Half Yearly Report

31st Mar 2009 12:57



Rubicon Software Group plc

INTERIM RESULTS FOR THE SIX MONTHS ENDED 31 DECEMBER 2008

Rubicon Software Group plc ("Rubicon" or "the Group"; AIM: RUBI), a leading provider of smart customer relationship management IT solutions, announces its unaudited results for the six months ended 31 December 2008. 

KEY POINTS :

2 new clients in "Green Technology"

Pre-tax loss reduced to £103,000 (2007: loss of £351,000)

Revenues fell 40% to £451,000 but recurring income has increased by 2%

Loss per share of 0.3p (2007: loss per share of 0.9p)

Commenting on these results, Rob Burnham, Chairman of Rubicon, said:

"The impact of the global economic slowdown has resulted in an exceptionally challenging first half to the current financial year. We have concentrated our efforts on winning new business from other sectors and, although this is taking time, the business has made encouraging progress in the first half of the financial year.

"We have recently agreed to commence two bespoke software projects in the "Green Technology" arena, one of which is from a data centre audit company based in the United States and the other a UK based videoconferencing business. In addition to these larger projects, we have continued to enjoy success winning smaller Internet and CRM developments, taking advantage of our award winning pedigree in these areas.

"The Board retains a positive outlook for the business despite market conditions. We believe that a near term focus on professional services and projects, with a longer term strategy of delivering growth through partnerships and positioning our products and services into a wider audience of different markets, will enable the business to survive and grow."

Notes to Editors

About Rubicon Software

Based near Woking in Surrey, Rubicon Software is a provider of smart customer relationship management IT solutions. Its core technology is designed to enhance the effectiveness and efficiency of customer service, fulfilment and product selection, whilst facilitating business process and change management. Current clients include First Response Finance, Market Harborough Building Society, and Norton Finance. The Group's technology and skills are applicable to other markets and the Company is actively targeting these new areas. For more information, please visit www.rubiconsoftware.com.

For further information, please contact:

Rubicon Software Group plc	01276 706900
Alistair Hancock, Chief Executive Officer
Andrew Kirby, Finance Director
W.H. Ireland	0121 265 6330
Tim Cofman/Katy Birkin

  CHAIRMAN'S STATEMENT

The impact of the global economic slow down has resulted in an exceptionally challenging first half to the current financial year. Having, as previously reported, focused the business on serving the second charge loans market we have been faced with a significant reduction in opportunity within this market. As a consequence of this contraction we have concentrated our efforts on winning new business from other sectors and, although this is taking time, the business has made encouraging progress in the first half of the financial year.

The revenues for the first half were £451,000 being 40% lower than the same period last year (2007: £744,000). However on a positive note £246,000 of this income was recurring compared to £241,000 in 2007. £205,000 of the revenue in the year was derived from consultancy fees as compared to £503,000 in 2007. This reduction reflects the tail end of a large bespoke software development project that benefited 2007 and the longer lead times associated with acquiring new business in the current economic climate.

Despite the difficulties experienced at the start of the current financial year, we are starting to see indications that some businesses are taking the opportunity to invest in smart technology at a time when business levels are reduced so that they are better placed to leverage that technology when the economy recovers. We have recently agreed to commence two bespoke software projects in the "Green Technology" arena, one of which is from a data centre audit company based in the United States and the other a UK based videoconferencing business. In addition to these larger projects, we have continued to enjoy success winning smaller Internet and CRM developments, taking advantage of our award winning pedigree in these areas.

Furthermore we continue to provide the highest levels of support to our existing clients and in September 2008 we agreed a twelve month extension to the support and maintenance contract with Norton Finance. 

The Board continues actively to look at potential partner channels and new revenue generating opportunities, with our outsourced sales consultants Trinamo LLP undertaking a number of lead generation campaigns in order to increase the sales pipeline and accelerate revenue delivery.

The cost reductions undertaken by the Board in the second half of the last financial year have enabled us to operate at just above breakeven earnings before interest, tax, depreciation and amortisation (EBITDA) in the first six months of this financial year. This is a significant achievement and provides us with a stable platform of costs from which to grow and generate cash. EBITDA profit for the period was £3,000 (2007 loss: £282,000), while first-half pre-tax losses were £103,000 (2007 loss: £351,000).The Group's overdraft position was £46,000 at the period end (2007 overdraft: £54,000), which is within the facility provided by the bank which continues to remain supportive. 

