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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 ............................................................................................................... 188

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, foreign exchange

(FX), health care and more.

Our global, cloud-native platform, BankWORKS®, is built

using microservices architecture, available via a single API

integration. This enables our clients to enter the market

quickly, customize their payment processes, and seamlessly

adapt to evolving market demands.

With a 35+ year track record and proven technology, RS2 is

a trusted partner for the entire 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

has established itself as a leading, full-service global

payments provider.

Our Mission

To empower businesses worldwide with innovative, secure,

and scalable payment solutions that drive growth, enhance

efficiency, and accelerate digital transformation across the

entire payments ecosystem.

Our Vision

To be the global leader in payments, driving innovation and

financial inclusion by delivering seamless, secure, and

personalized solutions that connect businesses, consumers,

and technology.

35+

Years of

experience

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.

One single, global platform

The Group’s BankWORKS® platform is built on a state-of-the-art Application 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

RS2 has proven its resilience to withstand the challenges of the increasingly complex

and volatile global environment.

During 2024 one of our primary goals has been to maintain our trajectory of growing our client base and

increasing our project offering globally with special focus 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. We have seen significant growth in this revenue stream

after only three years of operations. Furthermore, through its ability to passport its licence, RS2’s

services may also be available to several countries within Europe.

The EMI licence enables the Group to manage merchant funding and provide acquiring services and falls

within the Group’s strategy to continue to shift its revenue model from dependencies on one-time licence

fees towards ongoing and recurring revenue streams based on transaction volumes processed.

We continue to see significant growth under our Processing Solutions business. Through customer

growth during 2024 we have processed over 1.8 billion transactions on the BankWORKS® platform

resulting in a 25% increase over the previous year.

Annual Report and Financial Statements | Page 10

Chairman’s Statement (continued)

Through further growth in our customer base, with both new and existing clients, we expect to see

continued growth in the years to come.

On the Software Solutions business side, the Group continues to build on its product offering making

sure that RS2 stays ahead of the curve. This includes an intelligent reconciliation system, data analytical

portal and merchant portal further empowered with the use of artificial intelligence and robotics.

The Group provides outsourced processing services to one of the largest banks in the United States on

a hybrid licencing and processing model to deliver Global Acquiring and Issuing Services. In the USA, we

have launched our acquiring programme during 2024 with our first client going live in the first quarter of

2024. The Group will continue to offer acquiring processing to Payment Facilitators (PayFacs), Payment

Service Providers (PSPs) and Independent Sales Organisation (ISOs). We also expect to be able to attract

tier one financial institutions and banks on our hybrid licencing and processing model as there is high

demand for outsourced solutions. RS2 is perfectly poised to offer a full product offering to such

enterprise clients allowing for customised and efficient solutions, reducing client costs and increasing

performance and customer satisfaction.

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 continues to direct the company through his

leadership and tireless work to execute the Group’s strategy and of course to our Board of Directors for

their support and guidance throughout the year.

Mario Schembri

Chairman

23 April 2025

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

Resilience, Strategic Execution, and Future Growth

The year 2024 was marked by an increasingly complex and volatile global economic environment.

Despite these challenges, RS2 has remained steadfast in its commitment of executing its long-term

strategy and achieving its ambitious targets. Our resilience, adaptability, and strategic foresight have

enabled us to navigate uncertainty while capitalizing on new opportunities.

This success would not have been possible without the dedication of our exceptional team, the strategic

oversight of our management, and the constant guidance of our Board of Directors. Their ability to swiftly

respond to external challenges and leverage the lessons learned from the pandemic has fortified RS2

into a more agile and robust organization—one that is well-prepared for any turbulence ahead.

Strong Business Performance in 2024

The 2024 financial results demonstrate a strong growth in profitability despite a decline in top-line

revenue, highlighting our resilience and operational efficiency. In recent years, we have witnessed a

significant rise in client inquiries and demand, a stark contrast to previous periods when customers

Annual Report and Financial Statements | Page 13

CEO’s Statement(continued)

delayed projects and scaled back investments. This clear upward shift in the business landscape

reinforces our confidence in a promising future.

Subsidiaries Update - delivering on our strategic priorities

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.

RS2 Smart Processing Limited

RS2 Smart Processing Limited continues to deliver cutting-edge payment solutions and white glove

services to our global customers and partners, helping them to manage market requirements and

regulatory changes, increasing their revenue and mitigating their risks.

The company’s client base consists of different types of payment providers, ranging from small and

medium payment providers to global financial institutions. Our clients enjoy a tailored made solution to

a market’s everchanging needs within the dynamic payment landscape giving them an advantage over

their competition. RS2 ensures that it has a robust and scalable cloud infrastructure while ensuring

seamless integration via user-friendly APIs and comprehensive security measures to safeguard sensitive

payment data.

Beyond technological advancement, prioritising customer support and partnership relationships is key

in our business. By automating operations and integrating robotics and inhouse developed chatbots, the

company has become very efficient in managing repetitive operations in order to make better and more

efficient use of resources therefore also allowing 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

which is possible by operating from various regions globally, to promptly address any technical issues

or inquiries and ensuring utmost client satisfaction.

As payment technology has been developing and enhanced for years through our own BankWORKS®

platform we remain focussed on our strengths of transaction processing, reconciliations and

orchestrations. We also collaborate with other technology partners in order to complement our service

offering and deliver turn-key solutions to our clients and partners. This includes loyalty and reward

programs, cashier systems, soft-POS (software point of sale – a revolutionary new technology which

allows merchants to accept card payments directly on their phone or devices), and additional value-

added services.

We do this by complying to strict compliance requirements within the payments industry, such as PCI

DSS (payment card industry data security standard - an information security standard used to handle

credit cards from major card brands), GDPR (general data protection regulation – European Union

regulation on information privacy in the European Union and the European Economic Area), TIBER ( threat

intelligence-based ethical red-teaming - provides comprehensive guidance on how authorities, entities,

Annual Report and Financial Statements | Page 14

CEO’s Statement(continued)

and threat intelligence providers and red-team testers should work together to test and improve the

cyber resilience of entities by carrying out controlled cyberattacks), and DORA (digital operational

resilience act - requires financial entities to improve their digital operational resilience), focusing on

security and regulatory requirements.

From a business perspective, RS2 Smart Processing has experienced substantial growth in terms of new

markets, diversified customer base and transaction volumes with over 1.8 billion technical transactions

on our private cloud in the past twelve months, marking a 25% increase from the previous year. We

attribute this growth to strong existing client relationships and a widened variety of 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 business to business (B2B) transactions. Implementations are underway in Europe, Asia

Pacific, and Latin America, while also negotiating further processing agreements.

The company will also be providing additional services to its managed service clients which are currently

deployed under RS2 Financial Services such as Sale Agent Application, KYC/AML (know your customer/

anti-money laundering) digital platform and other services.

Expanding on our commitment for innovation, we continue to enhance reporting tools to empower clients

in making informed decisions and optimising 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 United States (US) arm, operates across three primary lines of business:

• Acquiring Processing for ISVs, PayFacs, and ISOs

Following significant investment and dedication, the first Acquiring ISO clients has gone live in 2024

in the US. Throughout 2024, RS2 Software Inc. secured a number of processing agreements with

significant ISVs and PayFacs, with plans to roll out services for some of them in 2025. 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.

• Enterprise Managed Services for Tier One Financial Institutions

The company is actively pursuing business with tier-1 acquirers and banks in the US for which the

project’s scope involves building the entire processing infrastructure on the cloud and overseeing

Annual Report and Financial Statements | Page 15

CEO’s Statement(continued)

daily operations, from merchant onboarding to clearing and settlement, up to merchant statementing

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.

RS2 Financial Services GmbH

RS2 Financial Services GmbH, a licensed financial entity regulated by German authorities, has

strategically rebranded its merchant services under the brand name "Beyond by RS2" . This initiative

enables RS2 to offer comprehensive end-to-end payment solutions directly to merchants and

consumers by encompassing payment network services, payment acceptance, POS devices,

eCommerce solutions, digital wallets, and merchant loyalty programs as well as debit and business cards

to businesses. By integrating these services, RS2 not only caters to merchants in Germany but also

extends its reach across Europe, facilitating cross-border payment processing on a global scale.

Targeting large European and multinational merchants, RS2 has established a dedicated key account

management team to provide tailored services. This focus underscores RS2's commitment to becoming

a significant player in the European issuing and acquiring market. The company's strategic shift is to use

the platform and the skill of the team to provide services in Europe that are today supported on the

platforms in other regions and differentiate our merchants and consumer as well as our partners from

their competitors

The evolution of RS2's business model reflects a broader vision of the Group, where adaptability and

comprehensive service offerings in the industry are paramount. By embracing this shift, RS2 is poised to

deliver sustained value to its clients and stakeholders, solidifying its position as a leader in the global

payments landscape.

RS2 Software APAC Inc.

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. RS2 Software APAC Inc. also continues to be

responsible for client relationships and support in the APAC area as well as exploring other opportunities

with banks in the Philippines.

RS2 Germany GmbH

RS2 Germany GmbH's Product team remains at the forefront of innovation, continuously designing and

developing state-of-the-art financial products and services that empower the RS2 platform to lead the

Annual Report and Financial Statements | Page 16

CEO’s Statement(continued)

industry. With an unwavering commitment to excellence, the team creates cutting-edge solutions that

service both internal operational efficiency and the evolving needs of external clients, ensuring that

businesses can thrive in an increasingly digital and interconnected financial ecosystem.

By leveraging advanced technologies and deep industry expertise, RS2’s Product team delivers solutions

that redefine the financial services landscape. From the development of an intelligent reconciliation

system and data analytics portals that streamline financial oversight, to merchant portals that optimise

business transactions and interactions, every product is meticulously designed to enhance efficiency,

transparency, and control empowered by artificial intelligence and robotics.

Moreover, RS2 is spearheading the future of open banking, introducing innovative products and services

that enable seamless payment experiences and enhanced financial data management.

These solutions are built with a strong focus on compliance, security, and scalability, ensuring that

businesses across Europe and beyond can confidently integrate and expand their financial operations.

At the heart of RS2's product strategy lies an unwavering commitment to user experience. Every solution

is developed with a customer-first approach, ensuring that merchants, banks, and businesses benefit

from intuitive interfaces, seamless payment processing, and tailored financial tools that cater to their

unique operational requirements. By placing customer satisfaction at the core, RS2 not only strengthens

its market position but also sets a new benchmark for the payments and financial services industry.

As the financial technology sector rapidly evolves, RS2 Germany GmbH’s Product team remains

relentlessly dedicated to staying ahead of the curve, ensuring that the RS2 platform continues to lead in

innovation, reliability, and industry influence. With a visionary approach and an agile development

process, RS2 is not just keeping up with industry trends—it is shaping the future of global financial

services.

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 an

infrastructure perspective as well as from a product technology point of view. This is done by selecting

the right technologies to best support our customers and our colleagues across the globe, both from a

technology and from a delivery perspective allowing the Group to work with the latest technology

available on the market. Our team has enhanced the RS2 platform to 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

Annual Report and Financial Statements | Page 17

CEO’s Statement(continued)

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 provides 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.

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. This 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.

The payments industry is constantly evolving and 2025 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

Annual Report and Financial Statements | Page 18

CEO’s Statement (continued)

expanding the managed service business, ramping up the US expansion and growing 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.

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 will lead us to a successful 2025 and

beyond.

Closing Remarks

Shaping the Future: RS2’s Unstoppable Drive Toward Innovation, Growth, and Profitability

As we stand on the brink of an era-defining transformation in the global payments industry, RS2 is not

just evolving—we are revolutionizing the way businesses and consumers interact with financial

technology. With relentless innovation, strategic expansion, and an unwavering commitment to

excellence, we are forging a future where seamless, intelligent, and highly secure payment solutions

power the global economy.

Our ambition is bold, and our path is clear: to dominate the payments industry by accelerating our

technological advancements, expanding our market reach, and unlocking new avenues for revenue

growth and long-term profitability. As we continue this remarkable journey, we are focussing on:

• Groundbreaking artificial intelligence (AI) - driven payment solutions that anticipate market

trends and enable businesses to optimise cash flow and risk management in real-time.

• Unmatched global issuing and acquiring services, empowering enterprises to expand effortlessly

across borders with our seamless, end-to-end financial ecosystem.

• Next-generation digital payment experiences, ensuring frictionless transactions that redefine

convenience, personalisation, and security for merchants and consumers alike.

A Future Built on Excellence, Driven by Our People

This extraordinary journey would not be possible without the dedication, expertise, and passion of our

talented global team across Europe, the USA, Asia Pacific, and the Middle East. They are the architects

of our success—pioneers of a financial revolution that is setting new benchmarks in our industry. Their

Annual Report and Financial Statements | Page 19

relentless pursuit of innovation fuels our ability to create groundbreaking solutions and drive

unprecedented growth.

We extend our deepest gratitude to our Management and Board for their unwavering leadership, and to

our esteemed shareholders for their continued trust and belief in our vision. Their support is the

foundation upon which we build the future of RS2.

Beyond Payments: A Global Movement Toward Limitless Possibilities

RS2 is more than a payments company—it is a global force, reshaping the financial landscape with

future-ready solutions. The opportunities ahead are limitless, and together, we will push the boundaries

of what’s possible, create immense value for our customers, and unlock new levels of profitability.

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 2025

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 former 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 having served

on Council from 2007 till 2019. 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)

Prof. Dr. Raša Karapandža

Non-Executive Director

Professor Karapandža is a Professor of Finance and the Dean of EBS Business School, Germany. He also

serves as the Academic Director of the Masters in Finance program and holds the Chair of Finance. He

earned his Ph.D. in Economics and Finance from the Barcelona Graduate School of Economics, University

Pompeu Fabra. Additionally, he has been a visiting research scholar at New York University and the

University of California, Berkeley, and currently serves as a Visiting Professor at New York University

(NYU). Professor Karapandža’s research has been featured in leading global media outlets, including The

Wall Street Journal, The New York Times, and Der Spiegel. He has advised members of the U.S. Congress

on regulatory matters concerning cryptocurrencies and blockchain technologies. Recognized for his

excellence in teaching, he was elected Favorite Professor by the EBS Business School student body for

ten consecutive years, from 2009 to 2023. At EBS University, he teaches courses in Investments,

Finance, Corporate Finance, Asset Pricing, and FinTech. At NYU, he teaches a FinTech course, as well

as courses at NYU Stern on the Foundations of Financial Markets and Advanced Investments.

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. Natalie Strange resigned from her position of Director on 3 April

2025.

Annual Report and Financial Statements | Page 23

Board of Directors (continued)

Hilary Galea Lauri

Non-Executive Director

Mr Galea-Lauri is a UK Chartered Certified Accountant with a Practicing Certificate in Auditing. He holds

a warrant as a Certified Public Accountant. With a career spanning 38 years at KPMG Malta and other

offices where KPMG has a presence, Mr. Galea-Lauri served as a senior Audit Partner, leading audits for

a diverse portfolio of clients, both locally in Malta and internationally. He also contributed significantly to

the firm's leadership as a member of its Executive Management Committee, and the Audit Executive

Committee and Audit Quality Council for KPMG's sub-region of EMA.

Beyond his professional endeavours at KPMG, Mr. Galea-Lauri has been a key figure in the accounting

community. He served as a Council Member of the Malta Institute of Accountants for 18 years, where he

chaired the Audit and Accounting Technical Committees. He also lectured in advanced financial

reporting and auditing, besides being an examiner for these core subject areas. Currently, he is an active

member of the Institute’s Ethics Committee.

Mr. Galea-Lauri is recognised as a court expert in the field of accounting and holds the position of Non-

Executive Director and Audit Committee Chair for several financial institutions.

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.

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.

Ladybird Foundation Wildlings OCR

Annual Report and Financial Statements | Page 25

Corporate Social Responsibility (continued)

RS2’s Corporate Social Responsibility (CSR) strategy is aligned with the Company culture and values

embedded in its ethical principles. Within the RS2 Group, we are committed to creating value and

building a sustainable future for our customers, team members, shareholders and the broader

community in which we operate.

RS2’s social responsibility activities are primarily focused on strengthening global communities,

supporting people, education, philanthropic organisations, sports clubs and improving the environment.

We are dedicated to continuous improvement and we are committed to evolving our environmental,

social and community initiatives going forward. Our priorities fall under three pillars: People, Social

Initiatives and Environment.

People

Fostering a thriving, diverse, inclusive workplace. Our team members are one of RS2’s greatest

strengths. We believe that a company culture focused on diversity and inclusion is the key driver of

creativity and innovation. Therefore, we strive to make RS2 a great place to work and foster a culture of

inclusion and diversity where all team members are treated with respect and equality, regardless of

gender, ethnicity, sexual orientation, gender identity, religious beliefs, or other characteristics. Our

efforts have been honoured with 'The Equality Mark' in recognition of our commitment to effective HR

practices that promote the potential of all employees, regardless of gender or caring responsibilities.

Additionally, we have been acknowledged with “The Quality Mark” for placing HR at the forefront of our

business operations, implementing comprehensive strategies, policies, and employee relations initiatives

that prioritize the well-being and development of our team members.

Supporting learning and developing skills. The skills and competencies of our team members

are important for RS2’s growth and lasting success. With comprehensive training and development

programs, RS2 continuously supports our teams to further develop their skill set. The Company’s

Trainings Academy provides a variety of comprehensive virtual and instructor-led courses that focus on

technical, business and IT skills to strengthen and enrich team members’ expertise. Furthermore, RS2’s

Compliance Portal gives access to legal, ethics and global compliance training. Through videos,

interactive sessions and short quizzes, our teams enhance their knowledge and professionalism,

ensuring adherence to legal regulations and the ethical use of data and resources to help prevent

conflicts of interest. All team members and managers are obliged to receive the Compliance trainings,

which cover courses such as Anti-Fraud and Payments Handling, General Data Protection, Payment Card

Industry Data Security Standards and Security Awareness and Information security.

Annual Report and Financial Statements | Page 26

Corporate Social Responsibility (continued)

Promoting Mental Health, Safety and Well-Being. Ensuring the health, safety, and well-being

of our team members is fundamental to our business ethos. RS2 provides programs to support our team

members in addressing concerns impacting their home lives, work lives, and mental well-being. In

collaboration with the Richmond Foundation, RS2 offers several fully prepaid subscriptions for mental

health support sessions and individual counselling sessions.

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, MCAST Freshers’ Week, ICTSA Industry

Expo 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.

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 and Germany:

•

Dar tal

Kleru

• Inspire

• Angela House

• Dar Papa Frangisku

•

ICTSA

• Lions Club

• TV 1861 Neu-Isenburg

• TUS Zeppelinheim

Annual Report and Financial Statements | Page 27

Corporate Social Responsibility (continued)

Environment

At RS2, we remain committed to minimise our footprint on the environment by reducing energy use,

water 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 replaced the

majority of its car fleet with hybrid vehicles. To further limit paper usage in the offices, RS2 utilises digital

signatures for various administrative purposes.

Minimizing waste and water usage. We're committed to continually improving our environmental

practices by managing waste disposal effectively and finding ways to use water more efficiently. RS2

offers an advanced recycling program aimed at minimizing waste through prevention, reuse, recycling,

and elimination. Our thorough waste management system ensures that all waste is properly disposed of

in a safe and responsible manner, using the necessary bins located in key areas. The generated waste

and disposal methods are measured and reported to ensure we are making progress in our efforts to

reduce waste.

RS2 is taking all possible measures to use water more efficiently and has also implemented conservation

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,

facilitated by automatic control timers and feeders. This ensures the optimization of water usage

according to crop type and season

Reducing energy consumption. 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

upgrading our solutions and facilities with more efficient servers, converting to LED lighting in its offices

and implementing motion sensor lights to conserve energy.

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 2024

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 2024.

Board of Directors

Mr. Mario Schembri (Chairman)

Mr. Radi Abd El Haj (CEO)

Dr. Robert Tufigno

Mr. John Elkins (term of office expired on 5 June 2024)

Mr. Franco Azzopardi

Prof. Raša Karapandža

Ms. Natalie Strange (resigned on 3 April 2025)

Mr. Hilary Galea-Lauri (appointed on 5 June 2024)

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 2024,

the Group remained focused on its strategy of growing and expanding its Managed Services business

and Direct Merchant Acquiring and Issuing Services in Europe, as well as commencing its Acquiring

Processing in the United States (US).

Annual Report and Financial Statements | Page 29

Directors’ Report (continued)

RS2 Software INC., 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:

• Acquiring Processing for Independent Sales Vendors (ISVs), Payment Facilitators (PayFacs) and

Independent Sales Organisations (ISOs) – this business line will operate under two models:

• BYOB – Bring Your Own Bank. In this model, RS2 INC serves as a processor. Under this model,

clients would bring their own bank/acquiring license or BIN, and as such, RS2 INC acts as a

technical service provider. This model has launched earlier in 2024 and started processing

live transactions in Q4 2024.

• RBYB - RS2 brings your Bank. In this model, RS2 acts as a key facilitator between its

customers and partner banks. RS2 delivers a comprehensive service package to ISOs,

PayFacs, and ISVs, covering everything from KYC and AML processes to terminal

provisioning, e-commerce gateway solutions, and extending to settlement, funding services,

statement generation, and reconciliation. This model has launched in Q1 2025.

• Enterprise managed services for tier one Financial Institutions – within this model the company

services tier one financial institutions which involves building an entire processing infrastructure on

the cloud and overseeing daily operations, from merchant onboarding to clearing and settlement, up

to merchant statementing.

• 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.

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. 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 one single API while ensuring comprehensive security measures to

safeguard sensitive payment data.

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.

RS2 Financial Services GmbH, a licensed financial entity regulated by the German authority, is now

operating under https://www.beyondbyrs2.com/ providing services directly to merchants and will shortly

start its consumers’ business, through its issuing program to provide corporate cards and wallets to

businesses and individual consumers.

Annual Report and Financial Statements | Page 30

Directors’ Report (continued)

The e-money license allows the Group to acquire merchants across all EU member states and the

company has now also received the approval to start cross-border activities in Switzerland.

To facilitate business scalability, the company has continued to enter into distribution agreements with

various ISOs in Germany that cater for 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 continues to collaborate 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 fifty partners,

enabling rapid onboarding of merchants within hours. 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 Germany GmbH’s Product team remains dedicated to pioneering solutions that optimise operational

efficiency for both the 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 and issuing business. Moreover, we have

fully digitalised our customer offering by providing merchants with a state-of-the-art Merchant Portal

allowing them to access all their information in real-time. The Portal provides access to transaction,

authorisation, reporting and financial data, as well as a ticketing system furnished with a 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 compliant 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 allowing them to take the

necessary measures to retain them.

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 plc.

Annual Report and Financial Statements | Page 31

Directors’ Report (continued)

During the year under review, the Company registered revenues from its principal activities of €16.3m

(2023: €18.2m) and a profit before tax of €0.8m (2023: €2.3m). From the Managed Services Solutions,

RS2 Smart Processing Limited recorded revenues of €13.4m (2023: €13.6m) and a profit before tax of

€1.1m (2023: €1.2m) while RS2 Software INC., recorded revenues of €15.7m (2023: €17.2m) and a profit

before tax of €3.2m (2023: €2.0m). From the Merchant Solutions, RS2 Financial Services recorded

revenues of €1.6m (2023: €0.8m) which translates into growth of 91% when compared to prior year, and

a loss before tax of €1.5m (2023: loss of €1.9m), while RS2 Zahlungssystemme recorded revenues of

€2.7m (2023:€2.8m) and a loss before tax of €0.06m (2023: profit of €0.12m). These results reflect the

strategy of the group where the Company continues to maintain its current licenced clients while being

selective in the sales of new licences. The Managed Services Solutions is well established in the market

and well positioned for further growth.

During the year under review, upon consolidating its activities, the Group generated revenues of €37.5m

(2023: €39.7m) and registered a profit before tax of €2.2m (2023: €1.4m). At 31 December 2024, the

Group’s total assets amounted to €49.1m (2023: €49.4m), whereas its current liabilities exceeded its

current assets by €0.02m (2023: current assets exceeded current liabilities by €0.04m).

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

2024

2023

2022

2021

2020

€

Revenues (Eur 000s)

37,

537

39,672

37,516

38,680

26,813

EBITDA (Eur 000s) 5,432

4,138

3,800

8,760

(1,464)

EBITDA margin (%) 14.47%

10.43%

10.13%

22.65%

-5.46%

Profit/(loss) before tax (Eur 000s) 2,154

1,438

1,778

6,416

(3,889)

Earnings

per ordinary share (Euro)

€0.00

€0.02

Earnings per preference share (Euro) €0.00

-€0.00

€0.00

€0.02

Equity to asset ratio (%) 48.25%

46.75%

55.71%

53.41%

18.56%

Debt/equity ratio multiple 1.07

1.14

0.80

0.87

4.39

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.

Annual Report and Financial Statements | Page 32

Directors’ Report (continued)

Reserves

Retained earnings amounting to €22.4m (2023: €22.4m) for the Company and retained losses of €0.9m

(2023: €0.9m) for the Group are being carried forward.

Dividends

On 30

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.

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 2024 (2023: nil).

Going Concern

Management has prepared a going concern assessment for RS2 Group, based on the 2024 financials

whilst also taking into consideration approved budgets covering periods 2025 to 2027. 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.

The 2025 consolidated top line is expected to show a steady improvement over the prior year and with

further growth projected beyond 2025, while the group remains focused on cost effectiveness in its

operations coupled with the benefits of economies of scale particularly in the Managed Services

Solutions and Merchant Solutions and resulting in significantly improved profitability over the three-year

period.

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 also plans to invest 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.

The outlook for 2025 is that business will 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 a Data

Analytics Portal, a new Merchant Portal, Artificial Intelligence and automation initiatives as well as focus

Annual Report and Financial Statements | Page 33

Directors’ Report (continued)

on microservices allowing for better scalability which will lead the Group to a successful 2025 and

beyond.

From a profitability viewpoint, in 2024, both Software (Licensing) and Managed Services Solutions have

delivered a positive bottom-line contribution before tax, while Merchant Solutions is expected to start

generating a positive bottom line after 2026. The latter will continue to ramp up business organically

through direct merchants and partners.

From a liquidity point of view, RS2 Group is confident in its ability to meet any working capital

requirements.

In this respect, the Board of Directors is confident that the Group can, not only continue to operate as a

going concern for 12 months from the end of the reporting period, but will continue to see substantial

growth over the coming years.

Upon due consideration of the Company’s profitability, balance sheet, capital adequacy and solvency,

the Directors are satisfied that at the time of approving the financial statements, the Company has

adequate resources to continue operating as a going concern for the foreseeable future.

Pursuant to Capital Market Rule 5.64

Rule 5.64.1 - Share capital structure

The Company’s authorised share capital is of €21,600,000, divided into €18,000,000 Ordinary Shares

and €3,600,000 Preference Shares.

Ordinary Share Capital

The Company’s authorised ordinary share capital is of €18,000,000, divided into 300,000,000 Ordinary

Shares, at €0.06 each. The Company's issued ordinary share capital is of €13,104,222 divided into

218,403,701 ordinary shares of €0.06 each, each ordinary share being fully paid up. All of the issued

Ordinary Shares of the Company form part of one class of Ordinary Shares in the Company, which shares

are listed on the Malta Stock Exchange. All of the Ordinary Shares have the same rights and entitlement

and rank pari passu between themselves.

The following are highlights attached to the Ordinary Shares:

Dividends:

The shares carry equal rights to participate in any distribution of dividends declared by the Company.

Annual Report and Financial Statements | Page 34

Directors’ Report (continued)

Voting rights:

Each share shall be entitled to two (2) votes at the meetings of the shareholders.

Pre-emption rights:

Subject to the limitations contained in the Memorandum and Articles of Association, shareholders are

entitled to be offered any new shares to be issued by the Company, in proportion to their current

shareholding, before such shares are offered to the public or to any person not being a shareholder.

Capital distributions:

The shares carry the right for the holders thereof to participate in any distribution of capital made

whether on a winding up or otherwise.

Transferability:

The shares are freely transferable in accordance with the rules and regulations of the Malta Stock

Exchange applicable from time to time.

Other:

The shares are not redeemable.

Preference Share Capital

The Company’s authorised preference share capital amounts to €3,600,000, divided into 60,000,000

preference shares, at €0.06 each. The Company's issued preference share capital amounts to €608,499

divided into 10,141,649 preference shares of €0.06 each, each preference share being fully paid up. All

of the issued Preference Shares of the Company form part of one class of Preference Shares in the

Company, which shares are listed on the Malta Stock Exchange. All of the Preference Shares have the

same rights and entitlement and rank pari passu between themselves.

The following are highlights attached to the Preference Shares:

Dividends:

When a dividend is declared payable in respect of any financial period, the holders of Preference Shares

shall be entitled to a dividend at a premium (“Premium Dividend”) over the dividend distributed and

Annual Report and Financial Statements | Page 35

Directors’ Report (continued)

payable to the holders of Ordinary Shares. Such Premium Dividend shall be determined by the Board of

Directors at the time of issue of the dividend but shall not be less than ten per cent (10%).

Bonus Shares:

The holders of Preference Shares shall qualify in the same manner as the holders of Ordinary Shares to

be entitled to any bonus shares issued by the Company.

Voting rights:

The holder shall not be entitled to vote at the meetings of the shareholders except for the purpose of:

1) reducing the capital of the Company; or

2) winding up of the Company; or

3) where the proposition to be submitted directly affects their rights and privileges; or

4) when the dividend on their shares is in arrears by more than six (6) months.

In such case where the holder of Preference Shares shall have the right to vote, such shareholder shall

have one (1) vote in respect of each Preference Share held.

Pre-emption rights:

The holders of Preference Shares shall not have any rights of pre-emption in respect of allotment of

Preference shares to officers and employees of the Company and, or its subsidiaries.

Capital distributions:

The holders of Preference Shares shall not be entitled to participate in the assets of the Company except

by way of distribution of assets to its members on its winding up and this in the same manner as holders

of Ordinary Shares. In any such case the holders of Preference Shares shall not enjoy any preference

over the holders of the other shares.

Transferability:

The shares are freely transferable in accordance with the rules and regulations of the Malta Stock

Exchange applicable from time to time.

Other:

The shares are non-cumulative and are not redeemable.

Annual Report and Financial Statements | Page 36

Directors’ Report (continued)

Rule 5.64.3 - Holding in excess of 5% of the share capital

On the basis of the information available to the Company as at 31 December 2024, Information

Technology Management Holding Limited (ITM) and Barclays Bank P.l.c. (Barclays) hold 109,799,922

and 39,618,896 ordinary shares respectively, equivalent to 48.04% and 17.34% of the Company’s total

issued share capital.

In his capacity as ultimate shareholder of ITM, Radi Abd El Haj directly and indirectly holds 48.36% of

the issued share capital of the Company. As far as the Company is aware, no other person holds an

indirect shareholding in excess of 5% of its total issued share capital.

Rule 5.64.5 – Employee share option scheme

The Company’s subsidiary’s share option scheme is administered by the Board of Directors of the relative

subsidiary. The decision of the board on all disputes concerning share options is final.

Rule 5.64.7 – Restrictions on transfer of securities

By virtue of an agreement entered between ITM and Barclays, ITM undertook that, for so long as it holds

more than 10% of the issued share capital of the Company, upon receiving any offer from third parties

to acquire securities it holds in the Company, it is required to offer any such shares that it is desirous to

transfer to Barclays.

Rule 5.64.8 - Appointment and replacement of directors

The Memorandum and Articles of the Company regulates the appointment of directors. Article 55.1 of

the Articles of Association provides that a member holding not less than 0.5% of the issued share capital

of the Company having voting rights or a number of members who in the aggregate hold not less than

0.5% of the issued share capital of the Company having voting rights shall be entitled to nominate fit and

proper persons for appointment as directors of the Company. In addition, the directors themselves, or a

committee appointed for the purpose by the directors, may make recommendations and nominations to

the shareholders for the appointment of directors at the next Annual General Meeting.

Furthermore, in accordance with the provisions of Article 55.1(d) of the Articles of Association, the Board

of Directors, may, at any time, appoint a director if it believes that the appointment would be beneficial

to the Company due to the skill, expertise and knowledge of such person.

Article 55.3 of the Articles of Association of the Company also provides that in the event that the Board

is of the opinion that none of the directors appointed or elected in accordance with the provisions of

these Articles is a non-executive independent director competent in accounting and/or auditing as

required by the Capital Market Rules relating to the composition of the Audit Committee, the Board shall,

Annual Report and Financial Statements | Page 37

Directors’ Report (continued)

during the first Board meeting after the Annual General Meeting, appoint a person who is independent

and competent in accounting and/or auditing as a non-executive director, and shall appoint such person

to the Audit Committee.

Unless they resign or are removed, directors shall hold office for a period of one year. Directors whose

term of office expires, or who resign or are removed, are eligible for re-appointment.

Any director may be removed at any time by the Company in a general meeting, provided that the

director who is to be removed shall be given the opportunity of making representations. A resolution for

the appointment and/or removal of a director shall be considered to be adopted if it received the assent

of more than fifty percent of the members present and voting at the general meeting.

Rule 5.64.8 - Amendments to the Memorandum and Articles of Association

Amendments to the Memorandum and Articles of Association of the Company are regulated by the

Companies Act, 1995 (Chapter 386, Laws of Malta). Subject to the provisions of Article 79 of the Act,

and the Approval of the Malta Financial Services Authority, the Company may, by extraordinary

resolution, alter or add to its Memorandum and Articles of Association.

Rule 5.64.9 - Powers of the Board members

The directors are vested with the management of the Company, and their powers of management and

administration emanate directly from the Memorandum and Articles of Association and the law. The

directors are empowered to act on behalf of the Company and in this respect have the authority to enter

into contracts and sue and be sued in representation of the Company. In terms of the Memorandum and

Articles of Association they may do all such things that are not, by the Memorandum and Articles of

Association, reserved for the Company in general meeting.

By virtue of an extraordinary resolution of the shareholders dated 27 June 2022, the Board of Directors

is authorised to issue any share capital of the Company, which is unissued, which authority is valid for a

maximum period of five (5) years, renewable for further periods of five (5) years each. As at 31 December

2024, the Company had eighty-one million, five hundred and ninety-six thousand, two hundred and

ninety-nine (81,596,299) Ordinary Shares and forty-nine million eight hundred and fifty-eight thousand,

three hundred and fifty-one (49,858,351) Preference Shares in unissued share capital.

Rule 5.64.11 – Agreements with employees

The Company and one of its subsidiaries, have agreements with employees holding senior management

positions and directors providing for compensation upon termination based on either an agreed fixed

amount or the then applicable annual salary. Such agreements include a non-competition clause,

precluding such employees from competing with the Company and one of its subsidiaries, in the event

that their employment is terminated. In order for these non-competition clauses to be enforceable, the

Annual Report and Financial Statements | Page 38

Directors’ Report (continued)

Company and one of its subsidiaries, are bound to grant these individuals a sum based on an agreed

fixed amount or the then applicable annual salary.

During 2019, one of Company’s subsidiaries entered into a number of agreements with five employees,

to the effect of allocating 5,626 share options in the subsidiary, with 75% vesting taking place over 36

months during which the employee must be in office and the remaining 25% vesting taking place over

the next 12 months, during which the employee must be in office. On the tenth anniversary of the grant

date or on the termination of employment, any award shares that have not vested shall automatically be

forfeited. Upon termination, all shares issued upon exercise of the options shall be subject to a call option

by the company to repurchase at fair market value. Four of the five individuals terminated their

employment, while the remaining individual signed an amendment to the original agreement granting the

share options to be effective from their respective employment start date. From the total allocated share

options of 5,626 during 2019, 625 share options remain in effect as at 31 December 2024 (2023:1,563).

Other disclosures pursuant to Rule 5.64

No disclosures are being made pursuant to Rules 5.64.2, 5.64.4, 5.64.6, 5.64.10 as these are not

applicable to the Company.

Principal Risks and Uncertainties

In its operations, the Group has exposure to credit risk, liquidity risk and market risk. The Group’s

objectives, policies, and processes target to mitigate the effect of such risk by constantly measuring

and managing such risk, whilst proactively managing its capital. A more comprehensive outlook of such

risk exposure and the Group’s response can be viewed in Note 6 to these financial statements.

Non-financial risks

• Market forces and competition

The market in which the Group operates is characterised by rapidly evolving technology and industry

standards, as well as new competitors such as FinTechs and Big Techs entering the market, driving

change and market disruption, bringing new business models to the market. RS2 must be able to

compete with such companies and meet the need for innovation in its industry. In this regard, over the

past years, the Group continued to enhance its platform by adding new tools that streamline the

operation of its clients and differentiate it from competition in order to onboard more businesses from

various industries on its platform globally. In the last years, the Group invested significantly in its

proprietary BankWORKS®. This investment represents development work carried out internally by the

Group on enhancement of BankWORKS® and its functionality.

Annual Report and Financial Statements | Page 39

Directors’ Report (continued)

• Dependence on key clients

RS2 generally benefits from a highly diversified global client base, including Banks, PayFacs, PSPs, ISVs,

acquirers and issuers. However, since some of its clients are large global corporates with a high

aggregated payment and processing volume, these key clients stand for a large proportion of the Group’s

revenue. Although Management believes that its relationships with these key clients are stable, its ability

to renew existing agreements with them, or to enter into new contractual relationships on commercially

attractive terms, depends on a range of commercial and operational factors and events, any of which

may be beyond RS2’s control.

To broaden its client base, markets and opportunities, the Group is investing significantly in its US

subsidiary, namely its processing platform that will be the foundation of the processing solution in the

US, as well as in the operations to ramp up. Furthermore, the Group injected equity and capital reserves

to setup its third business line being Merchant Services, including its attainment of an EMI license. In

line with the Group’s strategic shift towards Merchant Solutions, the Group acquired Kalicom

Zahlungssysteme GmbH in 2020 (later renamed to RS2 Zahlungssysteme GmbH). This acquisition

provided RS2 with a quick start into the direct acquiring business with immediate capabilities of selling,

installing and servicing terminals, and processing card transactions in the German market for small and

mid-size accounts.

• Software risk

It is an inherent risk of this industry that software applications could contain undetected errors which

could lead to the software not operating as intended. Any failure of the Group’s current or future

platforms, software and technology infrastructure, including the Cloud-Solution, could materially

adversely affect its business, results of operations, financial condition or prospects. In this regard, RS2

has developed and continues to develop its own bespoke processing platform BankWORKS

, software

and technology infrastructure and operates and maintains the processing-platform, which are critical to

RS2’s operations, customer service and reputation.

• Cyber security risk

Similar to business and technology, cyber threat evolves and is always present. The most common cyber

security threats result in risks associated with either data breach or service provision disruptions. The

nature of RS2’s business and of its customers and partners, who use the processing services involve

systems and environments that possess large amounts of sensitive data. RS2 cloud services and data

centres as well as its operations, store and transmit sensitive information related to cardholders,

merchants and financial institutions including names, addresses and accounts

amongst other information that could be vulnerable to computer viruses, physical and cyber-criminal

attacks and web fraudsters that could lead to destruction or theft of transaction data and/or personal

data. This could lead to financial losses or delays in providing services to the customers. To mitigate

such risk, the Group will continue expanding its security resources and tools to fight and protect its

Annual Report and Financial Statements | Page 40

Directors’ Report (continued)

systems and facilities in order to cover any attack or eventualities using its disaster recovery system and

procedures that has been built in various locations to fit this purpose. In this regard, vulnerability

scanning, awareness training, ongoing investments in security operations, incident security planning,

supply chain monitoring, information security policies, insurance and compliance with regulatory

requirements through annual audits are carried out.

• Risk to intellectual property and proprietary rights

The Group regards its intellectual property as critical to its success. It relies and will rely on a combination

of trade secret, copyright, trademark and non-disclosure laws, domain name, registrations and other

contractual agreements and technical measures to protect its intellectual property rights (IPR). To

mitigate this risk, RS2 generally seeks to enter into confidentiality or license agreements with its

employees, consultants and clients. The Directors consider that, currently, RS2 has appropriate systems

and procedures to control access to and distribution of its intellectual property documentation and other

proprietary information and are continually on the lookout for new tools to protect its IPR in the future.

Subsequent Events

On 3 April 2025 the Company announced that Ms Natalie Strange resigned from her post of Non-

Executive Director.

Signed on behalf of the Company's Board of Directors on 23 April 2025 by Mario Schembri (Chairman)

and Radi Abd El Haj (Director and Chief Executive Officer) as per the Directors' Declaration on ESEF

Annual Financial Report submitted in conjunction with the Annual Report and Accounts 2024

Annual Report and Financial Statements | Page 41

Corporate Governance Statement of

Compliance

For the year ended 31 December 2024

Pursuant to the Malta Financial Services Authority Capital Market Rules 5.94 and 5.97, RS2 p.l.c. (“the

Company”) is hereby presenting a statement of compliance with the Code of Principles of Good

Corporate Governance (“the Principles” or “the Code”) for the year ended 31 December 2024, which

details the extent to which the Principles have been adopted, as well as the effective measures taken

by the Company to ensure compliance with these Principles.

