NEWS | Wednesday, 21 May 2008

RS2 lays plans for 40 per cent of IPO funds

Charlot Zahra

Business Today has learnt that out of €10 million in shares that Maltese IT company RS2 will be issuing on the Malta Stock Exchange (MSE) as part of its Initial Public Offering (IPO), €4 million or 40 per cent will be used towards investment projects listed by the company in the IPO which was published yesterday.
Out of these €4 million, €2.2 million will be used towards the company’s structured office expansion in those areas where its clients are concentrated.
At first the company will open an office in Jordan to serve Middle-East clients in Jordan itself, in Lebanon, Iran, Iraq, Dubai and Palestine. In the medium-term an office in Scandinavia will be opened to serve clients in Denmark, Sweden, Norway and Finland. The company also plans to open an office in the US.
The European offices, with Malta as a backbone, will be used as the company’s hub in terms of development, project management and disaster recovery.

Another €0.47 million will be used in increased marketing penetration to expand the company’s market share through the recruitment of new personnel.
A further €0.63 million will be utilised for intensified research and development to strengthen the product’s competitive edge and the company’s prominent market position.
Finally, an additional €0.5 million will be utilised towards the financing of the RS2 Training Academy, which provides ongoing training to RS2 customers worldwide, strategic partners and card organisations.
The remaining proceedings from the IPO, totaling €6 million or 60 per cent of the total shares issued, will remain at the company’s disposal. The company has not yet declared its intention about the purpose of these funds.
In the last financial year, RS2 registered a net profit of €2.239 million, up from €0.666 million in 2006, an increase of €1.573 million over the previous year.
The company’s revenue jumped from €3.764 million in 2006 to €6.26 million in 2007, an increase of €2.496 million over the previous year.
Earnings per share therefore increased from 2c0 in 2006 to 6c9 in 2007, an increase of 4c9 over the previous year.
After the IPO, the public’s shareholding in RS2 will consist of only 33 per cent of the total shareholding. In fact, company chairman Reinhold Schaffter will still retain a majority shareholding of 58.9 per cent in the company, with Chief Executive Officer (CEO) Mario Schembri holding the remaining 7 per cent, thus they will jointly still holding a controlling interest in the company.
Upon launching the IPO yesterday, Schembri said he believed that the company “has tapped only a small proportion of the potential market as to date the business was generated solely from networking and marketing efforts of the Malta-based office”.
He said RS2’s management team “is now set to embark on an ambitious program, financed with part of the IPO proceeds, and will include opening up of regional offices in the Middle East, Europe and the United States, increase promotion and marketing of its software products and solutions worldwide, further increase research and development and establishing the RS2 training academy.”
The IPO will be a combined offering of 12,500,000 ordinary shares of a nominal value of €0.20 each at a share price of €0.80 per share.
Of these, 50 per cent or 6,250,000 million shares will be offered in pre-placement with stock-broking firms, while the remaining 50 per cent will be offered to smaller shareholders.
In fact, the minimum amount of shares available during pre-placement is 10,000 shares per person, while the remaining shares will be allotted at a minimum of 2,000 shares per person.
Application forms will be available on 26 May 2008 and subscriptions open on 9 June 2008 and close on 13 June 2008. The combined offering may close earlier in the event of over-subscription.
Further information may be found in the prospectus dated 16 May 2008, copies of which may be obtained during office hours from all bank branches in Malta and Gozo and authorised intermediaries.
The sponsoring stockbrokers are Charts Investment Service Limited, while Bank of Valletta plc have been appointed as the managers and registrars of this IPO.
RS2 Software is an IT company that has been in operation in Malta for over 20 years. The company services banks, financial institutions and service providers operating in the fast-growing card payments industry.
Over the years the company experienced significant growth and is currently present in 23 countries including Scandinavia, Eastern Europe, the Middle East and the United States (US).
The company has invested considerably in developing its proprietary software solution trademarked “Bankworks” which is certified by the major international card organisations such as VISA and MasterCard.
The critical importance of Bankworks is the fact that it can support any financial institution, from a small bank to the largest multi-national organisation, since Bankworks can process an estimated three million transactions in one hour, controls thousands of POS terminals and ATMs in various institutions and can handle transactions in over 40 currencies.
In addition, Bankworks currently supports service providers having large client portfolios of up to 130 banks and financial institutions.

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