Announcements

Half Yearly Report

24 September 2015

RapidCloud International plc (AIM:RCI), the computing services, web-hosting and web-solutions provider based in Southeast Asia, announces its results for the six months ended 30 June 2015.

Financial highlights

  • Revenue of RM 7.8m (H1 2014: RM 6.1m)
    • Recurring revenue now 43% of total revenues (H1 2014: 48.9%)
    • Goods and Services Tax implementation process temporarily slowed non-vital spending in Malaysia, a core revenue centre for the Company
  • Gross profit increase of 14% to RM 4.4m (H1 2014: RM 3.9m)
    • Gross profit margin of 57% (H1 2014: 64%)
  • Operating profit of RM 0.6m (H1 2014: RM 1.2m)
    • Certain of our businesses previously accounted for as associates are now consolidated
  • Net profit attributable to shareholders of RM 0.8m (H1 2014: RM 1.1m)
  • Cash at 30 June 2015 of RM 13.6m (H1 2014: RM6.0m)
  • Trade receivables RM 9.9m (H1 2014: 4.7m)
  • Intention to pay interim dividend within Q4 2015

Operational highlights

  • Strategic partnership with CS Loxinfo PCL, a leading Internet Service Provider
  • Hewlett Packard joined the Strategic Partnership within the period under review
  • Contract Win with Redbox, the courier service of AirAsia, to implement an online Booking and Tracking portal
  • Contract wins with two major international enterprises, a global printing firm and a Southeast Asian airline
  • Strong new business pipeline for H2, a typically weightier half in terms of new business conversion for the Company
  • Equity subscription raised £1.74m at 54p per ordinary share
  • Appointment of Cindy Choo as Finance Director

Post period-end highlights

  • Strategic partnership with Oriented Media Group Berhad to develop business-to-business E-commerce platform for sportswear manufacturers, wholesalers and retailers across Asia
    • Contract has significant scale potential
  • Completion of Sales and Operational integration with RapidCloud Singapore (formerly known as Exxelnet Solutions Pte Ltd).
  • Introduction of Digital Marketing as a new business unit

Raymond Chee, Chief Executive of RapidCloud, commented: "The first half of the year saw us continue to grow revenues, achieving RM7.8m. This was despite a slowdown in non-essential spending generally across Malaysia following the implementation of the Goods and Services Tax (similar to VAT) on 1 April 2015. I am pleased to say that this destabilising period has now passed. The successful execution of our integration plan with RapidCloud Singapore enables us to quickly deliver a host of new products and services whilst the formation of the Digital Marketing business unit provides a strong footing to upsell services that enables our customers to effectively promote their brands online."

"We continue to invest in our cloud infrastructure and the strategic partnerships we have made put us in a strong position as a Company. The Company has historically produced more of its revenues in the second half. The combination of this, the return to normality of trading following the impact of the Goods and Services Tax and the number of attractive projects embarked upon and in the pipeline lead the Board to be confident of achieving market expectations for the current financial year."

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

About RapidCloud

RapidCloud, provides computing services, web-hosting and proprietary web-solutions, such as web-site building and e-commerce solutions. 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 over 42,000. 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, Indonesia, Singapore, Thailand and the Philippines. 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. For further information, please visit www.rapidcloudasia.com

 

Chief Executive's Review

Financial performance
We were pleased to deliver a 28% increase in revenues over the comparative period in 2014, which itself had seen a 26% rise over the same period last year. Revenues for the first half of 2015 increased to RM 7.8m (H1 2014: RM 6.1m) due to both organic growth and the contribution of the newly acquired subsidiary, RapidCloud Singapore Pte Ltd ('RCSG'). The proportion of revenues which were recurring remained broadly steady at 43% (H1 2014: 48.9%).

Gross profit for the period increased 14% to RM 4.4m (H1 2014: RM 3.9m), with our gross profit margin decreasing to 57% (H1 2014: 64%) as the result of increase in hosting charges due to additions of new subsidiaries. Operating profit was RM 0.6m (H1 2014: RM 1.2m). Profit for the financial period after tax and basic earnings attributable to ordinary shareholders RM 0.8m (H1 2014: RM 1.1m).

Pre-tax profit decreased from RM1.15m to RM595,000 due to administration costs associated with the consolidation of associates becoming subsidiaries for Thailand and the Philippines, and the administration costs of our new subsidiary in Singapore and Indonesia.

