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rs2.com
Annual Report & Financial Statements
2023
RS2 PLC
Annual Report and Financial Statements | Page 2
Table of Contents
Annual Report
Who We Are ............................................................................................................................................. 04
Chairman’s Statement ............................................................................................................................. 08
CEO’s Statement ....................................................................................................................................... 11
Board of Directors.................................................................................................................................... 20
Corporate Social Responsibility .............................................................................................................. 24
Directors’ Report ...................................................................................................................................... 28
Corporate Governance Statement of Compliance ................................................................................. 41
Remuneration Report ................................................................................................................................ 51
Statement of the Directors pursuant to Capital Market Rule 5.68 ........................................................ 55
Company Information .............................................................................................................................. 56
Directors’ Responsibility for the Financial Statements .......................................................................... 57
Financial Statements
Statements of Financial Position............................................................................................................. 59
Statements of Profit or Loss .................................................................................................................... 61
Statements of Comprehensive Income .................................................................................................. 62
Statements of Changes in Equity............................................................................................................ 63
Statements of Cash Flows ...................................................................................................................... 67
Notes to the Financial Statements .......................................................................................................... 69
Independent Auditors’ Report ............................................................................................................... 192
Annual Report and Financial Statements | Page 3
Annual Report
Annual Report and Financial Statements | Page 4
Who We Are
A global payments technology leader
RS2 is a leading provider of global omnichannel payment
software and processing solutions for both issuing and
acquiring on one single platform.
The RS2 global, cloud-native platform provides an end-to-
end payment solution to banks, large financial institutions,
integrated software vendors (ISVs), payment facilitators
(PayFacs), independent sales organisations (ISOs), and
merchants throughout Europe, North America, Latin America
(LATAM), the Asia Pacific (APAC) region, and the Middle East
– covering travel, hospitality, retail, gaming, FX, health care
and more. Our 35-year track record and reliable technology
makes us a trusted partner for the full payments ecosystem.
Following the approval and issuance of an Electronic Money
Institution (EMI) licence by the German regulator, the German
Federal Financial Supervisory Authority (BaFin), for the
Group’s subsidiary RS2 Financial Services GmbH, the Group
is now a leading, full service, global payments player.
Our Vision
To deliver global, scalable, agile solutions combined with best
in-class customer service across the entire payments value
chain.
Our Mission
To empower the payments ecosystem to benefit from the
digitalization of financial services by removing complexity
and opening up opportunities that deliver success for their
business.
35+
Years of
experience
7
Global
offices
31bn
Transactions
per year
40+
Countries
served by RS2
80mn
Transactions
per hour
Top 20
Acquirers
choose RS2
8.6K
Authorizations
per second
>99.99%
Platform
uptime
480+
Employees
Global
Reach
with local
presence
RS2 Today
Annual Report and Financial Statements | Page 5
Who We Are (continued)
Our Solutions
The Group provides a fully integrated, digital omni-/multichannel payment solutions as well as value-
added services across the entire payments value chain through three global business lines.
RS2 global platform
The Group’s BankWORKS® platform is built on a state-of-the-art Ap plication Programming Interface
(API)-based micro services technology, providing end-to-end payment, such as payment gateway,
switching of payment transactions originated from Point-of-Sale (POS), ATM, e-Commerce, InAPP,
clearing and settlement, chargeback management integrated in the merchant portal, fraud and risk
monitoring, reporting and statement, and a sub-GL accounting and automated reconciliation that fully
integrates with the client’s general ledger.
This allows our clients to get to market fast, customize their payments processes, and adapt with ease
as market demand evolves.
The uniqueness of the solution, being one single global platform deployed on the cloud, provides the
customer, through one single API sandbox integration, the ability to transact globally, integrating with
local acquirers and issuers, to increase their conversion rate, reduce their interchange and other related
fees and charges, and provide them with quick access to the market. The Group is well-positioned to
service multinational customers and process their international and local payments, providing them with
one single view, consolidated reporting, and reconciliation of their entire business in multi-languages,
multi-currencies including crypto, and other digital currencies in multiple time zones.
Merchant
Network / Card Scheme
Consumer / Card Holder
Annual Report and Financial Statements | Page 6
Who We Are (continued)
Processing Solutions
A full-feature end-to-end processing solution for issuing and acquiring through a single API integration
to RS2’s unique BankWORKS® cloud platform. Customers can manage their entire payment services
such as authorisation, on boarding, payment gateway, security and fraud, chargebacks, reconciliation,
and settlement as well as optimise their interchange.
• Processing of payment transactions utilising BankWORKS® software;
• Platform as a service (PAAS) on a private/public cloud solution for acquiring, issuing, clearing and
settlement covering multiple omni-channels;
• Provision of installation services (setup); and
• Other services including statements, chargebacks, merchant portal and e-commerce gateway.
Software Solutions
RS2’s modular, highly scalable, and flexible software solutions are developed in-house and cover all
areas of payment, including card issuance, merchant acquiring, clearing and settlement, online switching
and authorisation, PIN management, customer services, e-commerce, and dispute and fraud
management, allowing its customers to rapidly and cost-effectively set up their system by configuring
only those products and modules required for business.
The Group provide flexible collaboration models to suit customers’ business needs:
• Term or perpetual licences for banks and financial institutions to utilise its BankWORKS
®
issuing and
acquiring platform;
• Installation, depending on size and scope of installation;
• Customisation, implementation, and installation services;
• Upgrades, enhancements, customisation and on-going support for its BankWORKS
®
platform, as well
as updates mandated by international card organisations;
• Additional services, including but not limited to, onsite support for testing, implementation and
training, beyond the originally defined scope of the initial implementation; and
• Value added services.
