RS2 Software plc - Interim Directors’ Statement

On 27 November 2017, RS2 Software plc issued an Interim Directors’ Statement explaining the Group’s current and prospective international expansion strategy.

RS2 noted that during 2017 it continued with the implementation of its strategy in terms of geographical expansion and the development of the managed services business. In this respect, the Group’s offices in Asia and the US are now fully operational and working to support the core team in Malta in terms of development and project delivery. As such, the strategy of the Group is to develop these offices to be extended arms to the European operation with four main tasks to perform: (i) core development; (ii) local and custom development; (iii) managed service operation; and (iv) sales and marketing.

RS2 explained that it has continued to build its strong network to implement its global acquiring strategy partnering with fintech companies and local banks in various jurisdictions throughout Europe, Middle East, Asia Pacific and North America. Moreover, the Group managed to form an alliance with a large corporation that provides 42% of the global travel market to offer their client processing services and consolidation of their business. RS2 also revealed that it is working on securing multi-million Euro processing deals for its managed services company in different regions. These deals could be closed by end of Q1 and Q2 2018.

In terms of project delivery and implementations, the Group has delivered through its managed services, multiple projects in the Middle East, Europe and Latin America. RS2 is in advanced stages of completing the implementation for customers in Canada and Columbia, translating these businesses into recurring income starting in 2018. Such efforts, targeting to grow the managed services business line, are yielding results, with the Group expecting to register a 50% growth in its corresponding revenue streams for the current year compared to last year.

In terms of its licencing business, RS2 completed a significant licence implementation project of one of its largest clients in the UK in July 2017. Since its Go-Live date, this client has successfully been processing an ever-growing number of merchants and their respective transactions. During the third quarter, the Group also concluded an agreement with a Middle Eastern company, which provides online credit card processing and Online Payments, for a licence sale and its subsequent implementation.

Overall, RS2 is expecting revenues for the current financial year ending 31 December 2017 to remain stable and comparable to 2016. Furthermore, the Group is expecting to maintain, and possibly marginally improve its profitability, over 2016. Meanwhile, the Group’s sales pipeline across the different regions and across the two business lines remains very healthy and conducive to successfully implementing the Group’s expansion strategy.