Good corporate governance is the responsibility of the Board of Directors (“the Board”), which adopts

the Principles and endorses them accordingly. The Board believes that adoption of the Principles is

evidence of the Company’s commitment to a more transparent governance structure in the best interest

of its shareholders and the market as a whole.

As demonstrated by the information set out in this statement, together with the information contained

in the Remuneration Report, the Company believes that it has, save as indicated in the section entitled

“Non-Compliance with the Code”, throughout the accounting period under review, applied the Principles

and complied with the provision of the Code. In the Non-Compliance Section, the Board indicates and

explains the instances where it has departed from or where it has not applied the Code, as allowed by

the Code.

Part 1: Compliance with the Code

Principle One: The Board

The Board is composed of one (1) executive director and six (6) non-executive directors.

All the Directors, individually and collectively, are of the appropriate calibre with the necessary skills,

diversity of knowledge and experience to assist them in providing leadership, integrity and judgement in

directing the Company.

The Board is entrusted with establishing the long-term strategy, objectives and policies of the Company

and ensuring that these are pursued within the parameters of the relevant laws and regulations and best

business practices.

Further detail in relation to the Committees and the responsibilities of the Board may be found in Principle

Four of this statement.

Principle Two: Chairman and Chief Executive

In line with the Principles, the roles of the Chairman and the CEO are kept separate. The Company adopts

a structure of clear division of responsibilities between the running of the Board and the management

of the Company’s business. The Chairman is responsible to lead and set the agenda of the Board. The

Chairman ensures that the Board’s members are all actively engaged in discussions and receive precise,

timely and objective information so that the Directors can take judicious and rigorous decisions to be

able to effectively monitor the performance of the Company.

Annual Report and Financial Statements | Page 42

Corporate Governance Statement of

Compliance (continued)

The Chairman is also responsible for communicating with shareholders. During 2024, the position of

Chairman was occupied by Mr. Mario Schembri.

The delegation of specific responsibilities to appropriate Committees, namely the Audit Committee and

the Remuneration Committee is taken care of by the Board. On the other hand, the CEO takes care of

the day-to-day running of the Company’s business. During 2024, this position was occupied by Mr. Radi

Abd El Haj.

Principle Three: Composition of the Board

The number of directors shall be not less than three (3) and not more than eight (8) individuals. This

range provides diversity of thought and experience without hindering effective discussion or diminishing

individual accountability. Members of senior management also attend meetings, albeit without a vote, at

the request of the Board, as and when necessary. The Board is currently composed of one (1) executive

director (CEO) and six (6) non-executive independent directors. In determining the independence or

otherwise of its directors, the Board has considered, amongst others, the Principles relating to

independence contained in the Code, the Company’s own practice as well as general good practice.

In accordance with Code Provision 3.2 of the Code, the Board has taken the view that the business

relationship existing between the Company and two of its directors, Mr. Mario Schembri and Dr. Robert

Tufigno, is not significant and thus does not undermine the said directors’ ability to consider

appropriately the issues which are brought before the Board. Apart from possessing valuable experience,

the Board feels that the directors in question are able to exercise independent judgement and are free

from any relationship which can hinder their objectivity. Furthermore, with respect to the non-executive

directors Mr. Mario Schembri, Dr. Robert Tufigno and Mr. Franco Azzopardi, despite their longevity of

service, the Board retains that there are no relevant factors that impair their objectivity or that could

influence or exert bias in their judgement and hence they are determined to be independent.

The appointment of directors to the Board is reserved exclusively to the Company’s shareholders, except

in so far as an appointment may be made to fill a casual vacancy on the Board or to comply with the

provision of the Capital Market Rules, relating to the members of the Audit Committee. Prior to being

appointed as directors, nominees undergo a due diligence process by the Company, to establish that

they are fit and proper persons.

Principle Four: The Responsibilities of the Board

The Board has the first level responsibility of executing the four basic roles of corporate governance

namely accountability, monitoring, strategy formulation and policy development. The Board regularly

reviews and evaluates corporate strategy, major operational and financial plans, risk policy and the

performance of the Company. The Board has a formal schedule of matters reserved for it to discuss

and includes a review of management’s implementation of corporate strategy and corporate

objectives, assessment of the Company’s present and future operations,

Annual Report and Financial Statements | Page 43

Corporate Governance Statement of

Compliance (continued)

opportunities, risks and threats emanating from the external environment as well as current and future

strengths and weaknesses.

When a Director is unable to agree with a decision of the Board, because a proposed course of action is

not deemed to be consonant with his statutory or fiduciary duties and responsibilities, and all reasonable

steps have been taken to resolve the issue, the Director can either opt to formally note his reasons for

objection to any decision of the Board, or alternatively if the decision is of such material importance,

then resignation may be the better alternative. When a Director feels that resignation may be a better

alternative to submission, which objectively is of material importance to the shareholders, then an

appropriate announcement will be made.

Board Committees

The Board has established the Audit Committee and the Remuneration Committee.

Audit Committee

The Audit Committee’s terms of reference, which have been approved by the Malta Financial Services

Authority, are modelled on the provisions of the Capital Market Rules, primarily to monitor the financial

reporting process and the effectiveness of the Company’s internal control procedures. Whilst the

Committee vets and approves related party transactions, it also considers the materiality and the nature

of related party transactions to ensure that the arm’s length principle is adhered to.

The Audit Committee is responsible for managing the Board’s relationship with external auditors,

monitoring the audit of the annual and consolidated accounts, making recommendations to the Board

on their appointment and monitoring their independence, especially with respect to non-audit services.

An Internal Audit function has been set up and the Committee constantly monitors and assesses the role

and effectiveness of the internal audit function. Moreover, the Audit Committee shall review the

Company’s arrangements related to whistle blowing, also ensuring that such arrangements allow

proportionate and independent investigation of such matters and appropriate follow up action.

Mr. Franco Azzopardi, an independent non-executive director appointed by the Board, acts and serves

as Chairman, whilst Dr. Robert Tufigno, Prof. Raša Karapandža and Mr. Hilary Galea Lauri, all independent

non-executive directors, act as members. Mr. Hilary Galea Lauri was appointed as a member of the Audit

Committee following his election to the Board of Directors on 5 June 2024. The Company Secretary, Dr.

Ivan Gatt, acts as secretary to the Committee.

Annual Report and Financial Statements | Page 44

Corporate Governance Statement of

Compliance (continued)

Mr. Franco Azzopardi is a certified public accountant specialising in corporate strategy, governance, risk

and finance, and contributes towards the development of the Malta Institute of Accountant. The Board

considers Mr. Azzopardi as the person competent in accounting and auditing. Prof. Raša Karapandža is

a professor of finance and serves as an academic director of the Master in Finance programme. Dr.

Robert Tufigno has practised in the fields of general commercial law, property law and litigation. Mr.

Hilary Galea Lauri is a chartered certified accountant, a former senior partner at a big four firm and has

served for 18 years on the Malta Institute of Accountants’ Council. All members are deemed as

competent members of the Audit Committee by the Board. The Board of Directors of the Company

considers that the Audit Committee as a whole has the required competence relevant to the payment

software industry. In fact, each member has an individual skill set which complements the skills required

in this industry.

The members of the Audit Committee are free from any business, family or other relationship with the

Company, its controlling shareholder and the management of either. During 2024, Dr. Robert Tufigno

was a partner in GTG Advocates (legal advisors to the Company); however, such relationship is not

considered to be significant and does not create a conflict of interest such as to jeopardise exercise of

his free judgement. The executive directors, members of senior management and the external auditors

are invited to attend meetings at the request of the Committee, as and when required.

Meetings held: 5

Attended

Mr. Franco Azzopardi 5

Dr. Robert Tufigno 5

Prof. Raša Karapandža 4

Mr. Hilary Galea Lauri* 2

* Appointed as a member on the Audit Committee on 5 June 2024

Principle Five: Board Meetings

Meetings of the Board are held as frequently as necessary and are notified by the Company Secretary

with appropriate notice before the meeting. Each agenda for the forthcoming meeting is accompanied

by such papers and documents as are necessary to make directors informed of the issues to be

discussed and in particular the decisions they are expected to take. Meetings may also include

presentations by Management, whilst other information and documentation is made available for perusal

by the directors, at their request. After each Board meeting and before the next, minutes that faithfully

record attendance and decisions are circulated to all directors. Members of senior management attend

meetings at the request of the Board, as and when necessary.

Annual Report and Financial Statements | Page 45

Corporate Governance Statement of

Compliance (continued)

When the Audit Committee’s monitoring and review activities reveal cause for concern or scope for

improvement, it shall make recommendations to the Board on actions needed to address the issue or

improvements to be made. The Board shall satisfy itself that any issues raised by the audit committee

and the external Auditor and communicated to the Board, have been adequately addressed.

The Board meetings were attended as follows:

Meetings held: 5

Attended

Executive Director

Mr. Radi Abd El Haj (CEO) 5

Non-executive Directors

Mr. Mario Schembri (Chairman) 5

Dr. Robert Tufigno 5

Mr. Franco Azzopardi 5

Mr. John Elkins* 1

Prof. Raša Karapandža 3

Ms. Natalie Strange** 3

Mr. Hilary Galea Lauri*** 4

* Term of office expired on 05 June 2024

** Resigned on 03 April 2025

*** Appointed director on the Board following AGM held on 5 June 2024

Dr. Ivan Gatt occupies the position of Company Secretary.

Principle Six: Information and professional development

The CEO is appointed by the Board and enjoys the full confidence of the Board. The CEO, although

responsible for the recruitment and selection of senior management, consults with the Remuneration

Committee and the Board on the appointment of, and on a succession plan, for senior management.

As part of the Company’s succession planning, the Board implements appropriate schemes to recruit,

motivate and retain highly qualified individuals by creating the right environment and opportunities to

move forward within the organisation. On their appointment, new directors are provided with briefings

by the CEO and the other Chief Officers on the activities of their respective

Annual Report and Financial Statements | Page 46

Corporate Governance Statement of

Compliance (continued)

business area. Ongoing training of directors, management and employees is seen as very important.

The Directors have access to the advice and services of the Company Secretary and supporting legal

advice, and are entitled, as members of the Board, to take independent professional advice on any

matter relating to their duties, at the Company’s expense. The Directors are fully aware of their

responsibility to always act in the best interest of the Company and its shareholders as a whole,

irrespective of whoever appointed them to the Board.

Principle Seven: Evaluation of the Board

During the year under review, the Board undertook an evaluation of its own performance. The Board

appointed a sub-committee, comprised of Dr. Robert Tufigno and Mr. Franco Azzopardi to carry out the

performance evaluation of the Board and its Committees. The evaluation exercise was conducted

through a Board effectiveness questionnaire. The results were communicated to the Chairman and then

discussed at Board level and there were no material changes in the Company’s governance structures

and organisation to report.

Principle Eight: Committees

The Remuneration Committee is dealt with under a separate section in the Annual Report entitled

“Remuneration Report” which can be found on pages 51 to 54. This section also includes a “Remuneration

Statement” which deals with the remuneration of Directors and senior management.

Principles Nine and Ten: Relations with Shareholders, Market, and Institutional Shareholders

The Company is highly committed to having an open and communicative relationship with its

shareholders and investors. At the Company’s Annual General Meeting (AGM), the Board ensures that

information is communicated to the shareholders in a transparent and accountable manner. The ordinary

business at the AGM is to consider the financial statements of the Company, the directors’ and auditors’

report for the period, to approve any dividend recommendation by the directors, to elect the directors

and to appoint the auditors. The Chairman ensures that all Directors of the Board who include the

Chairmen of the Audit and Remuneration Committees are available at the AGM in order to answer

questions.

The Board also considers the Annual Report to be an effective document which, in addition to statutory

disclosures, contains detailed information about the Company and its performance.

At the time of the AGM or whenever there are any significant events affecting the Company, meetings

are held with institutional investors, financial intermediaries and stockbrokers. The Board recognises the

importance of providing the market with regular, timely, accurate, comprehensive and comparable

information in sufficient detail to enable investors to make

Annual Report and Financial Statements | Page 47

Corporate Governance Statement of

Compliance (continued)

informed decisions. Periodic Company announcements are issued in accordance with the Capital Market

Rules to maintain a fair and informed market in the Company’s equity securities. The Board discharges

its obligations under the Memorandum and Articles of Association, legislation, rules and regulations by

having in place formal procedures for dealing with potentially price-sensitive information and ensuring

the proper conduct of its officers and staff in this regard. These procedures are incorporated in an

Internal Code of Dealing which is drawn up in accordance with the requirements of the Capital Market

Rules and which applies to all directors and key employees of the Company.

The Board believes that shareholders should have an opportunity to send communications to the

Board. Any communication from a shareholder, to the Board generally or to a particular director, should

be in writing, signed, contain the number of shares held in the sender’s name and should be delivered

to the attention of the Company Secretary at the principal offices of the Company.

Any two members of the Company holding at least five per cent (5%) of the shares conferring a right to

attend and vote at general meetings of the Company, may convene an Extraordinary General Meeting in

accordance with the provisions of the Articles of Association.

The Company’s presence is also on the worldwide web through its website at www.rs2.com, which

contains information and news about the Company, its products, developments and activities, as well

as an investors section.

Principle Eleven: Conflicts of Interest

The Directors are strongly aware of their responsibility to act at all times in the interest of the Company

and its shareholders as a whole, and of their obligation to avoid conflicts of interest, irrespective of

whoever appointed them to the Board.

The Board has approved an Internal Code of Dealing that details the obligations of the directors, as well

as those of senior management and other individuals having access to sensitive information, on dealings

in the equity of the Company within the parameters of the law and the Principles. Each Director has

declared his interest in the share capital of the Company distinguishing between beneficial and non-

beneficial interest.

In accordance with the provisions of the Articles of Association of the Company, any actual, potential or

perceived conflict of interest must be immediately declared by a Director to the other members of the

Board, who then (also possibly through a referral to the Audit Committee) decide on whether such a

conflict exists. In the event that the Board perceives such interest to be conflicting with the Director’s

duties, the conflicted Director is required to leave the meeting and both the discussion on the matter

and the vote, if any, on the matter concerned, are conducted in the absence of the conflicted Director.

When a Director has a continuing material interest that conflicts with the interests of the Company, he

is required to take effective steps to eliminate the grounds for conflict. In the event that such steps do

not eliminate the grounds for conflict, then the Director should consider resigning.

Annual Report and Financial Statements | Page 48

Corporate Governance Statement of

Compliance (continued)

Principle Twelve: Corporate Social Responsibility

The Company understands that it has an obligation towards society at large to put into practice sound

principles of Corporate Social Responsibility (CSR). It is therefore committed to embark on initiatives

which support the community, the environment, as well as sports and arts.

The Company recognises the importance of good CSR principles in its dealings with its employees. In

this regard, it actively encourages open communication, teamwork, training and personal development,

whilst creating opportunities based on performance, creativity and initiative. The Company is committed

towards social investment and the quality of life of its work force and their families, and of the local

community in which it operates.

Part 2: Non-Compliance with the Code

Principle Four: The Responsibilities of the Board

Principle 4.2.7: The Code recommends the development of a succession policy for the future

composition of the Board of Directors. The Company does not consider this principle to be applicable to

it on the basis that appointment of Directors is a matter which is reserved exclusively to the Company’s

shareholders (except as specified herein).

Principle Eight B: Nomination Committee

The Memorandum and Articles of Association of the Company regulates the appointment of directors.

Article 55.1 of the Articles of Association provides that a member, holding not less than 0.5% of the

issued share capital of the Company, having voting rights, or a number of members who in the aggregate

hold not less than 0.5% of the issued share capital of the Company, having voting rights, shall be entitled

to nominate fit and proper persons for appointment as directors of the Company. In addition, the

directors themselves or a committee appointed for the purpose by the Board may make

recommendations and nominations to the shareholders for the appointment of directors at the next AGM.

Within this context, the Board believes that the setting up of a Nomination Committee is currently not

suited to the Company since it will not be able to undertake satisfactorily its full functions and

responsibilities as envisaged by the spirit of the Code. Notwithstanding this, the Board will retain under

review the issue relating to the setting up of a Nomination Committee.

Annual Report and Financial Statements | Page 49

Corporate Governance Statement of

Compliance (continued)

Principle Nine (Code provisions 9.3 and 9.4): Relations with shareholders and with the

market

The Company firmly believes that shareholder participation is an essential precondition for effective

corporate governance. The Company has fully implemented the Shareholders Rights Directive (Directive

2007/36/EC) as transposed in Maltese Law and to this regard, has introduced a number of measures

aimed at facilitating the exercise of shareholders’ rights and protecting the shareholders’ interests.

The measures currently available for shareholders, notably the right to put items on the agenda of the

AGM, and to table draft resolutions, and the right to ask questions, provide the necessary safeguards

for the protection of the shareholders’ interests. To this regard, the Company does not believe that the

current corporate structure requires it to introduce (a) procedures to resolve conflicts between minority

shareholders and controlling shareholders; and/or (b) the possibility for minority shareholders to formally

present an issue to the Board.

Pursuant to Capital Market Rule 5.97

Rule 5.97.4 – Internal Control and Risk Management Systems in relation to the Financial

Reporting Process

The Board is ultimately responsible for the Group’s systems of internal control and for reviewing their

effectiveness. Such systems are designed to manage rather than eliminate the risk of failure to achieve

business objectives, and can only provide reasonable, as opposed to absolute, assurance against

material misstatement or loss.

Management is responsible for the identification and evaluation of key risks applicable to the different

areas of business. The Board reviews its risk management policies and strategies and oversees their

implementation to ensure that identified key risks are properly assessed and managed. An internal audit

function has been set up to ensure that appropriate controls are in place and to review how such key

risks are mitigated.

Financial reporting standards are applicable to all entities of the Group. Systems and procedures are in

place to identify, control and report on the high-risk areas. The Board and the Audit Committee receive

management information, giving an analysis of financial and business performance and position,

including variances against budgets.

On a bi-annual basis, a discussion is held with the Audit Committee on the processes in place to generate

this financial information. A discussion on the results is also held on a bi-annual basis with the Board of

Directors.

Annual Report and Financial Statements | Page 50

Corporate Governance Statement of

Compliance (continued)

Rule 5.97.6 – General Meetings

Pursuant to the Company’s statutory obligations in terms of the Companies Act and the MFSA Capital

Market Rules, the Annual Report and financial statements, the declaration of a dividend, the election of

directors, the appointment of the auditors, the authorisation of the directors to set their remuneration,

and other special business, are proposed and approved at the Company’s AGM. The Board of Directors

is responsible for developing the agenda for the AGM and sending it to the shareholders.

The AGM is conducted in accordance with Articles of the Company and has the powers therein defined.

The shareholders’ rights can be exercised in accordance with the Articles of the Company.

The Memorandum and Articles of the Company may be amended by means of an extraordinary

resolution (as defined in the Articles) of the Company during general meetings.

All shareholders registered in the Shareholders’ Register on the Record Date as defined in the Capital

Market Rules, have the right to attend, participate and vote in the general meeting. A shareholder or

shareholders holding not less than 5% in nominal value of all the shares entitled to vote at the general

meeting may request the Company and/or table draft resolutions for items included in the agenda of a

general meeting. Such requests are to be received by the Company at least forty six (46) days before

the date set for the relative general meeting.

A shareholder who cannot participate in the general meeting can appoint a proxy by written or electronic

notification to the Company. Every shareholder represented in person or by proxy is entitled to ask

questions which are pertinent and related to items on the agenda of the general meeting and to have

such questions answered by the directors or such persons as the directors may delegate for that

purpose.

Mario Schembri Radi Abd El Haj

Chairman Director

23 April 2024

Annual Report and Financial Statements | Page 51

Remuneration Report

For the year ended 31 December 2024

Remuneration Report

Terms of Reference and Membership

The remit of the Remuneration Committee (“the Committee”) is set out in the Terms of Reference

adopted by the Board of Directors. The Committee is composed of three (3) non-executive directors,

Dr. Robert Tufigno (Chairman), Mr. Franco Azzopardi and Mr. Mario Schembri. The CEO is invited to

attend meetings of the Committee where appropriate. The Chairman of the Committee, Dr. Robert

Tufigno, is independent in accordance with Code Provision 8.A.1.

Meetings

The Committee held two (2) meetings during the period under review.

Attended

Dr. Robert Tufigno 2

Mr. Franco Azzopardi 2

Mr. Mario Schembri 2

Remuneration Statement

Remuneration of Directors

The determination of the remuneration arrangements for Board members is determined by the

Committee. The Committee is primarily responsible for devising appropriate packages needed to attract,

retain and motivate executive and non-executive directors with the right qualities and skills for the

proper management of the Company and for ensuring compliance with the relevant provisions and

regulations of good corporate governance on remuneration and related matters.

The Company has agreements with directors providing for compensation upon termination based on

either an agreed fixed amount or the then applicable annual salary. These agreements include a non-

competition clause, precluding such persons from competing with the Company in the event that their

employment is terminated. Upon termination of employment of the said directors, the Company is bound

to grant these individuals a sum based on either an agreed fixed amount or on their annual salary as

compensation.

During the year, there were no director contracts which were terminated.

Annual Report and Financial Statements | Page 52

Remuneration Report (Continued)

Remuneration Statement – Senior Management

The Committee also makes recommendations on the remuneration of senior management. Upon making

such recommendations, it considers that members of senior management of the Company are provided

with appropriate incentives to encourage enhanced performance and are, in a fair and responsible

manner, rewarded for their individual contributions to the success of the Company.

There have been no significant changes in the Company’s remuneration policy during the financial year

under review and no significant changes are intended to be effected during 2025.

In addition, the Committee is responsible for authorising all remuneration arrangements involving share

options. In the case of the CEO and Chief Officers, the Committee is of the view that the link between

remuneration and performance is reasonable and appropriate.

Non-cash benefits to which the CEO and Chief Officers are entitled are the use of a company car and

health insurance. Other benefits include an allowance in relation to a residential property. The death-in-

service benefit also forms part of the contract of employment of senior management personnel on the

same terms applicable to all other Company employees.

The Company has agreements with employees holding senior management positions providing for

compensation upon termination, based either on an agreed fixed amount or on the then applicable

annual salary.

These agreements include a non-competition clause, precluding such employees from competing with

the Company in the event that their employment is terminated. Upon termination of employment of

senior management, the Company is bound to grant these individuals a sum based on their annual salary

as compensation. The Company has opted not to disclose further information regarding the

remuneration to be paid to its senior executives pursuant to its non-competition clause on the basis that

it is commercially sensitive.

Code Provision 8.A.5

Directors

For the financial period under review, the aggregate remuneration of the Directors of the Company

was as follows:

Fixed Remuneration €495,449

Variable Remuneration €200,000

Fixed remuneration as full-time employees of the Company €756,793

Others €17,347

Annual Report and Financial Statements | Page 53

Remuneration Report (Continued)

Directors' total remuneration, split out by component, for the financial year ended 31 December 2024,

was as follows:

Fixed

Remuneration

Variable

Remuneration

Fixed

remuneration

as full-time

employees of

the Company

Others

Total

€

Mr. Mario Schembri (Chairman)

202,479

Mr. Radi Abd El Haj (CEO) 54,000

200,000

756,793

1,010,793

Dr. Robert Tufigno 76,500

76,500

Mr. Franco Azzopardi 76,500

76,500

Mr. John Elkins* 5,782

17,347

23,130

Prof. Raša

Karapandža

61,500

Mr. Hilary Galea-Lauri** 18,688

18,688

Ms. Natalie Strange*** -

495,449

200,000

756,793

17,347

1,469,589

*John Elkins was not-reappointed as director on 5 June 2024 and remuneration is proportionate to date

terminated.

**Hilary Galea Lauri was appointed as director on 5 June 2024 and remuneration is proportionate to date

appointed.

*** Natalie Strange, who was appointed as a director of the Company on 2 May 2023 and resigned on

3 April 2025, was the Corporate Strategy Director - Barclaycard Payments. No remuneration was paid

by the Company as she was remunerated accordingly by Barclays Group, being one of the shareholders

of RS2 p.l.c..

In terms of Code Provision 8.A.5 of the Malta Financial Services Authority Capital Market Rules, Mr. Radi

Abd El Haj received remuneration of €120,000 by one of the subsidiaries during the financial year ended

31 December 2024. The total emoluments Mr. Radi Abd El Haj was entitled to for this financial year

amounted to €1,130,793. Mr. John Elkins has received remuneration of $30,000 by another subsidiary

during the financial year ended 31 December 2024. The total emoluments Mr. John Elkins was entitled

to for this financial year amounted to €50,846.

The Remuneration Committee is guided by its Terms of Reference which binds the members of the

Committee and defines parameters on constitution of committees, membership, frequency of meetings,

the duties and defines other obligations of the Committee under a section named other matters.

Within section four (titled Duties) of the aforementioned Terms of Reference; the Committee has the

vested powers to agree on the remuneration package of the Directors based on parameters as set out

in section 4 (iv). The committee has full visibility of the Company’s projected budgets for a three-year

span and is also aware of Company performance for any quarter and year. The remuneration of each

Director, together with the responsibility carried by each member, ensures fair compensation to ensure

achievement of the expected results of the Company, as outlined in the budgets, and ensures that the

overall remuneration package remains competitive when positioned in the market. The performance

Annual Report and Financial Statements | Page 54

Remuneration Report (Continued)

criteria applied in 2024 were based on the responsibility that is expected to be carried by the Directors

on various fronts including but not limited to; achievement of performance targets, retention of existing

clients, adherence to governance rules and regulations in the various regions of established subsidiaries

and ensuring best practices, as well as continuing to optimise management and operational practices of

the Group.

The performance criteria on which the variable component of remuneration was awarded included both

an objective evaluation (results-based) and strategic measures (behaviour-focused).

The Committee measured these qualities and abilities as critical performance criteria. The evaluation

process also focused on the ability to align the Company’s operations with the strategy of the

organisation and integration with the overall organisation’s goals.

Senior Management personnel

For the financial period under review, the aggregate remuneration of the senior management personnel

of the Company, other than those that serve as Directors, was as follows:

Fixed Remuneration €845,542

Variable Remuneration €245,000

Share-based Payments €nil

Share Options €nil

Others €nil

The following table presents the annual change of remuneration on a full-time equivalent of employees

of the Company other than directors over the most recent five financial years:

2024

2023

2022

2021

2020

Fixed

Remuneration

12%

15%

29%

32%

Variable Remuneration 40%

-46%

13%

-35%

The contents of the Remuneration Report have been reviewed by the external auditor to ensure that the

information that needs to be provided in terms of Chapter 12 of the Capital Market Rules including

Appendix 12.1 has been included.

Dr. Robert Tufigno

Chairman, Remuneration Committee

23 April 2025

Annual Report and Financial Statements | Page 55

Statement of the Directors pursuant to Capital

Market Rule 5.68

For the year ended 31 December 2024

We, the undersigned declare that to the best of our knowledge, the financial statements set out on pages

58 to 191 are prepared in accordance with the requirements of International Financial Reporting

Standards as adopted by the EU, give a true and fair view of the assets, liabilities, financial position and

profit or loss of the Company and the Group and that the Directors’ Report includes a fair view of the

performance of the business and the position of the Company and the Group, together with a description

of the principal risks and uncertainties that they face.

Signed on behalf of the Company’s Board of Directors on 23 April 2025 by Mario Schembri (Chairman)

and Radi Abd El Haj (Director and Chief Executive Officer) as per the Directors' Declaration on ESEF

Annual Financial Report submitted in conjunction with the Annual Report and Accounts 2024

Annual Report and Financial Statements | Page 56

Company Information

For the year ended 31 December 2024

Directors Mr Mario Schembri (Chairman)

Mr. Radi Abd El Haj (CEO)

Dr. Robert Tufigno

Mr. Franco Azzopardi

Mr. John Elkins (term of office expired 5 June 2024)

Prof. Raša Karapandža

Ms. Natalie Strange (resigned 3 April 2025)

Mr. Hilary Galea Lauri (appointed 5 June 2024)

Company Secretary Dr. Ivan Gatt

Registered Office RS2 Buildings

Fort Road, Mosta MST 1859

Malta

Country of Incorporation Malta

Company Registration No C 25829

Auditors Deloitte Audit Limited

Deloitte Place

Triq L-Intornjatur

Central Business District

CBD 3050, Malta

Annual Report and Financial Statements | Page 57

Directors’ Responsibility for the Financial

Statements

For the year ended 31 December 2024

The Companies Act, 1995 (Chapter 386, Laws of Malta) requires the Directors of the Company to prepare

financial statements for each financial period which give a true and fair view of the financial position of

the Company and the Group as at the end of the financial period and of the profit or loss of the Company

and the Group for that period in accordance with the requirements of International Financial Reporting

Standards as adopted by the EU.

The Directors are responsible for keeping proper accounting records which disclose with reasonable

accuracy, at any time, the financial position of the Group and the Company and to enable them to ensure

that the financial statements have been properly prepared in accordance with the provisions of the Act.

The Directors are also responsible for safeguarding the assets of the Group and hence for taking

reasonable steps for the prevention and detection of fraud and other irregularities.

Additionally, the directors are responsible for:

• the preparation and publication of the Annual Financial Report, including the consolidated financial

statements and the relevant tagging requirements therein, as required by Capital Markets Rule

5.56A, in accordance with the requirements of the European Single Electronic Format Regulatory

Technical Standard as specified in the Commission Delegated Regulation (EU) 2019/815 (the “ESEF

RTS”),

• designing, implementing, and maintaining internal controls relevant to the preparation of the Annual

Financial Report that is free from material non-compliance with the requirements of the ESEF RTS,

whether due to fraud or error,

• and consequently, for ensuring the accurate transfer of the information in the Annual Financial Report

into a single electronic reporting format.

• The Directors, through oversight of management, are responsible to ensure that the Group

establishes and maintains internal control to provide reasonable assurance with regards to the

reliability of financial reporting, effectiveness and efficiency of operations and compliance with

applicable laws and regulations.

Management is responsible, with oversight from the Directors, to establish a control environment and

maintain policies and procedures to assist in achieving the objective of ensuring, as far as possible, the

orderly and efficient conduct of the Group’s business. This responsibility includes establishing and

maintaining controls pertaining to the Group’s objective of preparing financial statements as required by

the Act and managing risks that may give rise to material misstatements in those financial statements.

In determining which controls to implement to prevent and detect fraud, Directors consider the risks that

the financial statements may be materially misstated as a result of fraud.

Signed on behalf of the Company's Board of Directors on 23 April 2025 by Mario Schembri (Chairman)

and Radi Abd El Haj (Director and Chief Executive Officer) as per Directors' Declaration on ESEF Annual

Financial Report submitted in conjunction with the Annual Report and Accounts 2024.

Annual Report and Financial Statements | Page 58

Financial Statements

Annual Report and Financial Statements | Page 59

Statements of Financial Position

As at 31 December

THE GROUP

THE COMPANY

2024

2023

2024

2023

Note

€

ASSETS

Property, plant and equipment

7,685,858

7,958,123

7,196,766

7,371,119

Right-of-use assets

2,430,314

2,196,700

376,844

380,279

Intangible assets and goodwill

23,768,782

22,025,380

17,640,236

15,719,363

Investments in subsidiaries

22,565,982

20,770,982

Loans receivable

2,062,643

58,690

Finance lease receivable

188,844

190,324

Total non-current assets

34,073,798

32,370,527

49,842,471

44,300,433

Trade and other receivables

5,490,532

7,527,306

18,708,642

22,036,471

Finance lease receivable

103,406

99,890

Loans receivable

21,754

2,107

1,083,740

2,065,161

Prepayments

1,742,295

1,636,853

531,682

751,963

Accrued income and contract assets

1,194,908

3,846,197

193,343

277,900

Inventories

194,632

282,393

Restricted cash 15 2,909,426

741,456

Cash at bank and in hand

3,393,389

2,932,711

92,030

1,605,388

Total current assets

15,050,342

17,068,913

20,609,437

26,736,883

Total assets

49,124,140

49,439,440

70,451,908

71,037,316

Annual Report and Financial Statements | Page 60

Statements of Financial Position (Continued)

As at 31 December

THE GROUP

THE COMPANY

2024

2023

2024

2023

Notes

€

EQUITY

Ordinary Share Capital

13,104,222

Preference Share Capital

608,499

Reserves

13,189,133

13,392,447

13,625,131

13,604,356

Retained (losses)/earnings

(931,793)

(911,757)

22,413,513

22,414,540

Total equity attributable

to equity holders of the

Company

25,970,061

26,193,411

49,751,365

49,731,617

Non-controlling interest

(2,266,116)

(3,078,949)

Total equity

23,703,945

23,114,462

49, 751,365

49,731,617

LIABILITIES

Bank borrowings

187,110

Lease liabilities

2,032,374

1,860,806

398,714

398,949

Employee benefits

27, 28

3,549,180

3,464,180

3,077,064

3,036,968

Deferred tax liability

4,768,493

3,785,080

3,424,833

2,622,818

Total non-current

Liabilities

10,350,047

9,297,176

6,900,611

6,245,845

Bank borrowings

5,357,608

6,934,572

5,357,608

6,934,572

Trade and other payables

5,191,452

3,595,720

5,822,044

5,239,822

Lease liabilities

517,718

407,493

21,343

19,665

Current tax payable

769,213

1,879,001

509,155

608,444

Accruals

2,138,985

2,630,674

1,006,809

1,114

,290

Provisions

912

897

Employee benefits

27, 28

159,884

624,567

Deferred income

934,376

954,878

1,082,973

1,143,061

Total current liabilities

15,070,148

17,027,802

13,799,932

15,059,854

Total liabilities

25,420,195

26,324,978

20,700,543

21,305,699

Total equity and liabilities

49,124,140

49,439,440

70,451,908

71,037,316

The accompanying Notes on pages 70 to 187 are an integral part of these financial statements.

The Financial Statements were approved and authorised for issue by the Board of Directors and signed

on behalf of the Company's Board of Directors on 23 April 2025 by Mario Schembri (Chairman) and Radi

Abd El Haj (Director and Chief Executive Officer) as per Directors' Declaration on ESEF Annual Financial

Report submitted in conjunction with the Annual Report and Accounts 2024.

Annual Report and Financial Statements | Page 61

Statements of Profit or Loss

For the year ended 31 December

THE GROUP THE COMPANY

2024

2023

2024

2023

Note

€

Revenue

21 37,537,033

39,671,991

16,269,181

18,168,105

Cost of sales

(25,726,769

)

(24,920,429)

(13,753,253

)

(11,606,544)

Gross profit

11,810,264

14,751,562

2,515,928

6,561,561

Other

income 22

975,956

355,487

859,943

69,528

Marketing and promotional

expenses

(1,398,370

)

(2,201,491)

(208,386)

(476,078)

Administrative expenses

(9,409,004

)

(10,254,676)

(2,649,748)

(3,026,165)

Other expenses

(38,656)

(142,164)

(22)

(10,151)

Exchange gain

/(loss) on

operating activities

22 791,815

(586,363)

498,889

(454,433)

Impairment

(loss)/reversal of

impairment loss on trade

receivables and contract assets 22

(192,284)

(336,829)

29,738

(330,941)

egal claims reversal

116,512

Results from operating activities

2,539,721

1,702,038

1,046,342

2,449,833

Finance income

53,906

42,619

127,772

118,672

Finance costs

(439,367)

(306,297)

(373,122)

(257,322)

Net finance costs

(385,461)

(263,678)

(245,350)

(138,650)

Profit

before income tax 22

2,154,260

1,438,360

800,992

2,311,183

Income tax expense

(1,243,275

)

(1,394,974)

(802,019)

(931,797)

Profit/(Loss) for the year

910,985

43,386

(1,027)

1,379,386

Profit

/(Loss) for the year

attributable to:

Owners of the Company

46,004

(513,855)

(1,027)

1,379,386

Non

-controlling interest

864,981

557,241

Profit

for the year

910,985

43,386

(1,027)

1,379,386

Earnings

/(Loss) per ordinary

25 € 0.000

-€ 0.002

-€ 0.000

€ 0.006

Earnings

/(Loss) per preference

25 € 0.000

-€ 0.002

-€ 0.000

€ 0.007

The accompanying Notes on pages 70 to 187 are an integral part of these financial statements.

Annual Report and Financial Statements | Page 62

Statements of Comprehensive Income

For the year ended 31 December

THE GROUP THE COMPANY

202

2023

202

2023

Note

€

Profit for the year

910,985

43,386

(1,027)

1,379,386

Other comprehensive income

Items that are or may be

reclassified to profit or loss

Foreign currency translation

differences on foreign

operations

(326,244)

227,508

Items that will not be

reclassified to profit or loss

Remeasurement in net

defined benefit liability

27 4,742

37,221

20,775

32,510

(321,502)

264,729

20,775

32,510

Total comprehensive

income

589,483

308,115

19,748

1,411,896

Total comprehensive

(loss)/income attributable

to:

Owners of the Company

(166,680)

(337,187)

19,748

1,411,896

Non-controlling interest

756,163

645,302

Total comprehensive

income for the year

589,483

308,115

19,748

1,411,896

The accompanying Notes on pages 70 to 187 are an integral part of these financial statements.

Annual Report and Financial Statements | Page 63

Statements of Changes in Equity

For the year ended 31 December

THE GROUP

Attributable to equity holders of the Company

Ordinary

Preference

Employee

Non-

Translation

Benefits

Other

Retained

Controlling

Total

Capital

Premium

Reserve

Earnings

Total

Interest

Equity

Note

€

Balance at 1 January

2024

13,104,222

608,499

14,763,347

(313,971)

(1,056,929)

(911,757)

26,193,411

(3,078,949)

23,114,462

Comprehensive income

for the year

Profit for the year

46,004

864,981

910,985

Other comprehensive

(loss)/income

Foreign currency

translation

differences

(217,426)

(108,818)

(326,244)

Remeasurement in net

defined benefit

liability 27

4,742

Total other

comprehensive

(loss)/income for the

year

(217,426)

4,742

(212,684)

(108,818)

(321,502)

Total comprehensive

(loss)/income for the

year

(217,426)

4,742

46,004

(166,680)

756,163

589,483

Transactions with

owners of the

Company

Acquisition of NCI

without a change in

control

9,370

(66,040)

(56,670)

56,670

9,370

(66,040)

(56,670)

56,670

Balance at 31

December 2024

13,104,222

608,499

14,763,347

(531,397)

(1,052,187)

9,370

(931,793)

25,970,061

(2,266,116)

23,703,945

The accompanying Notes on pages 70 to 187 are an integral part of these financial statements.

Annual Report and Financial Statements | Page 64

Statements of Changes in Equity (Continued)

For the year ended 31 December

THE GROUP

Attributable to equity holders of the Company

Ordinary

Preference

Employee

Non-

Translation

Benefits

Other

Retained

Controlling

Total

Capital

Premium

Reserve

Earnings

Total

Interest

Equity

Note

€

Balance at 1 January 2023

13,025,383

606,800

13,187,198

(453,418)

(1,094,150)

2,603,082

27,874,895

(3,724,251)

24,150,644

Comprehensive income for

the year

(Loss)/Profit for the year

(513,855)

557,241

43,386

Other comprehensive income

Foreign currency translation

differences

139,447

88,061

227,508

Remeasurement in net

defined benefit liability 27

37,221

Total other comprehensive

income for the year

139,447

37,221

176,668

88,061

264,729

Total comprehensive

income/(loss) for the year

139,447

37,221

(513,855)

(337,187)

645,302

308,115

Transactions with owners of

the Company

Scrip issue 16

78,839

1,699

1,576,149

(1,656,687)

Cash dividends 16

(1,344,297)

78,839

1,699

1,576,149

(3,000,984)

(1,344,297)

Balance at 31 December 2023

13,104,222

608,499

14,763,347

(313,971)

(1,056,929)

(911,757)

26,193,411

(3,078,949)

23,114,462

Annual Report and Financial Statements | Page 65

Statements of Changes in Equity (Continued)

For the year ended 31 December

THE COMPANY Ordinary

Preference

Employee

Benefits

Retained

Capital

Premium

Reserve

Earnings

Total

Note

€

€ €

Balance at 1 January 2024

13,104,222

608,499

14,763,347

(1,158,991)

22,414,540

49,731,617

Comprehensive income for the year

Loss for the year

(1,027)

Other comprehensive income

Remeasurement in net defined benefit liability

20,775

Total other comprehensive income for the year

20,775

Total comprehensive income for the year

20,775

(1,027)

19,748

Balance at 31 December 2024

13,104,222

608,499

14,763,347

(1,138,216)

22,413,513

49,751,365

The accompanying Notes on pages 70 to 187 are an integral part of these financial statements.

