Announcements

Unaudited preliminary results for the year ended 31 December 2013

29 May 2014

RapidCloud International plc (AIM:RCI), the Southeast Asia based software solutions provider offering subscription services through all segments of cloud computing, announces its unaudited preliminary results for the year ended 31 December 2013.

Financial highlights

  • Revenue increased by 21% to RM 11.34 million (approximately £2.09m) (2012: RM 9.38 million)
  • Gross profit increased by 32% to RM 8.46 million (approximately £1.56m) (2012: RM6.38 million)
  • Gross margin increased to 75% (2012: 68%)
  • Operating profit growth of 31% to RM 4.95 million (approximately £0.91m) (2012: RM 3.78 million)
  • Profit after tax increased by 18% to RM 4.30 million (approximately £0.79m) (2012: RM 3.65 million) after adding back exceptional costs of RM 1.78 million (approximately £0.33m) relating to the AIM IPO
  • Cash at year end increased 118% to RM 6.23 million (approximately £1.15m) (2012: RM 2.86 million). Cash at 26 May 2014 of RM5.34m (approximately £1.00m)
  • Receivables reduced from RM6.5 million (approximately £1.20m) at the year end to RM3.64m (approximately £0.67m) as at 27 May 2014
  • Final dividend of RM 0.0345 per share (approximately £0.006), subject to shareholder approval

Operational highlights (including post-period end highlights)

  • Successful AIM IPO raising RM 4.9 million for geographic expansion and to strengthen sales capabilities
  • Significant investment in R&D yielding several new products already selling to existing and new clients
  • Several senior sales hires, including new Head of Sales and Country Sales Managers in each geography
  • Successful expansion into Indonesia forming wholly owned subsidiary PT. RapidCloud Indonesia
  • Total customers grew by 8.9% to over 37,700 with high customer retention rate of 73%
  • New 'MSC' status award will positively impact earnings from Malaysian territories over next decade
  • Signed strategic agreement with Celcom, Malaysia's longest established mobile telecoms provider

Raymond Chee, Chief Executive of RapidCloud, commented: "I am delighted to report progress on all fronts in terms of the strategic objectives we outlined at the time of our IPO. During 2013 we continued to invest in R&D, launching a number of new products that have been well received by the markets we serve. Our sales force has been expanded through new hires, including a new head of sales, and we have extended our geographic reach, establishing a presence in Indonesia.

"During this time we have maintained our solid growth rate and our healthy level of cash generation continues such that we have considerably strengthened our balance sheet during the period. This will allow us to continue with our expansion strategy, enabling further penetration of the cloud services market across Southeast Asia. In addition, a growing pipeline of substantial opportunities gives us confidence in delivering further strong growth during the year ahead."

For further information, please visit www.rapidcloudasia.com or contact:

RapidCloud International Plc
Raymond Chee, Managing Director
David Cotterell, Chairman
investorqueries@rapidcloudasia.com
WH Ireland, Nominated Adviser and Broker
Adrian Hadden
Mark Leonard
Tel: +44 (0)20 7220 1666
Walbrook, Financial PR and IR
Paul Cornelius
Guy McDougall
Tel: 44 (0)20 7933 8792
rapidcloud@walbrookpr.com

Chairman's statement

We have made significant progress during the period, particularly in terms of the strategic objectives we outlined at the time of our IPO, namely geographical expansion, adding new talent to the organisation, expanding sales capabilities and increasing investment into product development.

In terms of geographic expansion, Indonesia, with a population of greater than 240 million, is the fourth most populated country in the world and, with Southeast Asia's largest economy, was a key target for the Group. We began work on establishing operations during 2013 and have subsequent to the year end completed this process, forming a wholly owned subsidiary in the region named PT. RapidCloud Indonesia (PT. is the Indonesian abbreviation for Limited Liability Company).

Our new offices are located in the central business district of Jakarta, a metropolis with itself a population of over 26 million, and we have successfully hired five senior sales executives in the region. These executives carry with them considerable sales and marketing experience from global organisations such as Coca-Cola, Microsoft and Mitsubishi as well as leading Indonesian companies such as Axis telecom and internet service providers IndoSat.

The extensive regulatory procedures required by the Indonesian authorities led to the establishment of our subsidiary taking longer than expected but we are delighted to now have a presence in such an important strategic territory, which is expected to make a meaningful contribution to revenues from the second half of 2014 onwards.

We also plan expanding our operations into Singapore in the second half of 2014 which as a global financial centre will offer new revenue streams.