Furthermore, although overall revenue for the group was higher than the comparative period last year, we experienced slower sales in Malaysia. This was due to the newly implemented Goods & Services Tax on 1 April 2015, which is the equivalent of VAT in the UK. During the implementation process organizations across the country could be seen to be delaying on non-vital spending. This somewhat chaotic period has now passed and business life has returned to normal in the territory.

In June we announced we had raised £1.74m (before expenses) by way of a subscription for 3,231,138 new ordinary shares by the Southeast Asian asset management firm, Corston-Smith Asset Management.

During 2014, the company made significant progress, both in terms of financial performance and operational capabilities. In particular, the earnings enhancing acquisition of Exxelnet Solutions Singapore, now renamed RapidCloud Singapore, has provided the Company new products and skillsets and accelerated its growth further.

Since the beginning of 2015, the Company has continued to invest in sales and marketing functions and recently launched several new software products specifically designed for the enterprise segment, significantly expanding its addressable market.

Our cash position at 30 June 2015 was RM 13.6m (H1 2014: RM6.0m), with trade receivables of RM 9.9m (H1 2014: 4.7m).

Further to the announcement made in our final results for the year ended 31 December 2014, published on 3 June 2015, the Company intends to pay an interim dividend within 2015. The intention is to pay this within the final quarter of this year. Further announcements will be made in due course.

Operational Review

The period saw us convert several new business wins with major, and in some cases, global organisations and successfully execute on our stated strategy to move up the value chain in terms of higher margin and higher value projects. We continue to pick up a steady stream of day-to-day corporate deals which alone, we are confident, will see us achieve management expectations for the full year.

There were however a number of substantial projects for which the onset was delayed due to the Goods and Services Tax slowdown in Malaysia. I am pleased to report the majority of these have now commenced.

Furthermore, there are a number of new business opportunities which we expect to be awarded within the remainder of this year. This follows businesses emerging from the period of the Good and Services Tax implementation and putting work out to tender.

Most significantly, we are waiting for the outcome of a number of sizeable deals being handled by key RapidCloud Executives. A positive conversion rate in this regard would have significant and positive effects on full year revenues.

It is worthy of note that RapidCloud traditionally converts a larger proportion of new business in the second half the year. Management expects this trend to be repeated for this calendar year.

I am also pleased to report that the geographic expansion completed last year and the subsequent investment required to do this, has now begun to yield a significant level of new cross selling opportunities across the group.

Strategic Partnership with CS Loxinfo and HP

In February we announced a strategic partnership and distributorship with CS Loxinfo PCL., a leading systems integrator and Internet Services Provider (ISP) in Thailand, for an initial period of three years. CS Loxinfo is one of the longest standing and most recognised ISP brands in Thailand, providing Internet data centre services, leased line, broadband and satellite services for domestic and international communications in Thailand. They have a considerable and wide-reaching customer base.

The partnership allows CS Loxinfo to offer its large-scale enterprises  and SME customers a selection of RapidCloud's enterprise cloud applications, beginning with RapidCRM, the Sales Automation and Management tool, on a revenue sharing basis. RapidCRM will be offered to enterprises in a choice of public-cloud or on-premise cloud environment.

Teleco companies play a central role in our growth strategy and we expect this partnership to accelerate the Company's presence within the Thailand enterprise market. We were delighted to announce in June, that Hewlett Packard has joined the partnership through the provision of their HP Helion OpenStack ("HP Helion") platform with multiple large-bandwidth redundant connections to International and domestic Internet gateways over a secure and scalable on-premise or public cloud delivery environment.

All three parties within this strategic partnership complement each other to deliver secure and scalable cloud services with a wide variety of 'Software As A Service' offerings, with RapidCloud receiving a share of the software revenue and CS Loxinfo and HP receiving either project-based installation fees or 'Infrastructure As A Service' revenue over the term of the strategic partnership.

Redbox, Air Asia

In April, we announced a contract with RedBox, the award-winning courier service of Air Asia, for an initial period of five years.

The agreement sees RapidCloud designing, building and operating a cloud-based Logistic Management System (LMS) for RedBox, with the proprietary LMS will providing a complete end-to-end solution to monitor Redbox's entire shipment network with a fully integrated online Booking & Tracking portal.