Annual Report and Financial Statements | Page 66

Statements of Changes in Equity (Continued)

For the year ended 31 December

THE COMPANY Ordinary

Preference

Employee

Benefits

Retained

Capital

Premium

Reserve

Earnings

Total

Note

€

€ €

Balance at 1 January 2023

13,025,383

606,800

13,187,198

(1,191,501)

24,036,138

49,664,018

Comprehensive income for the year

Profit for the year

1,379,386

Other comprehensive income

Remeasurement in net defined benefit liability

32,510

Total other comprehensive income for the year

32,510

Total comprehensive income for the year

32,510

1,379,386

1,411,896

Transactions with owners of the Company

Scrip issue

78,839

1,699

1,576,149

(1,656,687)

Cash dividends

(1,344,297)

78,839

1,699

1,576,149

(3,000,984)

(1,344,297)

Balance at 31 December 2023

13,104,222

608,499

14,763,347

(1,158,991)

22,414,540

49,731,617

Annual Report and Financial Statements | Page 67

Statements of Cash Flows

For the year ended 31 December

THE GROUP

THE COMPANY

2024

2023

2024

2023

Notes

€

Cash flows from operating activities

Profit/(Loss) for the year

910,985

43,386

(1,027)

1,379,386

Adjustments for:

Depreciation 8, 9 946,709

1,000,462

271,873

279,383

Amortisation of intangible assets 10 1,945,684

1,435,772

1,686,649

1,366,422

Provision for expected credit losses

192,261

116,447

(29,738)

330,941

Bad debts and contract assets written off

22 23

220,382

Interest expense 23 438,330

308,476

373,845

256,736

Interest income 23 (53,906) (42,619)

(127,772)

(118,672)

Provisions 31 -

(124,392) -

(116,523)

Unwinding of discount on

post-employment benefits 27 68,378

70,971

60,871

63,094

Employee share benefits 28 (421,831) 362,972

Loss on disposal of property, plant and

equipment 22 5,154

730

Dividend receivable 11, 22

(825,163)

Income tax 24 1,243,275

1,394,974

802,019

931,797

Provision for exchange fluctuations 22, 23

(739,109) 761,897

(460,501

)

647,276

Property, plant and equipment write

offs

67,042

4,535,953

5,616,500

1,751,056

5,019,840

Changes in trade and other receivables 5,288,647

(3,240,221)

1,226,031

27,211

Changes in trade and other payables (20,250)

430,298

(764,978)

(399,620)

Change in other related parties’ balances 196,839

(33,440)

3,813,636

(233,846)

Inventories

(48,606)

(176,637)

Cash generated from operating

activities

9,952,583

2,596,500

6,025,745

4,413,585

Interest paid on bank loan and overdraft 17 (365,059) (240,859)

(365,059)

(240,859)

Interest paid on lease liabilities 9 (73,601) (58,402)

(11,986)

(12,080)

Post-employment benefit paid during the

year 27 -

(26,440) -

Interest received 1,131

1,072

192,512

76,136

Income taxes paid (1,355,054) (1,907,837)

(99,289)

(1,488,782)

Net cash generated from operating

activities

8,160,000

364,034

5,741,923

2,748,000

Cash flows from investing activities

Acquisition of property, plant and equipment

8, 32

(126,774)

(102,536)

(71,725)

(79,313)

Acquisition of intangible asset 10 (7,175) (92,498) -

Capitalised development costs 10 (3,367,363) (4,748,582) (3,607,522

)

(5,395,802)

Proceeds from sale of asset 9,946

Advances to subsidiaries

(1,795,000)

(1,850,000)

Repayment of advances from subsidiaries

843,193

Finance lease receipts 9 172,148

141,895

Net cash used in investing activities

(3,319,218) (4,801,721) (5,474,247

)

(6,481,922)

Annual Report and Financial Statements | Page 68

Statements of Cash Flows (Continued)

For the year ended 31 December

THE GROUP THE COMPANY

2024

2023

2024

2023

Notes

€

Cash flows from financing activities

Dividends paid 16, 32

(815,024) -

(815,024)

Repayments of bank borrowings 17, 32

(510,717) (444,163)

(510,717)

(444,163)

Repayment of lease liabilities

9, 32

(488,799) (518,544)

(20,917)

(16,329)

Repayment of share options

28, 32

(46,194) -

Net cash used in financing activities

(1,045,710) (1,777,731)

(531,634)

(1,275,516)

Net movement in cash and cash equivalents,

including restricted cash held on behalf of

customers

3,795,072

(6,215,418)

(263,958)

(5,009,438)

Cash and cash equivalents at 1 January,

including restricted cash held on behalf of

customers

(2,755,699)

3,493,547

(4,824,478)

185,546

Effect of exchange rate fluctuations on cash

held

83,733

(33,828) 757

(586)

Cash and cash equivalents at 31 December,

including restricted cash held on behalf of

customers

1,123,106

(2,755,699)

(5,087,679)

(4,824,478)

THE GROUP THE COMPANY

2024

2023

2024

2023

Notes

€

Cash and cash equivalents 15

3,393,389 2,932,711

92,030

1,605,388

Other restricted cash held on behalf

of customers

15 2,909,426 741,456

Bank overdraft 17 (5,179,709) (6,429,866)

(5,179,709)

(6,429,866)

Total cash and cash equivalents including

restricted cash held on behalf of customers

1,123,106 (2,755,699)

(5,087,679)

(4,824,478)

The accompanying Notes on pages 70 to 187 are an integral part of these financial statements.

Annual Report and Financial Statements | Page 69

Notes to the Financial

Statements

Annual Report and Financial Statements | Page 70

Notes to the Financial Statements

1 Reporting Entity

RS2 p.l.c. (“the Company”) is a public limited liability company domiciled and incorporated in Malta with

registration number C25829. The registered address of the Company is

RS2 Buildings, Fort Road, Mosta,

MST 1859, Malta

. These consolidated financial statements as at and for the year ended 31 December

2024 comprise the Company and its subsidiaries (collectively referred to as “the Group” and individually

as “Group entities”).

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 license obtained through BaFin, the German regulator (Merchant

Solutions).

2 Basis of Preparation

2.1 Statement of Compliance

The consolidated and separate financial statements (“the financial statements”) have been prepared and

presented in accordance with International Financial Reporting Accounting Standards as adopted by the

EU (“IFRS” or “the applicable framework”). All references in these financial statements to IAS, IFRS or SIC

/ IFRIC interpretations refer to those adopted by the EU. These financial statements have also been

drawn up in accordance with the provisions of the Companies Act, 1995 (Chapter 386, Laws of Malta),

and Article 4 of Regulation 1606/2002/EC, which requires the companies having their securities traded

on a regulated market of any EU member state to prepare their consolidated financial statements in

conformity with IFRS as adopted by the EU. Details of the material accounting policies are included in

Note 4 to these financial statements. Legal Notice 19 of 2009 as amended by Legal Notice 233 of 2016,

Accountancy Profession (Accounting and Auditing Standards) (Amendments) Regulations, 2016, which

defines compliance with generally accepted accounting principles and practice as adherence to IFRS as

adopted by the EU was also adhered to when preparing and presenting these financial statements.

2.1.2 Going Concern

Management has prepared a going concern assessment for RS2 Group, based on the 2024 financials

whilst also taking into consideration approved budgets covering periods 2025 to 2027.

RS2 continues to observe the economic landscape to assess potential risks to its future operations.

Climate change is a topic increasingly gaining momentum because of its potential effect on companies‘

business models, cash flows, financial position and financial performance. While most industries are likely

to be affected by climate change and efforts to manage its impact, some will be more affected by others.

The Group is currently not aware of any present indicators but will continue to monitor the situation so

that if any indicators arise through its customer base, supply chain, bankers, insurers, investors or

jurisdiction, these will be disclosed and reflected accordingly in the Group‘s Annual Report.

Annual Report and Financial Statements | Page 71

2 Basis of Preparation (Continued)

2.1 Statement of Compliance (Continued)

2.1.2 Going Concern (Continued)

The 2024 consolidated top line is expected to be lower than prior year but this has been compensated

for through lower costs incurred as a result of a restructuring exercise resulting in a higher profit before

tax figure than prior year.

In recent years, particularly in times of economic disruption, payment systems have proven to be resilient

and reliable, as they have been in earlier crises. This means that payment systems and providers

continue to enjoy high-level trust from the public. The importance of cashless payments is growing

rapidly around the globe, albeit any projection of industry performance rests on assumptions about

overall economic activity. Furthermore, the use of cash is quickly declining whilst card payments

(especially contactless payments) are rising rapidly at a consistent rate.

The payments industry is therefore experiencing a period of profound, rapid change. This has been

triggered partly by the Covid-19 pandemic and sustained by the more recent impact of bank failures

across the US and Europe. Financial institutions around the globe are assessing the constantly changing

macro environment to remain competitive. As a matter of fact, over the past recent years alone,

payments have taken a new shape, brought about by the acceleration of digital adoption, the shift

towards real-time payments, the increased comfort of omnichannel contexts as well as the newest tech-

related innovations taking hold, like biometrics. Notwithstanding this, the payments industry’s stability is

playing a crucial role in rebooting the global economy and the potential for payments in the mid- to long-

term is seen to be very positive.

In recent years, following the Covid-19 pandemic, the Russian invasion of Ukraine has magnified the

slowdown in the global economy which entered a period of feeble growth and elevated inflation. Global

central banks have since embarked in interest rate increases in a bid to reduce inflationary pressures.

Such interest rate hikes eventually led to the 2023 banking crisis in the US and Europe, resulting in a

more cautious global banking industry.

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 also plans to invest 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.

The outlook for 2025 is that business will 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 a Data

Analytics Portal amongst others, will lead the Group to a successful 2025 and beyond.

During the year under review, on consolidating all of its activities, the Group generated revenues of

€37.5m (2023: €39.7m) and registered a profit before tax of €2.2m (2023: €1.4m). At 31 December

2024, the Group’s total assets amounted to €49.1m (2023: €49.4m), whereas its current liabilities

exceeded its current assets by €0.02m (2023 current assets exceeded its current liabilities: €0.04m).

On the other hand, the Company registered revenues from its principal activities of €16.3m (2023:

€18.2m) and a profit before tax of €0.8m (2023: €2.3m). At 31 December 2024, the Company’s total

assets amounted to €70.5m (2023: €71.0m), whereas its current assets exceeded its current liabilities

by €6.8m (2023: €11.7m).

Annual Report and Financial Statements | Page 72

2 Basis of Preparation (Continued)

2.1 Statement of Compliance (Continued)

2.1.2 Going Concern (Continued)

From a liquidity point of view, RS2 p.l.c. has an overdraft facility of €10m with APS Bank p.l.c. to meet

any working capital requirements. As at 31 December 2024 €4.8m (2023: €3.6m) was not being utilised.

In this respect, the Board of Directors is confident that both the Group and the Company can, not only

continue to operate as a going concern for 12 months from the end of the reporting period, but will

continue to see substantial growth over the coming years.

2.2 Basis of Accounting

Details of the Group’s accounting policies are included in Note 4. Changes to material accounting policies

are described in Note 3.

2.3 Basis of Measurement

The financial statements have been prepared on the historical cost basis, except for financial

instruments measured at fair value. The methods used to measure fair values are discussed further in

Note 5.

2.4 Functional and Presentation Currency

These financial statements are presented in Euro, which is the Company’s functional currency. All

amounts disclosed in the financial statements and notes have been rounded off to the nearest currency

unit unless otherwise stated.

2.5 Use of Estimates and Judgements

In preparing these financial statements, Management has made judgements, estimates and assumptions

that affect the application of the Group's and the Company’s accounting policies and the reported

amounts of assets, liabilities, income and expenses. Actual results may differ from these estimates.

Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting

estimates are recognised in the period in which the estimates are revised and in any future periods

affected.

Annual Report and Financial Statements | Page 73

2 Basis of Preparation (Continued)

2.5 Use of Estimates and Judgements (Continued)

Information about judgements, assumptions and estimation uncertainties that have a significant risk of

uncertainty which may result in a material adjustment to the carrying amounts of assets and liabilities is

included in the following notes:

Note 2.5.1

impairment reviews

Note 4.5.7	useful life of internally generated computer software, software rights and
	customer and other related contractual relationship

Note 5.1.3 and

Note 28.2

cash-settled share-based payments

Note 6

recoverability assessment on trade and other receivables

Note 10.1 and
Note 10.2	capitalisation of internally generated computer software

Note 10.8 and
Note 10.9	impairment test for cash generating unit (CGU) containing goodwill; key
	assumptions underlying recoverability

Note 10.8.4,
Note 10.9.4 and
Note 11	recoverability of investment in subsidiaries
Note 21	identification of performance obligations; allocation of transaction price to
	performance obligation as well as revenue recognition whether over time
	or a point in time

Note 27

measurement of defined benefit obligations

In accordance with the requirements of IAS 1 Presentation of Financial Statements, assumptions and

other sources of estimation uncertainty that require Management's most difficult, subjective or complex

judgements include impairment reviews and the determination of whether the fee for the implementation

activity (without the sale of a licence) relates to a distinct performance obligation and whether that

activity results in the transfer of a promised good or service to the customer.

Annual Report and Financial Statements | Page 74

2 Basis of Preparation (Continued)

2.5 Use of Estimates and Judgements (Continued)

2.5.1 Impairments Reviews

The determination of the recoverable amount involves significant management judgement. In most

cases, this involves an assessment as to whether the carrying value of assets can be supported by the

present value of future cash flows derived from such assets using cash flow projections which have

been discounted at an appropriate rate. In calculating the present value of the future cash flows, certain

assumptions are required to be made in respect of highly uncertain matters, as noted below.

With respect to goodwill and intangible assets not yet put in use, IFRS requires Management to

undertake a test for impairment at least annually and at each reporting period if there is an indication

that the asset may be impaired. The Group currently undertakes an annual impairment test covering

goodwill and also reviews other certain financial and non-financial assets at least annually to consider

whether a full impairment review is required.

There are a number of assumptions and estimates involved in calculating the present value of future

cash flows from the Group’s businesses, including Management’s expectations of:

• growth in earnings before interest, tax, depreciation and amortisation (EBITDA), calculated as

adjusted operating profit or loss before depreciation and amortisation;

• timing and quantum of future capital expenditure;

• uncertainty of future technological developments;

• long-term growth rates; and

• the selection of discount rates to reflect the risks involved.

The selection of assumptions and estimates by Management involves significant judgement and small

changes in these assumptions could result in the determination of a recoverable amount which is

materially different to the results obtained using the variables selected by the Company. This is

particularly so in respect to the discount rate and growth rate assumptions used in the cash flow

projections. Changes in the assumptions used could significantly affect the Group’s impairment

evaluation and, hence, results.

Annual Report and Financial Statements | Page 75

3 New Standards and Changes in Material Accounting Policies

3.1 New Standards and Interpretations Not Yet Adopted

A number of new standards are effective for annual periods beginning on or after 1 January 2024 and

earlier application is permitted, however the Group and the Company have not early adopted the new or

amended standards in preparing these financial statements. These standards include the following:

• Amendments to IAS 21 – Lack of exchangeability: This amendment specifies how an entity should

assess whether a currency is exchangeable and how it should determine a spot exchange rate when

exchangeability is lacking. The amendments are effective for annual periods beginning on or after 1

January 2025.

• Amendments to IFRS 9 and IFRS 7 – Classification and Measurement of Financial Instruments -

Amendments to IFRS 9 and IFRS 7: This amendment clarifies whether a financial liability is

derecognised on the ‘settlement date’ and provides guidance on how to derecognise financial

liabilities settled using an electronic payment system before the settlement date. The amendments

are effective for annual periods beginning on or after 1 January 2026.

• Amendments in annual improvements to IFRS Accounting Standards Volume 11 - The IASB's annual

improvements are limited to amendments that either clarify the wording of an IFRS standard or

correct relatively minor unintended consequences, oversights or conflicts between requirements in

the standards. The amendments are effective for annual periods beginning on or after 1 January

2026.

• Amendment to IFRS 18 – Presentation and Disclosure in Financial Statements: This amendment

replaces IAS 1 and introduces new categories and subtotals in the statement of profit or loss. It also

requires disclosure of management-defined performance measures (as defined) and includes new

requirements for the location, aggregation and disaggregation of financial information. The

amendments are effective for annual periods beginning on or after 1 January 2027.

• Amendment to IFRS 19 – Subsidiaries without Public Accountability: Disclosures: This amendment

allows eligible entities to elect to apply reduced disclosure requirements while still applying the

recognition, measurement and presentation requirements in other IFRS accounting standards. The

amendments are effective for annual periods beginning on or after 1 January 2027.

• Amendments to IFRS 10 and IAS 28 - Sale or Contribution of Assets between an Investor and its

Associate or Joint Venture: The amendments address the conflict between IFRS 10 Consolidated

Financial Statements and IAS 28 Investments in Associates and Joint Ventures in dealing with the

loss of control of a subsidiary that is sold or contributed to an associate or joint venture. There is

currently no set date for when the amendments are effective.

The Group and the Company are in the process of assessing the potential impact, if any, of these

Standards on these financial statements.

Annual Report and Financial Statements | Page 76

3 New Standards and Changes in Material Accounting Policies

(Continued)

3.2 Changes in Material Accounting Policies

During the financial year ended 31 December 2024, the Group and the Company adopted new

standards, amendments and interpretations to existing standards that are mandatory for the Group’s

and the Company’s accounting period beginning on 1 January 2024. The adoption of the following

standards did not result in significant changes to the Group’s accounting policies impacting the financial

performance and position:

• Amendments to IAS 1 - Presentation of Financial Statements: Classification of liabilities as current or

non-current and non-current liabilities with covenants. The amendments affect only the

presentation of liabilities in the statement of financial position. They clarify that the classification

should be based on rights that are in existence at the end of the reporting period; that classification

is unaffected by expectation about whether an entity will exercise its right to defer settlement of a

liability; make clear that settlement refers to the transfer to the counterparty of cash, equity

instruments, other assets or services; and introduce additional presentation and disclosure

requirements for liabilities that are subject to covenants. The amendments are effective for annual

periods beginning on or after 1 January 2024. The adoption of this amendment did not result in

significant changes to the Group’s accounting policies impacting the financial performance and

position.

• Amendments to IFRS 16 - Leases: The amendment is intended to improve the requirements for sale

and leaseback lease arrangements. It specifies how a seller-lessee measures the lease liability

arising in a sale and leaseback transaction, to ensure that a seller-lessee does not recognise any

amount of the gain or loss that relates to the right-of-use retained. The amendments are effective

for annual periods beginning on or after 1 January 2024. The Group has adopted this change and

shall be reflected within this set of financial statements.

• Amendments to IAS 7 and IFRS 7 - Disclosures: Supplier Finance Arrangements: The amendments

specify disclosure requirements to enhance the current requirements, which are intended to assist

users of financial statements in understanding the effects of supplier finance arrangements on an

entity’s liabilities, cash flows and exposure to liquidity risk. The amendments are effective for

annual periods beginning on or after 1 January 2024. The Group does not have supplier finance

arrangements.

Annual Report and Financial Statements | Page 77

4 Material Accounting Policies

The accounting policies set out below have been applied consistently to all periods presented in these

financial statements and have been applied consistently by Group entities.

4.1 Basis of Consolidation

4.1.1 Subsidiaries

Subsidiaries are entities controlled by the Company. Control exists when the Company has the power

to direct the relevant activities that significantly affect the subsidiary's returns. In assessing control,

there should also be exposure, or rights, to variable returns from its involvement with the subsidiary and

the ability of the Company to use its powers over the subsidiary to affect the amount of the Company's

returns.

The financial statements of the subsidiary companies are included in the consolidated financial

statements from the date that control commences until the date that control ceases. The accounting

policies of the subsidiaries have been amended where necessary to align them with the policies adopted

by the Group. Losses applicable to the non-controlling interests in a subsidiary are allocated to the non-

controlling interest even if doing so causes the non-controlling interests to have a deficit balance.

Non-controlling interests in the net assets of consolidated subsidiaries are presented separately from

the holding company’s owners’ equity therein. Non-controlling interests in the profit or loss and other

comprehensive income of consolidated subsidiaries are also disclosed separately.

4.1.2 Transactions Eliminated on Consolidation

Intra-group balances and transactions, and any unrealised income and expenses arising from intra-group

transactions, are eliminated in preparing these consolidated financial statements.

4.2 Foreign Currency

4.2.1 Foreign Currency Transactions

Transactions in foreign currencies are translated to the respective functional currencies of the Group

entities at exchange rates at the dates of the transactions. Monetary assets and liabilities denominated

in foreign currencies at the reporting date are translated to the functional currency at the exchange rate

as at that date. The foreign currency gain or loss on monetary items is the difference between the

amortised cost in the functional currency at the beginning of the period, adjusted for effective interest

and payments during the period, and the amortised cost in foreign currency translated at the exchange

rate at the end of the reporting period. Non-monetary assets and liabilities denominated in foreign

currencies that are measured at fair value are translated to the functional currency at the exchange rate

as at the date that the fair value was determined.

Foreign currency differences arising on retranslation are recognised in profit or loss except for

differences arising on the revaluation of non-monetary items in respect of which gains and losses are

recognised in other comprehensive income. Non-monetary items that are measured in terms of historical

cost in a foreign currency are translated using the exchange rate at the date of the transaction.

Annual Report and Financial Statements | Page 78

4. Material Accounting Policies (Continued)

4.2 Foreign Currency (Continued)

4.2.2 Foreign Operations

The assets and liabilities of foreign operations, including goodwill and fair value adjustments arising on

acquisition, are translated to the functional currency using exchange rates as at the reporting date. The

income and expenses of foreign operations are translated to the functional currency at exchange rates

as at the dates of the transactions.

Foreign currency differences are recognised in other comprehensive income and presented within equity

in the foreign currency translation reserve. However, if the operation is a non-wholly owned subsidiary,

then the relevant proportion of the translation difference is allocated to non-controlling interests. When

a foreign operation is disposed of, in part or in full, the relevant amount in the foreign currency translation

reserve is transferred to profit or loss as part of the profit or loss on disposal.

When the settlement of a monetary item receivable from or payable to a foreign operation is neither

planned nor likely in the foreseeable future, foreign exchange gains and losses arising from such a

monetary item are considered to form part of a net investment in a foreign operation and are recognised

in other comprehensive income in the consolidated financial statements, and are presented within equity

in the foreign currency translation reserve.

4.3 Financial Instruments

4.3.1 Non-Derivative Financial Assets

The Group initially recognises loans and receivables and deposits on the date that they are entered into.

All other financial assets are recognised initially on the trade date at which the Group becomes a party

to the contractual provisions of the instrument.

Financial assets not classified at fair value through profit or loss (FVTPL), are initially recognised at fair

value plus directly attributable transaction costs.

The Group derecognises a financial asset when the contractual rights to the cash flows from the asset

expire, or it transfers the rights to receive the contractual cash flows on the financial asset in a

transaction in which substantially all the risks and rewards of ownership of the financial asset are

transferred. Any interest in transferred financial assets that is created or retained by the Group is

recognised as a separate asset or liability.

Financial assets and liabilities are offset and the net amount

is presented in the statement of financial position when, and only when, the Group has a legal right to

offset such amounts and intends to either settle such amounts on a net basis or to realise the asset and

settle the liability simultaneously. The Group has the following principal non-derivative financial assets:

loans, trade receivables, investments and cash and cash equivalents.

Annual Report and Financial Statements | Page 79

4 Material Accounting Policies (Continued)

4.3 Financial Instruments (Continued)

4.3.1 Non-Derivative Financial Assets (Continued)

4.3.1.1 Classification of Financial Assets

All recognised financial assets are subsequently measured in their entirety at either amortised cost or

fair value.

Debt instruments are subsequently measured at amortised cost, if they meet the following conditions:

• the financial asset is held within a business model whose objective is to hold financial assets in order

to collect contractual cash flows; and

• the contractual terms of the financial asset give rise to cash flows that are solely payments of

principal and interest on the principal amount outstanding on specified dates.

Debt instruments are subsequently measured at fair value through other comprehensive income

(FVTOCI), if they meet the following conditions:

• the financial asset is held within a business model whose objective is achieved by both collecting

contractual cash flows and selling the financial assets; and

• the contractual terms of the financial asset give rise to cash flows that are solely payments of

principal and interest on the principal amount outstanding on specified dates.

By default, all other financial assets are subsequently measured at FVTPL.

Despite the foregoing, the Group may make the following irrevocable election/designation at initial

recognition of a financial asset:

• the Group may irrevocably elect to present subsequent changes in fair value of an equity investment

in other comprehensive income if certain criteria are met; and

• the Group may irrevocably designate a debt investment that meets the amortised cost or FVTOCI

criteria as measured at FVTPL, if doing so eliminates or significantly reduces a measurement or

recognition inconsistency.

The Business Model

An assessment of business models for managing financial assets is fundamental to the classification of

a financial asset. The Group determines the business models at a level that reflects how groups of

financial assets are managed together to achieve a particular business objective.

Annual Report and Financial Statements | Page 80

4 Material Accounting Policies (Continued)

4.3 Financial Instruments (Continued)

4.3.1 Non-Derivative Financial Assets (Continued)

4.3.1.2 Debt Instruments Measured at Amortised Cost

The following financial assets are classified within this category – trade and other receivables, cash at

bank and loans receivable.

Appropriate allowances for expected credit losses (ECLs) are recognised in profit or loss in accordance

with the Group’s accounting policy on ECLs. Changes in the carrying amount as a result of foreign

exchange gains or losses, impairment gains or losses and interest income are recognised in profit or

loss.

Interest income is recognised using the effective interest rate method and is included in the line item

‘Finance income’.

Trade receivables which do not have a significant financing component are initially measured at their

transaction price and are subsequently stated at their nominal value less any loss allowance for ECLs.

4.3.2 Non-Derivative Financial Liabilities

The Group initially recognises all financial liabilities, except for debt securities issued and subordinated

liabilities, on the trade date at which the Group becomes a party to the contractual provisions of the

instrument.

The Group derecognises a financial liability when its contractual obligations are discharged, cancelled

or expired.

Financial assets and liabilities are offset and the net amount presented in the statement of financial

position when, and only when, the Group has a legal right to offset the amounts and intends either to

settle on a net basis or realise the asset and settle the liability simultaneously.

The Group's non-derivative financial liabilities include: loans, borrowings and trade and other payables.

Such financial liabilities are recognised initially at fair value plus any directly attributable transaction

costs. Subsequent to initial recognition, these financial liabilities are measured at amortised cost using

the effective interest rate method.

Trade payables are stated at their nominal value, unless the effect of discounting is material.

4.3.3 Share Capital

The terms of financial instruments that are issued, the substance of the contractual arrangement and

the definitions of a financial liability, a financial asset and an equity instrument are evaluated to determine

whether the financial instruments issued are financial liabilities, financial assets or equity instruments or

whether they contain separate components, in which case such components are classified separately

as financial liabilities, financial assets and equity instruments. An equity instrument is any contract that

evidences a residual interest in the assets of the company after deducting all of its liabilities. Equity

instruments are recorded as the proceeds received, net of direct issue costs. The Company’s ordinary

shares, as well as its preference shares, are classified as equity. Incremental costs directly attributable

to the issue of ordinary and preference shares are recognised as a deduction from equity.

Annual Report and Financial Statements | Page 81

4 Material Accounting Policies (Continued)

4.3 Financial Instruments (Continued)

4.3.4 Cash and Cash Equivalents

Cash and cash equivalents comprise cash balances and call deposits with original maturities of three

months or less. Bank overdrafts that are repayable on demand and form part of the Company’s cash

management are included as a component of cash and cash equivalents for the purpose of the statement

of cash flows and are presented as current liabilities in the statement of financial position.

4.3.5 Restricted Cash

Through RS2 Financial Services, the Group holds cash balances in trust accounts which are restricted in

nature as they can only be used to settle dues with merchant customers.

4.4 Leases

4.4.1 Leases as a Lessee

The Group assesses whether a contract is or contains a lease, at inception of the contract.

The Group

recognises a right-of-use (ROU) asset and a corresponding lease liability with respect to all lease

arrangements in which it is the lessee, except for short-term leases (defined as leases with a lease term

of 12 months or less) and leases of low-value assets (such as tablets and personal computers, small

items of office furniture and telephones) as an operating expense on a straight-line basis over the term

of the lease unless another systematic basis is more representative of the time pattern of the lessee's

benefit.

The lease liability is initially measured at the present value of the lease payments that are not

paid at the commencement date, discounted by using the rate implicit in the lease. If this rate cannot be

readily determined, the Group uses its incremental borrowing rate.

Lease payments included in the measurement of the lease liability comprise:

• Fixed lease payments (including in-substance fixed payments), less any lease incentives

receivable;

• Variable lease payments that depend on an index or rate, initially measured using the index or

rate at the commencement date;

• The amount expected to be payable by the lessee under residual value guarantees;

• The exercise price of purchase options, if the lessee is reasonably certain to exercise the options;

and

• Payments of penalties for terminating the lease, if the lease term reflects the exercise of an

option to terminate the lease.

The incremental borrowing rate is the rate of interest that a lessee would have to pay to borrow the

funds necessary to obtain an asset of a similar value to the ROU asset in a similar economic environment,

over a similar term, and with a similar security.

The lease liability is presented in the statement of financial position as a separate line item.

Annual Report and Financial Statements | Page 82

4 Material Accounting Policies (Continued)

4.4 Leases (Continued)

4.4.1 Leases as a Lessee (Continued)

The lease liability is subsequently measured by increasing the carrying amount to reflect interest on the

lease liability (using the effective interest rate method) and by reducing the carrying amount to reflect

the lease payments made.

The Group re-measures the lease liability (and makes a corresponding adjustment to the related ROU

asset) whenever:

• The lease term has changed or there is a change in the assessment of exercise of a purchase

option, in which case the lease liability is re-measured by discounting the revised lease payments

using a revised discount rate;

• The lease payments change due to changes in an index or rate or a change in expected payment

under a guaranteed residual value, in which cases the lease liability is re-measured by

discounting the revised lease payments using an unchanged discount rate (unless the lease

payments change is due to a change in a floating interest rate, in which case a revised discount

rate is used); or a lease contract is modified and the lease modification is not accounted for as

a separate lease, in which case the lease liability is re-measured based on the lease term of the

modified lease by discounting the revised lease payments using a revised discount rate at the

effective date of the modification.

The Group did not make any such adjustments during the periods presented.

Right-of-use assets (ROU)

The ROU assets comprise the initial measurement of the corresponding lease liability, lease payments

made at or before the commencement date, less any lease incentives received and any initial direct

costs. They are subsequently measured at cost less accumulated depreciation and impairment losses

and adjusted for certain re-measurement of the lease liability.

Whenever the Group incurs an obligation for costs to dismantle and remove a leased asset, restore the

site on which it is located or restore the underlying asset to the condition required by the terms and

conditions of the lease, a provision is recognised and measured under IAS 37. To the extent that the

costs relate to a ROU asset, such costs are included with the related ROU asset amount, unless those

costs are incurred to produce inventories.

ROU assets are depreciated over the shorter period of the lease term and useful life of the underlying

asset. If a lease transfers ownership of the underlying asset, or the cost of the ROU asset reflects that

the Group expects to exercise a purchase option, the related

ROU asset is depreciated over the useful

life of the underlying asset. The depreciation starts at the commencement date of the lease.

The ROU assets are presented in the statement of financial position as a separate line item.

The Group applies IAS 36 to determine whether an ROU asset is impaired and accounts for any identified

impairment loss as described in Note 4.7.3.

Variable rents that do not depend on an index or rate are not included in the measurement of the lease

liability nor the ROU asset. The related payments are recognised as an expense in the period in which

the event or condition that triggers those payments occurs and are included within 'Other expenses' in

profit or loss.

Annual Report and Financial Statements | Page 83

4 Material Accounting Policies (Continued)

4.4.2 Leases as a Lessor

The Group enters into lease agreements as a lessor with respect to its rented terminals. Leases for which

the Group is a lessor are classified as finance or operating leases. Whenever the terms of the lease

substantially transfer all the risks and rewards of ownership to the lessee, the contract is classified as a

finance lease. All other leases are classified as operating leases.

When the Group is an intermediate lessor, it accounts for the head lease and the sub-lease as two

separate contracts. The sub-lease is classified as a finance or operating lease by reference to the ROU

asset arising from the head lease.

Rental income from operating leases is recognised on a straight-line basis over the term of the relevant

lease. Initial direct costs incurred in negotiating and arranging an operating lease are added to the

carrying amount of the leased asset and recognised on a straight-line basis over the lease term.

Amounts due from lessees under finance leases are recognised as receivables at the amount of the

Group’s net investment in the leases. Finance lease income is allocated to accounting periods so as to

reflect a constant periodic rate of return on the Group’s net investment outstanding in respect of the

leases. Subsequent to initial recognition, the Group regularly reviews the estimated unguaranteed

residual value and applies the impairment requirements of IFRS 9, recognising an allowance for ECLs on

the finance lease receivables. Finance lease income is calculated with reference to the gross carrying

amount of the finance lease receivables, except for credit-impaired financial assets for which interest

income is calculated with reference to their amortised cost (i.e. after a deduction of the loss allowance).

When a contract includes both lease and non-lease components, the Group applies IFRS 15 to allocate

the consideration under the contract to each component.

4.5 Intangible Assets

4.5.1 Re-Acquired Rights

When as part of a business combination, the Group re-acquires a right that it had previously granted to

the acquiree to use one or more of its recognised or unrecognised assets, an intangible asset is

recognised separately from goodwill. The value of the re-acquired rights is measured on the basis of the

remaining contractual term of the related contract regardless of whether market participants would

consider potential contractual renewals in determining its fair value. A settlement gain or loss is

recognised by the Group when the terms of the contract giving rise to a re-acquired right are favourable

or unfavourable, relative to the terms of current market transactions, for the same or similar items.

4.5.2 Goodwill

Goodwill that arises upon the acquisition of subsidiaries is included in intangible assets. Goodwill

represents the excess of the cost of the acquisition over the Group’s interest in the net fair value of the

identifiable assets, liabilities and contingent liabilities of the acquiree. When the excess is negative, it is

recognised immediately in profit or loss.

Subsequent to initial recognition, goodwill is measured at cost less accumulated impairment losses.

Annual Report and Financial Statements | Page 84

4 Material Accounting Policies (Continued)

4.5 Intangible Assets (Continued)

4.5.3 Internally Generated Computer Software Development

Development activities involve a plan or design for the production of new or substantially improved

products and processes. Development expenditure is capitalised only if development costs can be

measured reliably, the product or process is technically and commercially feasible, future economic

benefits are probable, and the Group intends to and has sufficient resources to complete development

and to use or sell the asset.

The expenditure capitalised includes the cost of materials, direct labour and overhead costs that are

directly attributable to preparing the asset for its intended use. Other development expenditure is

recognised in profit or loss as incurred.

Capitalised development expenditure is measured at cost less accumulated amortisation and

accumulated impairment losses.

4.5.4 Software Rights

Software rights that are separable or arise from contractual or other legal rights are recognised as

intangible assets if it is probable that the expected future economic benefits that are attributable to the

asset will flow to the entity and the cost of the asset can be measured reliably.

Software rights are initially measured at cost. Subsequent to initial recognition, software rights are

recognised at cost less any accumulated amortisation and any accumulated impairment losses.

4.5.5 Customer and Other Related Contractual Relationship

Customer and other related contractual relationship acquired as a result of a business combination are

initially recognised at their fair value at the date of acquisition, and are subsequently amortised on a

straight-line basis based on the timing of projected cash flows of the contracts over their estimated

useful lives.

4.5.6 Subsequent Expenditure

Subsequent expenditure is capitalised only when it increases the future economic benefits embodied in

the specific asset to which it relates and when it meets the definition of an intangible asset and the

recognition criteria. All other expenditure is recognised in profit or loss as incurred.

Annual Report and Financial Statements | Page 85

4 Material Accounting Policies (Continued)

4.5 Intangible Assets (Continued)

4.5.7 Amortisation

Amortisation is calculated over the cost of the asset, or other amount substituted for cost, less its

residual value.

Amortisation is recognised in profit or loss on a straight-line basis over the estimated useful lives of

intangible assets, other than goodwill, from the date that they are available for use since this most closely

reflects the expected patterns of consumption of the future economic benefits embodied in the asset.

The estimated useful lives for the current and comparative periods are as follows:

•	internally generated computer software	15 years
•	software rights	15 years
•	computer software	4 years
•	other software	15 years
•	customer and other related contractual relationship	12 years

The amortisation method, useful life and residual value are reviewed at each financial year-end and

adjusted if appropriate.

The assessment of all four categories of the useful life of software is based on the following factors:

• The software is the main driver of the Group’s revenue and is expected to remain so for the

foreseeable future;

• Highly qualified teams with robust expertise which enables the software to be efficiently managed;

• It is a mature product with years of development, knowhow and expertise;

• The software is maintained on a continuous basis to ensure that it keeps up with the technical,

technological and commercial changes;

• Industry and market demands are stable due to the increase in technological change in the payment

processes field;

• The company operates in a niche market with significant barriers to entry;

• The company owns the Intellectual property rights (IPR) for the software and therefore there is no

definite period of control over the asset; and

• The usage of the asset is not dependent on the useful life of assets of other companies.

The assessment of useful life of customer and other related contractual relationship is based on the

following factors:

• The average churn rate of customers based on historical figures;

• The extent to which the churn rate is expected to fluctuate on particular market segments due to

technological upgrades; and

• The company operates in a competitive market which brings about its own challenges and affects

the churn rate, however there is also an element of loyalty towards existing integrations.

Annual Report and Financial Statements | Page 86

4 Material Accounting Policies (Continued)

4.6 Investments in Subsidiaries

Investments in subsidiaries are shown in the statement of financial position of the Company at cost less

any impairment losses. Loans advanced by the Company to its subsidiaries for which settlement is

neither planned nor likely to occur in the foreseeable future, are treated as an extension to the

Company’s net investment in those subsidiaries and included as part of the carrying amount of

investments in subsidiaries to the extent that they represent a capital contribution.

4.7 Impairments

4.7.1 Investments in Subsidiaries

The carrying amounts of the Company’s investments in subsidiaries are reviewed at each reporting date

to determine whether there is an indication of impairment. If such indication exists, then the asset’s

recoverable amount is estimated. The recoverable amount is the higher of fair value less costs to sell

and value-in-use. In assessing value-in-use, the estimated future cash flows are discounted to their

present value using a pre-tax discount rate that reflects current market assessments of the time value

of money and the risks specific to the asset. An impairment loss is recognised if the carrying amount of

an asset exceeds its estimated recoverable amount. Impairment losses are recognised in profit or loss.

Impairment losses recognised in prior periods are assessed at each reporting date for any indications

that the loss has decreased or no longer exists. An impairment loss is reversed if there has been a change

in the estimates used to determine the recoverable amount. An impairment loss is reversed only to the

extent that the asset’s carrying amount does not exceed the carrying amount that would have been

determined if no impairment loss had been recognised.

4.7.2 Non-Derivative Financial Assets

4.7.2.1 Expected Credit Losses

The Group recognises a loss allowance for ECLs on financial assets measured at amortised cost, as well

as contract assets and lease receivables. The amount of ECLs is updated at each reporting date to

reflect changes in credit risk since initial recognition.

For trade receivables and contract assets that do not contain a significant financing component, the

Group applies the simplified approach and recognises lifetime ECL.

Annual Report and Financial Statements | Page 87

4 Material Accounting Policies (Continued)

4.7 Impairment (Continued)

4.7.2 Non-Derivative Financial Assets (Continued)

4.7.2.1 Expected Credit Losses (Continued)

If evidence of a significant increase in credit risk at the individual instrument level is not yet available,

the Group performs the assessment of significant increases in credit risk on a collective basis by

considering information on, for example, a group or sub-group of financial instruments. Where the Group

does not have reasonable and supportable information that is available without undue cost or effort to

measure lifetime ECLs on an individual instrument basis, lifetime ECLs are measured on a collective

basis. In such instances, the financial instruments are grouped on the basis of shared credit risk

characteristics, such as the nature, size and industry. Where a collective basis is applied, a provision

matrix is used, whereby a fixed provision rate is applied depending on the number of days that a trade

receivable is outstanding. The following steps are followed in order to estimate the ECL on trade

receivables:

Step 1: Determine the appropriate groupings of trade receivables into categories of shared credit risk

characteristics.

IFRS 9 does not provide any explicit guidance or requirement on how to group trade receivables. To be

able to apply a provision matrix to trade receivables, the population of individual trade receivables should

first be aggregated into groups of receivables that share similar credit risk characteristics. Management

deems that the most appropriate manner is the trade receivable aged analysis. Moreover, for the

purpose of the Group’s ECL calculation, the provision matrix is prepared in accordance with its default

definition.

Step 2: Determine the period over which historical loss rates are obtained to develop estimates of

expected future loss rates.

Once the sub-groups are identified, historical loss data needs to be collected for each sub-group. Again,

IFRS 9 does not provide specific guidance on how far back the historical data should be collected.

Judgement is needed to determine the period over which reliable historical data can be obtained that is

relevant to the future period over which the trade receivables will be collected. Management deems a

14-month period to be reasonable to consider for ECL calculation purposes.

Step 3: Determine the historical loss rates.

Once sub-groups have been identified and the period over which loss data will be captured has been

selected, the Group determines the expected loss rates for each sub-group sub-divided into past-due

categories (i.e. a loss rate for balances that are 0 days past due, a loss rate for 1-30 days past due, a

loss rate for 31-60 days past due, etc.). In this respect, losses incurred over the 14-month period

considered for this exercise are to be taken for each ageing bucket. Dividing invoiced amounts in each

ageing bucket by the losses incurred results in the loss rates to be used for each ageing bucket.