Annual Report and Financial Statements | Page 7
Who We Are (continued)
Merchant Solutions
The Group’s subsidiary RS2 Financial Services GmbH holds an EMI-Licence from the German regulator,
BaFin, enabling the Group to provide a wide array of services using one single platform that integrates
through a strong wide range of APIs to the merchant’s online businesses and physical shops,
consolidating the entire business of the merchant across all the omni-/ multichannel payments offering
them one-stop-shop services including but not limited to:
• E-Commerce
• Card not present (incl.
Payment Service Provider
(PSP) Services
• Card present (incl. POS
Terminals & Network
Services)
• InAPP-Payments
• Payment Gateway
• Chargeback Management
• Call Centre Services
• Issuing of Prepaid Cards
• Fraud and Risk Monitoring
Services
• Reporting and Reconciliation
• Interchange Optimisation
• Smart Routing increasing the
approval rate
• Dynamic Currency Conversion
• Instalments
• Recurring Payments
Annual Report and Financial Statements | Page 8
Chairman’s Statement
Annual Report and Financial Statements | Page 9
Chairman’s Statement
Mario Schembri
Chairman
I am pleased to say that 2023 may be considered as being a pivotal year for RS2. After
several months of negotiations, RS2 has secured another major processing outsourcing
agreement with one of the largest acquirers in the United States. This is considered to
be a milestone achievement, following the fruition and continued execution of the
Group’s growth strategy.
During the year, the Group continued to execute its strategy of expanding its client base and increase
its product offering in different markets throughout Europe, Middle East, North America, Latin America,
and Asia Pacific.
In the Merchant Solutions area of operations, after obtaining an Electronic Money Institution (EMI) licence
from the German regulator, BaFin, in 2021, RS2 Financial Services GmbH has been able to offer its
solutions and services directly to merchants. Furthermore, through the passporting of its licence, RS2’s
services are available to several countries within Europe.
The EMI licence enables the Group to manage merchant funding and provide acquiring services. It is
also part of the Group’s strategy to shift its revenue model from dependencies on one-time licence fees
towards ongoing and recurring revenue streams based on transaction volumes processed.
Annual Report and Financial Statements | Page 10
Chairman’s Statement (continued)
Under its Processing Solutions business, the Group has continued to increase its yearly processed
volumes, now reaching approximately 1.5 billion transactions on the BankWORKS® platform. This is a
20% increase over the previous year. This trend is expected to continue through further processing of
transactions of the Group’s existing and new clients.
On the Software Solutions business side, the Group now has signed on a second outsourced processing
agreement, and is now providing its services to two of the largest banks in the United States on a hybrid
licencing and processing model to deliver Global Acquiring and Issuing Services. This will further endorse
the power of our platform in the region. In the USA, the Group will continue to offer acquiring processing
to Payment Facilitators (PayFacs), Payment Service Providers (PSPs) and Independent Sales
Organisation (ISOs). We expect to be able to attract tier one financial institutions and banks of all sizes.
Indeed financial institutions and banks are increasingly opting for outsourcing models for their payments
processing operations in order to lower costs, reduce complexity and minimise risks.
I would like to take this opportunity to thank our team members in all regions for their commitment and
dedication, our Chief Executive Officer (CEO) who has worked tirelessly to execute the Group’s strategy
and our Board of Directors for their support throughout the year.
Mario Schembri
Chairman
23 April 2024
Annual Report and Financial Statements | Page 11
CEO’s Statement
Annual Report and Financial Statements | Page 12
CEO’s Statement
Radi Abd El Haj
Chief Executive Officer
Following a series of demanding years marked by exceptional market circumstances,
RS2 has closed 2023 on a positive trajectory by securing various processing
outsourcing deals with leading acquirers globally while also gaining traction in the
acquiring sector in Europe. These major accomplishments highlight RS2's resilience
and effective long-term planning, made achievable through the commitment of a
dedicated global team, management and board of directors.
Strong Business Performance in 2023
The financial results results of 2023 show an increase in revenue when compared to the previous year,
in a time when RS2 was still recovering from various market challenges. Alongside the ongoing effects
of the COVID-19 pandemic, the Russian invasion of Ukraine exacerbated the global economic slowdown,
leading to a period of slow growth and heightened inflation. In contrast to previous years where
customers postponed projects or minimized investments, we are currently witnessing a notable increase
in client inquiries and demands, indicating a positive shift in the business landscape.
Annual Report and Financial Statements | Page 13
CEO’s Statement(continued)
Subsidiaries Update
RS2 p.l.c. and its subsidiaries continue broadening their business across regions and lines of operation,
evolving from licencing to processing, and now also to acquiring business in Europe.
RS2 Smart Processing Limited
RS2 Smart Processing Limited is committed to delivering cutting-edge payment solutions and top-tier
services to our global customers and partners, tailored to their ever-changing market needs within the
dynamic payment landscape. Through strategic investments in robust and scalable cloud infrastructure,
we ensure seamless integration via user-friendly APIs while ensuring comprehensive security measures
to safeguard sensitive payment data.
Beyond technological advancement, we prioritize customer support and partnership relationships. By
automating operations and integrating robotics to enhance efficiency, we free up resources allowing
also for further innovation. Our dedicated support team operates 24-hours a day, 7-days a week, 365-
days per year, through the ‘following the sun’ principle possible by operating from various regions
globally, to promptly address any technical issues or inquiries and ensuring utmost client satisfaction.
We also collaborate with other technology partners in order to complement our service offering. This
includes loyalty and reward programs, cashier systems, soft-POS (software point of sale – revolutionary
new technology which allows merchants to accept card payments directly on their phone or devices),
and additional value-added services.
As we are managing very sensitive data we adhere to strict compliance requirements within the
payments industry, such as PCI DSS, GDPR, TIBER, and DORA, focusing on security and regulatory
requirements.
