On 20 April, RS2 Software plc published its 2009 full-year results showing a substantial drop in pre-tax profits to €431,247 compared to the 2008 pre-tax profit of €2.9 million. This drop is due to a combination of lower Comprehensive Package Agreements (CPAs) and licence sales as well as increased costs. The RS2 Group sold 2 CPAs during the year with new clients in Scandinavia and the Middle East in contrast to the 4 CPAs concluded in 2008. RS2 also concluded the sale of one licence agreement with a client in Egypt compared to the two license sales recorded in 2008. Moreover RS2 experienced a decline in service requests from its existing clients as they curtailed spending in the light of the challenging economic conditions in 2009. The Directors stated that this cautious approach may persist for the medium term and will take some time before the previous momentum is regained. The lower level of business resulted in a 29.3% decline in revenue to €5.9 million.
Group cost of sales only declined by 4.7% to €4.5 million due to the substantial level of fixed costs and the change in revenue mix from licence sales to CPAs. This resulted in a deterioration of the gross profit margin from 43.6% in 2008 to 24.1% in 2009. On the other hand, other costs, namely marketing expenses and administrative expenses, increased substantially from the previous year’s figures as the Group accelerated its marketing drive and overseas office expansion. With respect to the latter, the Directors noted that the Philippines office is now in operation and whilst this office will not result in increased revenues, it should help the Group lower its cost base. Furthermore, the United States subsidiary is still at its infancy stage and thus reported a loss. However the Directors expect that as its client base grows, the investment in Transworks LLC will generate positive contributions to the Group in the years ahead.
RS2 Software plc also benefited from a €448,642 tax credit mainly due to the significant investment tax credits related to the development of the Group’s new premises in Malta. After accounting for a loss of €145,810 related to minority interests, RS2 Software registered an after tax profit of just over €1 million (earnings per share: €0.027) compared to the profit of €2.5 million recorded in the previous year.
The Directors recommended the payment of an unchanged net dividend of €0.022 per share to those shareholders as at close of trading on Friday 7 May 2010. This dividend will be paid on Tuesday 15 June subject to approval by shareholders at the next Annual General Meeting scheduled for Monday 14 June.
Download a copy of RS2 Software plc 2009 Preliminary Profit Statement.