RS2 Software plc - Full-Year Results

On 12 April, RS2 Software plc published its 2010 financial results revealing a 27.4% rise in revenue to €7.5 million mainly due to the growth in number of licences for the use of the Bankworks software which doubled during the year. Moreover, service requests by clients increased by 18%, contrary to the Company’s expectations that its clients will continue to curtail their budgets as a response to the international market conditions. The rise in revenue also filtered through to gross profit which increased from €1.4 million in 2009 to €2.9 million in 2010 due to the higher margin earned from the sale of licences and the benefit derived from the fixed nature of certain cost items.

In line with its strategy to further expand operations, the Group increased its marketing and promotional expenses by 33.9% to €0.46 million whilst administrative expenses only increased by 7.8% to €0.97 million mainly reflecting the full-year operations of the cost efficient support services provided by the Philippines subsidiary. Furthermore, RS2 increased its investment in research and development resulting in more development costs being capitalised. Overall, RS2 reported an EBITDA of €2.4 million – more than double the 2009 figure.

Depreciation and amortisation only increased by 2.2% to €0.84 million resulting in an operating profit of €1.58 million compared to the 2009 operating profit of €0.35 million. After accounting for a net interest expense of €54,497, the pre-tax profit of €1.62 million is significantly higher than last year’s corresponding figure of €0.43 million.

RS2 Software recognised a tax credit (granted as a percentage of the investment carried out) of just under €1 million and has a further balance of €2.69 million which can be utilised against taxable profits in future years. The Income Statement also shows a minority interest figure of €248,095 (2009: €145,810) related to the 74% shareholding, not owned by RS2, in Transworks which is trying to secure its first clients and thus is still loss-making. RS2 Software generated a profit for the year of €2.86 million compared to the 2009 profitability of just over €1 million.

Given the improved profitability and cash flow position of the Group, the Directors recommended a net dividend of €0.032 per share, representing a 45.5% increase over last year’s dividend. Shareholders as at the close of trading on Wednesday 27 April will be entitled to this dividend and will also be invited to attend the Annual General Meeting scheduled to be held on 14 June.

Download a copy of the 2010 RS2 Software plc Preliminary Results.