From a business perspective, RS2 Smart Processing has experienced substantial growth in new markets,
customer base and transaction volumes with over 75 billion EURO processed on our private cloud in the
past twelve months, marking a 20% increase from the previous year. We attribute this growth to strong
client relationships and expanded services, enabling rapid merchant and cardholder onboarding and
market expansion.
Additionally, we are set to provide state-of-the-art issuing services to payment service providers (PSPs)
and independent sales vendors (ISVs), leveraging our platform's capabilities for loans, funding,
purchasing, and B2B (business to business) transactions. Implementations are underway in Europe, Asia
Pacific, and Latin America, while also negotiating further processing agreements.
Annual Report and Financial Statements | Page 14
CEO’s Statement(continued)
Continuing on our commitment for innovation, we continue to enhance reporting tools to empower
clients in making informed decisions and optimizing payment processes based on data-driven insights.
With a focus on continuous innovation, reliability, customer-centricity, and compliance, we position
ourselves as a leading technology payment processor, driving growth and success for our clients and
our business alike.
RS2 Software Inc.
RS2 Software Inc., the Group’s US arm, operates across three primary lines of business:
• Acquiring Processing for ISVs, PayFacs, and ISOs
Throughout 2023, RS2 Software Inc. secured seven processing agreements with significant ISVs
and PayFacs, with plans to roll out services for some of them in the latter half of 2024. The company's
strategic focus is on attracting large ISVs and PayFacs, positioning itself for international expansion.
RS2 has cultivated robust relationships with major payment schemes, solidifying its position as a
preferred processing partner. These partnerships are poised to drive business growth not only in the
US but also globally. Currently, negotiations are underway for an additional five deals, with a
promising pipeline extending into 2024/2025.
• Enterprise Managed Services for Tier One Financial Institutions
RS2 Software Inc. secured a six-year processing agreement with one of the top five acquirers in the
US. The project's scope involves building the entire processing infrastructure on the cloud and
overseeing daily operations, from merchant onboarding to clearing and settlement, up to merchant
statementing. The company is actively pursuing similar engagements with other enterprises within
this business model.
• Issuing Processing
Having completed the development of its service offering and product portfolio, RS2 Software Inc.
has partnered with a regional technology provider offering core banking services to community
banks. This partnership will facilitate the launch of issuing processing services once a bank
sponsorship is secured.
Annual Report and Financial Statements | Page 15
CEO’s Statement(continued)
RS2 Financial Services GmbH
RS2 Financial Services GmbH, a licenced financial entity regulated by German authorities, now operates
under https://www.beyondbyrs2.com/, offering services directly to merchants and expanding its reach
to other European countries.
To facilitate business scalability, the company has entered into distribution agreements with various
ISOs in Germany that cater to small and medium-sized merchants, while its sales team focuses on larger
merchant enterprises. This symbiotic partnership allows partners to concentrate on merchant sales and
service, while RS2 Financial Services GmbH provides acquiring licences and processing services.
In a bid to offer comprehensive services, the company has collaborated with various providers to furnish
additional offerings such as cashier systems, point-of-sale (POS) machines, soft-POS solutions, and
loyalty and reward programs tailored to small and medium-sized merchants.
Embracing a digital approach, RS2 Financial Services GmbH provides APIs for partners to seamlessly
onboard and service their merchant base. This streamlined process has attracted over twelve partners,
enabling rapid onboarding of merchants within hours, a significant improvement over the weeks-long
process experienced by partners in the German market.
Moreover, large European and multinational merchants are targeted and serviced through the company's
dedicated key account management team.
As RS2 Financial Services GmbH embarks on its growth journey, the diligent execution of its business
strategy is poised to establish the company as a prominent leader in the European issuing and acquiring
market.
RS2 Software APAC Inc.
RS2 Software APAC Inc. continues to play a crucial role in supporting the development and operations
of the Group, serving as an extension of the global team. Concurrently, it oversees client relationships
and support within the Asia Pacific market. In anticipation of emerging payment trends in Asia, the
company has also pioneered the development of a payment application for InstaPay, a real-time
alternative payment method in the region. This application enables consumers to make payments using
digital cards stored within the app, facilitating bill payments, account-to-account transfers, and other
financial services. To date, the company has secured letters of intent to provide this platform to small
and medium-sized banks as a white-label solution for their customers. Additionally, the company is
actively exploring outsourcing opportunities with banks in the Philippines.
Annual Report and Financial Statements | Page 16
CEO’s Statement(continued)
RS2 Germany GmbH
RS2 Germany GmbH's Product team remains dedicated to pioneering solutions that optimize operational
efficiency for both our Group and its clients. Our primary objective is to ensure merchants and
cardholders enjoy an exceptional user experience, cultivating loyalty and satisfaction. One notable
accomplishment is the creation of a reconciliation portal, effectively streamlining the laborious manual
processes involved in reconciling acquiring business. Moreover, we've launched a merchant portal
providing access to transactional, reporting, and financial data, thereby empowering our clients further.
The Portal provides an integrated workflow enhancing customer service and reducing customers’ service
calls. The team also continues to enhance the merchant’s onboarding journey by providing digital
onboarding tools to ensure a quick and fully complaint process. A partner portal was also provided to
help acquirers increase their sales and profitability, which enhances the cooperation between ISVs, ISO’s
PayFacs and their acquirers. A new product initiative is currently also being built which will provide an
acquirer with predication tools aimed at reducing the attrition rate of their customers.
The Product team is currently focused on developing new open banking products and services. These
offerings will be available to all our clients across various business lines, including processing within RS2
Smart Processing, as well as for issuing and acquiring through RS2 Financial Services GmbH.