Alongside the sales staff we have in hired in Indonesia we have also added 22 new sales staff in Malaysia and the other geographies in which we are present. Each geography now has a Country Sales Manager reporting directly to our recently appointed Head of Sales, such that we now have a common and co-ordinated go-to-market strategy across the Group. In addition, a new General Manager has been appointed who is focused on promoting the Company's offerings into new markets.

We also established new headquarters in Kuala Lumpur following our IPO. These are modern facilities offering an excellent working environment for our staff and cover 9,000 square feet of office space such that we have significant capacity for further expansion. The new headquarters include a 24/7 network operation centre for our technical team to monitor network and server performance as well as training facilities whereby we can provide technical training to clients post-development and during handover of projects.

We have continued to invest into research and development during the period, which has resulted in us launching a number of successful new products for which we are already seeing considerable interest from existing and new customers. We relocated our supporting Research and Development capabilities to the Philippines during the period, where there is a large and high calibre pool of talent to choose from, and where the costs are some 40% lower than in Malaysia. This will enable us to accelerate our investment in this area without significantly increasing costs.

In terms of financial performance, the results demonstrate continued solid growth with revenues up 21% to RM 11.34 million (2012: RM 9.38 million). Gross profits were up 32% to RM 8.46 million (2012: RM 6.38 million) with gross margins of 75% continuing to increase (2012: 68%). Adjusted profit after tax increased 18% to RM 4.30 million (before RM 1.78 million exceptional costs relating to the AIM IPO) (2012: RM 3.65 million). In addition, we continue to generate healthy levels of cash resulting in us having a greatly improved cash position at the end of year of RM 6.24 million (2012: RM 2.86 million).

The Company sees many exciting opportunities ahead and our listing on AIM provides us with a strong platform on which to carry out our organic and acquisitive growth strategy. We intend to achieve this growth through continued geographical expansion into new territories in Southeast Asia, which we have already begun though our move into Indonesia, whilst also looking for value enhancing acquisitions to accelerate our footprint.

The existing client base continues to seek further IT solutions from RapidCloud and the pipeline for new business is strong and includes some material enterprise opportunities, which allied with a strengthened sales team in our key territories, means that we remain confident of meeting the financial targets for the year.

Lastly the Company continues to be cash generative and, subject to shareholder approval, we will be distributing a dividend in our maiden year on AIM. Further announcements will be made in the coming weeks giving the record date and payment date for the final dividend.

David Cotterell
28 May 2014

Chief Executive's statement

2013 was a very important year for RapidCloud as we transitioned from a private company to a publicly listed entity.

We were delighted to join AIM at this crucial stage in RapidCloud's growth and development. As noted in a report we commissioned as part of the IPO process from Frost & Sullivan, the cloud services industry is still at a relatively early stage in Southeast Asia, characterised by rapid market growth, and this is being further facilitated by increasing broadband speed and penetration, government initiatives and an increasing number of registered businesses in the region.

Funds raised at the time of the IPO have enabled us to increase our investment into research and development, extend our sales capability and accelerate our strategy of geographic expansion in order to capitalise on this rapidly growing demand for cloud computing solutions within the Southeast Asian territories.

Our Research and Development team has created a number of functionally rich products which are taking us further up the value chain, many of which we believe will generate strong demand from existing and potential customers. In addition, our enlarged sales teams are already generating an increasing number of substantial and exciting opportunities for the Group and our recently established operations in Indonesia are expected to make a meaningful contribution to revenues from the second half of 2014 onwards.

The Company is cash generative, giving us the ongoing supply of capital necessary to continue to accelerate the penetration of our target markets. In summary, therefore, we believe RapidCloud is well positioned to deliver strong growth going forward.

Operational review

Increasing our sales capacity and our research and development capabilities are seen as crucial to the Group's future success and we have therefore recruited heavily since our IPO in these two areas of the business. Our total headcount has accelerated in recent months with almost all new hires being in sales and research and development functions.

In recent months, we have built an enterprise sales team under the leadership of our newly appointed Head of Sales, Lee Mooi Chee (also known as Fion), formerly of Microsoft Malaysia and Dell Asia Pacific. We now have 11 sales teams, a significant increase from the 4 sales teams prior to IPO, and have appointed a Sales Country Manager in each of the geographies in which we are present. As such the Company now has a more integrated approach to sales and this is expected to enable the faster roll-out of new products and services as well providing numerous cross-selling opportunities.

