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| Share Name | Share Symbol | Market | Type | Share ISIN | Share Description |
|---|---|---|---|---|---|
| Rapidcloud | LSE:RCI | London | Ordinary Share | JE00B8FX4C95 | ORD NPV |
| Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
|---|---|---|---|---|---|---|---|---|---|---|
| 0.00 | 0.00% | 13.00 | 0.00 | 01:00:00 |
| Industry Sector | Turnover | Profit | EPS - Basic | PE Ratio | Market Cap |
|---|---|---|---|---|---|
| 0 | 0 | N/A | 0 |
From May 2019 to May 2024
TIDMRCI
RNS Number : 6953C
RapidCloud International PLC
29 June 2016
RapidCloud International Plc
("RapidCloud", the "Company" or the "Group")
Final Results for the year-ended 31 December 2015
RapidCloud International Plc (AIM: RCI), the enterprise cloud computing services and web-solutions provider based in Southeast Asia, announces its Final Results for the year ended 31 December 2015.
Highlights of 2015
Financial highlights
-- Revenue of RM17.1 million (2014: RM17.8 million) -- EBITDA of RM3.18 million (2014: RM5.36 million) -- Cash as at year-end of RM6.8 million (2014: RM3.9 million)
Operational highlights
-- Several new contracts awarded including RedBox, the award winning courier service of Air Asia, a world's leading printing enterprises and a major Southeast Asian airline
-- Signed significant strategic agreements with Hewlett Packard, CS Loxinfo and Oriented Media Group Bhd
-- Successfully launched several new products and services during the period, including:
o RapidDocs
o ManageWeb
o Internet of Things Connectivity Management Solution
-- Enhanced the Board with the appointment of Cindy Choo as Finance Director
-- Significantly strengthened the balance sheet through the strategic investment of GBP1.74 million and the payment of the interim dividend of GBP0.0067 per share through by cash and a reverse scrip dividend
Raymond Chee, Managing Director of RapidCloud, said: "2015 was undoubtedly a period of consolidation with significant investment in products, services and the sales and marketing functions across the Company against a difficult market backdrop across the Southeast Asia region.
"The commercial agreements now signed, with both national and international organisations, demonstrate the strength of the Company's products and services and the board believes the launch of the new products and services, coupled with the strong financial control of all aspects of the Group, has positioned the Company for significant and sustainable profitable growth during 2016 and beyond.
"Trading in 2016 has started in-line with management expectations and the Company looks forward to providing further updates to the market in due course."
CONTACTS
RapidCloud International investorqueries@rapidcloudasia.com Plc Raymond Chee, Managing Director David Cotterell, Chairman WH Ireland, Nominated Tel:+44 (0)20 7220 1666 Adviser and Broker Adrian Hadden Mark Leonard Walbrook, Financial PR Tel: +44 (0)20 7933 8792 and IR Paul Cornelius rapidcloud@walbrookpr.com Sam Allen
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 43,000. 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
Chairman's Statement
There is no doubt the 12-month period to 31 December 2015 was a difficult period as the Company contended with a benign market for web-hosting and web-solutions across Southeast Asia.
Notwithstanding the challenging trading environment, the Company continued to invest in new products and services and strengthened the balance sheet whilst developing strategic partnerships with a number of global enterprises to ensure the Company is well placed to win increasing numbers of larger new contracts this year and beyond.
Strategic Partnerships
I was particularly pleased to see the Company sign several important strategic partnerships during the period with multi-national organisations such as Hewlett Packard, CS Loxinfo and, post-period end, Alibaba Cloud, a subsidiary of Alibaba.com. It is now a strategic focus across the Company to partner with global enterprises, where possible, to ensure the Company is well placed to win significant levels of new business this year and beyond.
Balance Sheet Strengthened
During the period we appointed WH Ireland as nominated advisor and broker to the Company. The Board completed a subscription with investment company Coston-Smith Asset Management to raise GBP1.74m, before expenses, during the period.
I was also particularly pleased with the level of shareholder support during the recent reverse Scrip Dividend, which was widely taken up by our shareholder base increasing both the liquidity in the Company's equity whilst preserving the strength of the Company's balance sheet.
In combination, these two events, further strengthened the balance sheet to provide much needed funding for investment in new products and services and enhanced working capital facilities.