Additionally, these innovations will extend to our licenced clients within RS2 p.l.c..
Delivering on Our Strategic Priorities
The Group has made strong progress and executed its key strategic priorities at a steady pace. This will
strongly position the Group to increase the pace of its growth into 2024 and beyond. In 2023, the Group
remained focused on its strategy of growing and expanding its managed services business and
accelerating its global expansion, as well as commencing its direct merchant acquiring and issuing
services in Europe.
The product offering for direct merchant acquiring will cover international credit and debit card acquiring
services, girocard acquiring services (being a German interbank network and debit card service), point-
of-sale (POS) terminals, e-commerce, as well as payment service provider (PSP) and network service
provider (NSP) services.
The Group is ramping up its business by initially cross selling acquiring services into the portfolio of RS2
Zahlungssysteme GmbH. Eventually this is expected to increase through organic growth via on-boarding
of sales partners, and potential selective add-on acquisitions of profitable merchant portfolios.
Annual Report and Financial Statements | Page 17
CEO’s Statement(continued)
This new acquiring business line will provide the Group with a higher profit margin as compared to the
processing model, by charging a percentage of each individual transaction.
The Group continued to expand its outsourcing business through its subsidiary, RS2 Smart Processing
Limited, by increasing the number of services offered to existing customers, enabling them to enter new
markets and consolidating their global business. At the same time, direct services will be offered to
merchants mainly in Europe with the intention of following them internationally utilising the global
Acquiring and Issuing platform capabilities.
RS2 Smart Processing continued to innovate to expand its market reach. In this respect RS2 Smart
Processing is developing a fully digitalised service enabling a client to self-onboard and configure the
services required for its business and market needs. This service will be offered in a fully automated
manner without the need of human intervention using a software as a service model.
Technology and Platform Update
As a technology provider, we always make sure that we are on the forefront of new technologies that
contribute to the highest security standard, reliability, and performance. Over the past years, our
dedicated Technology team have been working on the enhancement of our platforms from the
infrastructure perspective as well as from the product technology point of view , by selecting the right
technologies to best support our customers and our colleagues across the globe, both from a technology
and a delivery perspective allowing the Group to work with the latest technology available on the market.
Our team commenced working on the delivery of a new version of the RS2 platform, with the aim of
becoming a complete micro-services environment, supporting a wide range of application programming
interfaces (APIs), while also reducing our costs and dependency on specific databases and software
technologies, which in return will provide us with more flexibility and also increase our profitability
margins.
The Group has been enhancing its BankWORKS® platform by adding additional capabilities and products
to provide a variety of services to its clients and business partners. The team continues to add more
application programming interfaces (APIs) to allow easy and quick integration with the BankWORKS®
platform, thereby successfully increasing its service offering and capabilities.
Our Product team is in constant discussion and collaboration with our clients, to determine the best way
of enhancing operation efficiency, increasing security and positioning BankWORKS® ahead of
competition. This has already been notably recognised by our clients using our Merchant Portal, which
eliminates more than 40% of time normally required in call-centres, as it provides merchants with a self-
service portal. This gives them access to real-time information without the need of contacting our call-
centre. Our newly developed reconciliation product will provide customers with a powerful, fully
digitalised tool, which will enable them to reconcile their entire business through all payment channels,
also eliminating manual operations, thereby improving efficiency, and providing full control over their
income and expenses, while automating the feed into their general ledger system.
Annual Report and Financial Statements | Page 18
CEO’s Statement(continued)
RS2 is also working on launching its new Partner Portal, which will provide Payfacs (payment facilitators),
ISVs (independent software vendors) and PSPs (payment service providers) access to their clients’
portfolio. Rich with specialised capabilities, it will enable these clients to digitalise their data access,
chargeback capabilities, reporting and service management.
Our infrastructure and technology services are constantly enhanced to optimise platform security and
performance. The latest improvements conducted by our team allow the Group to process 80 million
transactions per hour (i.e., 31billion transactions per year or 8.6k authorisations per second). This
achievement lowers the requirement of infrastructure costs per transaction, which will benefit the
Group’s profit as the number of processed transactions continues to increase. RS2’s Security team
continues to actively improve the security of our network and infrastructure, which is necessary to
mitigate any cyber threat to our environment, thus ensuring secure transactions for all our clients.
Looking forward
The Group continues to focus on implementing and delivering its strategy around its main business
pillars. For the managed services business, this is being done by continuing to build on its global
expansion servicing ISVs and Payfacs. This also includes adding more enterprise clients, such as tier
one banks and financial institutions, which would require building a private cloud and running their
operations. The Group also aims to increase the issuing processing business in markets where our
acquiring services are already provided.
The Group also plans to invest further in its infrastructure to strengthen the technology and complete
the product offering in order to play a more active role in the digitalisation of the whole customer journey,
to offer omni-channel solutions and to go beyond traditional payment solutions. This includes the
provision of our own electronic cash register (ECR) and mobile devices as well as reward and loyalty
programs.
The payments industry is constantly evolving and 2023 is shaping up to be a year of significant
innovation and change with focus on making payments more convenient, secure, and personalised for
consumers. Taking advantage of the latest advancements in technology and security, customers can
expect a seamless payment experience when paying online or at a store. RS2 Group will continue to
concentrate on implementing and delivering its strategy around its main business pillars of growing and
expanding the managed service business, ramping up the US expansion and building its own direct
acquiring business. The Group is also investing further in its infrastructure to strengthen the technology
and complete the product to play a more active role in the digitalisation of the whole customer journey,
to offer omni-channel solutions and go beyond traditional payment solutions.