RedBox has contracts with several of the largest e-commerce enterprises in Asia Pacific, and is experiencing rapid growth. Industry forecasts state, Asia Pacific will surpass North America as the main e-commerce market in the world within 2015, at USD$681.2 Billion1.

http://www.emarketer.com/Article/Global-B2C-Ecommerce-Sales-Hit-15-Trillion-This-Year-Driven-by-Growth-Emerging-Markets/1010575

RapidCloud will receive royalty revenue from each transaction processed by the LMS. The Company envisages that the agreement will generate revenues for RapidCloud of at least £150,000 in the first year with material increases thereafter.

Contracts with major two international enterprises

In May we announced contract wins with one of the world's leading printing enterprises and a major Southeast Asian airline, for our newly launched PortalWEB product worth an aggregate £180,000 in the first year.

For the printing enterprise RapidCloud will build a framework and workflow system to handle internal purchase requisition, purchase orders, invoices, budgeting, contracts and assets management to automate the internal procurement approval processes.

For the airline, RapidCloud will build an internal Training Management System ("TMS") on its PortalWEB platform. The TMS application will be developed to manage job posting, job recruitment, coaching, candidate profiling and on-the-job assessments. Job seekers, recruiters, trainers and administrative users will be granted different access controls and functionality to perform individual tasks. Dashboards for Business Intelligence analysis will provide an overview of the various key performance indicators of the entire placement processes enabling company-wide decision making.

Post Period End - Agreement with OMEDIA

Post the period end, we announced a significant partnership agreement with the Oriented Media Group Bhd ("OMEDIA") to develop a comprehensive business-2-business e-commerce platform for small to medium sportswear manufacturers, wholesalers and retailers across Asia.

OMEDIA is a Malaysia-based company focussed on software and services across the logistics and digital media industries. The logistics business offers web-based management systems to manage complex logistics networks while the digital media business offers a range of services including publishing massive multiplayer online games internet advert serving and the development of 'edutainment' related products and services. OMEDIA is listed on the Malaysian stock exchange with a market capitalisation of RM53.4m as of 18 September 2015.

Under the 24 month agreement, the Company will supply all the necessary hardware and software for OMEDIA to develop an Online Sportswear Trading Platform to enable manufacturers, initially across the Fujian province of the Peoples Republic of China ("PRC") to market and trade their products with wholesalers and retailers directly online.

The PRC e-commerce market is growing rapidly with global ecommerce sales volume increasing from USD561.0 billion in 2010 to USD1.2trillion in 2014. In particular, the ecommerce market in PRC is estimated to contribute approximately 40% of the global e-commerce market, having recorded a Compound Annual Growth Rate of 62% over the last six years2.

2 Independent Market Research Report, Smith Zander International, Malaysia

Agreement Value

The agreement is worth a minimum of £760,000 for hosting and maintaining the Online Sports Trading Platform. However, the agreement could be worth up to £3.39m dependent upon the adoption of the additional modules offered by RapidCloud. The Company expects receipt of revenues on this contract in the final quarter of this year.

Outlook

The first half of the year saw us continue to grow revenues, achieving RM7.8m. This was despite a slowdown in non-essential spending generally across Malaysia following the implementation of the Goods and Services Tax (similar to VAT) on 1 April 2015. I am pleased to say that this destabilising period has now passed. The successful execution of our integration plan with RapidCloud Singapore enables us to quickly deliver a host of new products and services whilst the formation of the Digital Marketing business unit provides a strong footing to upsell services that enables our customers to effectively promote their brands online

We continue to invest in our cloud infrastructure and the strategic partnerships we have made put us in a strong position as a Company. The Company has historically produced more of its revenues in the second half. The combination of this, the return to normality of trading following the impact of the Goods and Services Tax and the number of attractive projects embarked upon and in the pipeline lead the Board to be confident of achieving market expectations for the current financial year.

Consolidated Statement of Comprehensive Income

for the six months ended 30 June 2015

Notes (Unaudited) Six months to 30 June 2015 (RM'000) (Unaudited) Six months to 30 June 2014 (RM'000) (Audited) Year ended 31 December 2014 (RM'000)
Continuing operations
Revenue 2 7,838 6,088 17,820
Cost of sales (3,396) (2,188) (8,146)
Gross profit 4,442 3,900 9,674
Other operating income 97 48 1,149
Administrative expenses (3,936) (2,786) (7,559)
Share of losses from associate - 4 -
Operating profit                         603 1,166 3,264
Finance costs (8) (10) (26)
Profit before tax 595 1,156 3,238
Income tax expense (21) (27) (50)
Profit for the year 574 1,129 3,188
Other comprehensive income
Exchange differences on translation of foreign operations (41) - (100)
Total comprehensive income 533 1,129 3,088
Profit attributable to:
Equity owners of the parent company 767 1,129 3,671
Non-controlling interests (193) - (483)
574 1,129 3,188
Total comprehensive income attributable to:
Equity owners of the parent company 771 1,129 3,609
Non-controlling interests (238) - (521)
533 1,129 3,088
Earnings per share
Basic (Sen) 3 4.11 6.50 20.59
Diluted (Sen) 3 3.97 6.50 19.86

