On 27 April 2022, RS2 Software plc published its Annual Report & Financial Statements for the year ended 31 December 2021.
Revenues surged by 44.3% to €38.7 million reflecting growth across all three business lines. Income generated by ‘Software (Licensing) Solution’ increased by 23% to €17.9 million mostly driven by the higher level of business in North America (+93% to €4.65 million) and Europe (+11.7% to €12.1 million). Similarly, the ‘Processing Solutions’ arm also recorded significant growth, with revenues climbing by more than 80% to €18.8 million largely on the back of surge in business in North America (+77.5% to €11.5 million) and Europe (+73.4% to €4.33 million). Meanwhile, ‘Merchant Solutions’ – which is the newest operating segment of the Group – generated revenues of €2.07 million which is 3.2% higher than the amount recorded in the 2020 financial year.
Despite the considerable expansion in business, total operating costs only increased by 6% to €32.1 million (2020: €30.3 million). As a result, RS2 achieved an operating profit (“EBIT”) of €6.56 million compared the operating loss of €3.48 million recorded in the previous financial year. Excluding depreciation and amortisation charges, EBITDA amounted to €8.76 million compared to the negative figure of €1.43 million recorded in 2020. Both the EBITDA and the EBIT are well above the projected figures of €3.58 million and €0.93 million respectively as provided at the time of the Preference Share issue.
After taking into account net finance costs of €0.14 million, tax charges of €3.07 million, and minority interests amounting to €0.34 million, the net profit for the year amounted to €3.01 million (2020: loss of €3.78 million) which, in turn, translates into a return on average equity of 14.4%.
The Statement of Financial Position as at 31 December 2021 shows that total assets increased by 25% to €20.4 million mostly driven by higher cash balances, trade receivables, and intangible assets. On the other hand, total liabilities contracted by 28.5% to €22.2 million mostly due to the considerable reduction in borrowings. As a results, RS2’s equity base grew significantly to €30.2 million compared to €11.7 million as at the end of 2020.
In his commentary, RS2’s CEO explained that RS2 will continue building on the success of its executed strategy by expanding its outsourcing business through additional services and gain on the successes of its clients. Moreover, the Group will start offering direct services to merchants (mainly in Europe) and follow them into international market by utilising the global capability of its platform for Issuing and Acquiring.
To further enable the Group’s rapid expansion and growth, RS2 will also continue to nurture its hub of internationally renowned C-Level Executives and industry specialists. RS2’s vast network with banks and partners around the globe will aid the implementation of the Group’s third business model – i.e. ‘Merchant Solutions’ – as this new operating segment extends its roll-out across Europe. In this respect, the aim is to eventually leverage the Group’s network to offer truly global Issuing and Acquiring services and products to customers allowing them to control their business and access their data in real time to mitigate their risk, anticipate their revenue and expenses, as well manage their cash flows.
Meanwhile, RS2 will continue focusing on its regional expansion as the Group is committed to investing further in North America with a view of attracting large processing clients. Moreover, RS2 will dedicate additional resources to improve even further its platform by digitalising the entire customer’s journey enabling consumers and businesses in one single ecosystem to add value to their shopping and payments experiences.