Annual Report and Financial Statements | Page 19
CEO’s Statement (continued)
The goal is to eventually leverage the Group’s network to offer true global issuing and acquiring services
and products to our customers, allowing them to control their business and access their data in real-
time to mitigate their risk, anticipate their revenue and expenses, and manage their cash flow. We will
continue to focus on regional expansion and provide the respective products and services in the
different markets.
Business is expected to ramp up with a stronger pipeline, gearing up for the coming year, which, together
with the launch of several exciting new products for the Group, including merchant reconciliation
modules, merchant and partner portals and tokenisation for issuing services, amongst others, will lead
the Group to a successful 2024 and beyond.
Closing Remarks
I would like to take this opportunity to thank our talented global team in Europe, the USA, Asia Pacific
and the Middle East for their dedication, loyalty and continuous outstanding support which has
translated into RS2’s success; our Management and Board for supporting us throughout our journey; and
the support of our esteemed shareholders who have continued believing in us.
Stay with us and share our success to continue our global journey.
Let’s be together - beyond payments.
Thank you for your continued support and dedication.
Radi Abd El Haj
Chief Executive Officer
23 April 2024
Annual Report and Financial Statements | Page 20
Board of Directors
Mario Schembri
Chairman & Non-Executive Director
Mr. Schembri joined RS2 in 1999 as Regional Manager, Mediterranean Region and took on the role of
Deputy Chief Executive Officer in 2006. Mr. Schembri was appointed Chief Executive Officer in January
2008 and Chairman in January 2012.
Mr. Schembri has extensive knowledge related to card management systems, with diverse exposure to
the international card organisations including VISA International, MasterCard and DINERS Club
International. Up to the time of joining the Company, Mr. Schembri had been in the banking industry for
26 years and has vast experience relating to retail banking operations, product management and co-
ordination. He also served as a lecturer and examiner for the IFS for a period of 12 years.
Radi Abd El Haj
CEO & Executive Director
Mr. El Haj joined RS2 in 1997 as a Project Manager for Tier 1 European banks where he was responsible
for the implementation of corporate card programs, later promoted to Customer Relationship Manager
in 2002 and Head of Sales and Implementation in 2004. Mr. El Haj was appointed Chief Executive Officer
in January 2012.
In the cards and payments industry, Mr. El Haj specialises in the areas of issuing, acquiring, clearing and
settlement, e-commerce and accounting. His international experience, professional contacts in various
regions and working closely with the Technical and Product Development Units within the Group, has
contributed in providing RS2’s clients with a global compliant platform.
Annual Report and Financial Statements | Page 21
Board of Directors (continued)
Dr. Robert Tufigno LL.D.
Non-Executive Director
Dr. Tufigno, LL.D., has vast experience in company law, contract law, financial services, employment
law, maritime law and legislative drafting. Dr. Tufigno, who is also an Arbitrator, has practised in the fields
of general commercial law, property law and litigation. He has also acted as Chairman of Malta’s
Employment and Training Corporation and as Chairman of Malta’s Housing Authority, and as past Board
Director of Lohombus Bank. Dr. Tufigno is a Partner at GTG Advocates.
Franco Azzopardi
Non-Executive Director
Mr. Azzopardi, a Certified Public Accountant with a UK postgraduate MSc in Finance, spent twenty-
seven years working in public practice, ten of which with Deloitte Haskins and Sells and later in a firm he
co-founded in 1990. In 2007 he exited the firm to contribute more towards the strategic direction of
Boards of Directors. He specialises in corporate strategy, governance, risk and finance. He is today a
professional director and a registered fellow member of the UK Institute of Directors. He serves on
Boards of Directors, Audit, and Risk and Compliance Committees of both listed and private companies
in various sectors including banking, insurance and software. He is currently CEO of a listed entity
actively involved in strategic corporate finance. He is also former CEO of the leading logistics company
in Malta. His focus there was sustainable growth in shareholder value, highest degree of readiness for
public listing, and investor-family governance. As part of his social responsibility he also contributed
towards the development of the Malta Institute of Accountants. He is a fellow member serving on
Council since 2007. He was also elected and served as President of the Institute for the term 2015-
2017.
Annual Report and Financial Statements | Page 22
Board of Directors (continued)
John Elkins
Non-Executive Director
Mr. Elkins currently serves on the boards of FINCA International, ELATERAL Ltd., Card Dynamics, the
Dean’s Advisory Board for the Lundquist School of Business at the University of Oregon and RS2 p.l.c.
(previously RS2 Software p.l.c.) and RS2 Software INC.
Mr. Elkins served as President, International Regions at First Data (a global leader in electronic payments
with operations in 35 countries) until June 2015. Mr. Elkins had full responsibility for over 8,000
employees and all markets outside of the United States.
Mr. Elkins served as a Senior Adviser at McKinsey & Company (2007-2009). Between 2002 and 2007 he
served as Executive Vice-President and Global Chief Marketing Officer for Visa International. Mr. Elkins
was the founder, former Chairman and CEO of FutureBrand, built from a start-up into one of the leading
worldwide corporate brand and design consultancies.
Natalie Strange
Non-Executive Director
Natalie Strange, Corporate Strategy Director- Barclaycard Payments is a proven leader within the
payments industry with 19 years of experience within the Barclays Group. Natalie Strange supports the
Barclaycard Payments executive team shape commercial strategy for Corporate and Small Business
segments across the Issuing and Acceptance business. Natalie Strange has extensive customer
experience spanning holding various leadership posts within Barclaycard Payments from leading
International and Ecommerce Account teams and UK New Business teams for Barclaycard Payments,
Acceptance and Specialist Products.
