RS2 plc's profits plummet

RS2 Software plc yesterday announced a half-yearly profit of €200,829, a 91 per cent drop over the corresponding period in 2008.

No interim dividend has been recommended.

Revenues at €2,685283 were halved compared to last year, with the company blaming the time and nature of the contracts won which involved different accounting treatment.

In 2008, the group - developer and provider of IT solutions for financial services worldwide - concluded two licence contracts in the first half of the year. This year, two comprehensive package agreements were concluded: one effective in June, the other in October. The group is also experiencing a slowdown in demand from its current clients in the prevailing climate.

RS2, currently housed in premises on The Strand, said the revenue mix has a significant impact on profit margins and the reduction of licence and service fees recognised during this half year was a direct contributor to the decline in profits.

The company said 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.

RS2 said its plans for overseas expansion were progressing rapidly. Last April, it inaugurated its new subsidiary company in the Philippines which will serve as a cost-effective support centre and the group's base in Asia, a key region with potential for expansion.

In June, RS2 acquired an investment in New York-based company Transworks LLC. Together with an investment already held by RS2 Software's parent ITM Holding Ltd in the same company, the move will provide RS2 with a foothold in the US market coupled with a sound partner relationship with industry executives in the region.

Since January, the group also invested heavily in new marketing initiatives and participated in major events in the cards industry, market research and advertising, to promote the Bankworks brand.