Announcements

Acquisition of Exxelnet Solutions Pte. Ltd. Singapore
Issue of equity to raise £600,000
Earnings enhancing acquisition, fast tracking services into Singapore

15 August 2014

RapidCloud International plc (AIM: RCI), the Southeast Asia based software solutions provider offering subscription services through all segments of cloud computing, announces that it has today signed a conditional agreement for the acquisition of Exxelnet Solutions Pte. Ltd ("Exxelnet”), a Singaporean web development firm, for c. £0.95 million of which half will be paid in cash and half in new ordinary shares of RapidCloud (the "Acquisition”). Subject to satisfaction of the relevant conditions, the Acquisition is scheduled to complete during the week commencing 11 August 2014, whereupon it will further expand the Company’s geographic footprint and is expected by Rapidcloud to be earnings enhancing.

In order to fund the cash required to complete the Acquisition and to provide further working capital, RapidCloud also announces that, through a placing and subscription of 1,111,112 ordinary shares of nil par value (the "Placing Shares”) at 54p per Placing Share (the "Placing Price”), it has raised £600,000 before expenses from both existing and new shareholders (the "Placing").

Managing Director and Founder, Raymond Chee commented: "We are delighted to be acquiring Exxelnet which provides us with a profitable business in a lucrative territory. Exxelnet is an excellent strategic fit with a skilled workforce and solid customer base and we are confident that the combined Group will benefit greatly from cross-selling and up-selling opportunities.

"We are also delighted that new and existing shareholders have supported us in supplying the cash for our first acquisition since our admission to AIM. Following the acquisition RapidCloud will be a Company of increased scale and reach and we are confident of further growth. We are greatly looking forward to expanding into Singapore, and building further on our recent successes.”

About Exxelnet

Exxelnet is a web development firm offering end-to-end online solutions. The core expertise is in web design, web hosting, search-engine optimisation and application development services. Exxelnet services over 2,000 customers and the business reported unaudited revenues of SGD1.5 million (£0.7 million) for the year ended 31 December 2013, with a profit before tax for the same period of SGD0.33 million (£0.16 million) (unaudited). Exxelnet had net assets of SGD0.30 million (£0.15 million as at 31 December 2013) (unaudited).

Exxelnet has 13 members of staff (7 in Singapore and 6 in Kuala Lumpur), including the founder, Ong Pang Seng, who is the majority shareholder and who will remain with RapidCloud as CEO of Singapore operations.

The directors of Rapidcloud consider that Exxelnet is a strategic fit with RapidCloud’s existing business and will enable the fast track launch of RapidCloud’s solutions into Singapore, in line with the Company’s strategy of expansion in Southeast Asia. Singapore is the world’s fourth largest financial centre and is the preferred location for many multi-nationals to position their headquarters.

The Acquisition is revenue accretive and is expected to be earnings enhancing following integration costs. In addition, it is expected to provide numerous cross-selling and up-selling opportunities withthe potential for Exxelnet’s products to be sold to RapidCloud’s existing c. 38,000 customers and RapidCloud’s solutions to be sold to Exxelnet’s existing 2,000 customers. The Acquisition also offers a number of other synergistic opportunities and provides further opportunity for accelerated expansion of the business into Indonesia.

Consideration and earn out

Pursuant to the agreement entered into between the Company and the shareholders of Exxelnet, Ong Pang Seng and Chia Oi Lin (Xie Ailin), the Company will acquire the entire issued share capital ofExxelnet for a total aggregate consideration of SGD2.0 million (c. £0.95 million) (the "Consideration”). SGD0.8m of the Consideration will be paid in cash on completion and at the same time Rapidcloud is required to invest SGD0.2m into Exxelnet by way of working capital. The balance of the Consideration is to be paid to Ong Pang Seng in new ordinary shares of nil par value in RapidCloud, to be issued at a price of 74.4p per share, (the " Consideration Shares”) up to a maximum of 650,000 Consideration Shares based on Exxelnet’s performance over the 36 months following the completion of the Acquisition(the "Guarantee Period”). Exxelnet will need to achieve cumulative audited profit after tax of SGD1.0 million (c. £0.48 million) (the "Profit Target”) over the Guarantee Period for the maximum number of Consideration Shares to be issued. The Consideration Shares will be issued in tranches on a pro rata basis for the portion of the Profit Target achieved in each financial year during the Guarantee Period up to the maximum 650,000 cumulative number of Consideration Shares possible. It is therefore possible that all the Consideration Shares are issued earlier in the Guarantee Period or that fewer Consideration Shares are issued altogether ifthe Profit Target is not achieved by the end of the Guarantee Period. Once issued, the Consideration Shares will be subject to a selling restriction for a 12 month period following the date of issuance.