All RapidCloud core products are designed internally from initial concept through to the finished, commercially available product and we have invested in our technical teams in order that we can continue to launch products in anticipation of market demands. Focus has been on expanding our research and development facilities in Manila, where there is a ready supply of high calibre candidates while cost efficiencies can be realised.

As a result of this investment we have launched a number of new products since IPO and our investment in sales resources has seen these products enjoy strong initial interest from a number of new and existing enterprise clients. New products include:

  • RapidAPI
    , a cloud based application programming interface launched post period end.
  • RapidSITE
    , a powerful website builder system researched and developed entirely in-house. It contains features such as business intelligence analytics, search engine optimisation (SEO) and integration to social media portals. With Internet access today dominated by smartphones and tablets, RapidSITE also includes mobile website builder capability, allowing rapid deployment of mobile websites even by non-technical users.
  • RapidCRM
    , a cloud based Customer Relationship Management solution launched in April 2014 that provides sales automation & analytics, helping clients improve customer relations, internal communications and pipeline assessment and maximise up-selling and cross-selling opportunities.
  • RapidSearch
    is a "search engine for big data" solution to be launched within the coming months. Offering comprehensive reporting and data analytics, the product can analyse structured and unstructured data, both private and in the public cloud sphere.
  • RapidERP
    is a cloud-based ERP (Enterprise Resource Planning) solution, providing a management system to streamline manufacturing processes as well as business process automation for all facets of an organisation.

Recent wins for these new products include a contract for RapidAPI with the Multimedia Development Corporate (MDec), the Malaysian government agency that awards MSC-status to sound, research driven ICT companies. This is of strategic significance to the Group as it takes us beyond our typical corporate enterprise customer base.

In addition, a client based in the manufacturing sector has become the first RapidERP customer and has paid RapidCloud RM 0.5 million to date as part of a multi-phase project which began in February 2014. Further to this, RapidCRM has recently secured its first customer, a global accountancy firm based in Bangkok.

We are also delighted to be partnering with Celcom, which we announced towards the end of 2013. Celcom is regarded as one of the market leaders in the Malaysian telecom industry and we are confident that the partnership will accelerate our penetration of the Malaysian mobile market.Furthermore, Celcom's selection of RapidCloud's solutions is a strong endorsement of the quality of our services and acts as a solid foundation from which to seek similar channel opportunities in line with our strategy.

Results analysis

Revenues increased by 21% to RM 11.34 million (2012: RM 9.38 million). Revenue growth is attributable to the continuing strong demand for our core products from a growing market place, enhanced by the expansion of our sales resources during the period.

Gross profits increased 32% to RM 8.46 (2012: RM 6.38) with gross margins of 75% continuing to increase (2012: 68%). Operating profit also saw strong growth of 31% to RM4.95 million (2012 RM 3.78 million) with operating margins increasing to 44% (FY 2012: 40%).

Profit after tax, and before RM 1.78 million one off costs relating to the AIM IPO, increased by 18% to RM 4.30 million (2012: RM 3.65 million). Profit after tax was also negatively affected by a higher than usual 20% tax rate due to a transition period toward the end of the year where our tax free MSC status in Malaysia did not apply. MSC status is awarded by the Malaysian government to technology companies investing in research and development and meeting other specific criteria. RapidCloud's prior ten year MSC status award expired during 2013 but was newly awarded later in the year. As such, RapidCloud will enjoy a further ten years of tax breaks for revenues generated from Malaysian territories and our tax rate going forward is expected to be in the region of 5 - 10%.

Trade and other receivables, however, increased to RM 6.5 million (approximately £1.20m) during the year (2012: RM 3.8 million). We have taken measures to address this situation and this has improved post-year end such that receivables have been reduced to RM3.64m (approximately £0.67m) as at 27 May 2014. Cash at period end increased 118% to RM 6.23 million (2012: RM 2.86 million) with cash at 26 May 2014 of RM5.34m.

Outlook

I am delighted to report progress on all fronts in terms of the strategic objectives we outlined at the time of our IPO. During 2013 we continued to invest in R&D, launching a number of new products that have been well received by the markets we serve. Our sales force has been expanded through new hires, including a new head of sales, and we have extended our geographic reach, establishing a presence in Indonesia.

During this time we have maintained our solid growth rate and we have strengthened our balance sheet during the period. This will allow us to continue with our expansion strategy, enabling further penetration of the cloud services market across Southeast Asia. In addition, a growing pipeline of opportunities gives us confidence in delivering further strong growth during the year ahead.