Annual Report and Financial Statements | Page 88

4 Material Accounting Policies (Continued)

4.7 Impairment (Continued)

4.7.2 Non-Derivative Financial Assets (Continued)

4.7.2.1 Expected Credit Losses (Continued)

Step 4: Consider forward looking macro-economic factors and adjust historical loss rates to reflect

relevant future economic conditions.

The historical loss rates calculated in Step 3 reflect the economic conditions in place during the period

to which the historical data relate. While they are a starting point for identifying expected losses, they

are not necessarily the final loss rates that should be applied to the carrying amount. Albeit, Management

deems that the historical loss rates were incurred under economic conditions that are representative of

those expected to exist in the foreseeable future.

Step 5: Calculate the expected credit losses.

The ECL of each sub-group determined in Step 1 should be calculated by multiplying the current gross

receivable balance plus contract assets by the loss rate. The summation of all the ECLs of each ageing

bucket results in the total ECL of the portfolio.

For all other financial instruments, the Group uses the general approach and recognises lifetime ECLs

when there has been a significant increase in credit risk since initial recognition. If, on the other hand,

the credit risk on the financial instrument has not increased significantly since initial recognition, the

Group measures the loss allowance for that financial instrument at an amount equal to 12-month ECLs.

The assessment of whether lifetime ECLs should be recognised is based on significant increases in the

likelihood or risk of default occurring since initial recognition, instead of evidence of a financial asset

being credit-impaired at the reporting date or an actual default occurring.

Lifetime ECLs represent the ECLs that will result from all possible default events over the expected life

of a financial instrument. In contrast, 12-month ECLs represents the portion of lifetime ECLs that is

expected to result from default events on a financial instrument that are possible within 12 months after

the reporting date.

The Group recognises an impairment gain or loss in profit or loss for all financial assets with a

corresponding adjustment to their carrying amount, except for investments in debt instruments that are

measured at FVTOCI, for which the loss allowance is recognised in other comprehensive income and

accumulated in equity, and does not reduce the carrying amount of the financial asset in the statement

of financial position.

Annual Report and Financial Statements | Page 89

4 Material Accounting Policies (Continued)

4.7 Impairment (Continued)

4.7.2 Non-Derivative Financial Assets (Continued)

4.7.2.1 Expected Credit Losses (Continued)

Significant increase in credit risk

In assessing whether the credit risk on a financial instrument has increased significantly since initial

recognition, the Group compares the risk of default occurring on the financial instrument as at the

reporting date with the risk of default occurring on the financial instrument at the date of initial

recognition. In making this assessment, the Group considers both the quantitative and the qualitative

information that is reasonable and supportable, including historical experience and forward-looking

information that is available without undue cost or effort and, where applicable, the financial position of

the counterparties.

Irrespective of the outcome of the above assessment, the Group presumes that the credit risk on a

financial asset has increased significantly since initial recognition when contractual payments are more

than 30 days past due, unless the Group has reasonable and supportable information, that is available

without undue cost or effort, that demonstrates otherwise.

Despite the above assessment, the Group assumes that the credit risk on a financial instrument has not

increased significantly since initial recognition if the financial instrument is determined to have low credit

risk at the reporting date. Accordingly, for these financial assets, the loss allowance is measured at an

amount equal to 12-month ECL. The Group has applied the low credit risk assumption for cash at bank

held with banks rated as investment grade.

Credit-impaired financial assets

A financial asset is credit-impaired when one or more events that have a detrimental impact on the

estimated future cash flows of that financial asset have occurred.

Evidence that a financial asset is credit-impaired includes observable data about the following events:

a) significant financial difficulty of the issuer or the borrower;

b) a breach of contract, such as a default or past due event;

c) the lender(s) of the borrower, for economic or contractual reasons relating to the borrower's

financial difficulty, having granted to the borrower a concession(s) that the lender(s) would not

otherwise consider;

d) it is becoming probable that the borrower will enter bankruptcy or other financial reorganisation;

e) the disappearance of an active market for that financial asset because of financial difficulties.

Annual Report and Financial Statements | Page 90

4 Material Accounting Policies (Continued)

4.7 Impairment (Continued)

4.7.2 Non-Derivative Financial Assets (Continued)

4.7.2.1 Expected Credit Losses (Continued)

Based on past experience and reasonable and supportable information which corroborates this

experience, as adjusted (where necessary) for forward-looking information, the Group and the Company

consider that default has occurred when a financial asset is more than 300 days past due.

Write-off policy

The Company writes off a financial asset when there is information indicating that the counterparty is in

severe financial difficulty and there is no realistic prospect of recovery.

Measurement and recognition of ECLs

For financial assets, the credit loss is the difference between all contractual cash flows that are due to

the Group in accordance with the contract and all the cash flows that the Group expects to receive,

discounted at the original effective interest rate. ECLs represent the weighted average of credit losses.

The assessment of the probability of default, and loss given default, is based on historical data adjusted

by forward-looking information, where applicable. Forward-looking information considered includes,

where applicable, the future prospects of the industries in which the Group’s debtors operate, as well as

consideration for various external sources of actual and forecasted economic information that relate to

the Group’s core operations.

4.7.3 Non-Financial Assets

The carrying amounts of the Group’s non-financial assets, other than deferred tax assets, are reviewed

at each reporting date to determine whether there is any indication of impairment. If any such indication

exists, then the asset’s recoverable amount is estimated. For goodwill and intangible assets that have

indefinite useful lives, the recoverable amount is estimated each year at the same time. An impairment

loss is recognised if the carrying amount of an asset or its cash generating unit (CGU) exceeds its

estimated recoverable amount.

The recoverable amount of an asset or CGU is the greater of its value-in-use and its fair value less costs

to sell. In assessing value-in-use, the estimated future cash flows are discounted to their present value

using a pre-tax discount rate that reflects current market assessments of the time value of money and

the risks specific to the asset. For the purpose of impairment testing, assets that cannot be tested

individually are grouped together into the smallest group of assets that generates cash inflows from

continuing use that are largely independent of the cash inflows of other assets or CGU.

Subject to an operating segment ceiling test, for the purpose of goodwill impairment testing, CGUs to

which goodwill has been allocated are aggregated so that the level at which impairment is tested reflects

the lowest level at which goodwill is monitored for internal reporting purposes. Goodwill acquired in a

business combination is allocated to groups of CGUs that are expected to benefit from the synergies of

the combination.

Annual Report and Financial Statements | Page 91

4 Material Accounting Policies (Continued)

4.7 Impairment (Continued)

4.7.3 Non-Financial Assets (Continued)

Impairment losses are recognised in profit or loss unless the asset is carried at a revalued amount. For

assets recognised at a revalued amount, the impairment loss is recognised in other comprehensive

income to the extent that it does not exceed the amount in the revaluation recognised for that asset.

Impairment losses recognised in respect of CGUs are allocated first to reduce the carrying amount of

any goodwill allocated to the CGU, and then to reduce the carrying amounts of the other assets in the

CGU on a pro-rata basis.

An impairment loss in respect of goodwill is not reversed. In respect of other assets, impairment losses

recognised in prior periods are assessed at each reporting date for any indications that the loss has

decreased or no longer exists. An impairment loss is reversed if there has been a change in the estimates

used to determine the recoverable amount. In addition to this, an impairment loss is reversed only to the

extent that the asset’s carrying amount does not exceed the carrying amount that would have been

determined, net of depreciation or amortisation, if no impairment loss had been recognised.

4.8 Share-Based Payment Transactions

The grant-date fair value of equity-settled share-based payment awards granted to employees is

recognised as an employee expense, with a corresponding increase in equity, over the period that the

employees become unconditionally entitled to the awards. The amount recognised as an expense is

adjusted to reflect the number of awards for which the related service and non-market performance

conditions are expected to be met, such that the amount ultimately recognised as an expense is based

on the number of awards that meet the related services and non-market performance conditions at the

vesting date.

For cash-settled share-based payments, a liability is recognised for the goods or services acquired,

measured initially at the fair value of the liability. As at each reporting date until the liability is settled,

and at the date of settlement, the fair value of the liability is re-measured, with any changes in fair value

recognised in profit or loss for the year.

4.9 Employee Benefits

Non-competition post-employment benefits due to employees holding senior management positions are

payable upon cessation for whatever reason, based on either a fixed amount or the then applicable

annual salary. The cost of providing for these post-employment benefits is determined using the

projected unit method, with estimations being carried out at each reporting date. In line with the

recognition of other provisions, the post-employment benefits are recognised when the Group has a

present legal or constructive obligation as a result of past events, when it is probable that an outflow of

resources embodying economic benefits will be required to settle the obligation. The liability recognised

in the statement of financial position represents the present value of the expected future payments

required to settle the obligation at the end of the reporting period. The present value of a defined benefit

obligation is determined by discounting the estimated future cash outflows to be paid on termination

using market yields. Such yields are denominated in the currency in which the benefits will be paid and

have terms to maturity approximating the estimated termination date. The Directors consider this to be

an appropriate proxy to a high-quality corporate bond. The service cost and the net interest on the net

defined benefit liability are recognised in profit or loss. Re-measurements of the net defined benefit

liability are recognised in other comprehensive income and are not reclassified to profit or loss in a

subsequent period.

Annual Report and Financial Statements | Page 92

4 Material Accounting Policies (Continued)

4.9 Employee Benefits (continued)

Re-measurements may include changes in the present value of the defined benefit obligation arising

from experience adjustments and the effects of changes in the actuarial assumptions. Such re-

measurements are reflected immediately in retained earnings.

RA 7641 under Philippines law provides for the minimum retirement pay to qualified private sector

employees in the Philippines. Benefits due under RA 7641 are accounted for as defined benefit plan

under IAS 19. An employee upon reaching the age of sixty (60) years or more, but not beyond sixty-five

(65) years which is declared the compulsory retirement age, who has served at least five (5) years in the

said establishment, may retire and shall be entitled to retirement pay equivalent to at least one-half (1/2)

month salary for every year of service, a fraction of at least six (6) months being considered as one

whole year. The Group is in compliance of the minimum requirement of RA 7641 as at December 31,

2024 and has a non-contributory defined benefit plan for its employees. The present value of the

defined benefit obligation, and the related current service cost and past service cost, were measured

using the projected unit credit method, with actuarial valuations being carried out at the end of each

annual reporting period. Remeasurements comprising actuarial gains and losses are recognised

immediately in the statement of financial position with a charge or credit to other comprehensive income

in the period in which they occur. Remeasurements recognised in other comprehensive income are not

reclassified. Past service cost is recognised in profit or loss when the plan amendment or curtailment

occurs. Net interest is calculated by applying a discount rate to the net defined benefit liability or asset.

Defined benefit costs are split into three categories:

• Service costs, which includes current service cost, past service cost and gains and losses on

curtailments and settlements

• Net interest expense or income

• Remeasurements

The group recognises service costs within profit or loss as cost of sales and administrative expenses

(Note 22.5). Net interest expense or income is recognised within finance costs (see Note 23).

Re-measurements may include changes in the present value of the defined benefit obligation arising

from experience adjustments and the effects of changes in the actuarial assumptions. Such re-

measurements are reflected immediately in retained earnings.

4.10 Provisions

A provision is recognised if, as a result of a past event, the Group has a present legal or constructive

obligation that can be estimated reliably, and it is probable that an outflow of economic benefits will be

required to settle the obligation. Provisions are determined by discounting the expected future cash

flows at a pre-tax rate that reflects current market assessments of the time value of money and the risks

specific to the liability. The unwinding of discount is recognised as a finance cost.

Annual Report and Financial Statements | Page 93

4 Material Accounting Policies (Continued)

4.11 Revenue

Revenue is recognised when the Group or the Company satisfies a performance obligation by

transferring control of a promised good or service to a customer. Revenue is measured based on the

consideration specified in a contract with a customer and excludes amounts collected on behalf of third

parties. Determining the timing of the transfer of control, at a point in time or over time, requires

judgement.

In cases where there is transfer of control of a promised good or service to a customer, and this is not

yet invoiced for, the Group recognises a contract asset. Once an invoice is issued to the customer, this

contract asset is then recognised as a trade receivable. On the other hand, in cases where the Group

invoices the customer prior to transfer of control of a promised good or service happening, a contract

liability is recognised. Once the transfer of control to the customer happens, the contract liability is then

recognised as revenue.

4.11.1 Licenses

4.11.1.1 Perpetual Licenses and Significant Customisation/Implementation Services

License fees arise from software license agreements where the Group grants non-exclusive licenses to

use specific BankWORKS® modules. In the case of perpetual licenses, the fee is generally a one-time

fee.

The Group accounts for individual products and services separately if they are distinct, that is, if a

product or service is separately identifiable from other promises in the contract (i.e. the promise to

transfer the good or service is distinct within the context of the contract) and if a customer can benefit

from it either on its own or together with other resources that are readily available to the customer (i.e.

the good or service is capable of being distinct).

In accordance with IFRS 15, the Group is required to assess each arrangement to understand whether

licenses are distinct from the significant implementation and customisation services provided with that

license and from the other services provided. For the purposes of understanding whether the licenses

are distinct, management is required to consider additional criteria including whether the customers can

benefit from the use of the license alone or otherwise and whether there exist activities which require

significant integration, modification or which are otherwise interdependent.

In this respect, Management has assessed that in the majority of the Group’s contracts, the license and

the significant implementation and customisation services are to be considered as one performance

obligation in terms of the above criteria.

The Group has determined that revenue from this performance obligation should be recognised when

the performance obligation has been satisfied by transferring control of a promised good or service to a

customer. In this case, in accordance with IFRS 15, revenue is recognised as each licensed system is

customised and set up according to the customer’s specific needs, by reference to the stage of

satisfaction of the performance obligation.

Payment for the license and the significant customisation services is generally fixed and is payable by

the customer in advance by way of milestone payments. Any cash received in advance of the provision

of the customisation services is therefore recognised as a contract liability, thus representing the entity’s

obligation to perform the obligation. Such amounts are recognised as revenue over the customisation

period.

Annual Report and Financial Statements | Page 94

4 Material Accounting Policies (Continued)

4.11 Revenue (Continued)

4.11.1 Licenses (Continued)

4.11.1.1 Perpetual Licenses and Significant Customisation/Implementation Services

(Continued)

Such contracts are not deemed to have a significant financing component, as the period between the

recognition of revenue under the stage of completion and the payment is less than one year.

Management has also considered IFRS 15’s impact on contracts in which consideration for the promise

is variable. For the license business, this is relevant for contracts in which the Group’s consideration is

based on a percentage of revenues that are earned by the client from its own customers. For this variable

consideration, the Group concludes that it cannot include its estimate of such revenues in the

transaction price until the uncertainty is resolved.

This is based on the fact that the variability of the fee based on the customer’s own revenues indicates

that the Group cannot conclude that it is highly probable that a significant reversal in the cumulative

amount of revenue recognised would not occur. Accordingly, such estimates are not included before

they are earned.

The Group recognises revenue on the output method as the current systems in place assess the

progress of completion based on the lifecycle of the delivery. This is deemed to be the more appropriate

method for measuring revenue over time by observing the value to the customer transferred to date

relative to the remaining deliverables promised.

4.11.1.2 Term License with the Provision Implementation Activities and Managed

Services

The Group is party to a term license agreement with an option by the customer of acquiring the source

code through an additional license for a longer term. The agreement also governs the provision by the

Group of implementation activities at the inception of the contract and of managed services during the

term of the agreement.

The Group accounts for individual products and services separately if they are distinct, that is, if a

product or service is separately identifiable from other promises in the contract (i.e. the promise to

transfer the good or service is distinct within the context of the contract) and if a customer can benefit

from it either on its own or together with other resources that are readily available to the customer (i.e.

the good or service is capable of being distinct).

In accordance with IFRS 15, the Group assesses whether licenses are distinct from the significant

implementation and customisation services provided with that license and from the other services

provided. For the purposes of understanding whether the licenses are distinct, Management considers

additional criteria including whether the customers can benefit from the use of the license alone or

otherwise and whether there exist activities which require significant integration, modification or which

are otherwise interdependent. In this respect, Management has assessed that the license and the

significant implementation and customisation services are to be considered as two performance

obligation in terms of the above criteria.

The Group recognises the related fee for customisation and implementation activities over the

customisation period. This is established on the basis that the infrastructure is owned, managed and

governed by the customer and is hosted on its own system and that by the time the customised software

Annual Report and Financial Statements | Page 95

4 Material Accounting Policies (Continued)

4.11 Revenue (Continued)

4.11.1 Licenses (Continued)

4.11.1.2 Term License with the Provision Implementation Activities and Managed

Services (Continued)

is live, the customer has already obtained and paid for that system, without having to pay an additional

amount for such customisation and implementation activities such that upon the exercise of the option

to acquire the additional license, the customer has the contractual right and the practical ability to

perform the managed services itself.

The Group recognises the revenue attributable to the term license over time, immediately upon each

periodic renewal of the license agreement to the extent that the contract is either cancellable or to the

extent that there is no history of enforcing contracts. The Group invoices the customer quarterly in

advance, based on volume tiers which are trued-up annually.

The Group recognises revenue on the output method as the current systems in place assess the

progress of completion based on the lifecycle of the delivery. This is deemed to be the more appropriate

method for measuring revenue over time by observing the value to the customer transferred to date

relative to the remaining deliverables promised.

The Group does not consider the customer’s option to represent a material right that the customer would

not receive without entering into that contract and accordingly the Group concludes that this option

does not represent another performance obligation in the arrangement. Accordingly, the entire license

fee is being recognised in profit or loss as it arises, without any deferral. The uniqueness of the contract

increases the element of judgement that is applied in this respect. This conclusion is based on the fact

that the pricing of the option did not alter the pricing of the remaining components of the contract, the

pricing of the option does not give rise to a discount for the license being provided and the option was

granted as security for continuity of service.

Given that the contractual form of the exercise price of the option is a function of the cumulative license

fees paid by the customer prior to that option being exercised, the Group has projected the applicable

exercise price during the option period based on its projections of the annual license fees expected to

be applicable to the customer on the basis of the expected volume of transactions. Based on the pricing

of the exercise price, in conjunction with the additional costs (including employee costs for handling and

managing the software) that would need to be incurred by the customer following the exercise of the

option, the Group believes that the likelihood of the option being exercised is very low.

For managed services, refer to the accounting policy in 4.11.2.

4.11.2 Services

The Group provides (a) transaction processing services; (b) maintenance services, such as ongoing

support for BankWORKS®, software enhancements and software upgrades; and (c) other services,

including change requests.

The agreements for the maintenance services and the other services are either entered into (i) at the

same time with the sale of the license; or (ii) after the sale of the license, as part of a comprehensive

package. Where the agreements are entered into at the same time with the sale of the license, the Group

assesses whether such agreements need to be combined with the license contract for the purpose of

IFRS 15.

Annual Report and Financial Statements | Page 96

4 Material Accounting Policies (Continued)

4.11 Revenue (Continued)

4.11.2 Services (Continued)

The Group accounts for individual products and services separately if they are distinct, that is, if a

product or service is separately identifiable from other promises in the contract (i.e. the promise to

transfer the good or service is distinct within the context of the contract) and if a customer can benefit

from it either on its own or together with other resources that are readily available to the customer (i.e.

the good or service is capable of being distinct).

Transaction processing is determined to be a performance obligation which is distinct from the

corresponding implementation or customisation activities that are performed in advance of such

transaction processing (see Note 4.11.2.1). Transaction processing services are regarded as a series of

distinct services that are substantially the same and that have the same pattern of transfer to the

customer; the performance obligation is the fact that the Group needs to stand ready to perform, which

obligation is satisfied over time. The consideration in respect of such services contains variable elements

that are dependent on the volume of transactions processed, with a minimum monthly fee. Management

allocates the variable fees charged for each transaction to the time period in which the Group has the

contractual right to bill the customer since such payments relate specifically to the Group’s efforts to

satisfy the performance obligation and allocating that amount entirely to that specific time period is

consistent with the allocation objective in IFRS 15. The Group accordingly recognises the monthly billings

to customers as revenue in the month of billing, that is, when the performance obligation is satisfied by

transferring control to the client.

Maintenance services are generally billed quarterly or annually in advance. Regardless of whether the

corresponding agreements for such services are entered into at the same time with the sale of the

license, these services are determined to be distinct from the corresponding licenses under IFRS 15.

Revenues allocated to the maintenance services are recognised over time in accordance with IFRS 15,

as the customer simultaneously receives and consumes all of the benefits provided by the entity as the

entity performs. The transaction price is recognised as a contract liability at the time of receipt.

Revenue from other additional services requested by the client outside the scope of the original contract,

such as changes that are requested after the sale of the license and/or the period of customisation, are

generally treated as a separate contract if the scope of the contract increases because of the addition

of services that are distinct and the price charged is calculated at a man-rate per hour that reflects the

standalone selling price of such additional services. This performance obligation is generally recognised

over the period of such service. The Group charges for other services on a fixed cost basis. As the

current systems in place assess progress of completion based on the lifecycle of the delivery it is

concluded that the output method is the more appropriate method for measuring revenue that is

recognised over time by observing the value to the customer transferred to date relative to the remaining

services promised.

Revenue from services provided in comprehensive packages continues to be recognised over time under

IFRS 15 unless separate performance obligations are identified.

The Group recognises revenue on the output method as the current systems in place assess the

progress of completion based on the lifecycle of the delivery. This is deemed to be the more appropriate

method for measuring revenue over time by observing the value to the customer transferred to date

relative to the remaining deliverables promised.

Annual Report and Financial Statements | Page 97

4 Material Accounting Policies (Continued)

4.11 Revenue (Continued)

4.11.2 Services (Continued)

4.11.2.1 Implementation and Customisation Fees Followed by Transaction Processing

Services

There should not be a significant financing component in relation to such services as the period between

the recognition of revenue and the payment is always less than one year.

Where the Group receives a fee for customisation and implementation activities without the sale of a

license, which are followed by transaction processing services, it assesses whether the fee relates to

the transfer of a promised good or service.

Where the fee relates to an activity that the Group is required to undertake at or near contract inception

to fulfil the contract and that activity does not result in the transfer of a promised good or service to the

customer, the fee is treated as an advance payment for future goods or services and, therefore, is

recognised as revenue when those future goods or services are provided.

Where the fee relates to a distinct performance obligation and that activity results in the transfer of a

promised good or service to the customer, the related revenue is recognised over the customisation

period. Determining whether the activity represents a distinct performance obligation and whether it

results in a transfer of a promised good or service to the customer requires judgement.

This is based on the Group’s conclusion that by the time the customised software is live, the customer

has already obtained and paid for the right to have that software solution hosted elsewhere, without

having to pay an additional amount for such customisation and implementation activities, subject to a

migration fee as a separate service that is distinct and a penalty for the cancellation of future transaction

processing services (which reduces with the number of remaining months) and without the requirement

for a different service provider to pay for an additional license in this regard.

4.11.3 Acquiring Business

The acquiring business includes the sale and rental of payment terminals and associated maintenance

services, including consultation, installation and repairs.

4.11.3.1 Sale of Terminals and Terminal Equipment

The Group enters into a sales contract or sales order with the customer, whereby the consideration for

the terminals or terminal equipment being sold is determined. Simultaneously, the goods are shipped,

the invoice is forwarded to the customer, and the consideration is due immediately. The Group has

determined that revenue from this performance obligation should therefore be recognised immediately

provided that the criteria for the recognition of revenue, where the performance obligation is satisfied

by transferring control, is satisfied.

Annual Report and Financial Statements | Page 98

4 Material Accounting Policies (Continued)

4.11 Revenue (Continued)

4.11.3 Acquiring Business (Continued)

4.11.3.2 Maintenance of Terminals and Terminal Equipment

The Group enters into a maintenance contract with the customer, specifying the monthly maintenance

fee and the relevant period. The monthly maintenance fee is due and payable on a monthly basis. The

Group has determined that revenue from this performance obligation should therefore be recognised on

a monthly basis in line with the applicable maintenance period reflecting the performance obligation

being satisfied through the transfer of control.

The agreements for the maintenance services are generally entered into at the same time with the rental

agreement, which defines all conditions and fees for the different services being provided. Where the

agreements are entered into at the same time with the rental agreement, the Group assesses whether

such agreements need to be combined with the rental contract for the purpose of IFRS 15.

4.11.3.3 Fees per Processed Transaction

The Group also charges transaction fees depending on the type of terminal. The Group enters into a

contract with the customer, specifying the transaction fee for the applicable period. The sum of the

transaction fees due per month are aggregated and billed to the client. These are payable on a monthly

basis. The Group has determined that revenue from this performance obligation should therefore be

recognised on a monthly basis in line with the applicable maintenance period reflecting the performance

obligation being satisfied through the transfer of control.

4.11.3.4 Fees based on operated Transaction Volume

The Group also earns revenue based on transaction volume processed by the customer terminals, both

from Giro cards and credit cards. In the case of the former, a commission is earned based on a

percentage of the total transaction volume processed by Giro cards. This commission is clearly defined

in the contract the Group has with its customers.

The Group has determined that revenue from this performance obligation should therefore be

recognised on a monthly basis in line with the applicable period reflecting the performance obligation

being satisfied through the transfer of control. In the case of revenue generated from transactions of

credit cards, the Group has a contract directly with the acquirer, rather than the customer. The Group

therefore receives a monthly commission from the profit generated by the acquirer from the Group’s

customers, based on transaction volume generated by credit cards.

The Group has determined that revenue from this performance obligation should therefore be

recognised on a monthly basis in line with the applicable period provided that the criteria for the

recognition of a contract are satisfied, including having an enforceable right to payment.

Annual Report and Financial Statements | Page 99

4 Material Accounting Policies (Continued)

4.11 Revenue (Continued)

4.11.4 Contract Modifications

A contract modification, such as changes that are requested after the sale of the license and/or the

period of customisation, is accounted for as a separate contract if (a) the scope of the contract increases

because of the addition of promised goods or services that are distinct; and (b) the price of the contract

increases by an amount of consideration that reflects the entity’s standalone selling prices of the

additional promised goods or services and any appropriate adjustments to that price to reflect the

circumstances of the particular contract.

For a contract modification that is not accounted for as a separate contract, the entity accounts for the

promised goods or services not yet transferred at the date of the contract modification based on the

specific facts and circumstances. A contract modification is accounted for as if it were a termination of

the existing contract and the creation of a new contract if the remaining goods or services are distinct

from the goods or services transferred on or before the date of the contract modification. A contract

modification is accounted for as if it were a part of the existing contract if the remaining goods or services

are not distinct and, therefore, form part of a single performance obligation that is partially satisfied at

the date of the contract modification. If the remaining goods or services are partly distinct and partly not

distinct, the effects of the modification on the unsatisfied (including partially unsatisfied) performance

obligations in the modified contract are accounted for in a manner that is consistent with the objectives

of IFRS 15.

4.11.5 Allocation of Variable Consideration

The Group and the Company allocate a variable amount (and subsequent changes to that amount)

entirely to a performance obligation or to a distinct good or service that forms part of a single

performance obligation if both of the following criteria are met: (a) the terms of a variable payment relate

specifically to the entity’s efforts to satisfy the performance obligation or transfer the distinct good or

service (or to a specific outcome from satisfying the performance obligation or transferring the distinct

good or service); and (b) allocating the variable amount of consideration entirely to the performance

obligation or the distinct good or service is consistent with the allocation objective in IFRS 15 when

considering all of the performance obligations and payment terms in the contract

Annual Report and Financial Statements | Page 100

4 Material Accounting Policies (Continued)

4.12 Income Tax

Income tax expense comprises current and deferred tax. Current and deferred tax are recognised in

profit or loss except to the extent that it relates to a business combination, or items recognised directly

in equity or in other comprehensive income.

Current tax is the expected tax payable or receivable on the taxable income or loss for the year, using

tax rates enacted or substantively enacted at the reporting date, and any adjustment to tax payable in

respect of previous years.

Deferred tax is recognised in respect of temporary differences between the carrying amounts of assets

and liabilities for financial reporting purposes and the amounts used for taxation purposes.

Deferred tax is not recognised for the following temporary differences: the initial recognition of assets

or liabilities in a transaction that is not a business combination and that affects neither accounting nor

taxable profit or loss, and differences relating to investments in subsidiaries to the extent that it is

probable that they will not reverse in the foreseeable future. In addition, deferred tax is not recognised

for taxable temporary differences arising on the initial recognition of goodwill.

Deferred tax assets are recognised for unused tax losses, and deductible temporary differences to the

extent that it is probable that future taxable profits will be available against which they can be used.

Future taxable profits are determined based on business plans for individual subsidiaries in the Group

and the reversal of temporary differences. Deferred tax assets are reviewed at each reporting date and

are reduced to the extent that it is no longer probable that the related tax benefit will be realised; such

reductions are reversed when the probability of future taxable profits improves.

Unrecognised deferred tax assets are reassessed at each reporting date and recognised to the extent

that it has become probable that future taxable profits will be available against which they can be used.

Deferred tax is measured at the tax rates that are expected to be applied to temporary differences when

they reverse, based on the laws that have been enacted or substantively enacted by the reporting date.

Deferred tax assets and liabilities are offset if there is a legally enforceable right to offset current tax

liabilities and assets, and they relate to income taxes levied by the same tax authority on the same

taxable entity, or on different tax entities, but they intend to settle current tax liabilities and assets on a

net basis or their tax assets and liabilities will be realised simultaneously.

4.13 Segment Reporting

An operating segment is a component of the Group that engages in business activities from which it may

earn revenues and incur expenses, including revenues and expenses relating to transactions with any

of the Group’s other components.

Operating results of all operating segments are regularly reviewed by the Group’s chief operating

decision maker to make decisions about resources to be allocated to the segment and assess its

performance, and for which discrete financial information is available.

The accounting policy information about operating segments is the same as that described as part of

the material accounting policy information of the Group disclosed in Note 4.

Annual Report and Financial Statements | Page 101

4 Material Accounting Policies (Continued)

4.14 Government Grants

Government grants are recognised as income over the periods necessary to match them to the costs

for which they are intended to compensate, on a systematic basis. Government grants that are

receivable as compensation for expenses or losses already incurred or for the purpose of giving

immediate financial support to the Group with no future related costs, are recognised in profit or loss in

the period in which they become receivable.

If a grant is compensation for expenses or losses already incurred, or for which there are no future

related costs, it is recognised in profit or loss in the period in which is becomes receivable. A grant

relating to income is deducted by the Group from the related expense.

Government grants are not recognised until there is reasonable assurance that the respective entity will

comply with the conditions attaching to them and the grants will be received. A forgivable loan from

government is treated as a government grant when there is reasonable assurance that the entity will

meet the terms for forgiveness of the loan.

5 Determination of Fair Values

A number of the Group’s accounting policies and disclosures require the determination of fair value, for

both financial and non-financial assets and liabilities. Fair values have been determined for measurement

and/or disclosure purposes based on the following methods. When applicable, further information about

the assumptions made in determining fair values is disclosed in the notes specific to that asset or liability.

When measuring the fair value of an asset or liability, the Group uses observable market data whenever

sufficient data is available.

Fair values are categorised into different levels in a fair value hierarchy based on the inputs used in the

valuation techniques as follows:

• Level 1: quoted prices (unadjusted) in active markets for identical assets or liabilities;

• Level 2: inputs other than quoted market prices included within Level 1 that are observable for the

asset or liability, either directly (i.e. as prices) or indirectly (i.e. derived from prices); and

• Level 3: inputs for the asset or liability that are not based on observable market data (unobservable

inputs).

If the inputs used to measure the fair value of an asset or a liability might be categorised in different

levels of the fair value hierarchy, then the fair value measurement is categorised in its entirety in the

same level of the fair value hierarchy as the lowest level input that is significant to the entire

measurement.

5.1 Measurement of Fair Values

5.1.1 Loans Receivable

The fair value of loans receivable is estimated as the present value of future cash flows, discounted at

the market rate of interest at the reporting date. This fair value is determined for disclosure purposes

and is categorised as Level 2 of the fair value hierarchy.

Annual Report and Financial Statements | Page 102

5 Determination of Fair Values (Continued)

5.1 Measurement of Fair Values (Continued)

5.1.2 Non-Derivative Financial Liabilities

Fair value is calculated based on the present value of future principal and interest cash flows, discounted

at the market rate of interest at the reporting date. Such non-derivative financial liabilities entail bank

borrowings, which have been categorised as Level 2 fair values.

5.1.3 Share-Based Payment Transactions

The fair value of employee share options or awards is measured using inputs that include the share price

at measurement date, the exercise price of the instrument, if any, expected volatility (based on an

evaluation of the Company’s historic volatility) where appropriate, the life of the instrument, expected

dividends to the extent applicable, and the risk-free interest rate. Service and non-market performance

conditions attached to the transactions are not considered in determining fair value.

For the cash-settled share-based payment arrangements, further disclosures are provided in Note 28.2.

Expected dividends were not included in the fair value measurement since the individual is entitled to

the rights of a shareholder, including the right to receive dividends from the date of grant of shares.

5.1.4 Finance Lease Receivables

The fair value of the finance lease receivables is classified as Level 2 and was calculated using the

discounted cash flow method using an appropriate discount rate.

5.2 Fair Values Versus Carrying Amounts

The reported carrying amounts at the respective reporting dates of the Group's and Company's current

financial instruments are a reasonable approximation of their fair values in view of their short-term

maturities. Derivative financial instruments are carried at fair value.

The Group's and Company's carrying amounts of other financial assets and liabilities, other than the

Company's investment in subsidiaries, in the statement of financial position are a reasonable

approximation of their respective fair values.

Annual Report and Financial Statements | Page 103

6 Financial Risk Management

6.1 Overview

The Group has exposure to the following risks from its use of financial instruments:

• credit risk;

• liquidity risk; and

• market risk.

This note presents information about the Group’s exposure to each of the above risks, the Group’s

objectives, policies and processes for measuring and managing risk, and the Group’s management of

capital. Further quantitative disclosures are included throughout these financial statements. The

Company's exposure to such risks is substantially similar to that of the Group unless otherwise stated.

6.2 Risk Management Framework

The Board of Directors has overall responsibility for the establishment and oversight of the Group’s risk

management framework.

The Group’s risk management policies are established to identify and analyse the risks faced by the

Group, to set appropriate risk limits and controls, as well as to monitor risks and adherence to limits.

Risk management policies and systems are reviewed regularly to reflect changes in market conditions

and the Group’s activities. The Group, through its training and management standards and procedures,

aims to develop a disciplined and constructive control environment in which all employees understand

their roles and obligations.

The Group’s Audit Committee oversees how Management monitors compliance with the Group’s risk

management policies and procedures and reviews the adequacy of the risk management framework in

relation to the risks faced by the Group.

6.3 Credit Risk

Credit risk is the risk of financial loss to the Group if a customer or counterparty to a financial instrument

fails to meet its contractual obligations, and arises principally from the Group's trade receivables from

customers, finance lease receivables, loans receivable, contract assets, and cash held with financial

institutions, including restricted cash.

Specifically, the Group’s exposure to credit risk arising from its trade receivables, is influenced mainly by

the individual characteristics of each customer. The demographics of the Group’s customer base,

including the default risk of the industry and country in which customers operate, have less of an

influence on credit risk.

The majority of the Group’s customers have been transacting with the Group for several years, and

losses have occurred infrequently. In monitoring customer credit risk, customers are classified according

to their credit characteristics, geographic location and ageing profile. Trade receivables relate to the

Group’s customers to whom services are rendered.

Annual Report and Financial Statements | Page 104

6 Financial Risk Management (Continued)

6.3 Credit Risk (Continued)

6.3.1 Exposure to Credit Risk

The carrying amount of financial assets represents the maximum credit exposure. The maximum

exposure to credit risk at the reporting dates was as follows:

		Carrying amount
	THE GROUP		THE COMPANY
	2024	2023	2024	2023
	€	€	€	€
Non-current assets
Loans receivable from
related parties	-	-	2,062,643	58,690
Finance lease receivables	188,844	190,324	-	-
	188,844	190,324	2,062,643	58,690
Current assets
Trade and other receivables	5,490,532	7,527,306	18,708,642	22,036,471
Finance lease receivables	103,406	99,890	-	-
Loans receivable from
related parties	21,754	2,107	1,083,740	2,065,161
Accrued income and contract
assets	1,194,908	3,846,197	193,343	277,900
Cash at bank, including
restricted cash	6,295,684	3,670,070	90,966	1,604,585
	13,106,284	15,145,570	20,076,691	25,984,117

Annual Report and Financial Statements | Page 105

6 Financial Risk Management (Continued)

6.3 Credit Risk (Continued)

6.3.1 Exposure to Credit Risk (Continued)

The maximum exposure to credit risk for cash at bank (including restricted cash), trade and other

receivables, finance lease receivables, loans receivable, and accrued income, at the respective reporting

dates by geographic region was as follows:

		Carrying amount
	THE GROUP		THE COMPANY
	2024	2023	2024	2023
	€	€	€	€
Non-current assets
Europe	188,844	190,324	2,000,000	-
South America	-	-	62,643	58,690
	188,844	190,324	2,062,643	58,690
Current assets
Europe	7,796,114	7,480,559	6,376,713	8,716,897
Middle East	163,022	158,152	123,181	144,426
South America	276,633	298,069	259	259
North America	3,316,836	5,523,916	13,528,876	16,803,943
Asia	1,553,679	1,684,874	47,662	318,592
	13,106,284	15,145,570	20,076,691	25,984,117

The nature of the Group and the Company’s activities is to service financial institutions (including banks)

and accordingly a significant proportion of receivables fall within this industry. In 2024, 42% (2023: 34%)

of the Group’s revenue is attributable to sales transactions with two major customers (2023: one major

customer) in the banking and payments industry as per Note 7.4. The below table shows the receivable

balances together with accrued income due by these major customers as at 31 December 2024 and

2023 respectively.

	THE GROUP		THE COMPANY
	2024	2023	2024	2023
	€	€	€	€
Customers situated in Europe	800,478	-	-	-
Customers situated in North
America	1,287,770	2,412,140	-	-
	2,088,248	2,412,140	-	-

Annual Report and Financial Statements | Page 106

6 Financial Risk Management (Continued)

6.3 Credit Risk (Continued)

6.3.2 Impairment Losses

The Group establishes an allowance for impairment that represents its estimate of incurred losses in

respect of trade and other receivables. This allowance represents specific provisions against individual

exposures and a collective provision where necessary, unless this is considered to be immaterial.

The tables below detail, by credit risk rating grades, the gross carrying amount of financial assets.

	THE GROUP		THE COMPANY
Bank balances, including
restricted cash	2024	2023	2024	2023
	€	€	€	€
External rating grades
AA-	2,519,319	342,044	-	-
A+	572,862	805,436	12,756	46,425
A-	3,117,998	-	-	-
BBB+	-	967,000	-	-
BBB-	17,314	13,354	17,314	13,354
Unrated	68,191	1,542,236	60,896	1,544,806
Gross/net carrying amount at
31 December	6,295,684	3,670,070	90,966	1,604,585

The Group’s cash (including restricted cash) is placed with reputable financial institutions; such that

Management does not expect any institution to fail to meet repayments of amounts held in the name of

the Group.

	THE GROUP		THE COMPANY
Finance lease receivables	2024	2023	2024	2023
	€	€	€	€
Internal rating grades
Performing*	292,250	290,214	-	-
Gross/net carrying amount at
31 December	292,250	290,214	-	-

	THE GROUP		THE COMPANY
Loans receivable	2024	2023	2024	2023
	€	€	€	€
Internal rating grades
Performing*	21,754	2,107	3,146,383	2,123,851
Gross/net carrying amount at
31 December	21,754	2,107	3,146,383	2,123,851

Annual Report and Financial Statements | Page 107

6 Financial Risk Management (Continued)

6.3 Credit Risk (Continued)

6.3.2 Impairment Losses (Continued)

*The contracting party has a low risk of default and does not have any past due amounts (12m ECL). In

respect of finance lease receivables and loans receivables, expected credit losses for the Group and

Company amount to €nil as at 31 December 2024 (2023: €nil).

		THE GROUP
31 December 2024	Lifetime ECL not-credit impaired		Lifetime ECL credit impaired

Trade debtors, contract assets and	Individual	Collective	Individual
finance lease receivables	Impairments	Impairments	Impairments
	€	€	€
Internal rating grades
Not in default - simplified model
applied	3,438,198	3,890,666	-
In default	-	545,137	-
Gross carrying amount at 31
December 2024	3,438,198	4,435,803	-
Loss allowance at 31 December
2024	-	(896,311)	-
Net carrying amount at 31
December 2024	3,438,198	3,539,492	-

The following table illustrates the Group’s gross carrying amounts for its trade debtors and contract

assets as at 31 December 2024, split by ageing buckets, as well as the lifetime ECL thereon.

