010, following shareholder approval of a re-financing exercise, the Company issued David Cover and Son Limited and Rupert Green 3,000,000 and 187,500 new ordinary shares respectively at par. Issue expenses totalling £2,798 are included in share premium.

19 Share options

The Group adopted the Rubicon Software Group EMI Scheme 2006 on 8 June 2006.

An aggregate of 3,278,000 options have been granted to employees of the Group, in return for such employees releasing certain earlier EMI schemes options which were granted to them by Rubicon Software Limited. This is the only share incentive scheme of the Group currently in place.

As at 30 June 2010, there were 1,513,750 share options outstanding (2009: 1,513,750). Of these, 756,875 were capable of being exercised (2009: 756,875). The Black-Scholes valuation methodology was used for the valuation of all options.

During the year the Group issued warrants in respect of 2,000,000 ordinary shares. The warrants are exercisable at any time within five years of issue at an exercise price of £0.012 per share. The Directors have calculated the fair value of the warrant instrument in accordance with International Financial Reporting Standard 2 'Share-based Payment' and consider any charge to the statement of comprehensive income to be immaterial to the financial statements.

21 Related party transactions

Director's fees of £20,000 were paid to David Webber and Richard Blakesley in respect of their non-executive duties (2009: £24,000).

22 Annual Report and Annual General Meeting

The Annual Report will be available from the Company's website www.rubiconsoftware.com from 30 November 2010 and will be posted to shareholders on or around 30 November 2010. The Annual Report contains notice of the Annual General Meeting of the Company which will be held at 1.00 p.m. on 21 December 2010 at Rubicon House, Guildford Road, West End, Surrey GU24 9PW