Raymond Chee
28 May 2014

Consolidated Statement of Comprehensive Income

For the year ended 31 December 2013

Year ended
31 December 2013
RM'000
Year ended
31 December 2012
RM'000
Continuing operations
Revenue
Cost of sales
11,341
(2,879)
9,379
(3,001)
Gross profit
Other operating income
Administrative expenses
Share of (losses)/profits from associate companies
8,462
446
(3,900)
(54)
6,378
60
(2,798)
137
Operating profit
Finance costs
Costs relating to the Admission to AIM Market
4,954
(22)
(1,770)
3,777
(12)
-
Profit before tax
Tax expense
3,162
(634)
3,765
(111)
Profit for the year
Other comprehensive income
2,528
-
3,654
-
Total comprehensive income 2,528 3,654
Profit attributable to:
Equity owners of the parent company
2,528 3,654
Total comprehensive income attributable to:
Equity holders of the parent company
2,528 3,654
Earnings per share
From continuing operations

Basic and diluted (Sen)
14.55 21.04

Consolidated Statement of Financial Position

As at 31 December 2013

Notes As at 31 December
2013
RM'000
As at 31 December
2012
RM'000
ASSETS
Non-current assets
Property, plant and equipment
Software development assets
Investment in associate companies
4
5

3,179
2,218
1,071
439
1,852
1,125
6,468 3,416
Current assets
Trade and other receivables
Amounts owed by associates
Cash and cash equivalents
6

7
6,508
1,583
6,238
3,846
327
2,862
Total assets 14,329 7,035
20,797 10,451
LIABILITIES
Current liabilities
Trade and other payables
Hire purchase liabilities
Taxation payable
869
79
821
1,653
53
389
1,769 2,095
NON-CURRENT LIABILITES
Hire purchase liabilities
Deferred tax liability
612
73
310
14
685 324
Total liabilities 2,454 2,419
Net assets 18,343 8,032
EQUITY
Capital and reserves attributable to equity holders
Share capital
Merger reserve
Retained earnings
21,643
(13,260)
9,960
13,860
(13,260)
7,432
Total equity and reserves 18,343 8,032

Consolidated Statement of Cash Flows

Year ended 31 December 2013

Notes Year ended
31 December 2013
RM'000
Year ended
31 December 2012
RM'000
Cash flows from operating activities
Profit before tax
Adjustments for non-cash items:
Amortisation
Depreciation
Gain on disposal of equipment
Impairment of trade receivables
Foreign exchange gain
Share of loss /(profit) from associate companies
Finance income
Finance costs
5
4

6




3,162

703
271
(78)
130
(187)
54
(82)
22
3,765

554
123

26
-
(137)
(57)
17
Operating profit before working capital changes
Increase in trade and other receivables
Decrease in trade and other payables
6

3,995

(2,662)
(307)
4,286

(2,300)
(154)
Cash generated from operations

Interest paid
Tax paid
1,026

(22)
(143)
1,832

(12)
(49)
Net cash from operating activities 861 1,771
Cash flows from investing activities
Purchase of property, plant and equipment
Proceeds from sale of property, plant and equipment
Advances to associates
Software development expenditure
Interest received
5

(2,617)
448
(1,256)
(1,069)
82
(91)
-
(193)
(1,000)
57
Net cash used in investing activities (4,412) (1,227)
Cash flows from financing activities
Dividends paid
Repayment of hire purchase liabilities
Cash proceeds on issue of shares and admission to AIM
Proceeds on issue of convertible preference shares
(500)
(434)
4,761
3,100
(500)
(35)
-
-
Net cash from/(used in) financing activities 6,927 (535)
Net increase in cash and cash equivalents 3,376 9
Cash and cash equivalents at the beginning of the year 2,862 2,853
Cash and cash equivalents at the end of the year 7 6,238 2,862

Notes to the consolidated financial statements

For the year ended 31 December 2013

1. Accounting policies

RapidCloud International plc ('RCI' or the 'Company') is a company registered and incorporated in Jersey on 15 March 2013. The address of the registered office is 13-14 Esplanade, St. Helier, Jersey, JE1 1BD.

These consolidated financial statements of RapidCloud International plc and its subsidiaries (together the 'Group') are presented in Malaysian Ringgit ('RM') which is the currency of the primary economic environment in which the group operates. Foreign operations are included in accordance with the policies set out in note 2. All amounts are prepared to the nearest thousand (RM'000) except where otherwise indicated.