The Board retains a positive outlook for the business despite market conditions. We believe that a near term focus on professional services and projects, with a longer term strategy of delivering growth through partnerships and positioning our products and services into a wider audience of different markets, will enable the business to survive and grow despite the collapse of our legacy markets and the wider macro economic problems. We will also continue to provide our existing clients with excellent service and genuine differentiation in their chosen markets through the efficiency of their business processes and the technology that they employ. 

I would take this opportunity to thank our clients, our dedicated staff, our suppliers and our shareholders for their ongoing support and loyalty in these unprecedented times. 

R. Burnham	31 March 2009
Chairman
Rubicon Software Group plc

  

Condensed consolidated interim income statement

		6 months to 31 December 2008	6 months to 31 December 2007	Year to  30 June  2008
		£'000	£'000	£'000
	Notes	(Unaudited)	(Unaudited)
Revenue		451	744	1,231
Other operating income and charges		(552)	(1,094)	(1,491)
Operating loss	4	(101)	(350)	(260)
Finance income		-	1	1
Finance charges		(2)	(2)	(3)
Loss before tax		(103)	(351)	(262)
Tax credit		-	-	125
Loss for the period attributable to equity shareholders		(103)	(351)	(137)
Loss per share (basic)	5	(0.3)p	(0.9)p	(0.4)p

Consolidated statement of changes in equity

	Share  capital	Share premium account	Share option reserve	Merger reserve	Profit and loss account	Total equity
	£'000	£'000	£'000	£'000	£'000	£'000
Balance at 1 July 2007	377	393	9	596	(950)	425
Loss for the period	-	-	-	-	(351)	(351)
Sub-total recognised gains and losses	-	-	-	-	(351)	(351)
Share options	-	-	3	-	-	3
Balance at 31 December 2007	377	393	12	596	(1,301)	77
Profit for the period	-	-	-	-	214	214
Sub-total recognised gains and losses	-	-	-	-	214	214
Share options	-	-	1	-	-	1
Balance at 30 June 2008	377	393	13	596	(1,087)	292
Loss for the period	-	-	-	-	(103)	(103)
Sub-total recognised gains and losses	-	-	-	-	(103)	(103)
Share options	-	-	1	-	-	1
Balance at 31 December 2008	377	393	14	596	(1,190)	190

  Condensed consolidated interim balance sheet

		6 months to 31 December 2008	6 months to 31 December 2007	Year to  30 June  2008
		£'000	£'000	£'000
		(Unaudited)	(Unaudited)
Assets
Non-current assets
Trade and other receivables due after one year		5	24	15
Property, plant and equipment		25	40	32
Intangible assets		314	228	380
		344	292	427
Current assets
Trade and other receivables due within one year		118	359	272
		118	359	272
Total assets		462	651	699
Equity
Called up equity share capital		377	377	377
Share premium account		393	393	393
Share option reserve		14	13	13
Merger reserve		596	596	596
Retained earnings		(1,190)	(1,301)	(1,087)
Total equity		190	78	292
Liabilities
Non-current liabilities
Amounts owing under finance leases		2	6	4
		2	6	4
Current liabilities
Trade and other payables		224	513	381
Overdraft		46	54	22
		270	567	403
Total liabilities		272	573	407
Total liabilities and equity		462	651	699

  Condensed consolidated interim cash flow statement

		6 months to 31 December 2008	6 months to 31 December 2007	Year to  30 June  2008
		£'000	£'000	£'000
		(Unaudited)	(Unaudited)
Operating activities
Result for the period before tax and finance costs		(101)	(350)	(260)
Adjustments for:
Amortisation of intangible assets		97	61	122
Depreciation of property, plant and equipment		7	7	15
Increase in trade and other receivables		259	132	261
Decrease in trade and other payables		(255)	39	(90)
Share option charges		1	4	4
Taxes received		-	-	91
Cash flows from operating activities		8	(107)	143
Investing activities
Purchase of property, plant and equipment		-	(3)	(7)
Additions to intangible assets		(31)	-	(213)
Interest received		-	1	1
Net cash used in investing activities		(31)	(2)	(219)
Financing activities
Interest paid		(1)	(2)	(3)
Net cash movement from financing		(1)	(2)	(3)
Net decrease in cash and cash equivalents		(24)	(111)	(79)
Cash and cash equivalents at beginning of period		(22)	57	57
Cash and cash equivalents at end of period		(46)	(54)	(22)