							THE GROUP
						Trade debtors and contract assets
	Not past due	<30	31-60	61-90	91-120	121-150	151-180	181-210	211- 240	241- 270	271- 300	>300	Total
	€000	€000	€000	€000	€000	€000	€000	€000	€000	€000	€000	€000	€000
31 December 2024

Expected credit loss rate	1.6%	1.5%	2.3%	3.4%	13.9%	32.0%	35.3%	37.7%	66.8%	0%	85.4%	100.0%	20.2%



Estimated total gross carrying amount at default	2,654	265	299	115	117	33	25	5	360	-	18	545	4,436

Lifetime ECL	42	4	7	4	16	11	9	2	241	-	15	545	896

Annual Report and Financial Statements | Page 108

6 Financial Risk Management (Continued)

6.3 Credit Risk (Continued)

6.3.2 Impairment Losses (Continued)

THE COMPANY

31 December 202

Lifetime ECL

not-credit impaired

Lifetime ECL

credit impaired

Trade debtors, contract assets and finance

lease receivables

Individual

Impairments

Collective

Impairments

Individual

Impairments

€ € €

Internal rating grades

Not in default - simplified model applied 17,969,929 1,012,146 -

In default

- 529,243 -

Gross carrying amount at 31 December

2024

17,969,929 1,541,389 -

Loss allowance at 31 December 2024

- (609,333) -

Net carrying amount at 31 December 2024

17,969,929 932,056 -

The following table illustrates the Company’s gross carrying amounts for its trade debtors and contract

assets as at 31 December 2024, split by ageing buckets, as well as the lifetime ECL thereon.

THE COMPANY

Trade debtors and contract assets

Not

past

due

<30 31-60 61-90 91-120 121-

150

151-

180

181-

210

211-

240

241-

270

271-

300

>300 Total

€000 €000 €000 €000 €000 €000 €000 €000 €000 €000 €000 €000 €000

31 December 2024

Expected credit loss rate 3.1% 6.5% 29.9% 46.4% 46.7% 49.4% 50.5% 98.4% 98.4% 98.4% 98.4% 100.0% 39.5%

Estimated total gross

carrying amount at default

924 18 - - 12 16 9 - 29 - 4 529 1,541

Lifetime ECL 29 1 - - 6 8 4 - 29 - 3 529 609

Annual Report and Financial Statements | Page 109

6 Financial Risk Management (Continued)

6.3 Credit Risk (Continued)

6.3.2 Impairment Losses (Continued)

		THE GROUP
31 December 2023	Lifetime ECL not-credit impaired		Lifetime ECL credit impaired

Trade debtors, contract assets and finance lease receivables	Individual Impairments	Collective Impairments	Individual Impairments

	€	€	€
Internal rating grades

Not in default - simplified model applied	7,075,049	4,843,895	-
In default	-	448,823	-

Gross carrying amount at 31 December 2023	7,075,049	5,292,718	-

Loss allowance at 31 December 2023	-	(704,050)	-

Net carrying amount at 31 December 2023	7,075,049	4,588,668	-

The following table illustrates the Group’s gross carrying amounts for its trade debtors and contract

assets as at 31 December 2023, split by ageing buckets, as well as the lifetime ECL thereon.

							THE GROUP
						Trade debtors and contract assets
	Not past due	<30	31-60	61-90	91-120	121-150	151-180	181-210	211- 240	241- 270	271- 300	>300	Total


	€000	€000	€000	€000	€000	€000	€000	€000	€000	€000	€000	€000	€000

31 December 2023
Expected credit loss rate	2.3%	1.9%	2.3%	4.5%	6.1%	75.7%	18.3%	26.7%	84.4%	85.5%	85.3%	100.0%	13.3%



Estimated total gross carrying amount at default	3,602	59	667	204	135	23	7	10	18	26	92	449	5,293

Lifetime ECL	84	1	15	9	8	18	1	3	16	22	78	449	704

Annual Report and Financial Statements | Page 110

6 Financial Risk Management (Continued)

6.3 Credit Risk (Continued)

6.3.2 Impairment Losses (Continued)

THE COMPANY

31 December 2023

Lifetime ECL

not-credit impaired

Lifetime ECL

credit impaired

Trade debtors, contract assets and finance

lease receivables

Individual

Impairments

Collective

Impairments

Individual

Impairments

€ € €

Internal rating grades

Not in default - simplified model applied 21,170,239

1,349,557 -

In default

433,646 -

Gross carrying amount at 31 December

2023

21,170,239

1,783,203

Loss allowance at 31 December 2023

(639,071)

Net carrying amount at 31 December 2023

21,170,239 1,144,132 -

The following table illustrates the Company‘s gross carrying amounts for its trade debtors and contract

assets as at 31 December 2023, split by ageing buckets, as well as the lifetime ECL thereon.

THE COMPANY

Trade debtors and contract assets

Not

past

due

<30 31-60 61-90 91-120 121-

150

151-

180

181-

210

211-

240

241-

270

271-

300

>300 Total

€000 €000 €000 €000 €000 €000 €000 €000 €000 €000 €000 €000 €000

31 December 2023

Expected credit loss rate 5.5% 10.8% 26.5% 37.5% 55.7% 76.1% 80.5% 80.5% 84.4% 85.3% 85.3% 100.0% 35.8%

Estimated total gross

carrying amount at default

1,160

434

1,783

Lifetime ECL

78 434

639

Annual Report and Financial Statements | Page 111

6 Financial Risk Management (Continued)

6.3 Credit Risk (Continued)

6.3.2 Impairment Losses (Continued)

Write-offs during the reporting period amounted to €23 (2023: €220,382) and €nil (2023: €nil) for the

Group and the Company, respectively. No reversals of write-offs happened during the year ended 31

December 2024 (2023: €nil).

		THE GROUP
31 December 2024	Lifetime ECL not-credit impaired		Lifetime ECL credit impaired

Trade debtors, contract assets and finance lease receivables	Individual Impairments	Collective Impairments	Individual Impairments

	€	€	€
Opening balance at 1 January 2024	-	704,050	-
Movement during the year	-	192,261	-
Closing balance 31 December 2024	-	896,311	-

		THE GROUP
	Lifetime ECL not-credit impaired


	Trade debtors	Contract assets	Total
	€	€	€
Balance as at 1 January 2023	552,104	19,817	571,921

Increase in loss allowance arising from new financial assets recognised in 2023	260,790	18,815	279,605

Increase in loss allowance on financial assets in 2023	253,310	-	253,310

Decrease in loss allowance from derecognition of financial assets in 2023	(380,969)	(19,817)	(400,786)
Balance as at 1 January 2024	685,235	18,815	704,050

Increase in loss allowance arising from new financial assets recognised in 2024	373,602	9,216	382,818

Increase in loss allowance on financial assets in 2024	51,004	-	51,004

Decrease in loss allowance from derecognition of financial assets in 2024	(222,746)	(18,815)	(241,561)
Balance as at 31 December 2024	887,095	9,216	896,311

Annual Report and Financial Statements | Page 112

6 Financial Risk Management (Continued)

6.3 Credit Risk (Continued)

6.3.2 Impairment Losses (Continued)

THE COMPANY

31 December 2023

Lifetime ECL

not-credit impaired

Lifetime ECL

credit impaired

Trade receivables and contract assets

Individual

Impairments

Collective

Impairments

Individual

Impairments

€ € €

Opening balance at 1 January 2024 - 639,071 -

Movement during the year - (29,738) -

Closing balance 31 December 2024 - 609,333 -

THE COMPANY

Lifetime ECL

not-credit impaired

Trade debtors

Contract

assets Total

€ € €

Balance as at 1 January 2023 302,588 5,542 308,130

Increase in loss allowance arising from

new

financial assets recognised in 2023

197,821

16,805

214,626

Increase in loss allowance on financial

assets in 2023

253,310

Decrease in loss allowance from

derecognition of financial assets in 2023

(131,453)

(5,542) (136,995)

Balance as at 1 January 2024 622,266 16,805 639,071

Increase in loss allowance arising from new

financial assets recognised in 2024

89,584 6,256 95,840

Increase in loss allowance on financial

assets in 2024

51,004 - 51,004

Decrease in loss allowance from

derecognition of financial assets in 2024

(159,777) (16,805) (176,582)

Balance as at 31 December 2024 603,077 6,256 609,333

Annual Report and Financial Statements | Page 113

6 Financial Risk Management (Continued)

6.3 Credit Risk (Continued)

6.3.2 Impairment Losses (Continued)

		THE GROUP
31 December 2023	Lifetime ECL not-credit impaired		Lifetime ECL credit impaired

Trade debtors, contract assets and finance lease receivables	Individual Impairments	Collective Impairments	Individual Impairments

	€	€	€
Opening balance at 1 January 2023	-	571,921	15,682
Movement during the year	-	132,129	(15,682)
Closing balance 31 December 2023	-	704,050	-

THE COMPANY

31 December 2023

Lifetime ECL

not-credit impaired

Lifetime ECL

credit impaired

Trade receivables and contract assets

Individual

Impairments

Collective

Impairments

Individual

Impairments

€ € €

Opening balance at 1 January 2023 - 308,130 -

Movement during the year - 330,941 -

Closing balance 31 December 2023 - 639,071 -

Annual Report and Financial Statements | Page 114

6 Financial Risk Management (Continued)

6.4 Liquidity Risk

Liquidity risk is the risk that the Group will not be able to meet its financial obligations, which are

associated with its financial liabilities that are settled by delivering cash or another financial asset, as

they fall due. The Group’s approach to managing liquidity is to ensure, as far as possible, that it will

always have sufficient liquidity to meet its liabilities when due, under both normal and stressed

conditions, without incurring unacceptable losses or risking damage to the Group’s reputation.

The Group monitors its cash flow requirements on a regular basis and ensures that it has sufficient cash

on demand to meet expected operational expenses; this excludes the potential impact of extreme

circumstances that cannot reasonably be predicted.

The following are the contractual maturities of financial liabilities, including estimated interest payments.

	Carrying	Contractual	12 months			More than
	amount	Cash flows	or less	1 - 2 years	2 - 5 years	5 years
31 December 2024	€	€	€	€	€	€
The Group
Secured bank loans	5,357,608	5,358,744	5,358,744	-	-	-
Accrued expenses	2,138,985	2,138,985	2,138,985	-	-	-
Trade and other
payables	5,191,452	5,191,452	5,191,452	-	-	-
Employment benefits	3,709,064	10,362,037	159,884	-	270,090	9,932,063
Lease liabilities	2,550,092	2,798,177	585,455	568,566	1,082,821	561,335
	18,947,201	25,849,395	13,434,520	568,566	1,352,911	10,493,398

Carrying

amount

Contractual

Cash flows

12 months

or less

1 - 2 years

2 - 5 years

More than

5 years

31 December 202

4 €

€

The Company

Secured bank loans

5,357,608

5,358,744

Accrued expenses 1,006,809

1,006,809

Trade and other

payables 5,822,044

5,822,044

Employment benefits 3,077,064

3,432,309

270,090

3,162,219

Lease liabilities 420,057

511,639

32,903

101,998

343,835

15,683,582

16,131,545

12,220,500

32,903

372,088

3,506,054

Annual Report and Financial Statements | Page 115

6 Financial Risk Management (Continued)

6.4 Liquidity Risk (Continued)

	Carrying	Contractual	12 months			More than
	amount	Cash flows	or less	1 - 2 years	2 - 5 years	5 years
31 December 2023	€	€	€	€	€	€
The Group
Secured bank loans	7,121,682	7,153,897	6,965,426	188,471	-	-
Accrued expenses	2,630,674	2,630,674	2,630,674	-	-	-
Trade and other
payables	3,595,720	3,595,720	3,595,720	-	-	-
Employment benefits	4,088,747	8,281,351	624,567	-	283,585	7,373,199
Lease liabilities	2,268,299	2,491,576	453,366	377,386	992,393	668,431
	19,705,122	24,153,218	14,269,753	565,857	1,275,978	8,041,630

Carrying

amount

Contractual

Cash flows

12 months

or less

1 - 2 years

2 - 5 years

More than

5 years

31 December 2023

€

The Company

Secu

red bank loans

7,121,682

7,153,897

6,965,426

188,471

Accrued expenses 1,114,290

1,114,290

Trade and other

payables

5,239,822

Employment benefits 3,036,968

3,439,025

270,090

3,168,935

Lease liabilities 418,614

517,176

31,249

93,747

360,931

16,931,376

17,464,210

13,350,787

219,720

363,837

3,529,866

The below table provides further details pertaining to the Group’s and the Company’s lease liabilities’

maturity analysis:

	THE GROUP		THE COMPANY
	2024	2023	2024	2023
	€	€	€	€
Year 1	585,455	453,366	32,903	31,249
Year 2	568,566	377,386	32,903	31,249
Year 3	514,918	357,054	32,903	31,249
Year 4	414,877	328,090	32,903	31,249
Year 5	153,027	307,249	36,193	31,249
Onwards	561,334	668,431	343,834	360,931
	2,798,177	2,491,576	511,639	517,176
Less unearned interest	(248,085)	(223,277)	(91,582)	(98,562)
	2,550,092	2,268,299	420,057	418,614
Analysed as
Non-current	2,032,374	1,860,806	398,714	398,949
Current	517,718	407,493	21,343	19,665

Further disclosures on liquidity risk are provided in Note 2.1.2.

Annual Report and Financial Statements | Page 116

6 Financial Risk Management (Continued)

6.5 Market Risk

Market risk is the risk that changes in market prices, namely foreign exchange rates, interest rates and

equity prices will affect the Group’s income or the value of its holdings of financial instruments. The

objective of market risk management is to manage and control market risk exposures within acceptable

parameters, while optimising the return.

6.5.1 Currency Risk

The Group is exposed to currency risk on sales and purchases that are denominated in a currency other

than the functional currency of the Company, the Euro. The currencies in which these transactions are

primarily denominated are USD, PHP, NZD and GBP.

The Group relies on natural hedges between inflows and outflows in currencies other than the Euro, and

does not otherwise hedge against exchange gains or losses which may arise on the realisation of

amounts receivable and settlement of amounts payable in foreign currencies.

The Group’s exposure to foreign currency risk as at 31 December was as follows, based on notional

amounts:

					2024
	NZD	CHF	PHP	USD	JOD	BRL	GBP	CAD	ISK
The Group
Trade receivables	1,747,835	-	3,549,055	1,445,145	-	-	511,876	-	-
Accrued income	474,480	-	1,304,464	722,826	-	-	88,790	-	-
Cash at bank	(25)	216	10,626,700	2,030,958	-	31,104	22,709	432	14,207
Trade payables	(57,375)	-	(2,402,127)	(121,449)	-	(15,689)	2,884	-	-
Deferred income	(18,042)	-	-	(122,638)	-	-	(271,455)	-	-
Gross statement of
financial position
exposure	2,146,873	216	13,078,092	3,954,842	-	15,415	354,804	432	14,207

2024

NZD

CHF

PHP

USD

JOD

BRL

GBP

CAD ISK

The Company

Trade receivables -

- 6,019,514

511,876

Loans receivable

from related parties

- 65,000

Accrued income -

- 83,370

88,790

Cash at bank -

- 9,506

22,535

Trade payables -

- (107,662)

2,884

Deferred income -

- (29,184)

(271,455)

Gross statement of

financial position

exposure -

- 6,040,544

354,630

Annual Report and Financial Statements | Page 117

6 Financial Risk Management (Continued)

6.5 Market Risk (Continued)

6.5.1 Currency Risk (Continued)

					2023
	NZD	CHF	PHP	USD	JOD	BRL	GBP	CAD	ISK
The Group
Trade receivables	1,565,459	-	3,844,903	3,017,783	-	-	380,179	-	-
Accrued income	-	-	1,304,464	3,754,038	-	-	169,937	-	-
Cash at bank	592	216	9,530,667	1,776,234	-	27,776	56,403	432	14,207
Trade payables	-	-	(1,533,728)	(233,232)	-	(15,719)	(4,618)	-	-
Deferred income	(18,042)	-	-	(137,167)	-	-	(272,575)	-	-
Gross statement of
financial position
exposure	1,548,009	216	13,146,306	8,177,656	-	12,057	329,326	432	14,207

2023

NZD

CHF

PHP

USD

JOD

BRL

GBP

CAD ISK

The Company

Trade receivables -

11,856,174

380,179

Loans receivable

from related parties

65,000

Accrued income -

96,987

169,937

Cash at bank -

1,461,643

56,230

Trade payables -

- (45,696)

(4,618)

Deferred income

(32,007)

(272,575)

Gross statement of

financial position

exposure -

- 13,402,101

329,153

The following significant exchange rates applied during the year:

		Average rate		Reporting date spot rate
		2024	2023	2024	2023
NZD	1	0.5593	0.5675	0.5396	0.5713
CHF	1	1.0497	1.0290	1.0625	1.0799
USD	1	0.9239	0.9248	0.9626	0.9050
JOD	1	1.3034	1.3026	1.3624	1.2768
BRL	1	0.1716	0.1852	0.1556	0.1865
PHP	1	0.0161	0.0166	0.0166	0.0163
GBP	1	1.1812	1.1497	1.2060	1.1507
CAD	1	0.6747	0.6852	0.6690	0.6830
ISK	1	0.0067	0.0067	0.0069	0.0066

Annual Report and Financial Statements | Page 118

6 Financial Risk Management (Continued)

6.5 Market Risk (Continued)

6.5.1 Currency Risk (Continued)

Sensitivity Analysis

A 10 percent strengthening of the Euro against the following currencies as at 31 December would have

(decreased)/increased equity and profit or loss by the amounts shown below. This analysis assumes

that all other variables, in particular interest rates, remain constant. The analysis is performed on the

same basis 2023.

	THE GROUP		THE COMPANY
	Equity	Profit or loss	Equity	Profit or loss
	€	€	€	€
31 December 2024
NZD	(115,847)	(115,847)	-	-
CHF	(23)	(23)	-	-
USD	(380,676)	(380,676)	(581,436)	(581,436)
JOD	-	-	-	-
BRL	(240)	(240)	-	-
PHP	(21,688)	(21,688)	-	-
GBP	(42,790)	(42,790)	(42,769)	(42,769)
CAD	(29)	(29)	-	-
ISK	(10)	(10)	-	-

	THE GROUP		THE COMPANY
	Equity	Profit or loss	Equity	Profit or loss
	€	€	€	€
31 December 2023
NZD	(88,437)	(88,437)	-	-
CHF	(23)	(23)	-	-
USD	(740,059)	(740,059)	(1,212,860)	(1,212,860)
JOD	-	-	-	-
BRL	(225)	(225)	-	-
PHP	(21,452)	(21,452)	-	-
GBP	(37,895)	(37,895)	(37,875)	(37,875)
CAD	(30)	(30)	-	-
ISK	(9)	(9)	-	-

A 10 percent weakening of the Euro against the above currencies as at 31 December would have had

the equal but opposite effect on the above currencies to the amounts shown above, on the basis that

all other variables remain constant.

Annual Report and Financial Statements | Page 119

6 Financial Risk Management (Continued)

6.5 Market Risk (Continued)

6.5.2 Interest Rate Risk

The Group’s borrowings are subject to an interest rate that varies according to revisions made to the

Bank’s Lending Base Rate.

Interest on certain loans receivable, bank borrowings and cash at bank (including restricted cash) are

also tested for interest rate risk.

6.5.2.1 Interest Rate Profile

At the reporting date the interest rate profile of the Group’s and the Company’s interest-bearing financial

instruments was:

	THE GROUP		THE COMPANY
	2024	2023	2024	2023
	€	€	€	€
Fixed rate instruments
Financial assets	1,986	1,686	-	-
Variable rate instruments
Financial assets	6,295,684	3,670,070	2,090,966	3,604,585
Financial liabilities	(5,357,608)	(7,121,682)	(5,357,608)	(7,121,682)
	938,076	(3,451,612)	(3,266,642)	(3,517,097)

6.5.2.2 Interest Rate Risk

In 2023 and mid-2024, the Group was exposed to interest rate risk on its financial instruments arising

from movements in the Bank’s 3-month Euribor rate.

The Group had evaluated the extent of the discontinuation of the IBOR rates on existing bank

borrowings. In view that there are no plans by the European Central Bank to discontinue or replace

Euribor, the Group did not expect any material impact brought about by the Interest rate benchmark

reform on its financial instruments and interest rate risk management strategy.

Annual Report and Financial Statements | Page 120

6 Financial Risk Management (Continued)

6.5 Market Risk (Continued)

6.5.2 Interest Rate Risk (Continued)

6.5.2.3 Cash Flow Sensitivity Analysis for Variable Rate Instruments

A change of 100 basis points in interest rates at the reporting date would increase/(decrease) equity and

profit or loss by the amounts shown below. This analysis assumes that all other variables, in particular

foreign currency rates, remain constant. The analysis is performed on the same basis for 2023.

		THE GROUP
	Profit or loss		Equity
	100 bp	100 bp	100 bp	100 bp
	increase	decrease	increase	decrease
	€	€	€	€
31 December 2024
Variable rate instruments	9,381	(9,381)	9,381	(9,381)
31 December 2023
Variable rate instruments	(34,516)	34,516	(34,516)	34,516

THE COMPANY

Profit or loss Equity

100 bp

increase

100 bp

decrease

100 bp

increase

100 bp

decrease

€

€ € €

31 December 2024

Variable rate instruments (32,666)

32,666 (32,666) 32,666

31 December 202

Vari

able rate instruments (35,171)

35,171 (35,171) 35,171

Annual Report and Financial Statements | Page 121

6 Financial Risk Management (Continued)

6.6 Capital Management

The Group’s policy is to maintain a strong capital base so as to maintain investors, creditors and market

confidence and to sustain future development of the business. The capital structure consists of debt

and items presented within equity in the statement of financial position. The Board of Directors monitors

the capital on the basis of the following ratios:

• Equity to asset ratio (%) – total equity divided by total assets

• Debt/equity ratio multiple – total liabilities divided by total equity (as shown in the statement of

financial position, including non-controlling interests)

The above ratios of the Group for the current and comparative financial periods are as follows:

	2024	2023
	€	€
Equity to asset ratio (%)	48.25%	46.75%
Debt/equity ratio multiple	1.07	1.14

The Board of Directors also monitors the level of dividends to ordinary and preference shareholders. The

Board of Directors manage the Company’s capital structure and make adjustments to it, in light of

changes in economic conditions.

The capital structure is reviewed on an ongoing basis. Based on recommendations of the Directors, the

Company balances its overall capital structure through the payment of dividends, new share issues, as

well as the issue of new debt or redemption of existing debt. There were no changes in the Group’s

approach to capital management during the year.

The Group is not subject to externally imposed capital requirements.

7 Operating Segments

The Group has three reportable segments, as described below, which represent the Group’s business

units. The business units offer different services and are managed separately because they require

different operating and marketing strategies. For each of the business units, the Group’s Board of

Directors reviews internal management reports on a bi-annual basis. The following summary describes

the operations in each of the Group’s reportable segments:

•

Software (License) solutions

- Licensing of the Group’s BankWORKS® software to banks and service

providers, including maintenance and enhanced services thereto.

•

Processing solutions

- Processing of payment transactions utilising the Group’s BankWORKS®

software.

•

Merchant solutions

- includes issuing and acquiring payment solutions directly to merchants,

including terminal and PSP gateway services.

Information regarding the results of each reportable segment is included below. The internal

management reports that are reviewed by the Group’s Board of Directors include the results of each

subsidiary, with additional disclosures showing disaggregated revenues attributable to each reportable

segment. Inter-segment pricing is determined on an arm’s length basis. The accounting policies of the

reportable segments are the same as the Group’s accounting policies described in Note 4.

Annual Report and Financial Statements | Page 122

7 Operating Segments (Continued)

7.1 Information About Reportable Segments

	Software (Licensing) solutions	Processing solutions	Merchant solutions	Total reportable segments
	€	€	€	€
Year ended 31 December
2024
External revenues	10,491,546	23,382,942	3,662,545	37,537,033
Inter-segment revenues	8,394,461	-	292,004	8,686,465
Segment revenues	18,886,007	23,382,942	3,954,549	46,223,498
Finance income	127,771	2,741	51,138	181,650
Finance expense	(424,264)	(4,411)	(138,436)	(567,111)
Depreciation and amortisation	(2,201,777)	(1,373,051)	(253,128)	(3,827,956)


Movement in provision for impairment loss on receivables	29,683	(221,967)	-	(192,284)


Reportable segment profit/(loss) before income tax	1,543,878	4,239,997	(1,602,981)	4,180,894

Income tax expense	(848,497)	(394,994)	216	(1,243,275)
Reportable segment assets	69,010,044	14,817,851	7,589,321	91,417,216
Capital expenditure	3,259,086	173,827	68,399	3,501,312
Reportable segment liabilities	20,196,336	18,882,949	6,274,456	45,353,741

Annual Report and Financial Statements | Page 123

7 Operating Segments (Continued)

7.1 Information About Reportable Segments (Continued)

	Software (Licensing) solutions	Processing solutions	Merchant solutions	Total reportable segments
	€	€	€	€
Year ended 31 December
2023
External revenues	11,801,442	24,897,416	2,973,133	39,671,991
Inter-segment revenues	9,081,686	-	395,048	9,476,734
Segment revenues	20,883,128	24,897,416	3,368,181	49,148,725
Finance income	119,995	2,725	38,553	161,273
Finance expense	(293,117)	(2,586)	(129,248)	(424,951)
Depreciation and amortisation	(1,931,738)	(884,651)	(231,840)	(3,048,229)


Movement in provision for impairment loss on receivables	(330,941)	214,494	-	(116,447)

Movement in amounts written off	-	(218,612)	(1,770)	(220,382)


Reportable segment profit/(loss) before income tax	2,531,146	3,202,969	(1,748,791)	3,985,324

Income tax expense	(957,366)	(417,789)	(19,819)	(1,394,974)
Reportable segment assets	70,599,978	18,497,694	5,420,166	94,517,838
Capital expenditure	4,776,711	251,983	111,207	5,139,901
Reportable segment liabilities	22,438,439	25,025,550	4,411,583	51,875,572

Annual Report and Financial Statements | Page 124

7 Operating Segments (Continued)

7.2 Reconciliations of Reportable Segment Profit or Loss, Assets and Liabilities,

And Other Material Items

	2024	2023
	€	€
External revenues
Total revenue for reportable segments	46,223,498	49,148,725
Elimination of inter-segment transactions	(8,686,465)	(9,476,734)
Consolidated revenue	37,537,033	39,671,991
Finance income
Total finance income for reportable segments	181,650	161,273
Elimination of inter-segment transactions	(127,744)	(118,654)
Consolidated finance income	53,906	42,619
Finance expense
Total finance expense for reportable segments	567,111	424,951
Elimination of inter-segment transactions	(127,744)	(118,654)
Consolidated finance expense	439,367	306,297
Depreciation and amortisation
Total depreciation and amortisation for reportable segments	3,827,956	3,048,229
Elimination of inter-segment transactions	(935,563)	(611,995)
Consolidated depreciation and amortisation	2,892,393	2,436,234
Profit before income tax
Total profit before income tax for reportable segments	4,180,894	3,985,324
Elimination of inter-segment transactions	(2,026,634)	(2,546,964)
Consolidated reportable segment profit before income tax	2,154,260	1,438,360
Assets
Total assets for reportable segments	91,417,216	94,517,838
Elimination of computer software	(3,249,098)	(3,475,824)
Elimination of contract assets	(2,651,073)	(6,148,454)
Elimination of other inter-segment assets	(36,392,905)	(35,454,120)
Consolidated total assets	49,124,140	49,439,440
Liabilities
Total liabilities for reportable segments	45,353,741	51,875,572
Elimination of inter-segment balances	(17,072,311)	(19,211,340)
Elimination of inter-segment accruals	(3,046,035)	(6,524,027)
Elimination of other inter-segment liabilities	184,800	184,773
Consolidated total liabilities	25,420,195	26,324,978

Annual Report and Financial Statements | Page 125

7 Operating Segments (Continued)

7.2 Reconciliations of Reportable Segment Profit or Loss, Assets and Liabilities,

And Other Material Items (Continued)

Except for revenues, the line items in the above tables are allocated as follows – (a) Software (Licensing)

solutions comprises the results and financial position of RS2 p.l.c., RS2 Germany GmbH, RS2 Software

APAC Inc. and RS2 Software LAC LTDA, (b) Processing comprises the results and financial position of

RS2 Software INC. and RS2 Smart Processing Limited and (c) Merchant Solutions comprises the results

and financial position of RS2 Merchant Services Europe GmbH, RS2 Financial Services GmbH and RS2

Zahlungssysteme GmbH. The revenue of RS2 Software INC. is allocated to the following two segments

– Software (Licensing) solutions and Processing.

Assets allocated to reportable segments exclude the BankWORKS® license held by RS2 Smart

Processing Limited and RS2 Software INC. and any contract assets recognised in relation to services

provided between the three segments. Likewise, the Group liabilities exclude accruals, inter-segment

balances and inter-segment liabilities.

7.3 Geographical Information

In presenting information for the Group on the basis of geographical segments, revenue is based on the

geographical location of its customers. The following non-current segment assets are based on the

geographical location of the assets and exclude financial instruments.


	Revenues	Non-Current Assets
	€	€
Year ended 31 December 2024
Malta	-	25,053,175
UK	9,271,844	-
USA	15,671,909	4,368,187
Other countries	12,593,280	4,463,592
	37,537,033	33,884,954
Year ended 31 December 2023
Malta	-	23,341,245
UK and Ireland	10,018,038	-
USA	17,173,729	4,413,505
Other countries	12,480,224	4,425,453
	39,671,991	32,180,203

Other countries comprise revenue based on geographical location of customers, which individually are

immaterial and do not exceed 10% of total revenue.

Annual Report and Financial Statements | Page 126

7 Operating Segments (Continued)

7.4 Major Customers

For the year ended 31 December 2024, revenues from two major customer (2023: one major customers)

of the licensing and processing segments amounted to €15,707,981 (2023: €13,508,476) of the Group's

total revenues.

Annual Report and Financial Statements | Page 127

8 Property, Plant and Equipment

8.1 The Group

			Equipment,
	Land and	Leasehold	furniture and	Motor
	buildings	Improvements	fittings	Vehicles	Terminals	Total
Cost	€	€	€	€	€	€
Balance at 1 January 2023	8,001,422	1,471,035	5,282,565	268,421	52,261	15,075,704
Additions	-	-	275,613	4,500	18,708	298,821
Disposals	-	-	(48,263)	-	(730)	(48,993)
Reclassifications	-	-	-	-	(11,047)	(11,047)
Write-off	-	-	(67,042)	-	-	(67,042)
Effects of movement in exchange
rates	-	(749)	(36,803)	(2,203)	-	(39,755)
Balance at 31 December 2023	8,001,422	1,470,286	5,406,070	270,718	59,192	15,207,688
Balance at 1 January 2024	8,001,422	1,470,286	5,406,070	270,718	59,192	15,207,688
Additions	5,085	-	110,526	-	11,163	126,774
Disposals	-	-	(59,336)	(18,804)	(651)	(78,791)
Reclassifications	143,044	-	(143,044)	-	13,321	13,321
Effects of movement in exchange
rates	-	368	55,284	1,084	-	56,736
Balance at 31 December 2024	8,149,551	1,470,654	5,369,500	252,998	83,025	15,325,728
Depreciation
Balance at 1 January 2023	1,534,450	489,923	4,564,120	231,497	31,852	6,851,842
Depreciation for the year	96,255	60,186	302,683	9,915	10,505	479,544
Released on disposals	-	-	(48,263)	-	-	(48,263)
Effects of movement in exchange
rates	-	(749)	(31,620)	(1,189)	-	(33,558)
Balance at 31 December 2023	1,630,705	549,360	4,786,920	240,223	42,357	7,249,565
Balance at 1 January 2024	1,630,705	549,360	4,786,920	240,223	42,357	7,249,565
Depreciation for the year	97,402	60,182	224,363	6,170	13,687	401,804
Released on disposals	-	-	(55,350)	(8,341)	-	(63,691)
Reclassifications	69,060	-	(69,060)	-	-	-
Effects of movement in exchange
rates	-	368	51,261	563	-	52,192
Balance at 31 December 2024	1,797,167	609,910	4,938,134	238,615	56,044	7,639,870
Carrying amounts
At 1 January 2023	6,466,972	981,112	718,445	36,924	20,409	8,223,862
At 31 December 2023	6,370,717	920,926	619,150	30,495	16,835	7,958,123
At 31 December 2024	6,352,384	860,744	431,366	14,383	26,981	7,685,858

Annual Report and Financial Statements | Page 128

8 Property, Plant and Equipment (Continued)

8.2 The Company

Land and

buildings

Leasehold

Improvements

Equipment,

furniture and

fittings

Motor Vehicles

Total

€

Cost

Balance at 1 January 2023 8,001,422

1,340,604

2,807,003

175,034

12,324,063

Additions

79,313

Balance at 31 Dec

ember 2023

8,001,422

1,340,604

2,886,316

175,034

12,403,376

Balance at 1 January 2024 8,001,422

1,340,604

2,886,316

175,034

12,403,376

Additions 5,085

66,640

71,725

Balance at 31 December 2024 8,006,507

1,340,604

2,952,956

175,034

12,475,101

Depreciation

Balance at 1 January 2023 1,534,451

437,984

2,630,206

175,034

4,777,675

Depreciation for the year 96,255

53,045

105,282

254,582

Balance at 31 December 2023 1,630,706

491,029

2,735,488

175,034

5,032,257

Balance at 1 January 202

1,630,706

491,029

2,7

5,488

175,034

5,032,257

Depreciation for the year 97,402

53,045

95,631

246,078

Balance at 31 December 2024 1,728,108

544,074

2,831,119

175,034

5,278,335

Carrying amounts

At 1 January 2023 6,466,971

902,620

176,797

7,546,388

At 31 December 2023

6,370,716

849,575

150,828

7,371,119

At 31 December 202

6,278,399

796,530

121,

7,196,766

Refer to Note 17.1 for information on pledged assets as security by the Group and the Company.

8.3 Measurement bases, depreciation methods and useful lives

Property, plant and equipment are measured at cost less accumulated depreciation and accumulated

impairment losses. Cost includes expenditure that is directly attributable to the acquisition of the asset.

Borrowing costs related to the acquisition and construction of qualifying assets are capitalised as

incurred.

Depreciation is calculated over the depreciable amount, which is the cost of an asset, or other amount

substituted for cost, less its residual value.

Depreciation is recognised in profit or loss on a straight-line basis over the estimated useful lives of each

part of an item of property, plant and equipment, since this most closely reflects the expected pattern

of consumption of the future economic benefits embodied in the asset. Buildings constructed on leased

land are depreciated over the shorter of the lease term and their useful lives unless it is reasonably

certain that the Group will obtain ownership at the end of the lease term. Land is not depreciated.

Annual Report and Financial Statements | Page 129

8 Property, Plant and Equipment (Continued)

8.3 Measurement bases, depreciation methods and useful lives (Continued)

The estimated useful lives for the current and comparative periods are as follows:

•	buildings	25 - 50 years
•	electrical and plumbing installation	15 years
•	furniture, fixtures & fittings	10 years
•	air-conditioning	6 years
•	motor vehicles	5 years
•	computer equipment	4 years
•	terminals	4 years

Depreciation methods, useful lives and residual values are reviewed at each financial year-end and

adjusted as appropriate.

9 Leases

9.1 The Group as a Lessee

This note provides information about lease agreements for which the Group was a lessee during 2024.

These include:

9.1.1 Leased Premises Gozo

An agreement was entered into for an emphyteutical grant for leased land at Imġarr Road, Xewkija, Gozo

under a deed with the Government of Malta. The lease is for a twenty five-year term, lasting until April

2039. Upon expiration of the emphyteutical grant, the emphyteutical site and any improvements thereon

shall devolve to the Government without any obligation on the latter to compensate the Company.

9.1.2 Leased Offices USA

An agreement for leased offices in Denver, USA. The initial term of the lease was for a five-year term,

commencing in 2016 up until March 2021. The initial lease agreement included an option for the lessee

to renew for a further four-year term or to terminate subject to a notice in writing provided that the

conditions of the contract agreement are satisfied. The option to extend the term was taken up and a

lease contract renewal agreement was entered into as of April 2021 valid until June 2024. Such term

was further extended through another agreement for a period between July 2024 and September 2027.

The extension agreement includes an option for the lessee to renew for a further 5-year term or to

terminate subject to a notice in writing provided that the conditions of the contract agreement are

satisfied.

Annual Report and Financial Statements | Page 130

9 Leases (continued)

9.1 The Group as a Lessee (continued)

9.1.3 Leased Offices Philippines

An agreement for leased offices in Manila, Philippines. The lease was for a three-year period

commencing during June 2016, and was subsequently renewed in June 2019 and June 2024 for another

five-year term, up until June 2024 and June 2029 respectively. The renewal of this lease was treated as

a new lease in accordance with IFRS 16. The agreement includes an option to renew the lease term

provided that both parties mutually agree on the new contract provisions. The lease may be terminated

prior to the lease termination date; however, in so doing the lessee will be liable to penalties.

9.1.4 Leased Properties in Germany

An agreement for leased offices in Neu-Isenburg, Germany. This agreement was entered into with a

related party on 1 January 2019. The lease is for a ten-year term, lasting until December 2028, with an

extension clause that stipulates that if the tenancy is not terminated by either party at least six months

before the end date, this is renewed again for another five-year term. Accordingly, the enforceable

period of this lease (and the lease term) is 10 years.

An agreement for leased offices in Reinsdorf, Germany. At acquisition date of RS2 Zahlungssysteme

GmbH, 1 January 2020, the remaining period of the lease was for 6 months up until June 2020, with an

extension clause that stipulates that if the tenancy is not terminated by either party at least three months

before the end date, this is renewed for a further one-year term. The lease was renewed for a further

one-year term in July 2021 and later terminated on 30 March 2022.

An agreement for leased offices in Reinsdorf, Germany. This agreement was entered on 1 December

2022. The lease is for a five-year term, lasting until November 2027. Accordingly, the enforceable period

of this lease (and the lease term) is five years.

An agreement for leased offices in Neu-Isenburg, Germany. This agreement was entered into with a

related party on 1 February 2022. The lease is for a five-year term, lasting until December 2026, with an

extension clause which the lessor has granted the unilateral right to renew unless terminated by the

lessee at least six months before the end date. This can be renewed again for another five-year term.

Accordingly, the enforceable period of this lease (and the lease term) is 10 years.

An agreement for leased apartment for residential purposes in Neu-Isenburg, Germany. This agreement

was entered into with a related party on 1 February 2023. The lease is for a ten-year term, lasting until

January 2033. Accordingly, the enforceable period of this lease (and the lease term) is 10 years.

9.1.5 Leased Cars in Germany

Various agreements for leased cars in Germany. The leases are for a three-year to four-year term, ending

between May 2024 and October 2027. The enforceable period of such leases (and the lease term) is 3

to 4 years. These agreements were entered into at different points in time between June 2021 and

November 2024.

Annual Report and Financial Statements | Page 131

9 Leases (Continued)

9.1 The Group as a Lessee (Continued)

9.1.6 Group and Company Leases

The following tables present the carrying amounts of the Group’s and the Company’s ROU assets

recognised and the movements during the period:

	Land and
THE GROUP	buildings	Cars	Total
	€	€	€
As at 1 January 2023	2,254,165	91,086	2,345,251
Additions to right-of-use assets	239,331	137,658	376,989
Depreciation charge for the year	(441,337)	(79,581)	(520,918)
Effects of movement in exchange rates	(4,622)	-	(4,622)
As at 31 December 2023	2,047,537	149,163	2,196,700
As at 1 January 2024	2,047,537	149,163	2,196,700
Additions to right-of-use assets	695,754	85,780	781,534
Depreciation charge for the year	(463,826)	(81,079)	(544,905)
Effects of movement in exchange rates	(3,015)	-	(3,015)
As at 31 December 2024	2,276,450	153,864	2,430,314

THE COMPANY

Land and

buildings

Total

€

As at 1 January 2023 405,080

405,080

Depreciation charge for the year (24,801)

(24,801)

As at 31 December 2023 380,279

380,279

Balance at 1 January 2024 380,279

380,279

Depreciation charge for the year (25,795)

(25,795)

Additions to right-of-use assets 22,360

22,360

Balance at 31 December 2024 376,844

376,844

Annual Report and Financial Statements | Page 132

9 Leases (Continued)

9.1 The Group as a Lessee (Continued)

9.1.6 Group and Company Leases (Continued)

The following tables present the carrying amounts of the Group's and the Company's lease liabilities and

the movements during the period:

	Land and
THE GROUP	buildings	Cars	Total
	€	€	€
As at 1 January 2023	2,335,368	77,606	2,412,974
Additions	239,331	137,658	376,989
Accretion of interest	54,303	4,099	58,402
Payments	(502,257)	(74,689)	(576,946)
Effects of movement in exchange rates	(3,120)	-	(3,120)
As at 31 December 2023	2,123,625	144,674	2,268,299
As at 1 January 2024	2,123,625	144,674	2,268,299
Additions	686,387	85,780	772,167
Accretion of interest	67,770	5,831	73,601
Payments	(481,279)	(81,121)	(562,400)
Effects of movement in exchange rates	(1,575)	-	(1,575)
As at 31 December 2024	2,394,928	155,164	2,550,092

	THE GROUP		THE COMPANY
	2024	2023	2024	2023
	€	€	€	€
Current	517,718	407,493	21,343	19,665
Non-current	2,032,374	1,860,806	398,714	398,949

THE COMPANY

Land and

buildings

Total

€

As at 1 January 2023 434,943

434,943

Accretion of interest 12,080

12,080

Payments (28,409)

(28,409)

As at 31 December 2023 418,614 418,614

Balance at 1 January 2024 418,614 418,614

Additions

22,360 22,360

Accretion of interest 11,986 11,986

Payments (32,903)

(32,903)

Balance at 31 December 2024 420,057

420,057

Annual Report and Financial Statements | Page 133

9 Leases (Continued)

9.1 The Group as a Lessee (Continued)

9.1.6 Group and Company Leases (Continued)

The maturity analysis of lease liabilities is disclosed in Note 6.4.