2. Significant accounting policies

2.1. Statement of compliance

The consolidated financial statements have been prepared in accordance with International Financial Reporting Standards as adopted by the European Union ('IFRS').

2.2. Basis of preparation

The consolidated financial statements have been prepared on the historical cost basis except for financial instruments that are measured at fair values at the end of each reporting period, as explained in the accounting policies below.

Historical cost is generally based on the fair value of the consideration given in exchange for goods and services.

Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date, regardless of whether that price is directly observable or estimated using another valuation technique.

The principal accounting policies are set out below:

2.3. Basis of consolidation

The consolidated financial statements incorporate the financial statements of the Company and entities controlled by the Company and its subsidiaries. Control is achieved when the Company:

  • has power over the investee;
  • is exposed, or has rights, to variable returns from its involvement with the investee; and
  • has the ability to use its power to affect its returns.

Consolidation of a subsidiary begins when the Company obtains control over the subsidiary and ceases when the Company loses control of the subsidiary. Specifically, income and expenses of a subsidiary acquired or disposed of during the year are included in the consolidated statement of profit or loss and other comprehensive income from the date the Company gains control until the date when the Company ceases to control the subsidiary.

2.4. Business combinations involving entities under common control

The Company acquired the entire share capital of RapidCloud Asia Berhad ('RCAB') and its subsidiaries (together the 'RCAB Group') by means of a share-for-share exchange as part of a reorganisation on its admission to AIM, this, under IFRS3 'Business Combinations', has resulted in a business combination involving entities under common control, where no acquirer is identified.

As the Company acquired other companies, by means of such a share-for-share exchange, resulting in a business combination involving entities under common control and where no acquirer is identified, the "pooling of interests" method of consolidation has been used. The difference between the purchase consideration and the carrying value of the share capital acquired (being share capital and share premium) is adjusted to equity.

As these are the Company's first annual financial statements, there are no corresponding amounts. However, in order to provide meaningful comparative information for the Group as the companies existed under common control before the combination, corresponding amounts have been prepared as if the Group had been in existence prior to the date of combination on the admission to AIM. The results shown in the consolidated income statement and the cash flows shown in the consolidated cash flow statement for the year ended 31 December 2012 therefore consists of the results and cash flows of the RCAB Group for that year. The assets, liabilities and equity shown in the consolidated statement of financial position as at 31 December 2012 therefore consists of the assets, liabilities and equity of the RCAB Group as at that date as if they had been part of the RapidCloud International plc Group as at that date.

2.5. Investments in associates

An Associate is an entity over which the Group has significant influence. Significant influence is the power to participate in the financial and operating policy decisions of the investee but is not in control or joint control over those policies.

The results and assets and liabilities of associates are incorporated in these consolidated financial statements using the equity method of accounting. Under the equity method, an investment in an associate is initially recognised in the consolidated statement of financial position at cost and adjusted thereafter to recognise the Group's share of profit or loss and other comprehensive income of the associate.

When the Group's share of losses of an associate exceeds the Group's interest in that associate (which includes any long-term interests that, in substance, form part of the Group's net investment in the associate), the Group discontinues recognising its share of further losses.

An investment in an associate is accounted for using the equity method from the date on which the investee becomes an associate. On acquisition of the investment in an associate, any excess of the cost of investment over the Group's share of the net fair value of the identifiable assets and liabilities of the investee is recognised as goodwill, which is included within the carrying amount of the investment.

2.6. Foreign currency translation

Functional and presentational currency

Items included in the financial statements of each of the Group's entities are measured using the currency of the primary economic environment in which the entities operate (the functional currency).

The consolidated financial information is presented in Malaysian Ringgits ('RM'), which is RCI's functional and presentational currency.

Transactions and balances

Foreign currency transactions are translated into the functional currency using the exchange rates prevailing at the dates of the transactions. Foreign exchange gains and losses resulting from the settlement of such transactions and from the translation at year end exchange rates of monetary assets and liabilities denominated in foreign currencies are recognised in the statement of comprehensive income.

2.7. Financial instruments

Financial Assets

All financial assets are recognised and derecognised on a trade date where the purchase or sale of a financial asset is under a contract whose terms require delivery of the financial asset within the time-frame established by the market concerned, and are initially measured at fair value, plus transaction costs, except for those financial assets classified at fair value through profit or loss, which are initially measured at fair value.