I am now pleased to report the investment phase across all our products and services is now largely complete and working capital management at the subsidiary level has been significantly improved.
Senior Personnel
On 19 January 2015, Darren Hopkins ceased to be the Group's Interim Finance Director in order to enable him to take up another UK based opportunity. I would personally like to thank Darren for his work as Interim Finance Director, which assisted the Company develop its financial reporting processes and achieving its IPO.
Cindy Choo joined RapidCloud as Finance Director shortly after and was appointed to the Board on 5 February 2015. Cindy's appointment was consistent with RapidCloud's stated intention to appoint a full time Finance Director, based in Malaysia, to the Board.
Finally, I would also like to thank the board and all the employees for their commitment and continued support, which have been invaluable during the past year and we can all now look to the future with increased confidence as the Company capitalises on the numerous opportunities this year and beyond.
David Cotterell
Chairman
29 June 2016
Chief Executive's Statement
Financial Review
During the year, the Company continued to focus on the development of new products & services. Therefore, the Group has further invested in computer and server equipment to support the development. As a result, depreciation expenses have increased substantially, resulting in a lower EBITDA.
Collection from trade receivables has been slower than expected due to the impact of the implementation of Goods & Sales Tax ('GST') in April 2015 on Malaysian businesses, as well as various economic adversities. Many Malaysian businesses underestimated the impact of GST on their business. However, this is a one-time event and after more than a year of implementation, most of the businesses in Malaysia have started recovering. The long term continuous business relationship that RapidCloud has developed with its customers has further ascertained the trustworthiness of trade receivables. Furthermore, the Company has a history of outstanding balances being settled. The Board have confidence that the amount is recoverable.
Since the beginning of the financial year under review, the Company has continued to invest in products, sales and marketing functions and has successfully launched several new products specifically designed for the enterprise segment, significantly expanding its addressable market.
In order to fund the investment in products and further the commercial development of the Company, we announced two strategic financial events during the year to strengthen the balance sheet:
-- In June 2015 the Company announced it had raised GBP1.74m (before expenses) by way of a subscription by the Southeast Asian asset management firm, Corston-Smith Asset Management ('Corston-Smith'), who subsequently have a 14.88% holding in RapidCloud.
-- In December 2015, the Company paid its interim dividend of GBP0.0067 per share by way of cash of RM207,000 and a reverse scrip dividend of RM730,000.
The collective effect of both of these events meant that the Company finished the year end with cash and cash equivalents of RM6.8m versus RM3.9m for the previous year despite the continued investment in Corporate and products development.
Operational Review
During the year, RapidCloud continued to sign new contracts and commercial agreements with significant partners and customers demonstrating its strong position across our target markets. The progress achieved during the year and post the year end, described in more detail below, evidence the continued operational progress the Company is making.
New Contract Wins
RapidCloud has recently announced several new contracts, demonstrating the strong market position the Company commands and the increasing traction the Company's products and services are gaining across out target markets across South East Asia:
-- In April 2015, the Company announced it had won a contract with RedBox, the award-winning courier service of AirAsia. Under the initial five-year contract, RapidCloud will design, build and operate a cloud-based Logistic Management System (LMS) for RedBox, AirAsia. The proprietary LMS will provide a complete end-to-end solution to monitor the entire shipment network with a fully integrated online Booking & Tracking portal. The LMS will be hosted and operated from RapidCloud's datacentre in Kuala Lumpur.
-- In May 2015, the Company also announced that its wholly owned subsidiary, Emerge Systems (M) Sdn. Bhd., had won contracts with two major international companies for its newly launched PortalWEB product worth an aggregate RM1 million, (GBP0.18m) in the first year.
o The first of these PortalWEB contract wins was with one of the world's leading printing enterprises. Under the terms of the Software-as-a-Service ('SaaS') contract, 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.
o The second contract was with a major Southeast Asian airline. Under the terms of the SaaS contract, 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.
-- In May 2016, the Company announced a contract win with Wellmart Online Sdn Bhd ('Wellmart'), a subsidiary of the automotive & plantation conglomerate Delloyd Ventures Bhd, for the Company's e-commerce portal system development tools and consulting services. This contract is expected to generate revenue of approximately RM550,000 in its first year of operation.
