20 Nov 2008 07:00
RUBICON SOFTWARE GROUP PLC
(AIM: RUBI)
Preliminary results for the year ended 30 June 2008
Rubicon Software Group plc ("Rubicon" or "the Company"), a leading provider of smart customer relationship management IT solutions, has announced its audited results for the year ended 30 June 2008.
Financials:
Total revenue 11% lower at £1,231,000 (2007: £1,380,000)
Net loss for the period reduced by 48% to £137,000 (2007: £266,000)
Recurring revenue increased 34% to £495,000 (2007: £370,000)
Loss per share 0.4p per share (2007: 0.7p per share)
Operational highlights:
Cost base significantly reduced
Revised business model proving successful
Alistair Hancock, Chief Executive of Rubicon, commented:
"We have been hit by the sharp downturn in our main areas of activity but have been proactive in adjusting very quickly.
"We have reduced the cost base, revised the business offering and improved our marketing and sales. As a result of this, we are currently operating at break-even with trading in line with forecasts.
"We are now looking to move into profitability as the year goes on and are cautiously optimistic regarding the company's prospects for the year."
For further information, please contact:
| Rubicon Software Group PLC | Tel: 01276 706 900 |
| Alistair Hancock, Chief Executive Officer | www.rubiconsoftware.com |
|
W.H. Ireland |
Tel: 0121 265 6300 |
| Tim Cofman/Katy Birkin | |
|
Lothbury Financial | |
| Michael Padley / Louise Davis | Tel: 020 7011 9411 |
Notes to Editors
About Rubicon
Based near Woking in Surrey, Rubicon is a provider of smart decisioning and workflow automation software. Its core technology is designed to enhance the effectiveness and efficiency of customer service, fulfillment 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 is applicable to other markets and the Company is currently actively targeting these new areas. For more information, please visit www.rubiconsoftware.com
Chairman's statement
In the year to 30 June 2008, Rubicon generated revenue of £1,231,000, 11% down on the prior year, but in line with expectations following our trading statement in December 2007. Overall loss for the year was £137,000, 48% less than the loss for 2007 of £266,000, reflecting both the cost saving actions taken by the business in the light of the deteriorating business climate and the tax credits receivable.
Operational review
This has been a year of exceptional challenges and the unprecedented turmoil in the global economy has impacted most businesses, especially those aligned with financial services. Rubicon, as a provider of software and services to companies within the sector, particularly those in second charge loan brokerage, has had to adjust its plans to reflect the problems of its customers.
As I reported last year, we had an early insight into the "Credit-Crunch". The withdrawal of lenders and the tightening of lending criteria restricted the business volumes of our clients and prospects resulting in less capital investment by those companies. Brokers have down-sized, with many being forced into administration.
In response to the deteriorating market conditions, we have reduced the overheads of the business down to a more sustainable level. Overall costs were reduced by 44% in the second half of the year.
In addition to realising cost savings, the Board has undertaken a review of suitable sales channels for both the core Accelerator product and the skills and capability of our software engineers. We have outsourced sales and business development to a specialist consultancy, Trinamo LLP, in order to facilitate market penetration in our chosen channels and to maximise our sales opportunities.
A fundamental element of the Group's strategy remains to establish a solid base of recurring revenue. We have made steady progress towards this aim in the year with recurring revenue of £495,000, 34% higher than in 2007 despite being hit by the demise of a number of clients.
Management
Richard Gordon, our part-time Finance Director left the Group on 30 September 2007 to join a larger organisation in a full time role.
Mark Peters, Commercial Director, left the Group on 31 August 2008 to pursue other business interests.
The Board would like to record its appreciation of their contribution to the Company's development.
On 15 October 2008, Andrew Kirby was appointed to the Board as Finance Director and Company Secretary, having previously worked within the business as Finance Manager.
Dividends
Distributable reserves are not available and the Directors do not propose to pay a dividend for the period.
Current trading and outlook
We continue to enjoy a positive relationship with all our clients, with our software playing an integral part in their competitive advantage, we aim to provide the highest levels of support to them whilst evolving our products to suit their changing needs.
Following the appointment of Trinamo LLP as our sales arm, we have initiated a new programme of lead generation and qualification to extend and validate our sales pipeline. The response to date has been encouraging, both directly and through partnerships, with renewed interest from regional building societies and the wealth management sector. Interest in our products and services is also coming from outside the Financial Services sector with opportunities emerging with "Green Technology" businesses.
The economy as a whole in the UK, Europe and worldwide has been, and continues to be, the focus of attention of industry analysts and economists. Their commentary covers the likely depth of recession and its longevity. We have taken action to reduce costs to match the current environment, identified new markets and engaged a successful business development consultancy to sell our products into these markets.
With these actions, the Board believes that we are well positioned both to weather the recessionary climate and to take advantage of new opportunities as they arise.