Annual Report and Financial Statements | Page 23
Board of Directors (continued)
Prof. Dr. Raša Karapandža
Non-Executive Director
Prof. Karapandža is a Professor of Finance and serves as Vice Dean Education at EBS University,
Germany. He also serves as an academic director of the Masters in Finance programme and head of
chair of finance. He received a PhD degree in economics and finance from Barcelona Graduate School
of Economics, University Pompeu Fabra, Barcelona. He has been a visiting research scholar at New York
University and at University of California at Berkeley. He currently also serves as a visiting professor at
New York University (NYU). Prof. Karapandža’s work has been featured in top media outlets like The
Wall Street Journal, The New York Times, and Der Spiegel. He advised members of the US congress on
the topics of regulating cryptocurrencies and other block chain related technologies. He was elected
favourite professor by the EBS business school’s student body for his teaching ten years in a row — in
2009 through 2020. At EBS University Prof. Karapandža teaches Investments, Finance, Corporate
Finance, Asset Pricing and Fintech class. At NYU Prof. Karapandža teaches a Fintech course as well as
NYU Stern courses on Foundation of Financial Markets and Advanced Investments.
Dr. Ivan Gatt LL.D.
Company Secretary
Dr. Gatt LL.D. represents clients in a broad spectrum of substantive legal areas. Having vast experience
in advising companies and board committees on corporate governance, he has facilitated a variety of
transactions, including securities offerings, venture capital investments, corporate acquisitions,
regulatory and compliance matters. In addition, he assists clients with annual general meeting
preparation and gives advice on numerous regulatory and compliance matters. Dr. Gatt is a Partner at
GTG Advocates.
Annual Report and Financial Statements | Page 24
Corporate Social Responsibility
Our Values
We innovate, we collaborate, we empower
RS2’s values reflect our objectives internally and externally, our priorities, and the beliefs by how we
conduct ourselves and carry out business activities. They guide all of us in everything we do and in how
we engage with each other and our surroundings.
KSU Freshers‘ Week
Ladybird Foundation
Luxol St. Andrews
Futsal Club
Wildlings OCR
ICTSA Industry Expo
Annual Report and Financial Statements | Page 25
Corporate Social Responsibility (continued)
Improving Mental Health & Well-Being. The COVID-19 pandemic also posed a mental health
challenge for individuals. In support of team members’ emotional health and their overall well-being, we
encouraged all team members to join several virtual mental health sessions, organised by our Human
Resources team in collaboration with the Richmond Foundation. RS2 has stepped up its effort to ensure
that mental well-being will retain the importance it warrants in the post COVID-19 era. In collaboration
with Richmond Foundation, RS2 will be financing any such therapy sessions as per required by the
company employees. A key element will be that the identity of the employees who seek assistance, will
at no point be disclosed. This will ensure that such assistance extends beyond the workplace.
Attracting New Talents. Our recruitment process starts at universities and educational institutes,
giving RS2 the opportunity to meet potential candidates and to identify future professionals. RS2
frequently participates in fairs organised by the aforementioned educational bodies. These include, yet
are not limited to KSU Malta Careers Expo; KSU Freshers’ Week; ICTSA Industry Expo; KSM Freshers’
Week, etc. Furthermore, our Human Resources team nurtures a close relationship with the faculties and
universities, helping to unlock a talent pool of well-educated and high-potential students.
Social Initiatives
RS2 is committed to positively contribute to society by leveraging our knowledge and actively supporting
local communities.
Promoting Education. RS2 promotes various initiatives to give numerous young people the relevant
exposure and the right training required to become future contributors to the Fintech industry. For the
past years, RS2 has made it a point to partake wholeheartedly in events and programs that promote job
exposure opportunities to students. One such event is MITA’s Student Placement Program. The
partnership, with the said agency, has given rise to scores of students gaining hands-on work experience
within diverse departments at RS2. To unlock potential, students are mentored by senior executives and
given the opportunity to delve and participate in projects which in turn sharpen their technical skills. RS2
provides students the possibility to work during both the summer holidays and the scholastic year. Upon
completion of studies, many students have been offered full-time employment with the Group. It is also
worth mentioning that RS2 has regularly collaborated with MCAST and acted as the main sponsor for
select events, to provide their students with experience in a technology company. RS2 firmly believes
that this program provides value to the local community while creating a gateway for RS2 to gain
prospective new employees with new talents.
Supporting Communities. RS2 supports various philanthropic organisations as well as numerous
sports and culture programs. Some of these organisations have continued to receive our ongoing
support for a number of years and have grown to consider RS2 as a loyal partner and contributor.
Annual Report and Financial Statements | Page 26
Corporate Social Responsibility (continued)
Furthermore, RS2 works with organisations involved in alleviating local social issues, using a fund with
volunteer donations from employees to donate to charitable institutions. In the reporting year, RS2 has
supported the following organisations in Malta; Philippines; Germany and Jordan:
• Dar tal-Providenza
• Ladybird Foundation
• Puttinu Cares
• Cystic Fibrosis Fundraising
• L-Istrina
• Dar Merhba Bik
• Women for Domestic
Violence
• Taalof Al Khair
• MCAST
• Kavallieri Handball Club
• Wildlings OCR Team
• Luxol St Andrews Futsal Club
• SSV Heidelberg Basketball
All of RS2’s CSR activities help to promote a strong and healthy team relationship, which proves to be
highly beneficial given the extensive growth the Group has experienced in the past couple of years.
Environment
At RS2, we remain committed to minimise our footprint on the environment by reducing our energy
consumption, limiting waste and conserving water across our facilities globally. We encourage all team
members to engage in environmental and sustainable initiatives.