The following are the amounts recognised in profit or loss for financial years ended 31 December:

	THE GROUP		THE COMPANY
	2024	2023	2024	2023
	€	€	€	€
Depreciation expense	544,905	520,918	25,795	24,801
Interest expense on lease liabilities	73,601	58,402	11,986	12,080
Expenses relating to short-term
leases	50,675	79,893	-	-
Total amount recognised in profit or
loss	669,181	659,213	37,781	36,881

The total cash outflow for leases amounted to €562,400 and €32,903 (2023: €576,946 and €28,409)

for the Group and the Company, respectively.

9.2 The Group as a Lessor

9.2.1 Operating Lease Arrangements

No variable lease payments exist as at 31 December 2024 and 2023 with respect to the leases held by

the Group and Company.

Operating leases, in which the Group is the lessor, relate to:

a) rental of a small number of POS terminals owned by the Group which are not of a specialised

nature with lease terms of less than three (3) years. During this lease term, the customers cannot

terminate the contract without paying a penalty for early termination; and

b) rental of POS terminals to taxi drivers in Berlin. The lease agreement with taxi drivers does not

have any specific lease term. The terminals are not of a specialised nature and taxi drivers may

choose to obtain POS terminals from other suppliers. In addition, the lessee may choose to

cancel the contract, providing three months’ notice without incurring penalties. The option to

extend or renew the contract is considered to be highly unlikely due to other available options

for taxi drivers. The lessee does not have an option to purchase the terminals at the expiry of

the lease period.

No residual value guarantees apply with respect to the leases held by the Group and the Company as at

31 December 2024 and 2023.

Annual Report and Financial Statements | Page 134

9 Leases (Continued)

9.2 The Group as a Lessor (Continued)

9.2.1 Operating Lease Arrangements (Continued)

Maturity analysis of operating lease receipts:

THE GROUP	2024	2023
	€	€
Within 1 year	4,293	6,775
Between 1 and 2 years	-	2,416
Total	4,293	9,191

The following table presents the amounts reported in profit or loss:.

THE GROUP	2024	2023
	€	€
Lease income on operating leases	54,612	48,794
Depreciation for the year	(13,687)	(10,505)
Total	40,925	38,289

Lease income on operating leases is included in the Revenue (Note 21).

9.2.2 Finance Lease Receivables

THE GROUP	2024	2023
	€	€
Balance on 1 January	290,214	242,452
Additions during the year	123,372	151,104
Release of receivables during the year	(172,148)	(141,895)
Unwinding of interest	50,812	38,553
Balance at 31 December	292,250	290,214

Annual Report and Financial Statements | Page 135

9 Leases (Continued)

9.2 The Group as a Lessor (Continued)

9.2.2 Finance Lease Receivables (Continued)

THE GROUP	2024	2023
	€	€
Amounts receivable under finance leases:
Within 1 year	171,618	147,187
Between 1 and 2 years	135,906	119,716
Between 2 and 3 years	87,482	80,681
Between 3 and 4 years	31,432	30,518
More than 4 years	2,108	1,067
Undiscounted lease payments	428,546	379,169
Less unearned finance income	(136,296)	(88,955)
Present value of lease payments receivable	292,250	290,214
Impairment loss allowance	-	-
Net investment in the lease	292,250	290,214
Undiscounted lease payments analysed as:
Recoverable within 12 months	171,618	147,187
Recoverable after 12 months	256,928	231,982
	428,546	379,169
Net investment in the lease analysed as:
Recoverable within 12 months	103,406	99,890
Recoverable after 12 months	188,844	190,324
	292,250	290,214

During the year ended 31 December 2023, the Group entered into finance leasing arrangements with

customers as a lessor, through the rental of POS terminals owned by the Group. The duration of the

rental contracts differs from one customer to another, however the average term of the finance lease

entered into is four (4) years. During this rental period, the customer cannot terminate the contract

without incurring a penalty for early termination. Ownership of the terminal is not transferred to the

customer at the end of the contract term. No similar finance leasing arrangements were entered into in

2024.

Finance income on the net investment in finance leases is included in the Finance Income and Finance

Costs (Note 23).

Annual Report and Financial Statements | Page 136

9 Leases (Continued)

9.2 The Group as a Lessor (Continued)

9.2.2 Finance Lease Receivables (Continued)

The Group determined that for those contracts having a remaining life of three (3) years or more, and

therefore equal or longer than 75% of the economic life of the terminals, the lessor has a finance lease,

even though the title is not transferred.

The Group is not exposed to foreign currency risk as a result of the lease arrangements, as all leases are

denominated in Euro.

Residual value risk on terminals under lease is not significant, because of the existence of a secondary

market with respect to the asset.

The following table presents the amounts included in profit or loss:

THE GROUP	2024	2023
	€	€
Finance income on the net investment in finance leases	50,812	38,553

The Group’s finance lease arrangements do not include variable payments.

The average effective interest rate contracted approximates 31.2% (2023: 23%) per annum.

None of the finance lease receivables at the end of the reporting period are past due, and taking into

account the historical default experience and the future prospects of the industries in which the lessees

operate, the Management of the Group considers that no finance lease receivable is impaired.

9.3 The Company as a Lessor

For the years ended 31 December 2024 and 2023, the Company did not enter into any lease agreements

for which the Company was a lessor.

Annual Report and Financial Statements | Page 137

10 Intangible Assets and Goodwill

10.1 The Group




	Goodwill	Internally generated computer software	Software rights	Other computer software	Customer and other relatedcontractual relationship	Total
	€	€	€	€	€	€
Cost
Balance at 1 January 2023	1,961,060	28,100,747	3,956,585	904,798	594,309	35,517,499
Additions	-	4,748,582	37,498	55,000	-	4,841,080

Effects of movement in exchange rates	(24,269)	(137,426)	(30,359)	-	-	(192,054)

Balance at 31 December 2023	1,936,791	32,711,903	3,963,724	959,798	594,309	40,166,525
Balance at 1 January 2024	1,936,791	32,711,903	3,963,724	959,798	594,309	40,166,525
Additions	-	3,367,363	-	7,175	-	3,374,538

Effects of movement in exchange rates	42,888	227,490	53,645	-	-	324,023

Balance at 31 December 2024	1,979,679	36,306,756	4,017,369	966,973	594,309	43,865,086
Amortisation
Balance at 1 January 2023	-	14,209,721	2,241,983	105,090	148,579	16,705,373
Charge for the year	-	1,118,805	205,077	62,364	49,526	1,435,772

Balance at 31 December 2023	-	15,328,526	2,447,060	167,454	198,105	18,141,145
Balance at 1 January 2024	-	15,328,526	2,447,060	167,454	198,105	18,141,145
Charge for the year	-	1,576,357	248,118	71,683	49,526	1,945,684

Effects of movement in exchange rates	-	7,675	1,800	-	-	9,475

Balance at 31 December 2024	-	16,912,558	2,696,978	239,137	247,631	20,096,304
Carrying amounts
At 1 January 2023	1,961,060	13,891,026	1,714,602	799,708	445,730	18,812,126
At 31 December 2023	1,936,791	17,383,377	1,516,664	792,344	396,204	22,025,380
At 31 December 2024	1,979,679	19,394,198	1,320,391	727,836	346,678	23,768,782

Annual Report and Financial Statements | Page 138

10 Intangible Assets and Goodwill (Continued)

10.2 The Company

Internally

generated

computer

software

Software

rights

Total

€

Cost

Balance at 1 January 2023 25,208,322

3,000,000

28,208,322

Additions 5,395,802

5,395,802

Balance at 31 December 2023 30,604,124

3,000,000

33,604,124

Balance at 1 January 2024 30,604,124

3,000,000

33,604,124

Additions 3,607,522

3,607,522

Balance at 31 December 2024 34,211,646

3,000,000

37,211,646

Amortisation

Balance at 1 January 2023 14,284,696

2,233,643

16,518,339

Amortisation for the year 1,174,834

191,588

1,366,422

Balance at 31 December 2023 15,459,530

2,425,231

17,884,761

Balance at 1 January 2024 15,459,530

2,425,231

17,884,761

Amortisation for the year 1,495,061

191,588

1,686,649

Balance at 31 December 2024 16,954,591

2,616,819

19,571,410

Carrying amounts

At 1 January 2023 10,923,626

766,357

11,689,983

At 31 December 2023 15,144,594

574,769

15,719,363

At 31 December 2024 17,257,055

383,181

17,640,236

Refer to Note 17.1 for information on pledged assets as security by the Group and the Company.

Annual Report and Financial Statements | Page 139

10 Intangible Assets and Goodwill (Continued)

10.3 Amortisation

The amortisation of internally generated computer software, customer and other related contractual

relationship and software rights is included in cost of sales, whereas amortisation of other computer

software is included in administrative expenses.

10.4 Internally Generated Computer Software

The internally generated computer software, which is continually under development, is recognised

annually and the relative amortisation is charged annually in line with the accounting policy in Note 4.5.7.

In view that the ISO business went live in 2024, RS2 Software INC. began amortising their internally

generated computer software accordingly. The carrying amount as at 31 December 2024 amounted to

€3,625,581 (2023: €3,575,489). The remaining amortisation period ranges depending on when the

assets are available for use and does not exceed 15 years being the total amortisation period.

10.5 Software Rights

Software rights comprise of BankWORKS® reacquired software rights. The BankWORKS® software rights

were re-acquired by RS2 Software Inc. through two separate transactions in 2009 and 2011 and the

carrying amount as at 31 December 2024 amounted to €773,134 (2023: €764,328). In 2009, upon the

business combination of RS2 Software INC., the Group reacquired the BankWORKS® software rights

previously granted. In view that the ISO business went live in 2024, RS2 Software INC. began amortising

their software rights accordingly. The remaining amortisation period amounts to 14 years (2023: not yet

amortised as it was not yet in use).

In 2011 the Company re-acquired BankWORKS® software rights from a customer situated in the

Scandinavian region. The carrying amount as at 31 December 2024 amounted to €383,181 (2023:

€574,769). The relative amortisation is charged annually in line with the accounting policy in Note 4.5.7.

The remaining amortisation period for the software rights amounts to 2 years (2023: 3 years). As at 31

December 2024, the carrying amount of software rights for RS2 Financial Services GmbH amounted to

€164,076 (2023: €177,567).

10.6 Other Computer Software

At 31 December 2024, other computer software with a carrying amount of €727,836 (2023: €792,344)

comprise of bank identification number sponsorship costs relating to RS2 Financial Services GmbH and

licenses acquired.

The relative amortisation is charged annually in line with the accounting policy in Note 4.5.7. The

remaining amortisation period ranges depending on when the assets are available for use and does not

exceed 15 years being the total amortisation period.

Annual Report and Financial Statements | Page 140

10 Intangible Assets and Goodwill (Continued)

10.7 Customer and Other Related Contractual Relationship

Upon acquisition of Kalicom Zahlungssysteme GmbH on 1 January 2020, the Group also acquired an

existing customer base and other contractual relationship. The relative amortisation is charged annually

in line with the accounting policy in Note 4.5.7. The remaining amortisation period for the customer and

other related contractual relationship amounts to 7 years (2023: 8 years).

10.8 Impairment Testing for Cash-Generating Unit Containing Goodwill

(RS2 Software INC.)

Goodwill primarily arose from the acquisition of 26% of the issued share capital of RS2 Software LLC

(formerly Transworks LLC) in 2009. During 2014, the Company acquired a further 38.2% shareholding in

RS2 Software LLC for $500,000. In 2018, RS2 Software LLC was merged into a newly formed company,

RS2 Software INC., in which the Company held the same percentage holding that it held in RS2 Software

LLC. For the purposes of impairment testing of goodwill arising on the acquisition of RS2 Software LLC

(now merged into RS2 Software INC.), the recoverable amount of the related CGU containing goodwill

was based on its value-in-use and was determined by discounting the projected future cash flows to be

generated from RS2 Software INC. As at the end of 31 December 2024, the total shareholding stood at

73.24% (2023: 72.57%). Management prepared forecasts of net cash flows for the five-year period 2025

- 2029 (2023: 2024 - 2028) and applied growth rates for subsequent years.

10.8.1 Past Performance and Outlook

North America presents the largest market in the growing global payment industry. Electronic payment

growth continues to benefit from secular trends. Mega-mergers in the card processing market have

created a void of providers to serve ISOs, ISVs and PayFacs. Legacy players have blurred the value chain

and operate patchworks of legacy platforms cobbled together through acquisitions and technology-

oriented new entrants still focus on niche markets but creating massive shareholder value. RS2 Software

INC. has adapted and certified RS2 p.l.c.’s proven BankWORKS® payment processing platform for the

North American Market, activated its first BIN sponsorship and hired a core team.

RS2 Software INC. offers a global, complete and modern cloud-based processing platform

(issue/settle/acquire) for any form of payment (including crypto-currency), with rich functionality and

API enablement. RS2 Software INC. is positioned as a leading service provider in the United States that

enables innovators to create their own payment ecosystem. Focus is on filling the void created by mega-

mergers: target customers are technical ISOs, ISVs, PayFacs and technology companies with merchant

base. The core global platform is enabled for online and offline processing and the company has an

ambitious product roadmap for the years to come.

10.8.2 Assumptions

There are a number of assumptions and estimates involved in calculating the present value of future

cash flows from the Group’s businesses, including Management’s expectations of:

Annual Report and Financial Statements | Page 141

10 Intangible Assets and Goodwill (Continued)

10.8 Impairment Testing for Cash-Generating Unit Containing Goodwill

(RS2 Software INC.) (Continued)

10.8.2 Assumptions (Continued)

• growth in forecast net cash flows, calculated as adjusted operating profit or loss before depreciation

and amortisation;

• timing and quantum of future capital expenditure;

• uncertainty of future technological developments;

• long-term growth rates; and

• discount rates to reflect the risks involved.

In order to estimate the Enterprise Value of the subsidiary, which was used by Management for the

purposes of impairment testing of goodwill arising on the acquisition of RS2 Software LLC (now merged

into RS2 Software INC.) as well as impairment testing of the Company’s investment in the US subsidiary,

an income approach valuation methodology has been considered.

The key assumptions used in the calculation of the value-in-use of RS2 Software INC. are the forecasted

net cash flows and the discount rate, used in a risk-adjusted cash flow forecast.

The cash flow projections used to calculate value-in-use consider the forecast net cash flows for five

years and a terminal growth rate of 2.88% (2023: 2.75%). These projections comprise cash flow

movements based on:

• revenue expected to be generated over the following five years, with growth being projected on the

forecasted sales volumes and charges. Such revenue forecasts comprise the revenue potential of

current leads and ongoing negotiations with prospective clients, as well as revenue expected from

new targets.

• expenses expected to be incurred to generate forecasted revenues. Such expenses mainly

encompass wages and salaries for staff engaged in management, operations, sales and

administration; operating costs including hosting and software related; consultancy fees, travelling

and other ancillary expenses.

For 2024 and 2023, the projection risk of 6.0% as well as a small company risk premium of 3.5% were

reflected in the forecasted net cash (outflows)/inflows.

Discount rate*:

	2024	2023
Post-tax	17.6%	17.4%
Pre-tax	21.3%	21.0%

* The discount rate is a measure based on the US risk-free rate, industry specific risk rate and the

estimated projection risk rate of the business initiative. The discount rate reflects the current market

assessments of the time value of money and Management's assessment of the risks specific to the

projected cash flows.

Annual Report and Financial Statements | Page 142

10 Intangible Assets and Goodwill (Continued)

10.8 Impairment Testing for Cash-Generating Unit Containing Goodwill

(RS2 Software INC.) (Continued)

10.8.3 Terminal Growth Rate

Cash flows beyond 2029 have been extrapolated using a terminal growth rate of 2.88% (2023: 2.75%).

The terminal growth rate was determined based on Management's estimate of the long-term

compounded annual cash flow growth rate, consistent with the assumption that a market participant

would make.

10.8.4 Assessment

At Company level, the recoverable amount of RS2 Software INC. was determined to be higher than its

carrying amount. The carrying amount comprises the cost of the investment in shares and advances to

RS2 Software INC. at 31 December 2024 which stood at €11.7m (2023: €11.7m).

At Group level, the carrying amount of the CGU, which includes internally generated as well as other

computer software in relation to RS2 Software INC., amounts to €5.1m (2023: €8.9m), of which goodwill

amounts to €0.7m (2023: €0.7m).

In line with the outcome of such assessments, Management is of the opinion that the investment in RS2

Software INC., both from a Company and a Group perspective, is not impaired.

10.9 Impairment Testing for Cash-Generating Unit Containing Goodwill

(RS2 Zahlungssysteme GmbH)

During the period ending on 31 December 2020, goodwill arose from the acquisition of 100% of the

issued share capital of Kalicom Zahlungssysteme GmbH (renamed to RS2 Zahlungssysteme GmbH) by

RS2 Group (RS2 Holding Europe GmbH). For the purposes of impairment testing of goodwill arising on

this acquisition, the recoverable amount of the related CGU containing goodwill was based on its value-

in-use and was determined by discounting the projected future cash flows to be generated from RS2

Zahlungssysteme GmbH. For this purpose, Management prepared forecasts of net cash flows for the

five-year period 2025 - 2029 (2023: 2024 - 2028) and applied growth rates for subsequent years.

10.9.1 Background and Outlook

RS2 Zahlungssysteme GmbH is an ISO and payment provider business for SMEs and selected key

account merchants across Germany. The services provided by RS2 Zahlungssysteme GmbH include

network service provider, giro card (an interbank network and debit card service virtually connecting all

German ATMs and banks) and credit card acceptance, terminals, terminal management, technical

maintenance and a wide range of value added services. The acquisition is a starting point for RS2`s

direct merchant business with more than 4,000 terminals and over 1,800 merchants under management.

Annual Report and Financial Statements | Page 143

10 Intangible Assets and Goodwill (Continued)

10.9 Impairment Testing for Cash-Generating Unit Containing Goodwill

(RS2 Zahlungssysteme GmbH) (Continued)

10.9.2 Assumptions

There are a number of assumptions and estimates involved in calculating the present value of future

cash flows from the Group’s businesses, including Management’s expectations of:

• growth in forecast net cash flows, calculated as adjusted operating profit or loss before depreciation

and amortisation;

• timing and quantum of future capital expenditure;

• uncertainty of future technological developments;

• long-term growth rates; and

• discount rates to reflect the risks involved.

The key assumptions used in the calculation of the value-in-use of RS2 Zahlungssysteme GmbH, are the

forecasted net cash flows and the discount rate, used in a risk-adjusted cash flow forecast.

The cash flow projections used to calculate value-in-use consider the forecast net cash flows for five

years and a terminal growth rate of 2.25% (2023: 1.81%). These projections comprise cash flow

movements based on:

• revenue expected to be generated over the following five years, with growth being projected on the

forecasted sales volumes and charges. Such revenue forecasts comprise the revenue potential of

current leads and ongoing negotiations with prospective clients, as well as revenue expected from

new targets.

• expenses expected to be incurred to generate forecasted revenues. Such expenses mainly

encompass wages and salaries for staff engaged in operations; operating costs; and other ancillary

expenses.

For both 2024 and 2023, the projection risk of 4% as well as a small company risk premium of 2% were

reflected in the forecasted net cash (outflows)/inflows.

Discount rate*:

	2024	2023
Post-tax	12.6%	12.4%
Pre-tax	16.3%	16.1%

* The discount rate is a measure based on the German risk-free rate, industry specific risk rate, the

estimated projection risk rate of the business initiative as well as a small company risk premium. The

discount rate reflects the current market assessments of the time value of money and Management's

assessment of the risks specific to the projected cash flows.

Annual Report and Financial Statements | Page 144

10 Intangible Assets and Goodwill (Continued)

10.9 Impairment Testing for Cash-Generating Unit Containing Goodwill (RS2

Zahlungssysteme GmbH) (Continued)

10.9.3 Terminal Growth Rate

Cash flows beyond 2029 have been extrapolated using a terminal growth rate of 2.25% (2023: 1.81%).

The terminal growth rate was determined based on Management's estimate of the long-term

compounded annual cash flow growth rate, consistent with the assumption that a market participant

would make.

10.9.4 Assessment

At Group level, the carrying amount of the CGU, which includes customer and other related contractual

relationship in relation to RS2 Zahlungssysteme GmbH, amounts to €2.4m (2023: €2.7m), of which

goodwill amounts to €1.3m (2023: €1.3m). In line with the outcome of such an assessment, Management

is of the opinion that this CGU is not impaired.

11 Investments in Subsidiaries

11.1 Movement Schedule of Investments in Subsidiaries

	THE COMPANY
	2024	2023
	€	€
Balance at 1 January	20,770,982	19,714,175
Contribution to subsidiaries	1,795,000	1,056,807
Balance at 31 December	22,565,982	20,770,982

11.2 Contributions to Subsidiaries

Contributions to subsidiaries are unsecured, interest free and represent capital contributions.

Annual Report and Financial Statements | Page 145

11 Investments in Subsidiaries (Continued)

11.3 Further Details About RS2 p.l.c.’s Investment in Subsidiaries

		Ownership interest
	Registered office	fully paid-up		Nature of business
		2024	2023
		%	%
RS2 Smart	RS2 Buildings,			Transaction
Processing Limited	Fort Road,			processing services
	Mosta MST1859,			with the use of
	Malta	99.92	99.92	BankWORKS®
RS2 Software INC.	Twelfth floor,
	Suite No. 1285,			Transaction
	South Ulster, Denver,			processing services
	Colorado			with the use of
	USA	73.24	72.57	BankWORKS®
RS2 Software LAC				Provision of support
LTDA	Rua Manoel de Nóbrega			and other related
	Município de São Paulo			services to the
	Estado de São Paulo			Company and
	Brazil	99.00	99.00	its clients
RS2 Software APAC	Unit 1501 AccraLaw Tower
Inc.	2nd Avenue Corner 30th
	Street			Provision of
	Bonifacio Global City			support and
	Barangay Fort Bonifacio			other related
	Taguig City 1634, Metro			services to the
	Manila			Company and
	Philippines	99.99	99.99	its clients
RS2 Germany GmbH				Provision of support
	Martin-Behaim-Straße 15A			and other related
	63263 Neu-Isenburg			services to the
	Germany	100.00	100.00	Company
RS2 Merchant	Martin-Behaim-Straße 15A
Services	63263 Neu-Isenburg
Europe GmbH	Germany	100.00	100.00	Holding company

Annual Report and Financial Statements | Page 146

11 Investments in Subsidiaries (Continued)

11.3 Further Details About RS2 p.l.c.’s Investment in Subsidiaries (Continued)

In addition, RS2 Merchant Services Europe GmbH owns the following subsidiaries:

		Ownership interest
	Registered office	fully paid-up		Nature of business
		2024	2023
		%	%
RS2 Financial	Martin-Behaim-Straße 15A
Services GmbH	63263 Neu-Isenburg
	Germany	100.00	100.00	Merchant Solutions
RS2	Martin-Behaim-Straße 15A
Zahlungssysteme	63263 Neu-Isenburg
GmbH	Germany	100.00	100.00	Merchant Solutions

11.4 Investment in RS2 Software INC.

On 12 June 2009, the Company acquired control of RS2 Software LLC, a transaction processing

company in the United States of America, by acquiring 26% of the shares and voting interests in the

company. On 24 September 2014, the Company acquired a further 38.2% shareholding in RS2 Software

LLC. On 16 February 2018, a new company, RS2 Software INC. was incorporated and the Company held

64.2% shareholding in it. The newly formed corporation merged with RS2 Software LLC on 28 March

2018, with the former company being the remaining company. During the year ended 31 December 2022,

the Company’s investment in RS2 Software INC. increased to 72.57% following the repayment of an

outstanding loan with its parent company. During the year ended 31 December 2024, the Company’s

investment in RS2 Software INC. increased to 73.24% following a buy back of vested share options from

an employee.

As further detailed in Note 28.2, in February 2018, the Group recruited a new CEO for its North American

business. This executive was granted 12,500 new shares in RS2 Software INC., with certain vesting

conditions and restrictions. Furthermore, in March 2019, the Group granted 5,626 share options to its

management, with certain vesting conditions and restrictions. These arrangements are accounted for as

cash-settled and accordingly a corresponding liability is recognised in the Group financial statements.

During the period in which such individuals will hold the shares, the Group’s effective voting rights will

be reduced accordingly. The carrying amount is tested for impairment as disclosed in Note 10.8.4.

As at 31 December 2024 issued ordinary share capital in RS2 Software INC. amounted to €1,398,576

(2023: €1,398,576). Profit for the year amounts to €3,173,605 (2023: €2,029,155) and the accumulated

profits total €1,016,047 (2023: accumulated losses total €2,524,934). The translation reserve of RS2

Software INC. comprises all foreign currency differences arising from the translation of the financial

statements of foreign operations. This reserve is non-distributable and amounts to a negative €302,621

(2023: €358,606).

Annual Report and Financial Statements | Page 147

11 Investments in Subsidiaries (Continued)

11.5 Investment in RS2 Smart Processing Limited

On 29 May 2012, the Company subscribed to and was allotted 1,200 shares in RS2 Smart Processing

Limited, a company registered in Malta, representing 99.92% of the share capital of this subsidiary.

During 2015, RS2 Smart Processing Limited increased its authorised share capital to 1,500,000 ordinary

shares at a nominal value of €1.00 each. The increase in share capital was fully subscribed to by the

existing shareholders as at 31 December 2014 in a proportionate manner.

At Company level, the recoverable amount of RS2 Smart Processing Limited was determined to be higher

than its carrying amount. The carrying amount comprises the cost of the investment in shares and

advances to RS2 Smart Processing Limited at 31 December 2024 which stood at €1.0m (2023: €1.0m).

The key assumptions used in the calculation of the value-in-use of RS2 Smart Processing Limited are

the forecasted net cash flows and the discount rate and any major fluctuations in these unobservable

inputs may significantly impact the estimated recoverable amount and consequently, any excess of such

amount over the carrying amount.

As at 31 December 2024 issued ordinary share capital in RS2 Smart Processing Limited amounted to

€1,500,000 (2023: €1,500,000). Profit for the year amounted to €671,399 (2023: €756,025) and the

accumulated gains amounted to €3,272,846 (2023: €2,601,447). Other reserves relates to post-

employment benefits to key management personnel amounting to €104,275 (2023: €97,261).

11.6 Investment in RS2 Software LAC LTDA

On 16 September 2015, the Company subscribed to and was allotted 3,465 shares in RS2 Software LAC

LTDA, a company registered in Brazil, representing 99.00% of the share capital of this subsidiary.

As at 31 December 2024 issued ordinary share capital in RS2 Software LAC LTDA amounted to €789

(2023: €789). Loss for the year amounts to €2,446 (2023: profit €3,893) and accumulated losses

amounted to €27,965 (2023: €25,519). The translation reserve of RS2 Software LAC LTDA comprises all

foreign currency differences arising from the translation of the financial statements of foreign operations.

This reserve is non-distributable and amounts to €13,972 (2023: €11,566).

11.7 Investment in RS2 Software APAC Inc.

On 4 April 2016, the Company subscribed to and was allotted 55,745 shares of PhP100 each in RS2

Software APAC Inc., a company registered in the Philippines, representing 99.99% of the share capital

of this subsidiary.

As at 31 December 2024 issued ordinary share capital in RS2 Software APAC Inc. amounted to €112,105

(2023: €112,105). Profit for the year amounts to €134,896 (2023: €201,025) and the retained earnings

reserve totals €1,321,523 (2023: €2,187,367). The translation reserve of RS2 Software APAC Inc.

comprises all foreign currency differences arising from the translation of the financial statements of

foreign operations. This reserve is non-distributable and amounts to a negative €128,486 (2023:

€167,030). Employee benefits reserve relates to post-employment benefits and amounts to a negative

€18,246 (2023: positive €4,801).

During the year ended 31 December 2024, RS2 p.l.c. received dividends amounting to €825,163 from

RS2 Software APAC Inc. through a set-off of outstanding invoices (2023: €nil).

Annual Report and Financial Statements | Page 148

11 Investments in Subsidiaries (Continued)

11.7 Investment in RS2 Software APAC Inc. (Continued)

At Company level, the recoverable amount of RS2 Software APAC Inc. was determined to be higher than

its carrying amount. The carrying amount comprises the cost of the investment in shares and advances

to RS2 Software APAC Inc. at 31 December 2024 which stood at €1.1m (2023: €1.1m). The key

assumptions used in the calculation of the value-in-use of RS2 Software APAC Inc. are the forecasted

net cash flows and the discount rate. Any major fluctuations in these unobservable inputs may

significantly impact the estimated recoverable amount and consequently, any excess of such amount

over the carrying amount.

11.8 Investment in RS2 Germany GmbH

On 2 February 2018, the Company subscribed to and was allotted 1 share equivalent to €25,000 in RS2

Germany GmbH, a company registered in Germany, representing 100.00% of the share capital of this

subsidiary.

As at 31 December 2024 issued ordinary share capital in RS2 Germany GmbH amounted to €25,000

(2023: €25,000). Profit for the year amounts to €563,956 (2023: loss of €10,526) and the retained

earnings reserve totals €1,220,837 (2023: €656,881).

At Company level, the recoverable amount of RS2 Germany GmbH was determined to be higher than its

carrying amount. The carrying amount comprises the cost of the investment in shares and advances to

RS2 Germany GmbH at 31 December 2024 which stood at €0.7m (2023: €0.7m). The key assumptions

used in the calculation of the value-in-use of RS2 Germany GmbH are the forecasted net cash flows and

the discount rate and any major fluctuations in these unobservable inputs may significantly impact the

estimated recoverable amount and consequently, any excess of such amount over the carrying amount.

11.9 Investment in RS2 Merchant Services Europe GmbH

On 1 November 2019, the Company subscribed to and was allotted 25,000 shares equivalent to €25,000

in RS2 Merchant Services Europe GmbH a company registered in Germany, representing 100.00% of the

share capital of this subsidiary.

As at 31 December 2024, issued ordinary share capital in RS2 Merchant Services Europe GmbH

amounted to €25,000 (2023: €25,000). The profit for the year amounts to €2,452 (2023: profit of

€5,558) and the accumulated losses total €25,872 (2023: €28,324). Other reserves amount to

€8,045,000 (2023: €6,250,000).

At Company level, the recoverable amount of RS2 Merchant Services Europe GmbH was determined to

be higher than its carrying amount. The carrying amount comprises the cost of the investment in shares

and advances to RS2 Merchant Services Europe GmbH at 31 December 2024 which stood at €8.1m

(2023: €6.3m). The key assumptions used in the calculation of the value-in-use of RS2 Merchant

Services Europe GmbH are the forecasted net cash flows and the discount rate and any major

fluctuations in these unobservable inputs may significantly impact the estimated recoverable amount

and consequently, any excess of such amount over the carrying amount.

Annual Report and Financial Statements | Page 149

11 Investments in Subsidiaries (Continued)

11.10 Restrictions on Assets and Liabilities

Other than as disclosed, there are no significant restrictions on the ability to access or use assets, and

settle liabilities of the Group.

11.11 Non-Controlling Interests

At 31 December 2024, RS2 p.l.c.’s investment in RS2 Software INC. stood at 73.24% (2023: 72.57%),

whilst the NCI’s percentage shareholding stood at 26.76% (2023: 27.43%). On the other hand, RS2 p.l.c.’s

investment in RS2 Software LAC LTDA stood at 99.00% (2023: 99.00%), whilst the NCI’s percentage

shareholding stood at 1.00% (2023: 1.00%).

	2024	2023
	€	€
Non-current assets	13,059,605	11,711,071
Current assets	3,810,243	5,847,572
Current liabilities	(14,757,846)	(19,043,608)
Net assets/(liabilities)	2,112,002	(1,484,965)
Netassets/(liabilities)attributable to NCI	565,172	(407,326)
Adjustments:
Share of capital contribution due to the Company	(2,667,335)	(2,633,347)
Other adjustments	(167,593)	(41,459)
Net assets attributable to other NCI	3,640	3,183
Net liabilities attributable to total NCI	(2,266,116)	(3,078,949)
Revenue	15,671,909	17,173,729
Profit	3,173,605	2,029,155
Other comprehensive (loss)/income	(419,475)	319,996
Total comprehensive income	2,754,130	2,349,151
Income attributable to NCI	864,455	556,597
Profit attributable to other NCI	526	644
Profit attributable to total NCI	864,981	557,241
Other comprehensive (loss)/income attributable to NCI	(112,233)	87,775
Other comprehensive income attributable to other NCI	3,415	286
Other comprehensive (loss)/income attributable to total NCI	(108,818)	88,061
Cash flows from operating activities	2,420,799	(34,650)
Cash flows from investing activities	(1,177,930)	(1,455,757)
Cash flows from financing activities
(dividends to NCI: nil)	268,403	(73,849)
Net movement in cash and cash equivalents	1,511,272	(1,564,256)

Annual Report and Financial Statements | Page 150

12 Inventories

	THE GROUP
	2024	2023
	€	€
Current
Finished goods – terminals at cost	164,243	248,608
Finished goods – terminals at net realisable value	30,389	33,785
	194,632	282,393

Inventories are valued at cost, using the specific identification method. Under this method, the cost of

each inventory item is directly assigned based on its actual purchase. The company primarily uses this

method for items that are individually identifiable and not interchangeable. Costs of purchased inventory

are determined after deducting rebates and discounts. Cost comprises all costs of purchase, costs of

conversion and other costs incurred in bringing the inventories to their present location and condition.

Inventories are stated at the lower of cost and net realisable value. Net realisable value represents the

estimated selling price less all estimated costs of completion and costs to be incurred in marketing,

selling and distribution.

Inventories recognised as an expense during the year ended 31 December 2024 amounted to €41,576

(2023: €141,290). These were included in cost of sales.

Write-downs of inventories to net realisable value amounted to €11,139 (2023: €8,562).

None of these inventories have been pledged as security for liabilities (2023: none).

13 Trade and Other Receivables

	THE GROUP		THE COMPANY
	2024	2023	2024	2023
	€	€	€	€
Current
Trade receivables	3,353,053	6,086,156	116,604	473,742
Amounts owed by subsidiaries	-	-	17,991,328	21,146,667
Amounts owed by other related
parties	597,905	413,325	597,905	413,325
Other receivables	1,539,574	1,027,825	2,805	2,737
	5,490,532	7,527,306	18,708,642	22,036,471

Annual Report and Financial Statements | Page 151

13 Trade and Other Receivables (Continued)

Transactions with related parties are set out in Note 30 to these financial statements.

Trade receivables for the Group and the Company are shown net of impairment losses recognised during

the year as disclosed in Note 22.4.

Information about the Group’s and the Company’s exposure to credit and market risks for trade

receivables is included in Note 6.

13.1 Loans Receivable

	THE GROUP		THE COMPANY
	2024	2023	2024	2023
	€	€	€	€
Non-current
Loans receivable from group companies	-	-	2,062,643	58,690
Current
Amounts owed by group companies	-	-	1,063,972	2,064,740
Amounts owed by other related parties	21,754	2,107	19,768	421
	21,754	2,107	1,083,740	2,065,161

Amounts due by RS2 Software LAC LTDA of €62,643 as at 31 December 2024 (2023: €58,690) were

unsecured, repayable on demand and did not bear any interest.

Amount due by RS2 Financial Services GmbH of €50,000 as at 31 December 2022 was unsecured and

bore interest of 2.7% per annum over the 3-month Euribor. This amount was fully repaid in 2023.

Amount due by RS2 Zahlungssysteme GmbH of €2.0m (2023: €2.0m) was unsecured and bears interest

of 2.7% per annum over the 3-month Euribor. Such amount is repayable by 2029.

Amounts owed by group companies are made up of advances of €367,377 due from RS2 Software INC

and €696,595 due from RS2 Smart Processing Limited. Amounts are unsecured, repayable on demand

and interest free.

Amounts owed by other related parties were unsecured and bear interest of 2.7% per annum. Such

amount was repaid in 2023. In 2023, the Group entered into an agreement with the other related party,

whereas the amount owed were offset through the purchase of assets by the Group from the other

related party.

Transactions with related parties are set out in Note 30 to these financial statements. The Group’s and

the Company’s exposure to credit and market risks for loans receivable are disclosed in Note 6.

Annual Report and Financial Statements | Page 152

14 Accrued Income and Contract Assets

	THE GROUP		THE COMPANY
	2024	2023	2024	2023
	€	€	€	€
Current
Contract assets owed by third parties	1,091,183	3,661,379	89,618	93,082
Contract assets owed by other related
parties	103,725	184,818	103,725	184,818
	1,194,908	3,846,197	193,343	277,900

	THE GROUP		THE COMPANY
	2024	2023	2024	2023
	€	€	€	€
Category of activity
Service fees, transaction processing and
customisation	1,194,908	3,839,312	193,343	277,900
Other recharges	-	6,885	-	-
	1,194,908	3,846,197	193,343	277,900

Significant changes in the contract assets balances during the period are as follows:

	THE GROUP		THE COMPANY
	2024	2023	2024	2023
	€	€	€	€
Balance at 1 January	3,846,197	2,130,015	277,900	435,806
Increases as a result of further
progress	1,104,748	3,798,515	130,131	257,291
Release of opening contract
assets to receivable	(3,764,247)	(1,936,004)	(229,082)	(403,931)
Written off	-	(146,969)	-	-
Other movements	(1,389)	(362)	3,845	(3)
Movement on expected credit
losses on contract assets	9,599	1,002	10,549	(11,263)
Balance at 31 December	1,194,908	3,846,197	193,343	277,900

Transactions with related parties are set out in Note 30 to these financial statements.

In relation to implementation and customisation which is followed by transaction processing services,

the following applies: (a) where the fee is treated as an advance payment for future goods or services

and is therefore recognised as revenue when those future goods or services are provided, the related

costs are amortised on a straight-line basis over the period that the related future service is expected

to be transferred to the customer; and (b) where the fee relates to a distinct performance obligation and

that activity results in the transfer of a promised good or service to the customer, the related revenue

and costs are recognised over the customisation period.

Annual Report and Financial Statements | Page 153

15 Cash at bank and in hand

	THE GROUP		THE COMPANY
	2024	2023	2024	2023
	€	€	€	€
Cash at bank	3,386,258	2,928,614	90,966	1,604,585
Cash in hand	7,131	4,097	1,064	803
	3,393,389	2,932,711	92,030	1,605,388
Restricted cash at bank in
RS2 Financial Services GmbH	2,909,426	741,456	-	-

As at 31 December 2024, restricted cash amounting to €2,909,426 (2023: €741,456) relates to

restricted cash held in trust accounts by RS2 Financial Services GmbH. This cash is restricted as it is

used to pay customers. These are due daily.

16 Capital and Reserves

16.1 Share Capital

	GROUP AND COMPANY
ISSUED SHARE CAPITAL	2024	2023
	€	€
Ordinary shares – issued and fully paid-up
218,403,701 shares at €0.06 per share	13,104,222	13,104,222
Preference shares – issued and fully paid-up
10,141,649 shares at €0.06 per share	608,499	608,499

Authorised Share Capital

The Company’s authorised share capital consisted of €18,000,000 in ordinary shares divided into

300,000,000 shares of €0.06 each and €3,600,000 in preference shares divided into 60,000,000 of

€0.06 each.

Issued Share Capital

On 31 December 2022, the issued share capital of the Company consisted of €13,025,383 in ordinary

shares of €0.06 each and €606,800 in preference shares of €0.06 each. In November 2023, following

the scrip issue of shares, the issued ordinary shares increased by 1,313,974 whilst the issued preference

shares increased by 28,320 (refer to Note 16.4 for further details).

Shareholder Rights

Ordinary shares

Ordinary shareholders are entitled to two votes per share at the meetings of the Company and are

entitled to receive dividends as declared from time to time. All ordinary shares shall rank pari passu.

Annual Report and Financial Statements | Page 154

16 Capital and Reserves (Continued)

16.1 Share Capital (Continued)

Preference shares

During the year ended 31 December 2021, the Company issued 8,989,600 preference shares with a

nominal value of €0.06 per share, at an offer price of €1.75. The shares are denominated in EUR. The

Preference Shares carry the right to participate in the Company’s profits in the form of non-cumulative

dividends at a premium of not less than 10% over the dividend distributed and payable to the holders of

Ordinary Shares.