Commercial Progress
CS Loxinfo & Hewlett Packard
In February 2015, the Company signed a strategic partnership agreement with CS Loxinfo PCL ('CS Loxinfo'), a leading systems integrator and Internet Services Provides (ISP) in Thailand, for an initial period of three years, and announced its partnership with Hewlett Packard ('HP') in June 2015.
CS Loxinfo is one of the most long-standing and recognised ISP brands in Thailand with considerable and wide-reaching customer base whereas HP is one of the most successful and recognised IT solutions providers in the world.
This innovative partnership provides enterprise and SME customers with multiple large-bandwidth redundant connections to International and domestic Internet gateways over a secure and scalable on-premise or public cloud delivery environment.
Oriented Media Group Bhd
In July 2015, the Company secured an agreement with Oriented Media Group Bhd ('OMEDIA') to develop a comprehensive Business-to-Business ('B2B') e-commerce platform for small to medium sportswear manufacturers, wholesalers and retailers across Asia.
OMEDIA is a Malaysia-based company focused 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 (MMOG), internet Ad serving and the development of edutainment related products and services. OMEDIA is listed on the Malaysian stock exchange.
Under the 24-month agreement, RapidCloud will supply all the necessary hardware and software for OMEDIA to develop an Online Sportswear Trading Platform ('OSTP') 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.
RapidCloud will also offer additional modules for OMEDIA to enhance the OSTP over the term of the agreement to enable users to manage their own virtual storefronts, track and monitor customer accounts and improve their own finance and human resources via additional proprietary cloud based software and services.
Alibaba Cloud
In March 2016, RapidCloud signed a strategic partnership with Alibaba.com Singapore E-commerce Private Limited ('Alibaba Cloud'), the international business and cloud computing arm of the Alibaba Group (NYSE:BABA).
Alibaba Cloud is one of the world's largest e-commerce companies, and was established in 2009 to operate the network that powers Alibaba's extensive online and mobile commerce ecosystem with a comprehensive suite of cloud computing services globally. The partnership allows RapidCloud to offer Alibaba Cloud's public cloud infrastructure, consulting, managed services, training and support across its offices in South East Asia. RapidCloud will also make its key products available from Alibaba Cloud's platform as a total service offering to its customers. After six months of research and development, RapidCloud's key products such as its enterprise content management system, sales automation tool and document management have already been developed to be tightly integrated onto Alibaba Cloud's platform. This will allow Alibaba and Alibaba Cloud users to be able to subscribe to such services easily.
The benefits of having RapidCloud's products on Alibaba Cloud platform include better reliability, faster access from various locations, including China and better scalability. At the same time, RapidCloud will also be working together with Alibaba Cloud and its parent company Alibaba to implement various go to market strategies and cross-selling opportunities.
RapidCloud Singapore
We are also pleased to report that RapidCloud Singapore has now become a Certified Partner of Google Inc. It is widely known that only the very best service providers receive the coveted Google Partner Badge and places RapidCloud Singapore amongst a small number of elite businesses offering services with this accreditation.
This division is now a trusted agency of Google and listed on Google's Partner Search, its proprietary online directory for trusted agencies for search engine optimisation and search engine marketing. As such, we expect RapidCloud to approach and secure larger contracts in the future with international 'blue chip' customers.
SalesMAP Sdn. Bhd.
Subsequent to the year end, SalesMAP Sdn. Bhd. was established in Malaysia to market and sell the Company's flagship product, SalesMAP. SalesMap is an intelligent sales system and a platform to build a structured sales process and manage sales performance.
Whilst sales to date have been modest, the Company remains confident that this initiative will deliver significant shareholder value over the medium term.
Product Development
During the year the Company continued to invest in the development of new products and services and launched a number of new revenue initiatives during the year, specifically targeted at the needs of both existing and potential customers.
RapidDocs
The Company launched RapidDocs during the year, which provides Document Management Systems ('DMS') via the cloud. RapidDocs is believed to be one of the simplest and most cost effective DMS solution across Southeast Asia today. The DMS has been specifically designed to minimise the need for physical storage space, by eliminating duplicate documents, whilst ensuring collaboration on the most up to date copies are shared throughout the organisation for seamless collaboration.