Consolidated Statement of Financial Position

as at 30 June 2015

  Notes (Unaudited) Six months to 30 June 2015 (RM'000) (Unaudited) Six months to 30 June 2014 (RM'000) (Audited) Year ended 31 December 2014 (RM'000)
ASSETS        
Non-current assets        
Property, plant and equipment 4 6,032 4,314 5,215
Software development assets 5 2,622 2,412 2,491
Investment in associate companies   - 1,076 -
Intangible assets and goodwill   5,839 - 5,839
    14,493 7,802 13,545
Current assets        
Trade and other receivables 6 11,623 5,895 11,191
Amounts owed by associates   - 2,143 -
Cash and cash equivalents   13,604 6,018 3,931
Taxation recoverable               111 - 68
    25,338 14,056 15,190
Total assets   39,831 21,858 28,735
LIABILITIES        
Current liabilities        
Trade and other payables   2,463 915 2,393
Hire purchase liabilities   222 38 62
Taxation payable   - 747 -
    2,685 1,700 2,455
Non-current liabilities        
Hire purchase liabilities   457 613 457
Deferred tax liability   86 73 86
    543 686 543
Total liabilities   3,228 2,386 2,998
Net assets   36,603 19,472 25,737
EQUITY        
Capital and reserves attributable to equity holders        
Share capital 7 34,942 21,643 24,609
Shares to be issued   2,074 - 2,074
Merger reserve   (13,260) (13,260) (13,260)
Currency translation reserve   (58) - (62)
Retained earnings   13,823 11,089 13,056
    37,521 19,472 26,417
Non-controlling interest   (918) - (680)
    36,603 19,472 25,737

Consolidated Interim Statement of Cash Flow

six months ended 30 June 2015

  Notes (Unaudited) Six months to 30 June 2015 (RM'000) (Unaudited) Six months to 30 June 2014 (RM'000) (Audited) Year ended 31 December 2014 (RM'000)
Cash flows from operating activities        
Profit before tax   595 1,156 3,238
Adjustments for non-cash items        
Depreciation 4 282 290 683
Amortisation of software development assets 5 379 426 931
Amortisation of website assets   - - 1
Gain on disposal of equipment   - (1) (60)
Equipment written off   - - 2
Impairment of trade receivables 6 - - 62
Foreign exchange loss/(gain)   (6) 8 46
Waiver of loan by subsidiary's director   - - (862)
Share of loss/(profit) from associate   - (4) -
Finance income   (1) (34) (52)
Finance costs   8 10 26
Operating profit before working capital changes   1,257 1,851 4,015
Increase in trade and other receivables   (423) 613 (1,216)
Decrease in trade and other payables   70 46 (1,262)
Cash generated from operations   904 2,510 1,537
Interest paid   (8) (10) (26)
Interest received   1 34 52
Tax paid   (62) (98) (929)
Net cash from operating activities   835 2,436 634
Cash flow from investing activities        
Purchase of property, plant and equipment   (847) (1,427) (2,060)
Proceeds from sales of property, plant and equipment   - 2 78
Software development expenditure 5 (510) (620) (1,204)
Advances to associates   - (560) -
Acquisition of subsidiaries (net of cash received)   - - (2,465)
Net cash used in investing activities   (1,357) (2,605) (5,651)

Consolidated Interim Statement of Cash Flow (continued)

six months ended 30 June 2015

  Notes (Unaudited) Six months to 30 June 2015 (RM'000) (Unaudited) Six months to 30 June 2014 (RM'000) (Audited) Year ended 31 December 2014 (RM'000)
Cash flows from financing activities        
Dividends paid   - - (575)
Advances from subsidiary's director   - - 529
Repayment of hire purchase liabilities   (90) (51) (172)
Proceeds on issue of placing shares 7 10,333 - 2,966
Net cash from financing activities   10,243 (51) 2,748
Net (decrease)/increase in cash and cash equivalent   9,721 (220) (2,269)
Effect on exchange rate changes on cash and cash equivalent   (48) - (38)
Cash and cash equivalents at the beginning of the period   3,931 6,238 6,238
Cash and cash equivalents at the end of the period   13,604 6,018 3,931