The Preference Shareholders have the right to attend general meetings of the Company but, save for

specific circumstances as documented in the Company’s Memorandum and Articles of Association, do

not have the right to vote at any general meeting of the Company. In those cases, where Preference

Shareholders have the right to vote, such Preference Shareholders have one vote in respect of each

Preference Share whereas Ordinary Shareholders have two in respect of each Ordinary Share. The

Preference Shareholders carry the right to participate in any distribution of capital made whether on a

winding up or otherwise, pari passu with all other Ordinary Shares. The Preference Shares are not

redeemable or convertible into any other form of security.

16.2 Share Premium

As at 31 December 2022, share premium reserve amounted to €13,187,198, net of issuance costs of

€491,610. During 2023, following the scrip issue of ordinary and preference shares, this reserve

increased by €1,576,149, resulting in a balance of €14,763,347, net of issuance costs of €491,610 as at

31 December 2023. Share issuance costs relate to expenditure associated with issuing preference

shares and include registration fees, legal fees and marketing expenses.

During 2012, the Company allotted 2,499,956 bonus shares (1 for every 15 held) at a nominal value of

€0.20 each, amounting to €499,991 out of its share premium reserve.

During 2013, the Company allotted 2,500,000 bonus shares (1 for every 16 held) at a nominal value of

€0.20 each, amounting to €500,000 out of its share premium reserve.

During the year ended 31 December 2014, the Company allotted 2,500,000 bonus shares (1 for every 17

held) at a nominal value of €0.20 each, amounting to €500,000 out of its share premium reserve.

During the year ended 31 December 2016, the Company allotted 5,000,000 bonus shares (1 for every 18

held) at a nominal value of €0.20 each, amounting to €500,000 out of its share premium reserve.

During the year ended 31 December 2017, the Company allotted 13,194,432 bonus shares (1 for every

12 held) approved by the AGM held on 20 June 2017 at a nominal value of €0.06 each, amounting to

€791,666 out of its share premium reserve.

During 2022, the Company allotted 25,244,887 bonus shares (1 for every 8 held) at a nominal value of

€0.06 each, amounting to €1,514,693 out of its share premium reserve, resulting in a balance of

€13,678,808 under the share premium reserve.

Annual Report and Financial Statements | Page 155

16 Capital and Reserves (Continued)

16.3 Reserves

16.3.1 Translation Reserve

The translation reserve of the Group comprises all foreign currency differences arising from the

translation of the financial statements of foreign operations. This reserve is non-distributable.

16.3.2 Employee Benefits Reserve

The employee benefits reserve includes non-competition post-employment benefits due to employees

holding senior management positions as further disclosed in Note 27 to these financial statements.

16.4 Retained Earnings

During the year ended 31 December 2019, the Company allotted 21,440,950 bonus shares (1 for every

8 held) approved by the AGM held on 18 June 2019 at a nominal value of €0.06 each, amounting to

€1,286,457 out of its retained earnings.

During the year ended 31 December 2023, the Company declared the payment of an interim dividend

of €3,000,984 (€2,854,741 for Ordinary Shares and €146,243 for Preference Shares), as scrip, i.e., giving

the option to shareholders to elect receiving the dividend in cash or through the issuance of new shares

at an attribution price of €1.23 for Ordinary Shares and €1.43 for Preference Shares. Election for cash

dividend totalled €1,238,552 for Ordinary Shares and €105,745 for Preference Shares. Election for scrip

shares totalled 1,313,974 Ordinary Shares amounting to €1,616,188 at an attribution price of €1.23 and

28,320 Preference Shares amounting to €40,499 at an attribution price of €1.43.

16.5 Availability of Reserves for Distribution

The non-distributable reserves include the Share premium reserve, Employee benefits reserve,

Translation Reserve, Other reserves and the Share option reserve.

17 Borrowings

	GROUP AND COMPANY
	2024	2023
	€	€
Non-current liabilities
Bank loan	-	187,110
At end of year	-	187,110
Current liabilities
Bank loan	177,899	504,706
Bank overdraft	5,179,709	6,429,866
At end of year	5,357,608	6,934,572

Annual Report and Financial Statements | Page 156

17 Borrowings (Continued)

The following table illustrates a reconciliation of opening and closing balances of borrowings for both

the Group and Company:

	THE GROUP		THE COMPANY
	2024	2023	2024	2023
	€	€	€	€
Opening balance	7,121,682	1,132,602	7,121,682	1,132,602
Interest charged on bank loan	24,504	53,331	24,504	53,331
Interest charged on overdraft	337,351	191,464	337,351	191,464
Other interest charged	4	4	4	4
Principal paid on bank loan	(510,717)	(444,163)	(510,717)	(444,163)
Interest paid on bank loan	(27,703)	(49,391)	(27,703)	(49,391)
Interest paid on overdraft	(337,352)	(191,464)	(337,352)	(191,464)
Other interest paid	(4)	(4)	(4)	(4)
Movement in bank overdraft	(1,250,157)	6,429,303	(1,250,157)	6,429,303
Closing balance	5,357,608	7,121,682	5,357,608	7,121,682

Bank borrowings represent the balance on two banking facilities. The first facility is a loan which was

sanctioned to the Company on 19 December 2019 to finance the investment cost relating to the cost of

acquisition of a merchant acquiring company based in Germany, repayable over a period of 5 years and

subject to interest at the rate of 2.7% over the 3-month Euribor rate, floored at 0% per annum.

The second facility is an overdraft facility used for working capital requirements in connection with

routine business operations, repayable on demand at the Bank's discretion. As per the latest sanction

letter dated 16

May 2024, this is subject to interest at the rate of 2.7% over the Bank’s base rate of

2.25% per annum (previously the rate was 2.7% over the 3-month Euribor rate, floored at 0% per annum).

17.1 Collateral Hedged Against Bank Borrowings

All facilities are secured by first general hypothec over the Company's assets, first special hypothec and

special privileges over the land and buildings situated in Mosta with a carrying amount of €6,278,399

(2023: €6,370,716) and a pledge on a comprehensive insurance policy covering the hypothecated

property.

The property which is specifically hypothecated in favour of the Bank shall not be let, rented out, leased

or transferred to any third party under any title whatsoever, nor subsequently charged in favour of third

parties, without the Bank’s prior written consent. Moreover, such property may be subject to a property

revaluation every three years or at shorter intervals, at the Bank’s discretion, depending on the property

market conditions.

17.2 Undrawn Overdraft Facilities

As at 31 December 2024, the Group had undrawn overdraft facilities of €4.8m (2023: €3.6m).

Annual Report and Financial Statements | Page 157

18 Deferred Tax Assets and Liabilities

Deferred tax assets and liabilities are attributable to the following:

THE GROUP	Assets		Liabilities		Balance
	2024	2023	2024	2023	2024	2023
	€	€	€	€	€	€
Property, plant and
equipment		-	(81,555)	(169,192)	(81,555)	(169,192)
Intangible assets	40,481	-	(5,202,948)	(4,114,550)	(5,162,467)	(4,114,550)
Provision for
exchange
fluctuations	115,635	239,370	(1,366)	(2,622)	114,269	236,748
Unabsorbed losses	28,204	4,587		-	28,204	4,587
Temporary
difference on
expected credit
losses under IFRS 9	313,709	246,429	-	(756)	313,709	245,673
Temporary
difference on
revenues
previously
recorded under
IFRS 15	184,800	184,800	(184,800)	(184,800)	-	-
Temporary
difference on
leases under
IFRS 16
Right-of-use
assets	-	-	(165,325)	(153,414)	(165,325)	(153,414)
Temporary
difference on
leases under
IFRS 16 Lease
liabilities	165,357	146,515	-	-	165,357	146,515
Temporary
difference on
inventories	-	-	(866)	(4,439)	(866)	(4,439)
Temporary
difference
arising from other
liabilities	20,181	22,992	-	-	20,181	22,992
Tax
assets/(liabilities)	868,367	844,693	(5,636,860)	(4,629,773)	(4,768,493)	(3,785,080)
Set off of tax	(868,367)	(844,693)	868,367	844,693	-	-
Net tax liabilities	-	-	(4,768,493)	(3,785,080)	(4,768,493)	(3,785,080)

Annual Report and Financial Statements | Page 158

18 Deferred Tax Assets and Liabilities (Continued)

THE COMPANY

Assets Liabilities Balance

2024 2023 2024 2023 2024 2023

€ € € € € €

Property, plant and

equipment -

(79,341)

(167,294)

(79,341)

(167,294)

Intangible assets -

(3,855,406)

(3,107,765)

(3,855,406)

(3,107,765)

Provision for

exchange

fluctuations

96,722

230,348

96,722

230,348

Temporary difference

on expected credit

losses under IFRS 9 213,267

223,676

213,267

223,676

Temporary difference

on revenue

previously recorded

under IFRS 15 184,800

184,800

Temporary difference

on leases under

IFRS 16 Right-of-use

assets -

(131,895)

(133,098)

(131,895)

(133,098)

Temporary difference

on leases under

IFRS 16 Lease

liabilities 147,020

146,515

147,020

146,515

Tax assets/(liabilities) 641,809

785,339

(4,066,642)

(3,408,157)

(3,424,833)

(2,622,818)

Set off of tax (641,809)

(785,339)

641,809

785,339

Net tax

liabilities

(3,4

24,833

)

(2,622,818)

(3,

424

833

)

(2,622,818)

The deferred tax liability includes the temporary differences between the written down value and the

net book value of the Group’s and Company's assets.

The temporary difference on revenues previously recorded under IFRS 15 relates to a deferred tax asset

under the Company arising from a past sale of a licence to RS2 Smart Processing Limited. In line with

IFRS 15 requirements, such an implementation is not yet fully completed and hence a deferred tax

element is arising, which is then eliminated upon consolidation.

Deferred tax assets have not been recognised in respect of tax losses, until such time as more definitive

information becomes available that sufficient tax profit will be available against which the Group can use

the benefits therefrom. The unused tax losses and unabsorbed capital allowances on which no deferred

tax asset is recognised at 31 December 2024 amounted to €12,796,574 (2023: €8,806,012) and

€2,501,354 (2023: nil) respectively.

Annual Report and Financial Statements | Page 159

18 Deferred Tax Assets and Liabilities (Continued)

Movement in temporary differences during the year are as follows:

		Recognised		Recognised
	Balance	in profit	Balance	in profit	Balance
THE GROUP	1 Jan 2023	or loss	31 Dec 2023	or loss	31 Dec 2024
	€	€	€	€	€
Property, plant and
equipment	(92,551)	(76,641)	(169,192)	87,637	(81,555)
Intangible assets	(3,201,999)	(912,551)	(4,114,550)	(1,047,917)	(5,162,467)
Impairment loss on
receivables	5,489	(5,489)	-	-	-
Provision for exchange
fluctuations	9,137	227,611	236,748	(122,479)	114,269
Provision for legal
claims	40,315	(40,315)	-	-	-
Unabsorbed losses	(16,143)	20,730	4,587	23,617	28,204
Temporary difference
on expected credit
losses under IFRS 9	200,188	45,485	245,673	68,036	313,709
Temporary difference
on revenues previously
recorded under IFRS 15	3,745	(3,745)	-	-	-
Temporary difference
on leases under
IFRS 16 Right-of-use
assets	(167,297)	13,883	(153,414)	(11,911)	(165,325)
Temporary difference
on leases under
IFRS 16 Lease
liabilities	152,230	(5,715)	146,515	18,842	165,357
Other temporary
differences	2,503	(2,503)	-	-	-
Temporary difference on
inventories	-	(4,439)	(4,439)	3,573	(866)
Temporary difference
arising from other
liabilities	25,532	(2,540)	22,992	(2,811)	20,181
	(3,038,851)	(746,229)	(3,785,080)	(983,413)	(4,768,493)

Annual Report and Financial Statements | Page 160

18 Deferred Tax Assets and Liabilities (Continued)

THE COMPANY

Balance

1 Jan 2023

Recognised

in profit

or loss

Balance

31 Dec 2023

Recognised

in profit

or loss

Balance

31 Dec 2024

€

€ €

Property, plant and

equipment (90,970)

(76,324)

(167,294)

87,953

(79,341)

Intangible assets (2,497,657)

(610,108)

(3,107,765)

(747,641)

(3,855,406)

Provision for exchange

fluctuations 7,620

222,728

230,348

(133,626)

96,722

Provision for legal

claims 40,315

(40,315)

Temporary difference

on expected credit

losses under IFRS 9 107,846

115,830

223,676

(10,409)

213,267

Temporary difference

on revenues

previously recorded

under IFRS 15 188,545

(3,745)

184,800

Temporary difference

on leases under

IFRS 16 Right-of-use

assets (141,778)

8,680

(133,098)

1,203

(131,895)

Temporary difference

on leases under

IFRS 16 Lease

liabilities 152,230

(5,715)

146,515

505

147,020

Other temporary

differences 2,503

(2,503)

(2,231,346)

(391,472)

(2,622,818)

(802,015)

(3,424,833)

Annual Report and Financial Statements | Page 161

19 Trade and Other Payables

	THE GROUP		THE COMPANY
	2024	2023	2024	2023
	€	€	€	€
Trade payables	808,333	977,866	423,289	544,271
Amounts due to customers	2,841,185	743,116	-	-
Other payables	154,697	632,523	170	560,544
Dividends payable	41,275	562,318	41,276	562,318
Other taxes and social securities	1,332,392	650,002	1,120,995	503,180
Amounts due to other related
parties	13,570	29,895	4,236,314	3,069,509
	5,191,452	3,595,720	5,822,044	5,239,822

Amounts due to customers relates to RS2 Financial Services GmbH’s restricted cash held in trust

accounts.

Transactions with related parties are set out in Note 30 to these financial statements.

The Group’s and the Company’s exposure to currency and liquidity risk related to trade and other

payables is disclosed in Note 6.

20 Accruals and Deferred Income

20.1 Accruals

	THE GROUP		THE COMPANY
	2024	2023	2024	2023
	€	€	€	€
Accrued expenses owed to third
parties	1,661,665	2,244,967	583,734	761,844
Amounts due to other related
parties	477,320	385,707	423,075	352,446
	2,138,985	2,630,674	1,006,809	1,114,290

20.2 Deferred Income

	THE GROUP		THE COMPANY
	2024	2023	2024	2023
	€	€	€	€
Current
Contract liabilities owed to third parties	606,999	641,644	227,596	301,827
Contract liabilities owed to subsidiary	-	-	528,000	528,000
Contract liabilities owed to other
related parties	327,377	313,234	327,377	313,234
	934,376	954,878	1,082,973	1,143,061

Annual Report and Financial Statements | Page 162

20 Accruals and Deferred Income (Continued)

20.2 Deferred Income (Continued)

	THE GROUP		THE COMPANY
	2024	2023	2024	2023
	€	€	€	€
Category of activity
License fees excluding customisation	-	26,250	480,000	506,250
Service fees, transaction processing
and customisation	336,225	311,616	48,005	68,472
Maintenance fees	538,651	557,512	495,468	508,839
Comprehensive packages	59,500	59,500	59,500	59,500
	934,376	954,878	1,082,973	1,143,061

Significant changes in the contract liabilities balances during the period are as follows:

	THE GROUP		THE COMPANY
	2024	2023	2024	2023
	€	€	€	€
Balance at 1 January	954,878	1,642,951	1,143,061	1,781,124
Release of opening contract liabilities
to revenue	(726,995)	(1,462,264)	(615,056)	(1,233,791)
Release of opening contract liabilities
to other income	-	(120,000)	-	-
Increases due to cash received,
excluding amounts recognised as
revenue during the year	713,716	895,162	554,968	595,728
Other movements	(7,223)	(971)	-	-
Balance at 31 December	934,376	954,878	1,082,973	1,143,061

No revenue is recognised in the current reporting period from performance obligations satisfied (or

partially satisfied) in previous periods (2023: nil).

Annual Report and Financial Statements | Page 163

21 Revenue

21.1 Disaggregation of Revenue

Revenue is stated after deduction of sales rebates and indirect taxes and comprises revenue from

contracts with customers (except for operating lease income).

In the following tables, revenue is disaggregated by category of activity and timing of revenue

recognition. These also include a reconciliation of the disaggregated revenue with the Group’s reportable

segments.

	Software (Licensing)		Processing
	solutions		solutions		Merchant solutions		Total
	2024	2023	2024	2023	2024	2023	2024	2023
Category of
activity	€	€	€	€	€	€	€	€
License fees
excluding
customisation	5,343,893	5,413,775	-	-	-	-	5,343,893	5,413,775
Service fees,
transaction
processing and
customisation	2,553,247	3,295,119	19,431,416	21,249,763	-	-	21,984,663	24,544,882
Maintenance
fees	1,880,404	2,378,545	103,958	173,135	-	-	1,984,362	2,551,680
Comprehensive
packages	714,000	714,000	3,847,569	3,474,519	-	-	4,561,569	4,188,519
Operating lease
income	-	-	-	-	54,612	48,794	54,612	48,794
Acquiring
revenue	-	-	-	-	3,607,934	2,924,341	3,607,934	2,924,341
	10,491,544	11,801,439	23,382,943	24,897,417	3,662,546	2,973,135	37,537,033	39,671,991

	Software (Licensing)		Processing
	solutions		solutions		Merchant solutions		Total
	2024	2023	2024	2023	2024	2023	2024	2023
Timing of
revenue
recognition	€	€	€	€	€	€	€	€
At a point in time	-	-	436,931	-	128,688	249,514	565,619	249,514
Over time	10,491,544	11,801,439	22,946,012	24,897,417	3,533,858	2,723,621	36,971,414	39,422,477
	10,491,544	11,801,439	23,382,943	24,897,417	3,662,546	2,973,135	37,537,033	39,671,991

The revenue recognised in the Group’s statements of profit or loss during the year ended 31 December

2024 amounted to €3.0m (2023: €4.0m) in relation to implementation activities (without the sale of a

license) which are considered to be a distinct performance obligation resulting in the transfer of a

promised good or service to the customer.

The following table outlines the Company’s revenue disaggregated by category of activity, all of which

was recognised over time.

Annual Report and Financial Statements | Page 164

21 Revenue (Continued)

21.1 Disaggregation of Revenue (Continued)

2024 2023

€ €

Category of activity

Licence fees

3,563,354 3,640,207

Service fees

9,224,905

10,545,311

Maintenance fees

2,766,922

3,268,587

Comprehensive packages

714,000

16,269,181 18,168,105

In the following tables, revenue is disaggregated by primary geographical markets. The below table also

includes a reconciliation of the disaggregated revenue with the Group’s reportable segments.

	Software (Licensing)		Processing		Merchant
	solutions		solutions		solutions		Total
	2024	2023	2024	2023	2024	2023	2024	2023
Geographical
markets	€	€	€	€	€	€	€	€
Europe	4,898,604	6,004,418	6,624,696	7,385,357	3,662,546	2,973,135	15,185,846	16,362,910
Middle East	92,278	323,404	321,488	222,195	-	-	413,766	545,599
North America	5,081,393	5,086,618	10,590,515	12,087,111	-	-	15,671,908	17,173,729
South America	-	-	2,198,213	2,071,337	-	-	2,198,213	2,071,337
Asia	419,269	386,999	3,648,031	3,131,417	-	-	4,067,300	3,518,416
	10,491,544	11,801,439	23,382,943	24,897,417	3,662,546	2,973,135	37,537,033	39,671,991

As outlined in the above table, the Group’s revenue is mainly generated through sales transactions

concluded with customers situated in Europe and North America (2023: Europe and North America).

The below table outlines the Company’s revenue disaggregated by primary geographical markets.

2024 2023

€ €

Geographical markets

Europe

9,126,652 10,810,331

Middle East

92,278 323,404

North America

6,902,342 6,892,855

Asia

147,909 141,515

16,269,181 18,168,105

Annual Report and Financial Statements | Page 165

21 Revenue (Continued)

21.2 Contract Balances

The following table provides information about the Group’s and the Company's receivables, contract

assets and contract liabilities from contracts with customers.

	THE GROUP		THE COMPANY
	2024	2023	2024	2023
	€	€	€	€
Receivables, which are included
in ‘Trade and other receivables’	5,490,532	7,527,306	18,708,642	22,036,471
Contract assets	1,194,908	3,846,197	193,343	277,900
Contract liabilities	(934,376)	(954,878)	(1,082,973)	(1,143,061)

The contract assets primarily relate to the Group’s rights to consideration for work completed but not

billed at the reporting date. The contract assets are transferred to receivables when the rights become

unconditional. This usually occurs when the Group issues an invoice to the customer. The contract

liabilities primarily relate to the advance consideration received from customers, for which the revenue

recognition criteria are not yet met. Once the transfer of control to the customer happens, the contract

liability is then recognised as revenue.

21.3 Future Revenues

The following tables include revenue expected to be recognised in the future related to performance

obligations that are unsatisfied (or partially unsatisfied) at 31 December 2024 and 2023.

2024	THE GROUP
			2027 and
	2025	2026	beyond	Total
	€	€	€	€
License fees	-	-	-	-
Services fees	18,067	76,440	-	94,507

202

THE COMPANY

2025 2026

2027 and

beyond Total

€ € € €

License fees

- 14,400 465,600 480,000

Services fees

- 1,440 46,560 48,000

Annual Report and Financial Statements | Page 166

21 Revenue (Continued)

21.3 Future Revenues (Continued)

2023	THE GROUP
			2026 and
	2024	2025	beyond	Total
	€	€	€	€
License fees	-	-	300,000	300,000
Services fees	2,762,988	81,000	125,000	2,968,988

2023

THE COMPANY

2024 2025

2026 and

beyond Total

€ € € €

License fees

780,000

Services fees

173,000

The Group applies the practical expedient in paragraph 121 of IFRS 15 and does not disclose information

about remaining performance obligations that have original expected durations of one year or less. The

Group also does not disclose information about the remaining performance obligations that have a fixed

amount and for which the Group has a right to invoice the customer in the amount that corresponds

directly with the value of the entity’s performance completed to date in accordance with paragraph B16

of IFRS 15.

The above also excludes fees from transaction processing services that are recognised in terms of Note

4.11.2.

22 Profit Before Income Tax

The Group’s and Company’s profit before income tax includes total fees charged by the auditors of the

Group and Company for:

	THE GROUP		THE COMPANY
	2024	2023	2024	2023
	€	€	€	€
Audit fee	217,773	201,584	212,623	196,584
Total fees payable for other
assurance services	10,000	10,000	10,000	10,000
Total fees payable for
non-audit services other than
other assurance and tax advisory
services	33,000	30,000	-	-
	260,773	241,584	222,623	206,584

Annual Report and Financial Statements | Page 167

22 Profit Before Income Tax (Continued)

The fees payable to other auditors of the subsidiaries in relation to audit services for 2024 amount to

€117,515 (2023: €73,836).

22.1 Other Income

	THE GROUP		THE COMPANY
	2024	2023	2024	2023
	€	€	€	€
Other income	975,956	355,487	34,780	69,528
Dividend receivable	-	-	825,163	-
	975,956	355,487	859,943	69,528

Research grants of €947,053 are included in the Group’s ‘Other income’ line item for the year ended 31

December 2024 (2023: €nil). Such grants do not include unfulfilled conditions or other forms of

contingency. The Group did not benefit directly from any other forms of government assistance during

2024.

During the year ended 31 December 2024, the Company received dividends amounting to €825,163

from one of its subsidiaries through a set-off of outstanding invoices (2023: €nil).

During the year ended 31 December 2023, the Company was granted funds through schemes

administered by Malta Enterprise, MITA and other government bodies. These schemes consist of both

Maltese government schemes as well as schemes emanating from European Union funds. For 2024, no

grants have been provided (2023: €69,528) which are captured as part of other income in the note

above.

22.2 Other Expenses

	THE GROUP		THE COMPANY
	2024	2023	2024	2023
	€	€	€	€
Fines and penalties	-	33,122	-	10,151
Write-off on equipment	-	67,042	-	-
Loss on disposal of property, plant
and equipment	5,154	730	-	-
Other expenses	33,502	41,270	22	-
	38,656	142,164	22	10,151

Annual Report and Financial Statements | Page 168

22 Profit Before Income Tax (Continued)

22.3 Exchange Gain/(Loss) on Operating Activities

	THE GROUP		THE COMPANY
	2024	2023	2024	2023
	€	€	€	€
Unrealised operating exchange
gains/(losses)	740,146	(764,076)	459,778	(646,690)
Realised operating exchange
gains	51,669	177,713	39,111	192,257
	791,815	(586,363)	498,889	(454,433)

22.4 Impairment Loss/(Reversal of Impairment Loss) on Trade Receivables

and Contract Assets

	THE GROUP		THE COMPANY
	2024	2023	2024	2023
	€	€	€	€
Increase in/(reversal of) provision for
impairment loss on trade receivables
and contract assets	192,261	116,447	(29,738)	330,941
Bad debts written off	23	220,382	-	-
	192,284	336,829	(29,738)	330,941

Annual Report and Financial Statements | Page 169

22 Profit Before Income Tax (Continued)

22.5 Expenses by Nature

		THE GROUP		THE COMPANY
		2024	2023	2024	2023
	Notes	€	€	€	€
Wages and salaries	26	21,653,221	22,933,117	9,313,946	8,613,649
Directors’ emoluments	26	1,660,633	1,655,126	1,540,633	1,535,126
Non-competition benefits	26	68,378	70,971	60,871	63,094
Share-based arrangements	26	(482,286)	287,930	-	-
Post-employment benefits	26	16,133	75,041	-	-
Staff welfare		625,817	666,286	301,764	400,445
Subcontracted costs		1,009,487	1,201,117	4,637,844	5,247,335
Professional fees		1,122,567	1,493,592	188,407	261,708
Professional services		60,921	163,650	1,014	2,270
Consultancy fees		1,517,178	1,512,611	1,129,939	1,155,379
Audit fees		217,773	201,584	212,623	196,584
Accountancy fees		121,865	158,916	-	7,643
Water and electricity fees		181,938	153,321	70,475	83,431
Cleaning fees		149,653	165,319	61,603	64,860
Acquiring fees		2,012,428	1,623,496	-	-
Hosting services		1,165,367	907,778	-	-
Travelling expenses		458,064	532,729	132,648	240,623
Market research fees		-	203,200	-	203,200
Infrastructure costs		2,290,621	1,853,689	1,226,076	1,120,720
Advertising and promotion fees		73,773	206,515	56,603	106,299
Participation in fairs and seminars		39,196	164,888	6,178	112,025
Administrative subscriptions		150,929	161,269	122,036	138,338
Renewals of software licences		218,850	224,682	14,595	29,044
Card schemes		722,448	1,070,363	-	2,700
Telecommunication fees		187,516	264,752	75,428	131,859
Depreciation	8, 9	946,709	1,000,462	271,873	279,383
Amortisation	10	1,945,684	1,435,772	1,686,649	1,366,422
Insurance costs		920,380	803,518	134,169	165,427
Capitalised development costs		(3,251,287)	(4,421,024)	(3,542,059)	(5,078,047)
Impairment loss/(reversal of
impairment loss) on trade
receivables and contract assets	22.4	192,284	336,829	(29,738)	330,941
Recharge of expenses to
intercompany		-	-	(1,343,546)	(1,557,669)
Other expenses		768,843	631,578	251,640	110,578
		36,765,083	37,739,077	16,581,671	15,333,367

Capitalised development costs include capitalised expenditure of direct labour and overhead costs that

are directly attributable to preparing the Group’s product for its intended use. This is recognised in profit

or loss as incurred, as a reduction in expenses.

Annual Report and Financial Statements | Page 170

23 Finance Income and Finance Costs

THE GROUP		THE COMPANY
2024	2023	2024	2023
€	€	€	€

Bank interest income	2,769	2,744	28	19
Interest on loans receivable	-	-	127,744	118,653
Other interest and similar income	51,137	39,875	-	-
Finance income	53,906	42,619	127,772	118,672

Bank interest expense	(361,859)	(244,799)	(361,859)	(244,799)
Non-operating unrealised
exchange (loss)/gain	(1,037)	2,179	723	(586)
Interest expense on lease
liabilities and retirement benefit
obligation	(76,471)	(63,820)	(11,986)	(12,080)
Other	-	143	-	143
Finance costs	(439,367)	(306,297)	(373,122)	(257,322)

Net finance costs

(385,461)

(263,678)

(245,350)

(138,650)

All the above items of finance income and cost are recognised in profit or loss.

Annual Report and Financial Statements | Page 171

24 Income Tax Expense

24.1 Recognised in Profit or Loss

	THE GROUP		THE COMPANY
	2024	2023	2024	2023
	€	€	€	€
Current tax expense
Current tax charge for the year	258,669	648,693	-	540,322
Withholding tax on interest
received	4	4	3	3
	258,673	648,697	3	540,325
Deferred tax expense
Origination and reversal of
temporary differences	984,602	746,277	802,016	391,472
Income tax expense	1,243,275	1,394,974	802,019	931,797

24.2 Reconciliation of Effective Tax Rate

The income tax expense for the year and the result of the accounting profit multiplied by the tax rate

applicable in Malta, the Company’s country of incorporation, are reconciled as follows:

	THE GROUP		THE COMPANY
	2024	2023	2024	2023
	€	€	€	€
Profit before income tax	2,154,260	1,438,360	800,992	2,311,183
Income tax using the domestic
income tax rate of 35%	753,991	503,426	280,347	808,914
Effect of tax rates in foreign
jurisdictions	(538,650)	(50,942)	-	-
Tax effect of:
Non-taxable income	(29,406)	2,179	-	-
Non-deductible expenses	6,291	301,665	(12,173)	3,551
Different tax rates on bank
interest income	(5)	(3)	(5)	(3)
Taxable income that was
previously determined to be
non-deductible	(41,701)	-	-	-
Depreciation charges not
deductible by way of capital	294	(325)
allowances			-	-
Unrecognised deferred tax
assets on unrelieved tax	(606,321)	(596,328)
losses			-	-
Elimination of intercompany
transaction	709,314	891,440	-	-
Other disallowed expenses	989,468	343,862	533,850	119,335
Income tax expense	1,243,275	1,394,974	802,019	931,797

Annual Report and Financial Statements | Page 172

25 Earnings Per Share

On 31 December 2021, the issued share capital of the Company consisted of €11,578,114 in ordinary

shares of €0.06 each and €539,376 in preference shares of €0.06 each. On 7 November 2022, the

Company issued 24,121,158 ordinary shares fully paid and 1,123,729 preference shares, by way of

capitalisation of reserves, in the proportion of 1:8 for the year ended 31 December 2022. In November

2023, following the scrip issue of shares, the issued ordinary shares increased by 1,313,974 whilst the

issued preference shares increased by 28,320.

The calculation of basic earnings per share is calculated by dividing the profit attributable to owners of

the Company (the numerator) by the weighted average number of ordinary shares outstanding during

the year (the denominator).

The earnings used in the calculation is net of all expenses including taxes, minority interests and

preference dividends on preference shares which do not meet the definition of ordinary shares for the

purpose of this calculation. For the Group’s ordinary shares, the EPS was derived by dividing the profit

of the Group of €43,768 (2023: loss of €488,883) and the loss of the Company of €977 (2023: profit of

€1,312,353) by 218,403,701 (2023: 218,403,701), being the equivalent weighted-average number of

shares outstanding during the year.

For the Company’s preference shares, which meet the definition of another class of ordinary shares for

the purpose of this calculation, the EPS was derived by dividing the profit of the Group of €2,236 (2023:

loss of €24,972) and the loss of the Company of €50 (2023: profit of €67,033) by 10,141,649 (2023:

10,141,649), being the equivalent weighted-average number of shares outstanding during the year.

Earnings per ordinary share of the Group and the Company for the year ended 31 December 2024

amounted to €0.000 (2023: negative €0.002) and €0.000 (2023: positive €0.006) respectively.

Earnings per preference share of the Group and the Company for the same reporting period amounted

to €0.000 (2023: negative €0.002) and €0.000 (2023: €0.007) respectively.

Due to the variable element on the preference share entitlement, on the basis of trends in the current

share price, an assumption has been taken where the preference dividend will not exceed 10% of the

dividend on the ordinary shares.

Annual Report and Financial Statements | Page 173

26 Personnel Expenses

Personnel expenses incurred by the Group and the Company during the year are analysed as follows:

		THE GROUP		THE COMPANY
		2024	2023	2024	2023
	Note	€	€	€	€
Directors’ emoluments:
Fees		495,449	484,562	495,449	484,562
Remuneration		1,001,361	1,000,695	881,361	880,695
Indemnity insurance		88,391	94,437	88,391	94,437
Fringe benefits		75,432	75,432	75,432	75,432
Key management personnel
emoluments:
Remuneration		2,375,857	2,364,236	1,075,379	1,119,126
Non-competition benefits	27	68,378	70,971	60,871	63,094
Share-based arrangements	28	(145,827)	115,135	-	-
Fringe benefits		18,163	16,477	15,163	13,477
		3,977,204	4,221,945	2,692,046	2,730,823
Other personnel emoluments:
Wages and salaries		17,564,370	18,785,503	7,682,363	6,935,552
Social security contributions		1,694,831	1,766,901	541,041	545,494
Share-based arrangements	28	(336,459)	172,795	-	-
Post-employment benefits	27	16,133	75,041	-	-
		22,916,079	25,022,185	10,915,450	10,211,869

Personnel expenses incurred during the year include share-based arrangements.

Other personnel

expenses included in the above table are short-term in nature. Personnel expenses incurred during the

year do not include long-term employment benefits nor employment termination benefits.

The weekly average number of persons employed by the Group and the Company during the year were

as follows:

	THE GROUP		THE COMPANY
	2024	2023	2024	2023
	No.	No.	No.	No.
Operating	333	347	194	186
Management and administration	77	88	44	51
	410	435	238	237

Annual Report and Financial Statements | Page 174

27 Post-Employment Benefits

The Group has non-competition post-employment benefits and retirement benefits obligations.

The cost of providing for these post-employment benefits is determined using the projected unit credit

method, with estimations being carried out at each reporting date. The movement in the liability is as

follows:

	THE GROUP		THE COMPANY
	2024	2023	2024	2023
	€	€	€	€
Post-employment liabilities
Present value at 1 January	3,464,180	3,377,398	3,036,968	3,006,384
Recognised in profit or loss:
Discount unwind	68,378	70,971	60,871	63,094
Current service cost for the year	16,133	75,041	-	-
Interest cost for the year	2,870	5,418	-	-
Post-employment benefits
settled during the year	-	(26,440)	-	-
Recognised in other comprehensive
income:
Remeasurement adjustment	(4,742)	(37,221)	(20,775)	(32,510)
Effects of movement in
exchange rates	2,361	(987)	-	-
Present value at 31 December	3,549,180	3,464,180	3,077,064	3,036,968

Balances as at 31 December 2024 are deemed to fall due after more than one year. The re-measurement

adjustment for the Group and Company (excluding the retirement benefit obligation) is as a result of

financial actuarial losses resulting from an adjustment in the annual salary of certain executives. In case

of the retirement benefit obligation, the gain on obligation is as a result of changes in financial

assumptions and experience adjustments (the effects of differences between the previous actuarial

assumptions and what has actually occurred)

Post-employment benefit exposes the Group and the Company to the following risks:

i) Interest rate risk, since a decrease in market yield will increase the liability;

ii) Longevity risk - in case of non-competition post-employment benefits, the longer the key

management person remains in office the higher the liability. In case of retirement benefit

obligations, the present value of the defined benefit plan liability is calculated by reference to

the best estimate of the mortality of plan participants both during and after their employment.

An increase in the life expectancy of the plan participants will increase the plan’s liability;

iii) Investment risk - The present value of the defined benefit plan liability is calculated using a

discount rate determined by reference to high quality corporate bond yields; if the return on plan

asset is below this rate, it will create a plan deficit; and

iv) Salary risk - The present value of the defined benefit plan liability is calculated by reference to

the future salaries of plan participants. As such, an increase in the salary of the plan participants

will increase the plan’s liability.

Annual Report and Financial Statements | Page 175

27 Post-Employment Benefits (Continued)

27.1 Non-competition post-employment benefits

Non-competition post-employment benefits due to employees holding senior management positions are

payable upon cessation based on an agreed fixed amount or the then applicable annual salary. Such

benefits are commensurate to the non-compete clauses which bind personnel not to compete with the

Company, or its subsidiaries, for periods ranging between one and three years. This liability is recognised

in the statement of financial position and represents the present value of the defined benefit obligation

as at 31 December 2024 based on the following:

i) Discount rate, determined by reference to market yields at the end of the reporting period. This

discount rate is used to discount the liability to the net present value;

ii) The expectation of the respective employees’ termination date; and

iii) The expected future salary growth in line with the Group’s policies.

The discount rate is based on market yields arising on high-quality Corporate Bonds. Such yields are

denominated in the currency in which the benefits will be paid and have terms to maturity approximating

the estimated termination date. The Directors consider such rates to be an appropriate proxy to a high-

quality corporate bond.

When estimating the expected years to retirement, the Directors considered the current age and the

expected retirement age of key management personnel. An average of the remaining number of years

each member of key management personnel is expected to work until retirement age, is deemed to be

a more realistic period to consider compared to other terms.

A reasonable growth rate was used when determining the future salary growth rates to be deployed in

the valuation model, which assumption considered the general percentage increases of the more recent

years and also the Group’s budgeted projections.

The significant assumptions applied by the Company in respect of post-employment benefits were as

follows:

	THE GROUP		THE COMPANY
	2024	2023	2024	2023
Discount rates	2.00%	2.11%	2.00%	2.11%
Expected years to termination
(weighted average)	5.49 yrs	5.59 yrs	5.49 yrs	5.94 yrs
Rate of projected salary
Increase	3%	3%	3%	3%

Annual Report and Financial Statements | Page 176

27 Post-Employment Benefits (Continued)

27.1 Non-competition post-employment benefits (Continued)

Due to the nature of the assumptions, in accordance with the provisions of IAS 19, the Group and the

Company did not involve a qualified actuary in the measurement of their post-employment benefit

obligations. The Group and the Company are providing sensitivity analysis in connection with the key

assumptions applied for the post-employment benefits (excluding the retirement benefit obligation)

(note 27.1) and the retirement benefit obligation (note 27.2). This analysis is prepared at the end of each

reporting period and shows how the liability would be affected by such hypothetical changes in the

assumptions that were reasonably possible at that date, while holding all other assumptions constant.

The below sensitivity is for illustrative purposes only and may not be representative of the actual

changes in the post-employment benefits obligation. This is due to the fact that it is unlikely that a

change in assumptions would occur in isolation of one another.

• If the discount rate is 100 basis points higher (lower) with all other assumptions held constant, the

net present value of the post-employment benefit obligation decreases by €161,956 (increases by

€171,985) at Company level and decreases by €182,141 (increases by €193,358) at Group level.

• If the expected years to termination increases (decreases) by two years with all other assumptions

held constant, the net present value of the post-employment benefit obligation increases by

€39,568 (decreases by €48,599) at Company level and increases by €46,908 (decreases by

€55,800) at Group level.

• If the salaries of key management personnel increase (decrease) by an additional 1% over the

budgeted increase with all other assumptions held constant, the net present value of the post-

employment benefit obligation increases by €152,891 (decreases by €146,136) at Company level

and increases by €173,602 (decreases by €165,962) at Group level.

27.2 Retirement benefit obligation

RA 7641 under Philippines law provides for the minimum retirement pay to qualified private sector

employees in the Philippines. Benefits due under RA 7641 are accounted for as defined benefit plan

under IAS 19. An employee upon reaching the age of sixty (60) years or more, but not beyond sixty-five

(65) years which is declared the compulsory retirement age, who has served at least five (5) years in

the said establishment, may retire and shall be entitled to retirement pay equivalent to at least one-half

(1/2) month salary for every year of service, a fraction of at least six (6) months being considered as one

whole year. The Group is in compliance of the minimum requirement of RA 7641 as at December 31,

2024 and has a non-contributory defined benefit plan for its employees.

An actuary has been engaged to compute the valuation of the RS2 Software APAC Inc. Employees‘

Retirement Plan considering the existing employee data and the minimum retirement benefits under the

law. This liability is recognised in the statement of financial position and represents the present value of

the defined benefit obligation as at 31 December 2024 based on the following:

i) Discount rate at the end of the reporting period. This discount rate is used to discount the liability

to the net present value;

Annual Report and Financial Statements | Page 177

27 Post-Employment Benefits (Continued)

27.2 Retirement benefit obligation (Continued)

ii) The expectation of the respective employees’ termination date; and

iii) The expected future salary growth in line with the Group’s policies.

The significant assumptions applied by the Group in respect to the retirement benefit obligation were as

follows:

	THE GROUP
	2024	2023
Discount rates	5.94%	6.02%
Rate of projected salary increase	5%	2.5%

Amounts recognised in profit or loss in respect of these defined plans are as follows:

	THE GROUP		THE COMPANY
	2024	2023	2024	2023
	€	€	€	€
Service cost:
Current service cost	16,133	75,041	-	-
Net interest expense	2,870	5,418	-	-
Components of defined benefit cost
recognised in profit or loss	19,003	80,459	-	-

The current service cost has been included in profit or loss as cost of sales and the net interest expense

has been included within finance cost (Note 23). The remeasurement of the net defined benefit liability

is included in other comprehensive income.

