RS2 Software has seen its interim profits slashed by 91 per cent and its revenue cut by 50 per cent in the first half of the year, the Malta Stock Exchange announced in an interim statement published this week.
Over the first half of the year, the RS2 Group generated revenues amounting to e2,685,283, 50 per cent lower than those generated in the first half of 2008.
Despite the decline in revenues, the group remains very much in the black, and, in fact, put the reduction down to a “direct result of the timing and nature of the contracts achieved during the two periods, involving different accounting treatment”.
In the first half of 2008, the group notes, RS2 concluded two licence contracts, while in 2009 it concluded two comprehensive package agreements – the first effective in June, while the second contract becomes effective in October.
On top of that, the group notes it has experienced a “slow down in requests for services from its current customers”, as anticipated, the group says, given international economic conditions.
Profit for the period amounted to e200,829, down 91 per cent from the first half of 2008.
“Since the revenue mix has a significant impact on profit margins,” the group said in a statement yesterday, “the reduction of licence and service fees recognised during the period is a direct contributor to the decline in profit for the period.
“Nevertheless, the reduction in licence fees is in line with the group’s strategy of engaging new clients on a comprehensive package basis, which instead of providing substantial licence fees and corresponding revenue recognition in the first year, smoothens the revenue stream over a longer term.”
The company, through its bank and credit card management software BankWORKS, is a world leader in its sector with known operations in 23 countries – and with its clients themselves operating in several countries, RS2’s global presence rises exponentially.
Since being founded in Malta in the late 1980s, the company has grown from strength to strength – first capitalising on the fall of the Iron Curtain and the liberalisation of several banks in the former eastern bloc, where there was a thirst for the company’s software.
RS2’s plans for overseas expansions, meanwhile, are progressing at a fast pace.
In April it opened a new subsidiary company in the Philippines, which, the group states, will serve as a cost-effective support centre, as well as the group’s base in Asia, which is considered as a key region with potential for expansion.
In June, the group acquired an investment in Transworks LLC, a company based in New York. The investment together with an investment already held by RS2 Software’s parent company (ITM Holding Limited) in the same company is expected to give RS2 a foothold in the American market coupled with a sound partner relationship with industry executives in the region.
Over the first half of the year, RS2 invested heavily in new marketing initiatives by participation in major fairs in the cards industry, market research and advertising – making the BankWORKS brand name more visible.
No interim dividends were recommended.