Reducing our environmental footprint. The business model of RS2, in essence, has minor
environmental impact. While our global digital platform eliminates paper usage, saving trees, conserving
water and mitigating climate change, our operations impact the environment. However, RS2 is still
committed to reduce its environmental footprint by increasing the eco-efficiency of our data centres,
offices and reducing of business travels. As part of our CO2 reduction effort, RS2 has started replacing
the majority of its car fleet with hybrid vehicles. Adopting these hybrid technologies will help reduce
RS2’s carbon footprint due to less fuel consumption resulting in lower CO2 emissions. To further limit
paper usage in the offices, RS2 utilises digital signatures for various administrative purposes.
Using water efficiently. Since water is the source of all life, RS2 is taking all possible measures to
use water more efficiently and has also implemented conserving practices such as water-efficient
landscaping across our office footprint. In our office building in Malta, the Company uses rainwater
collected in an underground reservoir for planned and controlled irrigation through the use of automatic
control timers and feeders. This ensures the optimisation of water usage according to crop type and
season.
Using electricity efficiently. Reducing energy-use lowers the running costs and protects the climate
at the same time. The Company has taken important steps to use electricity efficiently by converting to
LED lighting in its offices and implementing motion sensor lights to conserve energy.
Annual Report and Financial Statements | Page 27
Corporate Social Responsibility (continued)
Reducing waste. We aim to drive a culture of continuous environmental improvement by disposing
and separating waste generated by our Company in a safe and responsible manner in the necessary
bins placed in various key areas. The generated waste and disposal methods are measured and reported
to ensure we are making progress in our effort to reduce waste.
RS2 is confident that it will continue to achieve a balanced and holistic value for its stakeholders and will
strive continuously to promote sound CSR initiatives. At the same time, RS2 will continue to positively
affirm its efforts to become a sustainable Group and a market leader within the Fintech industry. We will
continue to innovate and evolve our efforts going forward.
Annual Report and Financial Statements | Page 28
Directors’ Report
For the year ended 31 December 2023
The Directors present their report, together with the financial statements of RS2 p.l.c. (previously RS2
Software p.l.c.) (the “Company”) and its subsidiaries, RS2 Smart Processing Limited, RS2 Software INC.,
RS2 Software LAC LTDA, RS2 Software APAC Inc., RS2 Germany GmbH and RS2 Merchant Services
Europe GmbH, together with its subsidiaries RS2 Financial Services GmbH and RS2 Zahlungssysteme
GmbH (collectively referred to as the “Group”), for the year ended 31 December 2023.
Board of Directors
Mr. Mario Schembri (Chairman)
Mr. Radi Abd El Haj (CEO)
Dr. Robert Tufigno
Mr. Franco Azzopardi
Mr. John Elkins
Prof. Raša Karapandža
Ms. Natalie Strange
Principal activities
The Group and the Company are principally engaged in the development, installation, implementation
and marketing of computer software for financial institutions under the trademark of BankWORKS
®
(Licencing Solutions). Through its subsidiaries, the Group acts as service provider with the use of
BankWORKS
®
(Processing Solutions) and has also established its own ‘Acquiring’ business line by making
use of a financial institution licence obtained through BaFin, the German regulator (Merchant Solutions).
The Company also enhanced its activities to include acquisition and holding of shares and like
instruments, in entities whose activities are complimentary to the business of the Company, including
entities that are payment, financial or credit institutions, and provider of services to such institutions as
well as merchants.
Business review and future developments
The Group has made strong progress and executed its key strategic priorities at a steady pace. In 2023,
the Group remained focused on its strategy of growing and expanding its Managed Services business
and accelerating its global expansion, as well as commencing its Direct Merchant Acquiring and Issuing
Services in Europe.
The Group has secured a major processing outsourcing agreement with one of the largest acquirers in
the United States thereby securing another Tier 1 bank under its enterprise managed services. The US
subsidiary, while continuing to ramp up its client base with respect to the Independent Sales
Organisations (ISO) processing business, has enhanced its strategy and will be primarily focused on the
following three business lines:
Annual Report and Financial Statements | Page 29
Directors’ Report (continued)
• Enterprise business, whereby RS2 manages the client’s private infrastructure on the cloud, in
addition to providing processing and other services;
• Acquiring processing, which focuses on Payment Facilitators (PayFacs), Payment Service Providers
(PSPs) and follow up on the existing ISO pipeline;
• Issuing processing (a new business line).
RS2 Smart Processing continues to increase its transaction processing volumes through new and
existing customers. It is also working on standardising its product and service offering to improve time-
to-market and profitability, thus enabling the Group to also offer services to smaller clients. This
subsidiary company is developing a fully digitalised service enabling a client to self-onboard and choose
the services required for its business and market needs. The company has executed letters of intent
with clients in Europe, Asia Pacific and Latin America, for which implementation has already started,
while also negotiating several processing agreements.
In Asia Pacific (APAC), the Group developed InstaPay, the real-time online local scheme, which will allow
the offering of services to banks in the market using our own developed mobile application for fund
transfers, bill payments and other banking services.
The Group’s investment in human resources provides the necessary support to successfully launch the
new acquiring business and obtain the EMI Licence, through BaFin. This enabled RS2 to provide a wide
range of payment acceptance and other financial services to merchants and consumers across Europe
and to process cross-border merchant payments globally. The new acquiring business will reinforce the
shift in the revenue model for RS2 Group, from dependence on one-time licence fees to ongoing and
recurring revenue based on the number and value of transactions processed. The launch of the Group’s
Financial Services sector, following the acquisition of its EMI licence, was concluded successfully in the
second quarter of 2022. In addition to this, the German subsidiary became a principle member of Visa
and MasterCard. As an EMI institution and principle member, the Group is now able to provide direct
acquiring and issuing services to merchants, which were set in motion in 2022.