Acquisition conditions and completion timing

The Acquisition is conditional on, amongst other things,:

  1. Ong Pang Seng having entered into a service contract with Rapidcloud in respect of his ongoing role;
  2. Rapidcloud being satisfied as to the terms and conditions of the employment of certain key employees of Exxelnet and their ongoing involvement following the completion of the Acquisition;
  3. all existing founder and investor loans and accrued interest being waived; and
  4. certain receivable balances owed to Exxelnet by a related party, Exxcelnet Technology Pte Ltd being paid in full.

The Acquisition is scheduled to complete during the week commencing 11 August 2014.

The Placing

The Company has raised £600,000 (before expenses) through the Placing, the net proceeds of which are intended to be used to fund the SGD1.0 million (c.£0.475 million) cash required to complete the Acquisition, as well as providing additional working capital. If the Acquisition does not complete, the entire net proceeds of the Placing will be used to provide additional working capital.

Application will be made for the Placing Shares to be admitted to trading on the AIM market ("Admission”) and it is expected that Admission will take place on or around 28 July 2014. Allenby Capital Ltd has conditionally agreed, pursuant to a Placing Agreement with the Company and as agent for the Company, to use its reasonable endeavours to procure subscribers for 1,055,556 Placing Shares at the Placing Price and a further 55,556 Placing Shares have been subscribed to at the Placing Price. The Placing Shares are being placed with institutional and other investors. The Placing Shares will represent approximately 6.0 per cent. of the enlarged issued share capital of the Company and will rank pari passu with its existing ordinary shares. The Placing has not been underwritten and is conditional, inter alia, on Admission occurring by 8.00 a.m. on 28 July 2014 and in any event no later than 8.00 a.m. on 6 August 2014 and on the Placing Agreement not being terminated. The Placing Agreement contains certain warranties and indemnities from the Company in favour of Allenby Capital Ltd in relation, inter alia, to certain matters relating to the Company.

Allenby Capital has certain rights to terminate the Placing Agreement prior to Admission, including for a material breach of warranty or the occurrence of certain force majeure events.

Director shareholding

As part of the placing, David Cotterell, Chairman of RapidCloud, has subscribed for 18,518 Placing Shares at the Placing Price and therefore on Admission will hold 146,295 ordinary shares in the Company representing 0.8 per cent. of the Company’s then enlarged issued share capital.

Total voting rights

The number of ordinary shares of nil par value in the capital of the Company in issue and number of voting rights following Admission will be 18,480,083. The above figure may be used by Shareholders as the denominator for the calculations by which they will determine whether they are required to notify their interest in, or a change to their interest in, the Company under the Financial Conduct Authority's Disclosure and Transparency Rules.

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

RapidCloud International Plc
Raymond Chee, Managing Director
David Cotterell, Chairman
investorqueries@rapidcloudasia.com
Allenby Capital, Nominated Adviser and Joint Broker
Alex Price
Jeremy Porter
Chris Crawford
Tel: +44 (0)20 3328 5656
Walbrook, Financial PR and IR
Bob Huxford
Guy McDougall
Tel: 44 (0)20 7933 8792
rapidcloud@walbrookpr.com

About RapidCloud

RapidCloud, one of the few integrated subscription-based computing solutions providers in Malaysia that offers its services through all three currently available segments of cloud computing. The Company is based in Southeast Asia and is one of the few solutions providers in the region to deliver its offerings through all three available Cloud Computing segments, i.e. Software-as-a-Service, Infrastructure-as-a-Service and Platform-as-a-Service.

Formed in 1999 the Company has a well-established cloud offering with a customer base of 37,000. These are predominantly SMEs but also include blue-chip clients such as Deloitte, BAE Systems and Canon, for which RapidCloud’s extensive R&D department creates bespoke software solutions.

RapidCloud currently has operations in Malaysia, Thailand and the Philippines and has plans to expand into Indonesia. According to industry research commissioned by RapidCloud from Frost & Sullivan in 2013, the Cloud Computing industry in Asia Pacific is expected to grow at a CAGR of 49.6% between 2013 and 2015, giving a market size of US45.6 billion by 2015.

RapidCloud International plc was admitted to AIM on 14 August 2013.