RS2 Group registers pre-tax profits of €4.25 million

RS2 continued to build on the momentum of the previous year’s performance to consolidate another positive year for the company, with pre-tax profits of €4.25 million.

Total revenue for 2013 amounted to €13.5m representing a 6.2% increase over 2012. In 2013, the revenue mix was very similar to that of the previous year, with 49% of the total revenue for 2013 made up of licence fees for the use of BankWORKS®.

The cost of sales for the year ended 2013 amounted to €6.4m, an increase of 18% over the previous year. Due to the expansion and the increase in RS2’s global client base and system implementation, the company continued to invest in its infrastructure and human resources. As a result, gross profit margin for the year stood at €7.1m a slight decrease of 3% over 2012.

In accordance with accounting rules and regulations, the company recognised a notional cost of €0.4m on the shares granted to its employees as part of the share option scheme for services provided in 2013.

This cost is a non-cash expense and was transferred to the share option reserve. As the share option is exercised by our eligible employees, this cost will gradually be transferred to the retained earnings reserve.

In 2013, the company continued to invest in its BankWORKS® product, and has capitalised development costs of €400,000 to keep it updated with the latest technology in the market.

Profit before tax amounted to €5.1m, a decrease of 10% when compared to 2012. Tax for the year amounted to €1.7m comprising mainly the movement in deferred tax asset. The company continued to benefit from the accumulated investment tax credits under the Malta Enterprise Act.

In the past two years, the company utilised a significant amount of the accumulated tax credit, and as a consequence it registered a shift from a deferred tax asset in the balance sheet to a deferred tax liability of €1.5m.

Earnings before interest, tax, depreciation and amortisation (EBITDA) for 2013 amounted to €6.5m, a decrease of €0.4m and reflects the strong position of the Company’s core profitability for 2013.

On a consolidated basis, the group registered a 33% increase in revenue when compared to 2012. This is explained by the elimination of intra-group sales in 2012, coupled with new revenues generated by a subsidiary in 2013.

Gross profit for the group increased by €1.9m when compared to 2012. Profit before taxation amounted to € 4.3m, an increase of 35% over 2012.

The group generated cash from operation of €4.3m compared to €1.0m generated in 2012. At year end, the group’s cash reserves stood at €3.6m.

RS2 chairman Mario Schembri said 2013 was the year in which RS2 established its potential. “It has confirmed its capability to provide solutions both to banking and service provider clients that dominate the Tier 1 segment of the diverse transaction payment industry. The financial results for the year ended December 2013 confirm our ability to generate healthy profits year after year.”

CEO Radi El Haj said 2013 was a testament to the proven relevance of the strategies employed by the company. “It is an achievement that reflects the quality of our product, our unwavering customer-driven focus, and our commitment to the highest levels of service, all of which are delivered by some of the most capable and talented people in our industry.”