Loans and receivables

Trade receivables, loans and other receivables that have fixed or determinable payments that are not quoted in an active market are classified as 'loans and receivables'. Loans and receivables are measured at amortised cost using the effective interest rate method, less any impairment. Interest income is recognised by applying the effective interest rate method, except for short-term receivables where the recognition of interest would be immaterial.

Impairment of assets

For certain categories of financial assets, such as trade receivables, a provision for impairment of receivables is established when there is objective evidence that the Group will not be able to collect all amounts due according to the original terms of the receivables. The amount of the provision is the difference between the assets' carrying amount and the recoverable amount. Provisions for impairment of receivables are included in the statement of comprehensive income.

Financial liabilities and equity

Debt and equity instruments are classified as either financial liabilities or equity in accordance with the substance of the contractual agreement.

Equity instruments

An equity instrument is any contract that evidences a residual interest in the assets of an entity after deducting all its liabilities. Equity instruments issued by the Group are recognised at the proceeds received, net of direct issue costs.

Other financial liabilities

Other financial liabilities, including borrowings, are initially measured at fair value, net of transaction costs.

Other financial liabilities are subsequently measured at amortised cost using the effective interest rate method, with interest expense recognised on an effective yield basis.

The effective interest rate method is a method of calculating the amortised costs of a financial liability and of allocating interest expense over the relevant period. The effective interest rate is the rate that exactly discounts estimated future cash payments through the expected life of the financial liability, or, where appropriate, a shorter period, to the net carrying amount on initial recognition.

2.8. Property, plant and equipment

Property, plant and equipment are stated at cost less accumulated depreciation and impairment losses.

Depreciation is provided to write off the cost less the estimated residual value of each asset on a straight line basis over their expected useful lives, as follows:

Fixtures and equipment 5 years
Office equipment 5 - 10 years
Computer equipment 3 years
Motor vehicles 5 years
Renovation 10 years
Signboard 10 years
Sun microsystems 5 years

The carrying values of property, plant and equipment are reviewed at each statement of financial position date to determine whether there are any indications of impairment. If any such indication exists, the assets are tested for impairment to estimate the assets' recoverable amounts. Any impairment losses are recognised in the statement of comprehensive income.

The assets' residual values and useful lives are reviewed, and adjusted if appropriate, at each statement of financial position date. Gains and losses on disposals are determined by comparing the proceeds with the carrying amount and are recognised within the statement of comprehensive income.

2.9. Software development expenditure

Software research costs are charged as an expense in the period in which they are incurred. Software development costs are charged as an expense in the period incurred unless RCI believes:

  • an asset is created that can be identified (a new software product);
  • it is probable that the asset created will generate future economic benefits; and
  • the development cost of the asset can be reliably measured.

The capitalised software development costs of the Group are amortised on a straight line basis over the estimated useful lives of the assets which is currently assessed to be 5 years.

Impairment of assets

The Group assesses at each reporting date whether there is an indication that an asset may be impaired. If any such indication exists, or when annual impairment testing for an asset is required, the Group makes an estimate of the asset's recoverable amount. An asset's recoverable amount is the higher of an asset's or cash-generating unit's fair value less costs to sell and its value in use and is determined for an individual asset, unless the asset does not generate cash inflows that are largely independent of those from other assets or groups of assets. Where the carrying amount of an asset exceeds its recoverable amount, the asset is considered impaired and is written down to its recoverable amount. In assessing value in use, the estimated future cash flows are discounted to their present value of money and the risks specific to the asset.

Impairment losses of continuing operations are recognised in the statement of comprehensive income in those expense categories consistent with the function of the impaired asset.

2.10. Cash and cash equivalents

Cash and cash equivalents are carried in the statement of financial position at cost and comprise cash in hand, cash at bank, deposits held at call with banks, other short-term highly liquid investments with original maturities of three months or less. Bank overdrafts that are repayable on demand are included within borrowings in current liabilities on the statement of financial position. For the purposes of the cash flow statement, cash and cash equivalents also include bank overdrafts if they form an integral part of the Group's cash management.

2.11. Leases

Leases in which a significant portion of the risks and rewards of ownership are retained by the lessor are classified as operating leases. Payments under operating leases (net of any incentives received from the lessor) are charged to the statement of comprehensive income on a straight line basis over the period of the lease.