Consolidated Interim Statement of Changes in Equity

six months ended 30 June 2015

Share capital RM'000  Share to be issued RM'000  Merger reserve RM'000 Foreign Currency Translation Reserve RM,000  Retained earnings RM'000    Total RM'000   Non-controlling interests RM'000  Total equity RM'000
Balance on 1 January 2014 21,643 - (13,260) - 9,960 18,343 - 18,343
Total comprehensive income                
Profit for the period - - - - 1,129 1,129 - 1,129
Balance at 30 June 2014 21,643 - (13,260) - 11,089 19,472 - 19,472
Transaction with owners, recorded directly in equity                
Acquisition of subsidiary companies - 2,074 - - - 2,074 (159) 1,915
Issue of placing shares 3,235 - - - - 3,235 - 3,235
Share issue costs (269) - - - - (269) - (269)
Dividends paid - - - - (575) (575) - (575)
Total comprehensive income                
Profit for the year - - - - 2,542 2,542 (483) 2,059
Others comprehensive income - - - (62) - (62) (38) (100)
Balance at 31 December 2014 24,609 2,074 (13,260) (62) 13,056 26,417 (680) 25,737
Transaction with owners, recorded directly in equity                
Issue of placing shares 10,333 - - - - 10,333 - 10,333
Total comprehensive income                
Profit for the period - - - - 767 767 (193) 574
Others comprehensive income       4   4 (45) (41)
Balance at 30 June 2015 34,942  2,074 (13,260) (58) 13,823 37,521 (918) 36,603

Notes to Financial Statements

six months ended 30 June 2015

1.      Accounting policies

This consolidated interim financial information, which is unaudited for the half-year ended 30 June 2015, has been prepared on a consistent basis in accordance with the International Financial Reporting Standards ('IFRS') as adopted by the European Union ('EU') issued by the International Accounting Standards Board ('IASB').

They do not contain all of the information required for the full financial statements and should be read in conjunction with the consolidated financial statements of the Group as at and for the year ended 31 December 2014. These interim financial statements do not constitute statutory accounts within the meaning of the Companies Act.

This consolidated interim financial information has been prepared in accordance with AIM Rules for Companies and IAS 34 'Interim Financial Reporting' and is presented in Malaysia Ringgit ('RM') which is the currency of the primary economic environment in which the Group operates.  The functional currency for each individual entity is the local currency of that individual entity.  All amounts are prepared to the nearest thousand (RM'000) except where otherwise indicated.

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.

2.      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 is 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.

3.             Earnings per share

The calculation of the basic and diluted earnings per share is based on the following:

  Six months to 30 June 2015 RM'000 Six months to 30 June 2014 RM'000 Year ended 31 December 2014 RM'000
Profit for the financial period and basic earnings attributed to ordinary shareholders   767   1,129   3,671
  Number Number Number
Weighted average numbers of ordinary shares 18,656,752 17,368,971 17,831,934
  Sen Sen Sen
Earnings per share:      
Basic 4.11 6.50 20.59
Diluted 3.97 6.50 19.86

If the basic earnings per share is diluted by the 650,000 deferred contingent shares to be issued as part of the acquisition of RapidCloud Singapore Pte. Ltd., the dilutive earnings per share would be 3.97 Sen (31 December 2014: 19.86 Sen; 30 June 2014: 6.50 Sen).