Amounts recognised in other comprehensive income are as follows:

	THE GROUP		THE COMPANY
	2024	2023	2024	2023
	€	€	€	€
Actuarial gains and losses from
changes in financial assumptions	33,549	(3,811)	-	-
Actuarial gains and losses arising
from experience adjustments	(10,126)	(1,080)	-	-
Remeasurement of the net
defined benefit liability	23,423	(4,891)	-	-

Annual Report and Financial Statements | Page 178

27 Post-Employment Benefits (Continued)

27.2 Retirement benefit obligation (Continued)

The amount included in the statement of financial position arising from the group’s obligations in respect

of its defined benefit retirement benefit plans is as follows:

	THE GROUP		THE COMPANY
	2024	2023	2024	2023
	€	€	€	€
Present value of obligation	90,567	75,568	-	-
Benefits paid directly during the year	-	(26,440)	-	-
Effects on movement on
exchange rates	2,361	(987)	-	-
Net liability arising from defined
benefit obligation	92,928	48,141	-	-

In presenting this sensitivity analysis, the present value of the defined benefit obligation has been

calculated using the Projected Unit Credit method at the end of the reporting period, which is the same

as that applied in calculating the defined benefit obligation liability recognized in the statements of

financial position.

• If the discount rate is 50 basis points higher (lower) with all other assumptions held constant, the

net present value of the post-employment benefit obligation decreases by €8,193 (increases by

€9,155) at Group level.

• If the salaries of employees increase (decrease) by an additional 100 basis points over the

budgeted increase with all other assumptions held constant, the net present value of the post-

employment benefit obligation increases by €18,987 (decreases by €15,516) at Group level.

Annual Report and Financial Statements | Page 179

28 Share-Based Payment Arrangements

At 31 December 2024, the Group had the following share-based payment arrangements.

28.1 RS2 Employee Share Option Scheme (Equity-Settled)

An RS2 Employee Trust was set up during the year ended 31 December 2010 to purchase and hold

750,000 ordinary shares in the Company in order to satisfy the future exercise of options by employees

in accordance with the scheme.

The number of shares in respect of which share options were granted under the Scheme in a three (3)

year period was limited to 2% of the then issued share capital of the Company (850,000 shares). Options

were exercisable at any time up to eight (8) years from the date on which the options are granted and

the scheme was implemented during 2011, being the first year of performance, and 2013, being the last

year of performance.

During the year ended 31 December 2022, a total of 20,960 share options were exercised, whilst the

79,640 share options outstanding after 11 February 2022 expired. The weighted average exercise price

amounted to €0.66 during the year ended 31 December 2022.

This RS2 Employee Share Option Scheme expired in February 2022. The unexercised shares are no

longer available to be exercised by the employees and subsequent to the bonus issue of November

2022, the shares held by the trust amounted to 506,174 as at 31 December 2022.

28.2 Performance-Related Share-Based Payment (Cash-Settled)

In terms of an agreement entered into in February 2018, an executive (referred to as 'key management

personnel' in Note 26) of RS2 Software INC. was granted 12,500 new shares in the subsidiary (the ‘Award

shares’), with certain vesting conditions and restrictions. In terms of the agreement, upon transfer of the

Award shares to the individual, the latter obtained all the rights of a shareholder, including the right to

vote and to receive any dividends with respect to such shares, provided however that the individual may

not sell, transfer, pledge or assign unvested Award shares.

The Award shares shall vest monthly in equal instalments over a service period of 36 months with an

accelerated vesting upon a Change of Control Event during the vesting period and with the requirement

to forfeit all Award Shares (whether vested or unvested) in the case of termination or resignation during

a fixed specified period from the date of grant.

The arrangement also includes the right by the company to repurchase and the right by the executive

to sell the vested Award shares at fair market value in the case of termination or resignation happening

after the expiration of a fixed specified period. The aforementioned executive’s employment with RS2

Software INC. was terminated in December 2020, with all the remaining unvested shares becoming

automatically vested in terms of the arrangement, and accordingly, the right to sell the vested shares

was triggered.

Following the termination of employment of the executive, a management’s third party expert was

engaged in order to assist in the valuation of the minority stake held in RS2 Software INC. The liability

as at 31 December 2020, amounting to €1m (USD 1.2m), was based on that valuation, which was

approved by the Board of RS2 Software INC. In estimating the liability, certain assumptions were made,

as further herein.

Annual Report and Financial Statements | Page 180

28 Share-Based Payment Arrangements (Continued)

28.2 Performance-Related Share-Based Payment (Cash-Settled) (Continued)

RS2 Software INC.'s Board of Directors held several meetings and in-depth discussions whereby the

Board agreed to offer a maximum amount of €1.32m (USD 1.5m) in this respect. The Board of the

subsidiary believes that this amount exceeds the fair market value of the 12,500 shares. The subsidiary’s

offer was accepted by the executive in the first quarter of 2022 as full and final settlement of the share

buy-back transaction.

In terms of agreements entered into in March 2019, five management personnel of RS2 Software INC.

were granted 5,626 share options in the subsidiary (the ‘share options’), with certain vesting conditions.

The weighted average exercise price amounts to USD 7.12.

The share options shall vest to 75% after not less than three but not more than four years of continued

service completed since the grant date and to 100% after not less than four years of continued service

are completed since the grant date. Options will become fully exercisable and vested as of the time of

a Change in Control with the requirement to forfeit share options (vested and unvested) in the case of

termination for cause. Upon termination, all shares issued upon exercise of the options shall be subject

to a call option by the company to repurchase at fair market value. Based on the terms of the contracts,

it is concluded that the company has a present obligation to settle in cash, hence their classification as

cash-settled share-based payment arrangements.

By December 2020, three of the five individuals terminated their employment, while the remaining two

individuals signed an amendment to the original agreement granting the share options to be effective

from their respective employment start date. In 2024, one of these two remaining individuals terminated

employment and received an amount of €46,194 (USD 50,000) in exchange for the 938 share options

held. Therefore, from the total allocated share options, 625 share options remain in effect as at 31

December 2024 (2023: 1,563 share options).

The key assumptions used in the calculation of the value of the cash-settled share-based awards for

the remaining one management personnel (2023: two management personnel) of RS2 Software INC. are

the forecasted net cash flows and the discount rate used in a risk-adjusted cash flow forecast, with the

pre-tax discount rate used being 21.3%.

The outstanding share options were fully vested by 31 December 2024 (2023: 100%).

	THE GROUP		THE COMPANY
	2024	2023	2024	2023
	€	€	€	€
Current liabilities
Share-based payments	159,884	624,567	-	-

Annual Report and Financial Statements | Page 181

29 Capital Commitments

The Group and the Company have no capital commitments in 2024 and 2023.

30 Related Parties

30.1 Parent and Ultimate Controlling Party

The Company is owned by ITM Holding Limited, a local registered company which holds 50.27% (2023:

50.27%) of ordinary shares in RS2 p.l.c. ITM’s registered office is 66, Old Bakery Street, Valletta, Malta.

The ultimate parent company of the Group is RS2 Holding GmbH, a company registered in Germany. In

his capacity as ultimate shareholder of ITM, Radi Abd El Haj indirectly holds 50.27% (2023: 50.27%) of

the issued ordinary share capital and directly holds 7.2% (2023: 7.2%) of the issued preference share

capital of the Company.

Given that the Preference Shareholders shall not, save for specific circumstances as documented in the

Company’s Memorandum and Articles of Association, have the right to vote at any general meeting of

the Company, as disclosed in Note 16.1, as a result, the voting rights vested in the Ordinary Shareholders

were not diluted as a consequence of the preference share issuance that happened in 2021.

30.2 Identity of Related Parties

The Company has a related party relationship with its parent company, its subsidiaries, the Company’s

key management personnel (including its Directors and the Company’s senior management), and entities

in which the Directors or their immediate relatives have an ownership interest and management entities

that provide key management personnel services to the Group (“other related parties”). The

compensation of such management entities amounts to €64,568 (2023: €56,412) and is included in the

table below as part of the legal and administrative services.

The Company uses the legal services of GTG Advocates in relation to advice given to the Company.

Amounts were billed based on normal market rates for such services and were due and payable under

normal payment terms. The Company also uses consultancy services by one of the Directors amounting

to €17,347 (2023: €42,354).

Directors of the Company hold directly and indirectly 51.6% (2023: 51.6%) of the voting shares of the

Company.

Annual Report and Financial Statements | Page 182

30 Related Parties (Continued)

30.3 Related Party Transactions

	THE GROUP		THE COMPANY
	2024	2023	2024	2023
	€	€	€	€
Subsidiaries
Support services provided to	-	-	11,130,456	11,698,878
Support services provided by	-	-	(4,637,844)	(4,443,356)
Other related parties
Depreciation charge on
right-of-use asset	251,419	249,424	-	-
Interest expense on lease
liability	30,416	33,153	-	-
Legal and administrative
services provided by	171,157	210,115	106,589	153,703
Support services provided to	3,191,356	3,456,895	3,191,356	3,456,895
Support services not yet
invoiced provided to	188,319	342,449	188,319	342,449

30.4 Related Party Balances

The Group and Company enter into transactions with key management personnel during the course of

their normal business. Transactions with key management personnel are set out in Notes 26 and 28 to

these financial statements but are not included in Note 30.3.

Additional information on amounts due

to/by related parties is set out in Notes 13, 14, 19 and 20 to these financial statements. Such amounts

due to/by related parties are unsecured, repayable on demand and do not bear any interest other than

disclosed in those notes. In addition, as further disclosed in Note 9.1.4, the Group has agreements for

leased properties in Neu-Isenburg, Germany, with a related party. As at 31 December 2024, ROU assets

amounting to €1,274,483 (2023: €1,525,902) and lease liabilities amounting to €1,325,829 (2023:

€1,571,412) relating to this lease are included within the Group’s Statements of Financial Position. The

depreciation charge for the year in relation to this asset amounts to €251,419 (2023: €249,424) and the

interest expense for the year in relation to this lease liability amounted to €30,416 (2023: €33,153).

Annual Report and Financial Statements | Page 183

31 Provisions and Contingent Liabilities

Significant changes in the provision balances for the Group and the Company during the period are as

follows:

THE GROUP
	Legal disputes	Provision for
	with former	legal claim by
	employees	debtor	Total
	€	€	€
At 1 January 2023	33,922	116,523	150,445
Utilisation of provision	(24,678)	-	(24,678)
Decrease in provision during the year	(7,869)	(116,523)	(124,392)
Foreign exchange movements
	(478)	-	(478)
At 31 December 2023	897	-	897
At 1 January 2024	897	-	897
Foreign exchange movements	15	-	15
At 31 December 2024	912	-	912

THE COMPANY
	Provision for
	legal claim by
	debtor	Total
	€	€
At 1 January 2023	116,523	116,523
Decrease in provision during the year	(116,523)	(116,523)
At 31 December 2023	-	-
At 31 December 2024	-	-

The amounts in respect of the provisions detailed above in Notes 31.1 to 31.2 are expected to be settled

within the next year, although an element of uncertainty still exists.

31.1 Provision for Legal Claim by Debtor

During the year ended 31 December 2021, a provision was booked in relation to a claim by one of the

Company’s debtors. Although it transpired that the Company was not legally obliged to settle any

amounts in relation to the claim raised, the Company offered the debtor an amount of €116,523 as a

discount against future services. During the financial year ending 31 December 2023, this provision has

been reversed.

Annual Report and Financial Statements | Page 184

31 Provisions and Contingent Liabilities (Continued)

31.2 Legal Disputes with Former Employees

During the year ended 31 December 2021, a provision was booked in relation to an ongoing dispute with

a former employee of RS2 p.l.c., whose employment was terminated on 26 May 2020. During the first

quarter of 2022, an out of court settlement agreement took place in respect of this legal obligation by

RS2 p.l.c. and a payment of €12,579 took place.

Moreover, during 2022, a provision was booked in relation to an ongoing dispute with a former employee

of RS2 Software INC., whose employment was terminated in September 2022. In 2023, the US

subsidiary settled the dispute through a non-public settlement agreement of €24,678, with the

remaining portion of the provision amounting to €7,869 being reversed.

32 Cash flow information

32.1 Non-cash investing and financing information

The Company had no material non-cash investing and financing activity-related transactions for the

years ended 31 December 2024 and 2023, except for the following:

• In 2024, the Company recognised additional right-of-use assets amounting to €22,360 (2023:

€nil) – Note 9.

• Outstanding cash dividends at 31 December 2024 amounted to €41,275 (2023: €562,318) –

Note 19.

• In 2024, cash dividend amounting to €825,163 that was received from a subsidiary company

and that was set-off against the Company’s payables balance due to this subsidiary.

The Group had no material non-cash investing and financing activity-related transactions for the years

ended 31 December 2024 and 2023, except for the following:

• In 2024, the Group recognised additional right-of-use assets amounting to €781,534 (2023:

€376,989) – Note 9.

• The Group recognised additional finance lease receivable amounting to €123,372 in 2024 (2023:

€151,104). This amount has come from reclassifying a portion of the Group's inventory – Note 9.

• Outstanding cash dividends at 31 December 2024 amounted to €41,275 (2023: €562,318) –

Note 19.

• No additions to PPE have been financed by offset with the loans receivable from RS Consult in

2024 (2023: €196,285)

Annual Report and Financial Statements | Page 185

32 Cash flow information (continued)

32.1 Non-cash investing and financing information (continued)

The tables below details changes in the Group’s liabilities arising from financing activities as at 31 December 2024 and 2023:

									Foreign
	31			Acquisition	Payments	Payment of	Employee	Payment of	Currency	31
	December	Interest	Interest	of right-of-	of lease	bank	Share	share	Translation	December
Group	2023	charged	paid	use assets	liabilities	borrowings	Benefits	options	Reserve	2024
	€	€	€	€	€	€	€	€	€	€
Bank
borrowings	691,816	24,504	(27,704)	-	-	(510,717)	-	-	-	177,899
Lease
liabilities	2,268,299	73,601	(73,601)	772,167	(488,799)	-	-	-	(1,575)	2,550,092
Employee
Benefits	624,567	-	-	-	-	-	(437,964)	(46,194)	19,475	159,884

								Foreign
	31			Acquisition	Payments	Payment of	Employee	Currency	31
	December	Interest	Interest	of right-of-	of lease	bank	Share	Translation	December
Group	2022	charged	paid	use assets	liabilities	borrowings	Benefits	Reserve	2023
	€	€	€	€	€	€	€	€	€
Bank
borrowings	1,132,039	53,331	(49,391)	-	-	(444,163)	-	-	691,816
Lease
liabilities	2,412,974	58,402	(58,402)	376,989	(518,544)	-	-	(3,120)	2,268,299
Employee
Benefits	355,163	-	-	-	-	-	287,930	(18,526)	624,567

Annual Report and Financial Statements | Page 186

32 Cash flow information (continued)

32.1 Non-cash investing and financing information (continued)

The tables below details changes in the Company’s liabilities arising from financing activities as at 31 December 2024 and 2023:

				Acquisition of		Payment of
	31 December	Interest		right-of-use	Payments of	bank	31 December
Company	2023	charged	Interest paid	assets	lease liabilities	borrowings	2024
	€	€	€	€	€	€	€
Bank
borrowings	691,816	24,504	(27,704)	-	-	(510,717)	177,899
Lease liabilities	418,614	11,986	(11,986)	22,360	(20,917)	-	420,057

	31 December			Payments of	Payment of bank	31 December
Company	2022	Interest charged	Interest paid	lease liabilities	borrowings	2023
	€	€	€	€	€	€
Bank borrowings	1,132,039	53,331	(49,391)	-	(444,163)	691,816
Lease liabilities	434,943	12,080	(12,080)	(16,329)	-	418,614

Annual Report and Financial Statements | Page 187

33 Subsequent Events

33.1 Resignation of Non-Executive Director

On 3 April 2025 the Company announced that Ms Natalie Strange resigned from her post of Non-

Executive Director.

34 Comparative Information

Comparative figures disclosed in the main components of these financial statements have been

reclassified to conform with the current year’s disclosure format for the purpose of compliance with the

International Financial Reporting Standards, and the requirements of the Maltese Companies Act (Cap.

386).

In the Statement of Financial Position, under Group, an amount of €741,456 has been reclassified from

“Cash at bank and in hand” to “Restricted cash”. Such amounts relate to restricted cash held at bank by

RS2 Financial Services GmbH (reported erroneously as €65,299 in prior year financial statements under

Note 15).

31 December 2023	THE GROUP
	(restated)	(as reported)
	€	€
Restricted cash	741,456	-
Cash at bank and in hand	2,932,711	3,674,167

Note 15 has also been restated as outlined below:

31 December 2023	THE GROUP
	(restated)	(as reported)
	€	€
Cash at bank	2,928,614	3,670,070
Restricted cash at bank in
RS2 Financial Services GmbH	741,456	-

In line with the above, another restatement has been reflected in Note 19, whereby an additional line

item “Amounts due to customers” has been added and the amount was reclassed from the line item

“Other payables”.

31 December 2023	THE GROUP
	(restated)	(as reported)
	€	€
Amounts due to customers	743,116	-
Other payables	632,523	1,375,639

Annual Report and Financial Statements | Page 188

Independent

Auditors` Report

Annual Report and Financial Statements | Page 189

Deloitte Audit Limited is a limited liability company registered in Malta with registered office at Deloitte Place, Triq l-Intornjatur, Central Business District,

CBD 3050, Malta. Deloitte Audit Limited forms part of Deloitte Malta. Deloitte Malta consists of (i) Deloitte, a civil partnership regulated in terms of the

laws of Malta, constituted between limited liability companies, operating at Deloitte Place, Triq l-Intornjatur, Zone 3, Central Business District, Birkirkara

CBD 3050, Malta and (ii) the affiliated operating entities: Deloitte Advisory and Technology Limited (C23487), Deloitte Audit Limited (C51312), Deloitte

Corporate Services Limited (C103276) and Deloitte Tax Services Limited (C51320), all limited liability companies registered in Malta with registered

offices at Deloitte Place, Triq l-Intornjatur, Zone 3, Central Business District, Birkirkara CBD 3050, Malta. Deloitte Corporate Services Limited is

authorised to act as a Company Service Provider by the Malta Financial Services Authority. Deloitte Audit Limited is authorised to provide audit services

in Malta in terms of the Accountancy Profession Act. Deloitte Malta is an affiliate of Deloitte Central Mediterranean S.r.l., a company limited by guarantee

registered in Italy with registered number 09599600963 and its registered office at Via Santa Sofia no. 28, 20122, Milan, Italy. For further details, please

visit www.deloitte.com/mt/about.

Deloitte Central Mediterranean S.r.l. is the affiliate for the territories of Italy, Greece and Malta of Deloitte NSE LLP, a UK limited liability partnership and

member firm of Deloitte Touche Tohmatsu Limited, a UK private company limited by guarantee (“DTTL”). DTTL and each of its member firms are legally

separate and independent entities. DTTL, Deloitte NSE LLP and Deloitte Central Mediterranean S.r.l. do not provide services to clients. Please see

www.deloitte.com/about to learn more about our global network of member firms.

Independent Auditors’ Report

to the members of

RS2 p.l.c

Report on the Audit of the Financial Statements

Opinion

We have audited the individual financial statements of RS2 p.l.c. (the Company) and the consolidated

financial statements of the Company and its subsidiaries (together, the Group), set out on pages 59 to

187, which comprise the statements of financial position of the Company and the Group as at 31

December 2024, and the statements of profit or loss, the statements of comprehensive income,

statements of changes in equity and statements of cash flows of the Company and the Group for the

year then ended, and notes to the financial statements, including material accounting policy information.

In our opinion, the accompanying financial statements give a true and fair view of the financial position

of the Company and the Group as at 31 December 2024, and of the Company’s and the Group’s financial

performance and cash flows for the year then ended in accordance with IFRS Accounting Standards as

issued by the International Accounting Standards Board (IASB) as adopted by the European Union and

have been properly prepared in accordance with the requirements of the Maltese Companies Act (Cap.

386).

Basis for Opinion

We conducted our audit in accordance with International Standards on Auditing (ISAs). Our

responsibilities under those standards are further described in the

Auditor’s Responsibilities for the Audit

of the Financial Statements

section of our report. We are independent of the Company and the Group in

accordance with the International Ethics Standards Board for Accountants’

International Code of Ethics

for Professional Accountants including International Independence Standards

(IESBA Code), as

applicable to audits of financial statements of public interest entities, together with the

Accountancy

Profession (Code of Ethics for Warrant Holders) Directive

(Maltese Code) that are relevant to our audit

of the financial statements of public interest entities in Malta. We have fulfilled our other ethical

responsibilities in accordance with the IESBA Code and the Maltese Code. We believe that the audit

evidence we have obtained is sufficient and appropriate to provide a basis for our opinion. In conducting

our audit, we have remained independent of the Company and the Group and

Deloitte Audit Ltd.

Deloitte Place,

Triq l-Intornjatur, Zone 3,

Central Business District,

Birkirkara CBD 3050,

Malta

Tel: +356 2343 2000, 2134 5000

Fax: +356 2134 4443

info@deloitte.com.mt

www.deloitte.com/mt

Company Ref No: C51312

VAT Reg No: MT2013 6121

Exemption number: EXO2155

Annual Report and Financial Statements | Page 190

Independent Auditors’ Report (continued)

to the members of

RS2 p.l.c

have not provided any of the non-audit services prohibited by article 18A(1) of the Maltese Accountancy

Profession Act (Cap. 281).

Key Audit Matters

Key audit matters are those matters that, in our professional judgment, were of most significance in our

audit of the financial statements of the current period and include the most significant assessed risks of

material misstatement (whether or not due to fraud) that we identified. The key audit matters described

below were addressed in the context of our audit of the individual and consolidated financial statements

as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these

matters.

Impairment testing of goodwill relating to the Group’s US and German operations recognised in the

consolidated financial statements.

Under IFRSs, the Group is required to annually test the amount of goodwill recognised in the

consolidated financial statements for impairment. These impairment tests are significant to our audit

because the amount of goodwill as at 31 December 2024 relating to the Group’s US operations amounted

EUR0.7m

and the amount of goodwill that arose on the acquisition of Kalicom business in Germany

amounted to

EUR1.3m

and these amounts are material to the consolidated financial statements. In

addition, the directors’ assessment process is highly judgmental and is based on assumptions, such as

forecasted business growth rates, profit margins, weighted average cost of capital and effective tax

rates, which are affected by expected future market or economic conditions.

Our audit procedures to address the risk of material misstatement on this matter included:

• Evaluating the design and implementation of key controls surrounding the Group’s impairment

assessment process.

• Involving an internal valuation specialist to assess the Group’s impairment testing methodology

determined from value-in-use calculations and the key assumptions applied by the directors for this

purpose.

• Performing scenario analysis of the impairment testing calculations to changes in key inputs such

as the projected growth rate and the weighted average cost of capital.

• Reviewing the impairment testing calculations for reasonability, mathematical accuracy and

consistency.

We also focused on the adequacy of the Group’s disclosures about those assumptions to which the

outcome of the impairment test is most sensitive, that is, those that have the most significant effect on

the determination of the recoverable amount of goodwill.

Annual Report and Financial Statements | Page 191

Independent Auditors’ Report (continued)

to the members of

RS2 p.l.c

The Group’s disclosures about goodwill are included in note 10, which specifically explains that the

directors have assessed the carrying amount of goodwill as at 31 December 2024 to be recoverable and

that there is no impairment in the value of the goodwill.

Impairment testing of investment in US subsidiary and German subsidiary held by the Company in the

individual financial statements

As at 31 December 2024, the Company held an investment with a carrying amount of

EUR11.7m

in its US

subsidiary, RS2 Software Inc. The Company performed an impairment assessment of its investment in

this subsidiary by computing its value-in-use in conjunction with the testing of impairment of goodwill

arising on the US operations.

In addition, as at 31 December 2024, the Company also held an investment with a carrying amount of

EUR8.1m

in the German intermediate holding company, RS2 Merchant Services Europe GmbH. The

Company performed an impairment assessment of its investment in this subsidiary by computing the

value-in-use arising from the two subsidiaries held by RS2 Merchant Services Europe GmbH, comprising

the business of RS2 Zahlungssysteme GmbH (previously Kalicom Zahlungssysteme KG) and the

acquiring business being developed by RS2 Financial Services GmbH.

Impairment testing of investment in US subsidiary and German subsidiary held by the Company in the

individual financial statements (continued)

The carrying amount of these investments are material to the Company’s financial statements and the

directors’ assessment process is highly judgmental and is based on assumptions, such as forecast

business growth rates, profit margins, weighted average cost of capital and effective tax rates, which

are affected by expected future market or economic conditions.

Our procedures to address the risk of material misstatement arising on this matter included:

• Evaluating the design and implementation of key controls surrounding the Company’s impairment

assessment process.

• Involving an internal valuation specialist to assess the Company’s impairment testing methodology

determined from value-in-use calculations and the key assumptions applied by the directors for this

purpose.

• Performing scenario analysis of the impairment testing calculations to changes in key inputs such

as the projected growth rate and the weighted average cost of capital.

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to the members of

RS2 p.l.c

• Reviewing the impairment testing calculations for reasonability, mathematical accuracy and

consistency.

We also focused on the adequacy of the Company’s disclosures in notes 10 and 11 about the key

assumptions that were used in the value-in-use calculations which have the most significant effect on

the determination of the recoverable amount of the investments in subsidiaries. The disclosures state

that the recoverable amount of each of these investments in subsidiaries was determined by the

Company to be higher than its carrying amount.

Other Information

The directors are responsible for the other information. The other information comprises (i) the Who We

Are section, (ii) the Chairman’s statement, (iii) the CEO’s statement, (iv) the Board of Directors’ section,

(v) the Corporate Social Responsibility section, (vi) the Directors’ Report, (vii) the Corporate Governance

Statement of Compliance, (viii) the Remuneration Report required under Rule 12.26K of the Capital

Markets Rules, (viii) the Statement of Directors pursuant to Capital Market Rule 5.68, (ix) Company

Information and (x) the Directors’ responsibilities for the financial statements, which we obtained prior

to the date of this auditor’s report.

However, the other information does not include the individual and consolidated financial statements,

our auditor’s report and the relevant tagging applied in accordance with the requirements of the

European Single Electronic Format, as defined in our

Report on Other Legal and Regulatory

Requirements.

Except for our opinions on the Directors’ Report in accordance with the Maltese Companies Act (Cap.

386), and on the Corporate Governance Statement of Compliance and on the Remuneration Report in

accordance with the Capital Markets Rules issued by the Malta Financial Services Authority, our opinion

on the financial statements does not cover the other information and we do not express any form of

assurance conclusion thereon.

Other Information (continued)

In connection with our audit of the financial statements, our responsibility is to read the other information

identified above and, in doing so, consider whether the other information is materially inconsistent with

the financial statements or our knowledge obtained in the audit or otherwise appears to be materially

misstated. If, based on the work we have performed, we conclude that there is a material misstatement

of this other information, we are required to report that fact. We have nothing to report in this regard.

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RS2 p.l.c

With respect to the Directors’ Report, we also considered whether the Directors’ Report includes the

disclosure requirements of Article 177 of the Companies Act (Cap. 386), and the statement required by

Rule 5.62 of the Capital Markets Rules on the Company’s and the Group’s ability to continue as a going

concern.

In accordance with the requirements of sub-article 179(3) of the Maltese Companies Act (Cap. 386) in

relation to the Directors’ Report on pages 28 to 40, in our opinion, based on the work undertaken in the

course of the audit:

• the information given in the Directors’ Report for the financial year for which the financial statements

are prepared is consistent with those financial statements; and

• the Directors’ Report has been prepared in accordance with applicable legal requirements.

In the light of the knowledge and understanding of the Company, the Group and their environment

obtained in the course of the audit, we have not identified any material misstatements in the Directors’

Report.

Responsibilities of the Directors and the Audit Committee for the Financial Statements

As explained more fully in the Statement of Directors’ responsibilities on page 57, the directors are

responsible for the preparation of financial statements that give a true and fair view in accordance with

IFRSs as adopted by the European Union and the requirements of the Maltese Companies Act (Cap.

386), and for such internal control as they determine is necessary to enable the preparation of financial

statements that are free from material misstatement, whether due to fraud or error.

In preparing the financial statements, the directors are responsible for assessing the Company’s and the

Group’s ability to continue as a going concern, disclosing, as applicable, matters related to going concern

and using the going concern basis of accounting unless the directors either intend to liquidate the

Company and/or the Group or to cease operations, or have no realistic alternative but to do so.

The directors have delegated the responsibility for overseeing the Company’s and the Group’s financial

reporting process to the Audit Committee.

Auditor’s Responsibilities for the Audit of the Financial Statements

This report, including the opinions set out herein, has been prepared for the Company’s members as a

body in accordance with articles 179, 179A and 179B of the Companies Act (Cap. 386).

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Independent Auditors’ Report (continued)

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RS2 p.l.c

Our objectives are to obtain reasonable assurance about whether the financial statements as a whole

are free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that

includes our opinions in accordance with articles 179, 179A and 179B of the Companies Act (Cap. 386).

Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in

accordance with ISAs will always detect a material misstatement when it exists. Misstatements can arise

from fraud or error and are considered material if, individually or in the aggregate, they could reasonably

be expected to influence the economic decisions of users taken on the basis of these financial

statements.

Auditor’s Responsibilities for the Audit of the Financial Statements (continued)

In terms of article 179A(4) of the Maltese Companies Act (Cap. 386), the scope of our audit does not

include assurance on the future viability of the Company and the Group or on the efficiency or

effectiveness with which the directors have conducted or will conduct the affairs of the Company and

the Group. The financial position of the Company and/or the Group may improve, deteriorate, or

otherwise be subject to change as a consequence of decisions taken, or to be taken, by the management

thereof, or may be impacted by events occurring after the date of this opinion, including, but not limited

to, events of force majeure.

As such, our audit report on the Company’s and the Group’s historical financial statements is not intended

to facilitate or enable, nor is it suitable for, reliance by any person, in the creation of any projections or

predictions, with respect to the future financial health and viability of the Company and/or the Group,

and cannot therefore be utilised or relied upon for the purpose of decisions regarding investment in, or

otherwise dealing with (including but not limited to the extension of credit), the Company and/or the

Group. Any decision-making in this respect should be formulated on the basis of a separate analysis,

specifically intended to evaluate the prospects of the Company and/or the Group and to identify any

facts or circumstances that may be materially relevant thereto.

As part of an audit in accordance with ISAs, we exercise professional judgment and maintain professional

scepticism throughout the audit. We also:

• Identify and assess the risks of material misstatement of the financial statements, whether due

to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit

evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not

detecting a material misstatement resulting from fraud is higher than for one resulting from error,

as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override

of internal control.

• Obtain an understanding of internal control relevant to the audit in order to design audit

procedures that are appropriate in the circumstances, but not for the purpose of expressing an

opinion on the effectiveness of the Company’s and the Group’s internal control.

• Evaluate the appropriateness of accounting policies used and the reasonableness of accounting

estimates and related disclosures made by the directors.

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RS2 p.l.c

• Conclude on the appropriateness of the directors’ use of the going concern basis of accounting

and, based on the audit evidence obtained, whether a material uncertainty exists related to

events or conditions that may cast significant doubt on the Company’s and the Group’s ability to

continue as a going concern. If we conclude that a material uncertainty exists, we are required

to draw attention in our auditor’s report to the related disclosures in the financial statements or,

if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit

evidence obtained up to the date of our auditor’s report. However, future events or conditions

may cause the Company and/or the Group to cease to continue as a going concern. Accordingly,

in terms of generally accepted auditing standards, the absence of any reference to a material

uncertainty about the Company’s and/or the Group’s ability to continue as a going concern in our

auditor’s report should not be viewed as a guarantee as to the Company’s and/or the Group’s

ability to continue as a going concern.

Auditor’s Responsibilities for the Audit of the Financial Statements (continued)

• Evaluate the overall presentation, structure and content of the financial statements, including

the disclosures, and whether the financial statements represent the underlying transactions and

events in a manner that achieves fair presentation.

• Plan and perform the group audit to obtain sufficient appropriate audit evidence regarding the

financial information of the entities or business units within the group as a basis for forming an

opinion on the consolidated financial statements. We are responsible for the direction,

supervision and review of the audit work performed for purposes of the group audit. We remain

solely responsible for our audit opinion.

For the avoidance of doubt, any conclusions concerning the adequacy of the capital structure of the

Company, including the formulation of a view as to the manner in which financial risk is distributed

between shareholders and/or creditors cannot be reached on the basis of these financial statements

alone and must necessarily be based on a broader analysis supported by additional information.

We communicate with the Audit Committee regarding, among other matters, the planned scope and

timing of the audit and significant audit findings, including any significant deficiencies in internal control

that we identify during our audit.

We also provide the Audit Committee with a statement that we have complied with relevant ethical

requirements regarding independence, and to communicate with them all relationships and other

matters that may reasonably be thought to bear on our independence, and where applicable, related

safeguards.

From the matters communicated with the Audit Committee, we determine those matters that were of

most significance in the audit of the individual and consolidated financial statements of the current

period and are therefore the key audit matters. We describe these matters in our auditor’s report unless

law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances,

we determine that a matter should not be communicated in our report because the adverse

consequences of doing so would reasonably be expected to outweigh the public interest benefits of

such communication.

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Independent Auditors’ Report (continued)

to the members of

RS2 p.l.c

Report on Other Legal and Regulatory Requirements

Report on compliance of the Annual Financial Report with the requirements of the European Single

Electronic Format Regulatory Technical Standard as specified in the Commission Delegated Regulation

(EU) 2019/815 (the "ESEF RTS”)

Pursuant to Capital Markets Rule 5.55.6 issued by the Malta Financial Services Authority, we have

undertaken a reasonable assurance engagement in accordance with the requirements of the

Accountancy Profession (European Single Electronic Format) Assurance Directive

issued by the

Accountancy Board in terms of the Accountancy Profession Act (Cap. 281), hereinafter referred to as

the “ESEF Directive 6”, on the annual financial report of the Company and the Group for the year ended

31 December 2024, prepared in a single electronic reporting format.

Solely for the purposes of our reasonable assurance report on the compliance of the annual financial

report with the requirements of the ESEF RTS, the “Annual Financial Report” comprises the Directors’

Report, Directors’ responsibilities for the Financial Statements, the Corporate Governance Statement of

Compliance, the annual financial statements, Company Information, and the Independent auditor’s

report, as set out in Capital Markets Rules 5.55.

Report on Other Legal and Regulatory Requirements

Report on compliance of the Annual Financial Report with the requirements of the European Single

Electronic Format Regulatory Technical Standard as specified in the Commission Delegated Regulation

(EU) 2019/815 (the "ESEF RTS”) (continued)

Responsibilities of the Directors for the Annual Financial Report

The directors are responsible for:

• the preparation and publication of the Annual Financial Report, including the consolidated financial

statements and the relevant tagging requirements therein, as required by Capital Markets Rule

5.56A, in accordance with the requirements of the ESEF RTS,

• designing, implementing, and maintaining internal controls relevant to the preparation of the Annual

Financial Report that is free from material non-compliance with the requirements of the ESEF RTS,

whether due to fraud or error,

and consequently, for ensuring the accurate transfer of the information in the Annual Financial Report

into a single electronic reporting format.

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Independent Auditors’ Report (continued)

to the members of

RS2 p.l.c

Auditor’s responsibilities for the Reasonable Assurance Engagement

Our responsibility is to obtain reasonable assurance about whether the Annual Financial Report, including

the consolidated financial statements and the relevant electronic tags therein comply, in all material

respects, with the ESEF RTS, based on the evidence we have obtained. We conducted our reasonable

assurance engagement in accordance with the requirements of ESEF Directive 6.

The nature, timing and extent of procedures we performed, including the assessment of the risks of

material non-compliance with the requirements of the ESEF RTS, whether due to fraud or error, were

based on our professional judgement and included:

• Obtaining an understanding of the Company’s and the Group’s internal controls relevant to the

financial reporting process, including the preparation of the Annual Financial Report, in accordance

with the requirements of the ESEF RTS, but not for the purpose of expressing an assurance opinion

on the effectiveness of these controls.

• Obtaining the Annual Financial Report and performing validations to determine whether the Annual

Financial Report has been prepared in accordance with the requirements of the technical

specifications of the ESEF RTS.

• Examining the information in the Annual Financial Report to determine whether all the required tags

therein have been applied and evaluating the appropriateness, in all material respects, of the use of

such tags in accordance with the requirements of the ESEF RTS.

We believe that the evidence we have obtained is sufficient and appropriate to provide a basis for our

reasonable assurance opinion.

Report on Other Legal and Regulatory Requirements

Report on compliance of the Annual Financial Report with the requirements of the European Single

Electronic Format Regulatory Technical Standard as specified in the Commission Delegated Regulation

(EU) 2019/815 (the "ESEF RTS”) (continued)

Reasonable Assurance Opinion

In our opinion, the Annual Financial Report for the year ended 31 December 2024 has been prepared, in

all material respects, in accordance with the requirements of the ESEF RTS.

This reasonable assurance opinion only covers the transfer of the information in the Annual Financial

Report into a single electronic reporting format as required by the ESEF RTS, and therefore does not

cover the information contained in the Annual Financial Report.

Annual Report and Financial Statements | Page 198

Independent Auditors’ Report (continued)

to the members of

RS2 p.l.c

Report on Corporate Governance Statement of Compliance

Pursuant to Rule 5.94 of the Capital Markets Rules issued by the Malta Financial Services Authority, the

directors are required to include in the Company’s Annual Financial Report a Corporate Governance

Statement of Compliance explaining the extent to which they have adopted the

Code of Principles of

Good Corporate Governance

set out in Appendix 5.1 to Chapter 5 of the Capital Markets Rules, and the

effective measures that they have taken to ensure compliance with those principles. The Corporate

Governance Statement of Compliance is to contain at least the information set out in Rule 5.97 of the

Capital Markets Rules.

Our responsibility is laid down by Rule 5.98 of the Capital Markets Rules, which requires us to include a

report to shareholders on the Corporate Governance Statement of Compliance in the Company’s Annual

Financial Report.

We read the Corporate Governance Statement of Compliance and consider the implications for our

report if we become aware of any information therein that is materially inconsistent with the financial

statements or our knowledge obtained in the audit, or that otherwise appears to be materially misstated.

We also review whether the Corporate Governance Statement of Compliance contains at least the

information set out in Rule 5.97 of the Capital Markets Rules.

We are not required to, and we do not, consider whether the directors’ statements on internal control

cover all risks and controls, or form an opinion on the effectiveness of the Company’s corporate

governance procedures or its risk and control procedures.

In our opinion, the Corporate Governance Statement of Compliance set out on pages 41 to 50 has been

properly prepared in accordance with the requirements of Rules 5.94 and 5.97 of the Capital Markets

Rules.

Report on Remuneration Report

Pursuant to Rule 12.26K of the Capital Markets Rules issued by the Malta Financial Services Authority,

the directors are required to draw up a Remuneration Report, whose contents are to be in line with the

requirements listed in Appendix 12.1 to Chapter 12 of the Capital Markets Rules.

Our responsibility is laid down by Rule 12.26N of the Capital Markets Rules, which requires us to check

that the information that needs to be provided in the Remuneration Report, as required in terms of

Chapter 12 of the Capital Markets Rules, including Appendix 12.1, has been included.

In our opinion, the Remuneration Report set out on pages 51 to 54 includes the information that needs

to be provided in the Remuneration Report in terms of the Capital Markets Rules.

Annual Report and Financial Statements | Page 199

Independent Auditors’ Report (continued)

to the members of

RS2 p.l.c

Matters on which we are required to report by exception under the Companies Act

Under the Companies Act (Cap. 386), we have responsibilities to report to you if in our opinion:

• Proper accounting records have not been kept;

• Proper returns adequate for our audit have not been received from branches not visited by us;

• The financial statements are not in agreement with the accounting records and returns; or

• We have been unable to obtain all the information and explanations which, to the best of our

knowledge and belief, are necessary for the purpose of our audit.

We have nothing to report to you in respect of these responsibilities.

Auditor tenure

We were first appointed by the members of the Company to act as statutory auditor of the Company

and the Group on 19 June 2018 for the financial year ended 31 December 2018, and were subsequently

reappointed as statutory auditors by the members of the Company on an annual basis. The period of

total uninterrupted engagement as statutory auditor including previous reappointments of the firm is

seven financial years.

Consistency of the audit report with the additional report to the Audit Committee

Our audit opinion is consistent with the additional report to the Audit Committee in accordance with the

provisions of Article 11 of the EU Audit Regulation No. 537/2014.

The audit was drawn up on 23 April 2025 and signed by:

David Delicata as Director

for and on behalf of

Deloitte Audit Limited

Registered auditor

Central Business District, Birkirkara, Malta

RS2.COM

RS2 p.l.c.

RS2 Buildings, Triq Il-Fortizza,

Il-Mosta MST 1859

Malta

+356 2134 5857

info@rs2.com

Confidential

The material contained within this

document is proprietary to RS2 p.l.c.

and may not be disclosed, duplicated

or otherwise revealed in whole or in

part, without the prior written consent

of RS2 p.l.c.

Any information exchanged as a

result of this request is confident and

subject to the NDA agreement which

has already been signed between

RS2 p.l.c. and each recipient of this

document.