ManageWeb
During the period, the Company successfully upgraded 'ManageWeb', its core website solution platform. Following the upgrade, which includes the addition of new features and operating enhancements, it has received significant new interest and recognition from its customer base by allowing them to optimise their user experience and enhance their business website.
Internet of Things ('IoT') connectivity Management Solution
The Company has now launched IoT Connectivity Management Solution that seamlessly addresses all the requirements of various industries currently deploying IoT solutions. The IoT Connectivity Management Solution empowers them to collate, manage, monitor and report the data received from their IoT-enabled devices.
Subsequent to the year end, the Company has also invested in the development of new cloud computing products and services.
Disaster Recovery as a Service ('DRaaS')
In May 2016, RapidCloud announced the launch of a Disaster Recovery as a Service. DRaaS is a cloud delivered disaster recovery managed service for protecting companies from loss of mission critical data in the event of a man-made or natural disaster. It is designed to ensure business continuity by minimising downtime and disruption in the event of server failure or other disaster.
The Company signed two strategic partnerships, with Symphonet Sdn Bhd and Interlink Communication PCL in Malaysia and Thailand respectively, to market the DRaaS solution.
Symphonet is a Malaysian fibre optic network operator offering dedicated high speed data Internet connections, wireless, Ethernet, leased lines, IP CCTV solutions, network services and network security services to over 1,000 businesses, large corporations and commercial buildings in Malaysia.
Interlink is one of the largest fibre optic backbone providers in Thailand and is currently engaged in implementation of high speed structured telecommunication networks and distribution of networking solutions. Interlink is publicly traded on the mainboard of the Stock Exchange of Thailand (SET).
These strategic partnerships allow Symphonet and Interlink to offer their customers a selection of RapidCloud's enterprise applications, beginning with DRaaS, which can be packaged together with their fibre connectivity, to provide a seamless and reliable high-speed transfer of critical data between the customer's primary server and RapidCloud's DRaaS facility.
Ximplify
Ximplify is a cloud business email service and is already one of the most affordable and fully-featured business email in the market today. The Company will make this service available globally and Ximplify is the brand that will propel us to become a global cloud computing service provider.
Outlook
2015 was undoubtedly a period of consolidation with significant investment in products, services and the sales and marketing functions across the Company against a difficult market backdrop across the Southeast Asia region.
The commercial agreements now signed, with both national and international organisations, demonstrate the strength of the Company's products and services and the board believes the launch of the new products and services, coupled with the strong financial control of all aspects of the Group, has positioned the Company for significant and sustainable profitable growth during 2016 and beyond.
Raymond Chee
Chief Executive
29 June 2016
Board of Directors
David Vernon Cotterell
(aged 63) Non-Executive Chairman
Mr Cotterell has nearly 30 years' experience in the information technology software and service sector. He has held senior management roles with firms such as ACT Financial Systems, DST, Advent and AIM listed SQS Group Plc. This wide ranging experience includes senior roles in international start-ups, organisations requiring change and mature businesses with establish brands. Mr Cotterell has led and successfully implemented two trade sales of technology companies. He holds other IT related board level positions and sits on the boards of two other AIM companies; Chairman of SyQic Plc (LSE: SYC) which joined AIM in December 2013 and he is also Non-Executive Director of Crossrider Plc (LSE: CROS) which listed in September 2014. He is also Director of Europe for Qualitest services.
Chee Han Wen
(known as Raymond, aged 39), Chief Executive, Managing Director and founder of the Group.
Mr Chee graduated from Universiti Kebangsaan Malaysia in Applied Physics with major in Physics Computing in 1999. He established E-Focus Internet Sdn Bhd ('E-Focus'), a company that was involved in web business search engines, content management system and Wireless Application Protocol (WAP) as well as Spyder Systems (M) Sdn Bhd, an MSC status company formed to research and develop digital video recording software applications over the Internet.
Mr Chee was a member of the Multimedia Engineering Research Group (MERG) from 1999 to 2000, during which he was a researcher in Java-based Smart Card systems and Internet compression technologies in Universiti Putra Malaysia. In 1999 he founded Emerge Technology Centre which became the platform for the establishment, which has now grown and evolved into the Group as it is today. As a result of his successes with the Group, he was awarded the JCY Young Entrepreneur Award from the Junior Chamber International in 2008.