4. Property, plant and equipment

  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 30 June 2015                
Cost                
At 1 January 2015 1,003 740 2,516 657 2,463 32 465 7,876
Additions                              149 22 658 218 - - - 1,047
Disposals - - - - - - - -
Impaired/ Written off                               - - - - - - - -
Exchange difference 5                              8 5 - 48 - - 66
At 30 June 2015 1,157 770 3,179 875 2,511 32 465 8,989
Charge for the year                
At 1 January 2015                          134 104 1,465 196 272 25 465 2,661
Charge for the year 33 34 102 40 72 1 - 282
Disposals - - - - - - - -
Impaired/ written off                               -                              - - - - - - -
Exchange difference 3 3 3 - 5 - - 14
At 30 June 2015 170 141 1,570 236 349 26 465 2,957
Net book value                
At 30 June 2015 987 629 1,609 639 2,162 6 - 6,032

4. Property, plant and equipment (continued)

  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
Period ended 30 June 2014                
Cost                
At 1 January 2014 731 395 1,440 850 1,395 32 465 5,308
Additions 162 112 1,118 - 35 - - 1,427
Disposals (60) (38) - - - - - (98)
Impaired -  -     - - - - - -
At 30 June 2014 833 469 2,558 850 1,430 32 465 6,637
Depreciation                
At 1 January 2014 85 57 1,234 218 49 21 465 2,129
Depreciation charge 37 19 78 85 70 1 - 290
Disposals (59) (37) - - - - - (96)
Impaired - - - - - - - -
At 30 June 2014 63 39 1,312 303 119 22 465 2,323
Net book value                
At 30 June 2014 770 430 1,246 547 1,311 10 - 4,314

4. Property, plant and equipment (continued)

   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 2014                
Cost                
At 1 January 2014 731 395 1,440 850 1,395 32 465 5,308
Acquisition of subsidiaries 43 60 34 - 624 - - 761
Additions 288 319 1,045 - 408 - - 2,060
Disposals (60) (38) - (193) - - - (291)
Impaired/ Written off - - (3) - - - - (3)
Exchange difference 1 4 - - 36 - - 41
At 31 December 2014 1,003 740 2,516 657 2,463 32 465 7,876
Charge for the year                
At 1 January 2014 85 57 1,234 218 48 21 465 2,129
Acquisition of subsidiaries 29 27 26 - 36 - - 118
Charge for the year 80 55 206 154 184 4 - 683
Disposals (60) (37) - (176) - - - (273)
Impaired/ written off - - (1) - - - - (1)
Exchange difference - 2 - - 4 - - 6
At 31 December 2014 134 104 1,465 196 272 25 465 2,661
Net book value                
At 31 December 2014 869 636 1,051 461 2,191 7 - 5,215

5. Software development expenditure

  Six months to 30 June 2015 RM'000 Six months to 30 June 2013 RM'000 Year ended 31 December 2014 RM'000
Cost      
At the beginning of the period 5,299 4,095 4,095
Additions 510 620 1,204
At the end of the period 5,809 4,715 5,299
Accumulated amortisation      
At the beginning of the period 2,808 1,877 1,877
Charge for the financial period 379 426 931
At the end of the period 3,187 2,303 2,808
Carrying amount      
At the end of the period 2,622 2,412 2,491

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 development and are recognised only if all the following conditions are met:

  • an asset is created that can be identified;
  • it is possible 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 period under review.

6. Trade and other receivables

  30 June 2015 RM'000 30 June 2014 RM'000 31 December 2014 RM'000
Trade receivables 10,504 5,140 10,293
Less: impairment provision (592) (424) (601)
Net trade receivables 9,912 4,716 9,692
Other receivables 587 172 262
Prepayments 1,124 1,007 1,237
  11,623 5,895 11,191

The Group's normal trade credit terms range from 30 to 60 days, however, the Group's Government and Multinational customers enjoy credit terms of 90 to 120 days. Other credit terms are assessed and approved on a case-by-case basis. The Group has no significant concentration of credit risk that may arise from exposure to a single receivable. The Directors consider that the carrying amount of trade and other receivables approximates to their fair values. All of the Group's trade receivables have been reviewed for indicators of impairment. There was no impairment of trade receivables for the six months to 30 June 2015 (31 December 2014: RM130,000; 30 June 2014: RM Nil).

Trade receivables above include amount that are past due at the period-end but against which no allowance for doubtful receivables has been made because there has not been any significant change in credit quality and the amounts are still considered recoverable.

7. Share Capital

Authorised at 30 June 2015
An unlimited number of ordinary shares of no par value each

n 5 June 2015, the Group has raised £1,744,815 (RM10,333,664) by way of subscription for 3,231,138 new ordinary shares by the Southeast Asia asset management firm, Corston-Smith Asset Management Sdn. Bhd.

  Number
At 1 January 2015 18,480,083
New shares issued 3,231,138
  21,711,221

8. Subsequent events

There were no material events that occurred subsequent to the end of the reporting date to the date of approval of these financial statement.