RS2 Software plc - Full-Year Results

Thursday, April 26th, 2018

On 25 April 2018, RS2 Software plc published its preliminary financial statements for the year ended 31 December 2017.

Performance Overview

During the period under review, revenues increased by a marginal 1.2% to €17.4 million as the company continued with shifting its main focus to managed service business (which generates ongoing revenues) from the more volatile licensing business. In fact, processing fees increased by 54% year-on-year following the 24% increase registered in 2016.

Total costs increased by 2.6% to €17.3 million (FY2016: €16.9 million) as RS2 continued to invest in its HR and IT infrastructure, and also intensified its efforts on expanding its client base not only in Europe, but especially in the US and the Asia-Pacific region. In this respect, RS2 explained that in Europe, the Group managed to secure strategic deals for its managed services which will secure substantial revenue for RS2 once the customer moves into production. Meanwhile, in the US market, the company continued to implement its strategy by recruiting a new CEO to run the North American business and strengthen the relationship with the Sponsor banks and the potential clients which are expected to be on board shortly.

On the other hand, the performance of RS2 was positively impacted by higher capitalised development costs (€0.91 million against €0.5 million in 2016) as well as other income of €0.64 million (FY2016: €0.04 million). The company’s operating profit improved to €1.62 million from €0.84 million in 2016, which in turn translates into an operating profit margin of 9.3% (FY2016: 4.9%).

Net finance costs increased to €0.39 million from a net income of €0.04 million in the previous comparable period, largely reflecting unrealised foreign exchange losses. However, RS2 still reported a 39.2% increase in pre-tax profits of €1.23 million compared to €0.88 million in 2016. After taking into account a tax charge of €0.61 million and minority interest (€0.18 million), the net profit attributable to the shareholders of the company amounted to €0.79 million (FY:2016: €0.58 million). This translates into an earnings per share of €0.005 (FY2016: €0.003).

The Statement of Financial Position shows a 7% drop in total assets to €29.6 million, largely driven by the significant decline in accrued income. Meanwhile, it is also worth highlighting that RS2’s cash balance as at 31 December 2017 improved to a record of €7.79 million compared to €6.34 million as at the end of the previous year. Similarly, total liabilities decreased by nearly 11% year-on-year to €8.92 million, mostly related to the 35% decline in total borrowings to €1.86 million. As a result, shareholders’ funds contracted by 4.2% to €21.1 million.

Dividend

The Directors recommended a final net dividend of €0.0146 per share, representing an increase of 58.2% over the €0.0092 net dividend per share paid out in respect of the 2016 financial year. Shareholders as at close of trading on Wednesday 16 May 2018 will be entitled to receive this dividend on Tuesday 26 June 2018 subject to shareholders’ approval at the upcoming Annual General Meeting scheduled to be held on Tuesday 19 June 2018.

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RS2 Software plc – Preliminary financial statements for the year ended 31 December 2017.

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