On 29 August 2011, RS2 Software plc published its 2011 interim financial statements. Group revenues jumped by 67% to €4.7 million mainly due to the new licence fees concluded during the first six months of the year which exceeded the Company’s projections for the whole of 2011. Income from new licences are recognised immediately by the company and have higher profit margins than other sources of revenue.
During the first half of 2011, cost of sales only rose by 13.6% to €2.6 million resulting in a gross profit of €2.2 million representing a significant improvement over the previous corresponding figure of €0.6 million. Similarly, the gross profit margin improved to 45.7% (June 2010: 20.2%). Administrative expenses only increased by 6.3% to €0.5 million whilst marketing and promotional expenses dropped by 39.5% to €170,810. Capitalised development costs rose by a further 42.3% to €165,093 reflecting the company’s commitment to continue investing in its BANKWORKS product. In the Half-Year Report, the Directors noted that the office in the Philippines is not only serving as a cost-efficient support centre but also as a base from where to market the Group’s product which yielded the first client from this region.
After accounting for other income and expenses, the Group registered an operating profit of €1.5 million, significantly higher than the operating profit of €47,563 reported in the first six months of 2010.
Pre-tax profits amounted to €1.6 million compared to €78,055 in the previous comparable six months. The minority interest of €73,896 reflects the loss of the U.S. subsidiary (Transworks) which is not attributable to RS2 Software. The Directors explained that although this subsidiary is still loss making it continues to generate and enhance brand recognition of BANKWORKS within the US market. In fact, RS2 Software managed to sign another client in the US during the period under review. Following a tax charge of €264,604, the profit attributable to shareholders for the first six months of 2011 amounted to €1.4 million (June 2010: €286,708).
Looking ahead, the Directors explained that while the significant improvements registered in the first half will not be maintained at the same levels during the second half of the year, they remain confident that more new business can be brought into the Company during the remainder of the year. The Directors stated that the financial performance for 2011 is expected to compare very favourably to the results of 2010 when RS2 registered a pre-tax profit of €1.6 million.
In line with its policy of paying a final dividend, the company did not declare an interim dividend.
Download a copy of the RS2 Software plc 2011 Interim Report