R Burnham
Chairman
20 November 2008
Consolidated income statement
|
2008 |
2007 | ||
| Note | £'000 | £'000 | |
| Revenue | 2 | 1,231 | 1,380 |
| Other operating income | 3 | 14 | 65 |
| Depreciation, amortisation | (137) | (179) | |
| Other operating charges | (1,368) | (1,529) | |
| _______ | _______ | ||
| Operating result | 4 | (260) | (263) |
| Finance income | 1 | 2 | |
| Finance charges | (3) | (5) | |
| _______ | _______ | ||
| Result from continuing activities before tax | (262) | (266) | |
| Tax credit | 125 | - | |
| _______ | _______ | ||
| Net results for the year | (137) | (266) | |
| ============ | ============ | ||
| Loss per share | Pence | Pence | |
| Basic and diluted | 5 | (0.4) | (0.7) |
All of the activities of the Group are classed as continuing.
Consolidated balance sheet
|
2008 |
2007 | ||
| Note | £'000 | £'000 | |
| Assets | |||
| Non-current assets | |||
| Trade and other receivables due after one year | 15 | 36 | |
| Property, plant and equipment | 7 | 32 | 40 |
| Intangible assets | 6 | 380 | 289 |
| _______ | _______ | ||
| 427 | 365 | ||
| Current assets | |||
| Trade and other receivables due within one year | 272 | 478 | |
| Cash and cash equivalents | - | 57 | |
| _______ | _______ | ||
| 272 | 535 | ||
| Total assets | 699 | 900 | |
| Equity | |||
| Called up equity share capital | 377 | 377 | |
| Share premium account | 393 | 393 | |
| Share option reserve | 13 | 9 | |
| Merger reserve | 596 | 596 | |
| Retained earnings | (1,087) | (950) | |
| _______ | _______ | ||
| Total equity | 292 | 425 | |
| Liabilities | |||
| Non-current liabilities | |||
| Amounts owing under finance leases | 4 | 4 | |
| _______ | _______ | ||
| 4 | 4 | ||
| Current liabilities | |||
| Trade and other payables | 403 | 471 | |
| _______ | _______ | ||
| 403 | 471 | ||
| _______ | _______ | ||
| Total liabilities | 407 | 475 | |
| Total liabilities and equity | 699 | 900 |
Consolidated cash flow statement
|
2008 |
2007 | |
| £'000 | £'000 | |
| Operating activities | ||
| Result for the period before tax and finance costs | (260) | (263) |
| Amortisation of intangible assets | 122 | 166 |
| Depreciation of property, plant and equipment | 15 | 14 |
| Change in trade and other receivables | 261 | (51) |
| Change in trade and other payables | (90) | 58 |
| Share option charges | 4 | 9 |
| Taxes received | 91 | - |
| Cash flows from operating activities | 143 | (67) |
| Investing activities | ||
| Purchase of property, plant and equipment | (7) | (14) |
| Additions to intangible assets | (213) | (179) |
| Interest received | 1 | 2 |
| Net cash used in investing activities | (219) | (191) |
| Financing activities | ||
| Proceeds from the issue of shares | - | 470 |
| Repayment of loans | - | (100) |
| Finance lease payments | - | 2 |
| Interest paid | (3) | (5) |
| Net cash movement from financing | (3) | 367 |
| Net movement in cash | (79) | 109 |
| Opening cash balance | 57 | (52) |
| Closing cash balance | (22) | 57 |
Consolidated statement of changes in equity
| Share capital | Share premium | Share option reserve | Merger reserve | Retained earnings |
Total equity | |
| £'000 | £'000 | £'000 | £'000 | £'000 | £'000 | |
| Balance at 1 July 2006 | 300 | - | - | 596 | (684) | (212) |
| Loss for the period | - | - | - | - | (266) | (266) |
| Sub-total recognised gains and losses | - | - | - | - | (266) | (266) |
| Issue of shares | 77 | 393 | - | - | - | 470 |
| Share options | - | - | 9 | - | - | 9 |
| Balance at 30 June 2007 | 377 | 393 | 9 | 596 | (950) | 425 |
| Balance at 1 July 2007 | 377 | 393 | 9 | 596 | (950) | 425 |
| Loss for the period | - | - | - | - | (137) | (137) |
| Sub-total recognised gains and losses | - | - | - | - | (137) | (137) |
| Share options | - | - | 4 | - | - | 4 |
| Balance at 30 June 2008 | 377 | 393 | 13 | 596 | (1,087) | 292 |
Notes to the financial statements
1 Basis of accounting
The financial statements are being prepared on the going concern basis which the directors believe to be appropriate for the reasons set out below.