  Notes to the interim report

 

1. Publication of non-statutory accounts and nature of operations

The financial information set out above does not constitute statutory accounts within the meaning of section 240 of the Companies Act 1985. The figures for the year ended 30th June 2008 have been extracted from the statutory financial statements prepared in accordance with the accounting policies which are based on the recognition and measurement principles of IFRS in issue as adopted by the European Union (EU), which have been filed with the Registrar of Companies. The auditors' report on those financial statements was unqualified. The auditors have issued an unqualified report on the full financial statements and remuneration report containing no statement under section 237 (2) or section 237 (3) of the Companies Act 1985.

Rubicon Software Group plc's consolidated interim financial statements are presented in Pounds Sterling (£), which is the functional currency of all Group companies.

Rubicon Software Group plc and subsidiaries' ('the Group') principal activity is consultancy and design, development and provision of computer software. 

Rubicon Software Group plc is the Group's ultimate parent company. It is incorporated and domiciled in Great Britain. The address of Rubicon Software Group plc's registered office, which is also its principal place of business, is Rubicon House, Guildford Road, West End, Woking, Surrey GU24 9PW. Rubicon Software Group plc's shares are listed on the AIM Market of the London Stock Exchange.

2. Basis of preparation and accounting policies

These interim condensed consolidated financial statements are for the six months ended 31 December 2008. They do not include all of the information required for full annual financial statements, and should be read in conjunction with the consolidated financial statements of the Group for the year ended 30 June 2008.

These financial statements have been prepared under the historical cost convention.

These condensed consolidated interim financial statements (interim financial statements) have been prepared in accordance with the accounting policies which are based on the recognition and measurement principles of IFRS in issue as adopted by the European Union (EU) and are effective at 30 June 2008 or are expected to be adopted and effective at 30 June 2008, our first annual reporting date at which we are required to use IFRS accounting standards adopted by the EU.

3. Research and development

Research and development costs capitalised in the period amounted to £31,000 (2007 - nil). In the year ended 30 June 2008, £213,000 of research and development was capitalised.

4. Operating loss

The Group operates a share-based compensation plan. The fair value of the employee services received under the plan is recognised as an expense in the consolidated income statement. Fair value is determined using the Black-Scholes Option Pricing Model. The amount to be expensed over the vesting period is determined by reference to the fair value of share options.

The operating loss is stated after adoption of IFRS 2 "Share-based payment". The Group recognised total expenses of £1,000 for the six months ending 31 December 2008 and £3,000 for the six months ending 31 December 2007. The financial effect of these adjustments is shown below:

Condensed consolidated income statement

	6 months to 31 December 2008	6 months to 31 December 2007	Year to  30 June  2008
	£'000 (Unaudited)	£'000 (Unaudited)	£'000

Revenue	451	744	1,231
Other operating income and charges	(551)	(1,091)	(1,487)
Operating profit before share-based payments	(100)	(347)	(256)
Share-based payment expense	(1)	(3)	(4)
Operating loss	(101)	(350)	(260)

 

5. Loss per share

The relevant figures used in the calculation are stated below:

	6 months to 31 December 2008	6 months to 31 December 2007	Year to  30 June  2008
	£'000	£'000	£'000
	(Unaudited)	(Unaudited)
Loss attributable to shareholders	(103)	(351)	(137)
Weighted average number of shares outstanding	37,699,995	37,699,995	37,699,995

At 31 December 2008, the Company had 1,513,750 share options outstanding. None of these options were exercisable in the period so there is no dilutive effect on the Group's loss per share.

ENDIR ILFELVVILVIA

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