Mr Chee is married to the Group's Operations Director, Chong Lip Kian.
Chew Man Fai
(aged 41), Technical Director
Mr Chew leads the technical team in R&D and the implementation of the Group's Cloud Computing products/services. He is responsible for shaping the Group's long-term technology strategy and driving innovation within the technical team.
He graduated with a Bachelor of Science (Hons) in Physics from UKM in 1999. He has more than 10 years of experience in the ICT industry in which he was involved in project management, systems architecture design and development. He started his career as a Systems Analyst in Aplnet Singapore Pte Ltd and in 2001 he worked as a Project Manager in EC1 Pte Ltd, which was for a joint venture company between Singapore Computer System and GE Global Exchange Services. During the course of his employment, he has successfully implemented several projects pertaining to the Supply Chain Management System and Enterprise Application Integration (EAI) for enterprises. In 2003, he was a Chief Consulting Office in Exceez Technologies Sdn Bhd for 3 years before joining the Group in 2006.
Cindy Choo
(aged 40), Finance Director
Miss Cindy graduated with a Bachelor of Commerce degree majoring in Accounting and Finance from the University of Western Australia in 2007 and is a Chartered Accountant of Malaysian Institute of Accountants (MIA), Certified Practising Accountant of Australia (CPA), Chartered Tax Practitioner of Chartered Tax Institute of Malaysia (CTIM), Certified Financial Planner of Malaysian Financial Planning Council (MFPC) and Registered Financial Planner of Financial Planning Association of Malaysia (FPAM). She is currently holding the Professional licensing of Approved Inland Revenue Board of Malaysia Tax Consultant and Approved Goods & Services Tax (GST) Consultant awarded by Ministry of Finance, Malaysia.
Cindy brings with her a wealth of experience having worked for 16 years at Perfect Advisory Sdn Bhd ('Perfect Advisory'), a Malaysia headquartered business and finance consultancy servicing. Cindy joined Perfect Advisory in 1998 as Director of its Tax Planning and Advisory division before becoming CEO in 2001. Under Cindy's leadership, Perfect Advisory greatly expanded from a tax compliance specialist to a provider of business, accounting, bookkeeping, financial planning and GST advisory and consultancy services. She has over 16 years working experience in handling tax consulting, accounting, financial planning, GST consulting and business advisory services.
Chong Lip Kian
(aged 40), Operations Director
Mrs. Chong has been with ESM since its inception in 2001 and heads the Group's Finance and Administration functions. She graduated from Universiti Kebangsaan Malaysia with a Bachelor of Science degree in Mathematics in 1999. Upon graduation, she joined Allied Hori Sdn Bhd as a Production and Material Planner where her responsibilities included managing the daily production schedule as well as procurement handling and planning. In 2000, she joined E-Focus Internet Sdn Bhd as the Operations Manager to oversee its administrative and human resources matters. She has over twelve years working experience in handling finance, administrative and human resources functions.
Chong Lip Kian is married to the Group's Managing Director, Raymond Chee.
Du Kiat Wai
(known as William, aged 37), Non-Executive Director
Mr Du graduated from the University of Hertfordshire, England with a First Class Honours in BA (Hons) Accounting in 1999 and a Master in Business Administration in 2000. His MBA thesis titled "Acquisition of Midland Bank by HSBC" was presented at the 19(th) World Association for Case Method Research & Application Conference in Manheim, Germany in 2002.
He started his career as a trainee accountant in London. Later, he joined PricewaterhouseCoopers ('PwC'), specialising in transfer pricing and tax investigations. He left PwC to join Star Cruise Ltd as a Senior Corporate Planning Executive before setting up his own consulting firm in 2003. He has extensive experience in debt and equity fund raising, corporate restructuring, corporate development and competitive strategy.
He was elected as the management committee of the Malaysian Venture Capital & Private Equity Association 2007 - 2010, and executive council of Technopreneur Association of Malaysia 2005 - 2008. He was invited to be part of the Evaluation & Investment Committee of Cradle Investment Program, Business Advisory & Assessment Program of Multimedia Development Corporation and many other investment programs as panel investors and advisors.