During the year under review, the Company registered revenues from its principal activities of €18.2m
(2022: €19.7m) and a profit before tax of €2.3m (2022: €1.8m). The Managed Services arm of the Group,
RS2 Smart Processing Limited which is principally engaged in the processing of payment transactions
with the use of BankWORKS®, recorded revenues of €13.6m (2022: €11.7m) and a profit before tax of
€1.2m (2022: €4m) while RS2 Software INC., which serves as the US arm of the Group with specific
focus on the provision of Managed Services in North America, recorded revenues of €17.2m (2022:
€14.7m) and a profit before tax of €2.0m (2022: loss before tax of €0.1m). RS2 Software APAC Inc. is
currently supporting the Company in product development and its expansion in the APAC region. The
RS2 German subsidiaries focus mainly on direct merchant acquiring and issuing services using one
platform that integrates through API to the merchant’s website or store, thereby consolidating the entire
business of the merchant across all the respective payment channels.
During the year under review, upon consolidating all of its activities, the Group generated revenues of
€39.7m (2022: €37.5m) and registered a profit before tax of €1.4m (2022: €1.8m). At 31 December 2023,
the Group’s total assets amounted to €49.4m (2022: €43.4m), whereas its current assets exceeded its
current liabilities by €0.04m (2022: €3.6m).
Annual Report and Financial Statements | Page 30
Directors’ Report (continued)
The Board of Directors is confident that the Group can continue to operate as a going concern for the
12 months from the end of the reporting period as set out on in the Going Concern section below.
A comprehensive review of the business and performance of the Group during the year under review,
and an indication of future developments are given in the CEO’s Statement set out on pages 12 to 19 of
this Annual Report.
Key Figures
The Group
2023
2022
2021
2020
2019
€
€
€
€
€
Revenues (Eur 000s)
39,672
37,516
38,680
26,813
22,100
EBITDA (Eur 000s)
4,138
3,800
8,760
(1,464)
(210)
EBITDA margin (%)
10.43%
10.13%
22.65%
-5.46%
-0.95%
Profit/(loss) before tax (Eur 000s)
1,438
1,778
6,416
(3,889)
(2,115)
Earnings per ordinary share (Euro)
-€0.00
€0.00
€0.02
-€0.02
-€0.01
Earnings per preference share (Euro)
-€0.00
€0.00
€0.02
-
-
Equity to asset ratio (%)
46.75%
55.71%
53.41%
18.56%
44.28%
Debt/equity ratio multiple
1.14
0.80
0.87
4.39
1.26
As from 1 January 2021, fines and penalties started to be accounted for under Other Expenses instead
of under Finance Costs. As such, EBITDA and EBITDA margin figures between 2018 and 2020 have been
re-stated accordingly.
Reserves
Retained earnings amounting to €22.4m (2022: €24.0m) for the Company and retained losses of €0.9m
(2022: retained earnings of €2.6m) for the Group are being carried forward.
Dividends
On 30
th
August 2023, the Directors authorised the distribution of an interim scrip dividend of €3,000,000
where each Ordinary and Preference Shareholder was giving the option to receive either cash or new
Ordinary Shares or Preference Shares as applicable, at an attribution price of €1.23 per Ordinary Share
and €1.43 per Preference Share. The net dividend was equivalent to €0.01c315 per Ordinary Share and
€0.01c446 per Preference Share.
An amount of €1,344,297.88 was paid in cash, whilst a total of 1,313,974 new Ordinary Shares and a
total of 28,320 new Preference Shares were allotted.
Annual Report and Financial Statements | Page 31
Directors’ Report (continued)
The Group continues to focus on its growth strategy, which requires further investment in infrastructure
and business development. For this reason, the Board is not recommending any final dividends for the
year ending 31 December 2023 (2022: nil).
Conflicts shaping the economic environment
In February 2022, Russia launched a large-scale military invasion on Ukraine, one of its neighbours to
the southwest, marking a major escalation to a conflict which began in 2014. The Group and Company
do not have any customers domiciled in such countries, and no significant impact was/is expected to be
incurred on that front.
The conflict between Russia and Ukraine brought about high and increasing inflation rates, resulting
from restricted supply of oils, gas and grains, an energy crisis and the looming threat of recession, while
recovering from the economic shocks of a global pandemic. This challenging economic environment
resulted in customers being cautious to execute signed projects whilst also holding back on new ones.
Prices for energy intensive commodities increased across Europe following the current economic
conditions. Over the past years, RS2 has moved towards a cloud-based infrastructure. Cloud computing
enables users to share resources by being connected to remote data centres. Data centres tend to be
more energy efficient than individual servers distributed around the Group and large companies offering
cloud services are constantly working to make their computing facilities more energy efficient.
Following the conflict in the Middle East, the impact on energy and financial markets has been limited
and temporary. After an initial surge, oil prices retreated and are now below pre-conflict levels, reflecting
changes in global demand conditions (as there was no disruption to oil production). Natural gas prices
have also come down after a large spike but are still about 25 percent above pre-conflict levels.
Cash flow projections and assumptions taken are updated to reflect observable trends related to
customer spending and increases in costs. These movements have been modelled into the Group’s
budgets and impairment testing. The discount rates used in the determination of the assets’ value in use
have been further updated to reflect current market assessments of the time value of money through
the current risk-free rate when calculating the Weighted Average Cost of Capital.
Going forward, energy prices, inflation, interest rates and economic growth will depend on how the
conflict in Ukraine and the Middle East will evolve.
Going Concern
Management has prepared a going concern assessment for RS2 Group, based on the 2023 financials
whilst also taking into consideration approved budgets covering periods 2024 to 2026.
The 2023 financial results for the Group show growth in revenue compared to prior year. The decline in
Company revenues was compensated for by increases in revenue from subsidiaries, which is in line with
the Group‘s strategy of transforming its revenue model from licence revenue to managed services and
merchant services.