2.12. Revenue

Revenue is recognised to the extent that it is probable that the economic benefits will flow to the Group and the revenue can be reliably measured. Revenue is recognised when the services are supplied and is measured at the fair value of consideration received or receivable net of sales tax, returns, rebates or discounts and after eliminating sales with the Group.

2.13. Financial income and expenses

Financial income comprises interest receivable on cash balances and deposits. Interest income is recognised when the right to receive payments is established.

Financial expenses comprise interest payable on bank loans, hire purchase liabilities' charges and other financial costs and charges. Interest payable is recognised on an accrual basis.

2.14. Employee benefits

Short term employee benefits

Wages, salaries, paid annual leave, paid sick leave, bonuses and non--monetary benefits are recognised as an expense in the period in which the associated services are rendered by employees.

Post-employment benefits

The Group pays monthly contributions to defined contribution plans. The legal or constructive obligation of the Group is limited to the amount that they agree to contribute to the plan. The contributions to the plan are charged to the statement of comprehensive income in the period to which they relate.

2.15. Current and deferred income tax

The current income tax charge is calculated on the basis of the tax laws enacted or substantively enacted at the statement of financial position date. Deferred income tax is provided in full, using the liability method, on temporary differences arising between the tax bases of assets and liabilities and their carrying amounts in the consolidated financial statements. Deferred income tax is determined using tax rates (and laws) that have been enacted or substantially enacted by the statement of financial position date and are expected to apply when the related deferred income tax asset is realized or the deferred income tax liability is settled.

Deferred income tax assets are recognised to the extent that it is probable that future taxable profit will be available against which the temporary differences can be utilized.

3. Operating segments

An operating segment is a component of the Group that engages in business activities from which it may earn revenues and incur expenses. IFRS 8 'Operating Segments' requires disclosure of the operating segments that are reported to the Chief Operating Decision Maker ('CODM'). The CODM at the end of the financial period under review has been identified as the Board of Directors who have responsibility for planning and controlling the activities of the Group. The Group's reportable segment has been identified as the provision of Cloud Computing services. Across the Group there is considered to be a commonality in the nature of services, the type of customer, the methods used to provide services and the regulatory environment.

All operations of the Group are carried out in South East Asia. All revenues therefore arise within South East Asia. No single external customer amounts to 10 per cent or more of the Group's revenues.

As the Group only has one reportable segment, no further segmental information is disclosed.

4. Property, plant and equipment

Furniture and fittings
RM
Office equipment
RM
Computers
RM
Motor vehicles
RM
Renovation
RM
Signboard
RM
Sun Microsystems Equipment
RM
Total
RM
Year ended 31 December 2013
Cost
At 1 January 2013
Additions
Disposals
Impaired
68
666
(3)
-
73
341
(14)
(5)
1,365
178
(103)
-
528
822
(500)
-
28
1,367
-
-
26
6
-
-
465
-
-
-
2,553
3,380
(620)
(5)
At 31 December 2013 731 395 1,440 850 1,395 32 465 5,308
Accumulated depreciation
At 1 January 2013
Charge for the year
Disposals
Impaired
65
23
(3)
-
65
10
(13)
(5)
1,265
71
(102)
-
216
135
(133)
-
20
29
-
-
18
3
-
-
465
-
-
-
2,114
271
(251)
(5)
At 31 December 2013 85 57 1,234 218 49 21 465 2,129
Carrying
amount
At 31 December 2013 646 338 206 632 1,346 11 - 3,179

Included within property, plant & equipment are motor vehicles acquired under hire purchase agreements with carrying values of RM632,000 (2012: RM312,000).




Fixtures, fittings & equipment
RM'000
Office equipment
RM'000
Computers
RM'000
Motor vehicles
RM'000
Renovation
RM'000
Signboard
RM'000
Sun Microsystems Equipment
RM'000
Total
RM'000
Year ended 31 December 2012
Cost
At 1 January 2012
Additions
Impaired
65
3
-
93
3
-
1,302
63
-
284
244
-
28
-
-
26
-
-
465
3
-
2,263
313
(23)
At 31 December 2012 68 73 1,365 528 28 26 465 2,553
Depreciation
At 1 January 2012
Depreciation charge
Impaired
64
1
-
82
6
(23)
1,201
64
-
169
47
-
17
2
-
16
3
-
465
-
-
2,014
123
(23)
At 31 December 2012 65 65 1,265 216 19 19 465 2,114
Net book values
At 31 December 2012 3 8 100 312 9 7 - 439

5. Software development assets

2013
RM
2012
RM
Cost
At the beginning of the year
Additions
3,026
1,069
2,026
1,000
At the end of the year 4,095 3,026
Accumulated amortisation
At the beginning of the year
Charge for the financial year
1,174
703
620
554
At the end of the year 1,877 1,174
Carrying amount
At the end of the year 2,218 1,852

Software development assets comprise capitalised development work on software products. These costs are internally generated wages and salaries costs arising from the Group's software developers and are recognised only if all the following conditions are met:

  • an asset is created that can be identified;
  • it is probable that the asset created will generate future economic benefit; and
  • the development cost of the asset can be measured reliably.