The group meet its day to day working capital requirements through banking facilities which are due for renewal in January 2009. In addition the group is currently in negotiation with a third party for a loan which if the application is approved and the facility is agreed will be in place by 31 December 2008. The Directors have prepared detailed projected cash flow information to 31 December 2009. Those projections and forecasts take into account information available at the time of approval of these financial statements, renewal of banking facilities and receipt of the new loan. On the basis of this cash flow information the Directors consider that the group will be able to continue to operate within the facilities the Directors believe will be in place.
The availability of the banking facilities and the additional facility (including the renewal of that facility in December 2009) will be dependent on a number of factors including financial performance and the economic environment at the time of refinancing. The current trading results are ahead of the budget for the current financial year.
These financial statements do not include any adjustments that would result from the going concern basis of preparation being inappropriate.
2 Segment reporting
The revenue and loss before tax are attributable to the one principal activity of the Group being software development. An analysis of revenue is given below:
|
2008 |
2007 | |
| £'000 | £'000 | |
| United Kingdom | 1,231 | 1,380 |
| ====== | ====== |
3 Other operating income
|
2008 |
2007 | |
| £'000 | £'000 | |
| Other operating income | (14) | (65) |
| ====== | ====== |
Other operating income of £14,000 (2007: £65,000) relates to rent receivable in respect of operating leases. This agreement was terminated in November 2007.
4 Operating result
Operating loss is stated after charging:
|
2008 |
2007 | |
| £'000 | £'000 | |
| Share-based payments | 4 | 9 |
| Capitalised software development | 213 | 179 |
| Amortisation of intangible assets | 122 | 166 |
| Depreciation of owned property, plant and equipment | 10 | 12 |
| Depreciation of assets held under finance leases and hire purchase agreements | 5 | 2 |
| Fees payable to the Company's auditor for the audit of the Company's annual accounts | 21 | 16 |
| Tax services | 5 | 4 |
| Corporate finance fees | - | 1 |
| Operating lease costs: | ||
| Buildings | 110 | 112 |
| ====== | ====== |
5 Loss per share
| 2008 | 2007 | |
| £'000 | £'000 | |
| Loss attributable to ordinary shareholders | (137) | (266) |
| ====== | ====== | |
| Weighted average number of shares (basic) | 37,699,995 | 37,699,995 |
| Basic loss per share | (0.4)p | (0.7)p |
At 30 June 2008, the Company had 1,763,750 share options outstanding. None of these options were exercised in the period. The options are anti-dilutive because the Group is loss making.
6 Intangible assets
| Development expenditure | |
| £'000 | |
| Carrying amount 1 July 2006 | 276 |
| Additions | 179 |
| Amortisation charge for the year | (166) |
| _______________ | |
| Carrying amount at 30 June 2007 | 289 |
| ============= | |
| Additions | 213 |
| Amortisation charge for the year | (122) |
| _______________ | |
| Carrying amount at 30 June 2008 | 380 |
| ============= |
Amortisation charged on intangible assets is included within depreciation, amortisation and impairment of non-financial assets in the consolidated income statement.
7 Property, plant and equipment
| Leasehold buildings | Office equipment | Total | |
| £'000 | £'000 | £'000 | |
| Cost at 1 July 2006 | 60 | 183 | 243 |
| Additions | - | 14 | 14 |
| _________ | _________ | _________ | |
| Cost at 30 June 2007 | 60 | 197 | 257 |
| Additions | - | 7 | 7 |
| _________ | _________ | _________ | |
| Cost at 30 June 2008 | 60 | 204 | 264 |
| ======== | ======== | ======== | |
| Depreciation at 1 July 2006 | 35 | 168 | 203 |
| Charge for the year | 7 | 7 | 14 |
| _________ | _________ | _________ | |
| Depreciation at 30 June 2007 | 42 | 175 | 217 |
| Charge for the year | 6 | 9 | 15 |
| _________ | _________ | _________ | |
| Depreciation at 30 June 2008 | 48 | 184 | 232 |
| ======== | ======== | ======== | |
| Net book value at 1 July 2006 | 25 | 15 | 40 |
| ======== | ======== | ======== | |
| Net book value at 30 June 2007 | 18 | 22 | 40 |
| ======== | ======== | ======== | |
| Net book value at 30 June 2008 | 12 | 20 | 32 |
| ======== | ======== | ======== |
Included within the net book value of £32,000 is £8,000 (2007 - £6,000) 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 £5,000 (2007 - £2,000).
8 The financial information set out in this preliminary announcement does not constitute statutory accounts as defined in section 240 of the Companies Act 1985.
The consolidated balance sheet at 30 June 2008 and the consolidated income statement, consolidated cash flow statement, consolidated statement of changes in equity and associated notes for the year end have been extracted from the Group financial statements.
The audit report in the financial statements is modified to include an emphasis of matter relating to the assumption that the going concern basis of preparation is appropriate.
The financial statements have not yet been delivered to the Registrar.