Maltese IT company’s profits plummet during first half of 2009
Maltese IT company RS2 Software plc saw its half-yearly profits for 2009 plummet by 91 per cent when compared with the same period last year, with the company citing the global international crisis as the reason behind the slide.
For the first six months of the year, RS2 Software registered a profit of €200,829, a reduction of 91 per cent when compared to the same period last year.
The financial results for the period ending 30 June 2009 were approved at a board meeting held on 18 August, 2009, and announced on the Malta Stock Exchange (MSE) the following day. As a result, no interim dividend is being issued this year.
The company explained that “in light of the international economic conditions, the Group is experiencing a slow down in requests for services from its current customers”.
Since the revenue mix of RS2 Software had “a significant impact” on profit margins, “the reduction of licence and service fees recognised during the period was a direct contributor to the decline in profit for the period”.
Nevertheless, the company said the reduction in licence fees was “in line” with its 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”.
During the first six months, the company generated revenues of €2,685,283. This represents a reduction of 50 per cent when compared to the same period last year.
The company attributed this reduction as a “direct result of the timing and nature of the contracts achieved during the two periods, involving different accounting treatment”.
In 2008, RS2 Software concluded two licence contracts in the first half of the year, while in 2009 it concluded two comprehensive package agreements towards the second half of the year, the first effective in June 2009, whilst the second contract would become effective in October 2009.
The company said its plans of overseas expansion were progressing “at a fast pace”.
In April 2009, RS2 inaugurated the opening of its new subsidiary company in the Philippines, which will serve as a “cost-effective support centre, as well as Group’s base in Asia, which is considered as a key region with potential for expansion”.
Two months later, the company made an investment in Transworks LLC, a company based in New York.
This investment, together with an investment already held by RS2 Software’s parent company – ITM Holding Limited – in the same company “will provide RS2 a foothold in the American market coupled with a sound partner relationship with industry executives in the region,” the company insisted.
During the period, RS2 also invested “heavily” in new marketing initiatives, participating in major fairs in the cards industry, market research and advertising, to make the BANKWORKS brand name more visible.
At the company’s Annual General Meeting held on 12 May 2009, shareholders had approved the declaration of a final dividend of €0.022 per share amounting to €825,000 for the Financial Year ending 31 December 2008, which was paid on 19 May 2009.