Once development has been completed the software development intangible assets are amortised on a straight-line basis over their useful lives, which is assessed annually and is currently considered to be 5 years.

The Group assesses at each reporting date whether there is an indication that an asset may be impaired. If any such indication exists, or when annual impairment testing for an asset is required, the Group makes an estimate of the asset's recoverable amount. An asset's recoverable amount is the higher of an asset's or cash-generating unit's fair value less costs to sell and its value in use and is determined for an individual asset, unless the asset does not generate cash inflows that are largely independent of those from other assets or groups of assets. Where the carrying amount of an asset exceeds its recoverable amount, the asset is considered impaired and is written down to its recoverable amount.

There have been no impairments in the periods under review.

6. Trade and other receivables

2013
RM'000
2012
RM'000
Trade receivables
Less: impairment provision
6,531
(424)
3,950
(294)
Net trade receivables
Other receivables
Prepayments
6,107
216
185
3,656
48
142
6,508 3,846

All of the Group's trade receivables have been reviewed for indicators of impairment. Certain trade receivables were found to be impaired and a provision of RM424,000 (2012: RM 294,000) has been included at the year end, the movement of those provisions are as follows:

2013
RM'000
2012
RM'000
At 1 January
Impairment losses recognised
294
130
268
26
At 31 December 424 294

Trade receivables above include amounts that are past due at the year-end but against which no allowance for doubtful receivables has been made because management have agreed payment plans with all of the aged debtors and the amounts are still considered recoverable in the long-term.

The ageing of trade receivables was:

2013
RM'000
2012
RM'000
Neither past due nor impaired
Past due not impaired:
Less than 30 days
31 to 60 days
61 to 90 days
More than 90 days
3,870

207
105
75
1,850
2,182

173
1,055
246
-
Balance at end of year 6,107 3,656

7. Cash and cash equivalents

Cash and cash equivalents in the statement of financial position comprise the following:

2013
RM'000
2012
RM'000
Cash at bank
Cash held in fixed deposit
4,705
1,533
1,375
1,487
6,238 2,862

The Group's exposure to interest rate risk for financial assets and liabilities is disclosed in note 24. The cash at bank earned interest at weighted average rates of 2.95% (2012: 3.10%). The maturities of the fixed deposits held by the Group are 30 days.

8. Subsequent events

On 15 January 2014, a 'PT RapidCloud Indonesia' was incorporated in Indonesia. The entity is 100% owned by the group.

On 27 May 2014, the Board approved a dividend of RM 0.6 million.

9. Related party transactions

Key management personnel of the Group are defined as those persons having authority and responsibility for the planning, directing and controlling the activities of the Group, directly or indirectly. Key management personnel compensation comprised:

2013
RM'000
2012
RM'000
Short-term employee benefits
Other long-term benefits
1,012
118
482
54
1,130 536

Other related party transactions relate to advances made to the Group's associated companies.

STATEMENT

RapidCloud International plc is quoted on AIM, a market of the London Stock Exchange and it is incorporated in Jersey.

This statement was approved by the directors on 28 May 2014. The group's consolidated financial statements for the year ended 31 December 2013, from which this financial information has been extracted, and for the comparative year ended 31 December 2012 are prepared on a going concern basis and in accordance with IFRS (as adopted by the EU).

The comparative figures for the year ended 31 December 2012 are not the statutory financial statements for that year. The unaudited financial information contained in this report does not constitute the Company's statutory accounts for the year ended 31 December 2013. Statutory 2013 accounts will be delivered to the Jersey Companies Registry following the Company's annual general meeting. The auditors have agreed to the issue of these results and expect to issue an unqualified audit report on the 2013 accounts following formal completion of the audit. The Annual report for 2013 will be available to the shareholders and the public on the Company's web site (www.rapidcloudasia.com) during early June and the Company will make a further announcement in this regard as appropriate.