Brian Wong Wye Pong
(aged 43), Non-Executive Director
Mr Wong graduated with a Bachelor of Commerce degree in Accounting and Finance from the University of Western Australia in 1995 and is a Chartered Accountant with the Malaysian Institute of Accountants, a Fellow with CPA Australia, a certified practising accountant and registered auditor with the Kampuchea Institute of Certified Public Accountants and Auditors as well as Certified Financial Planner with the Financial Planning Association of Malaysia. Having previously worked with KPMG, Kuala Lumpur, he has also served as the head of corporate affairs for Analab Resources Berhad, a public listed company. Mr Wong is presently a director of Privasia Technology Berhad, a technology services corporation listed on Bursa Malaysia Securities, and Mann Seng Metal International Limited, a specialist steel engineering corporation listed on the Singapore Stock Exchange. He is also a partner with PKF Malaysia.
Directors' Report
For the year ended 31 December 2015
The directors of RapidCloud International Plc ('RCI' or the 'Company') present their report together with the audited consolidated financial statements of RCI and its subsidiaries (together the 'Group') for the year ended 31 December 2015.
Principal activities and business review
The Group's principal activity during the year was the provision of software solutions to businesses through Southeast Asia. A full review of the Group's business operations is set out in the Chairman's Statement and Chief Executive's Statement.
The Company was incorporated in Jersey on 15 March 2013 as a private company originally under the name RapidCloud Limited. On 3 July 2013 the Company re-registered as a public company and changed its name to RapidCloud International Plc. On 14 August 2013, the Company was admitted to the AIM Market of the London Stock Exchange.
During the year the Group increased both its client base and product offering which has contributed to revenue of RM17.15 million (2014: RM17.82 million) and profit after tax of RM0.86 million (2014: RM3.67 million).
Outlook
The directors are pleased that the Company has launched new solutions into the addressable market over the past year. With these new products and services, we are focused on delivering value to our customers for sustainable and profitable growth in 2016 and beyond. We continue to consolidate and strengthen our sales and marketing operations and broaden our technical skillsets to capitalise on numerous opportunities.
Results and dividends
During the year, the Group made a profit after taxation of RM0.86 million (2014: RM3.67 million).
Dividends totalling RM0.94 million were paid during the year through cash of RM0.21 million and scrip of RM0.73 million at share price of 25.85p.
Risks relating to the Group and its business
Competition
There is significant competition in the software industry with low barriers to entry, new entrants and larger competitors with significant financial resources. There is risk that competitors have or will develop products that are competitive to the Group in terms of functionality, quality or price.
Technological evolution
Changing customer needs, introduction of new products and continual technologies evolution may impact the Group's business products. To mitigate this risk, the Group continuously invests in the research and development of new customer centric products.
Economic, legislative and political risks
The Group may be affected by the adverse developments in the political, economic and regulatory environment in which the Group operates. Uncertainties in the political and economic environment include: expropriation; nationalisation; inflation and deflation; changes in interest rates and taxation regime and currency exchange control. Any deterioration in the economic climate could result in the delay or cancellation of customers' technology investment projects and in a more prolonged economic downturn, it may lead to the overall decline in the sales of the Group that restrict the growth and profitability of the Group. Whilst the Group strives to continue to take measures to protect itself against such risks with prudent financial management and efficient operating procedures, there is no assurance that adverse political, economic and regulatory environments will not adversely affect the Group.
Credit Risk
The Group adopts a policy of only dealing with counterparties that the Directors consider to be credit worthy. Receivables are monitored on an on-going basis via Group's management reporting procedures and action will be taken for long outstanding debts deemed irrecoverable. While the Group had a high level of old receivables at the year end, action is being taken to recover old balances and a more formal credit control policy is to be implemented to ensure that the recoverability of receivables improves in the future.
Foreign currency risk
The Group may experience fluctuations in exchange rates that may have a material adverse effect on the Group's profitability or pricing competitiveness for its products and services. There can be no guarantee that the Group would be able to compensate or hedge against such adverse effects and negative exchange rate effects could have a material adverse effect on the Group's business and financial performance.
Protection of intellectual property
The Group protects its proprietary rights on its software for major technology platforms where the core products are built. These protected platforms are SME WebCombo, E-Commerce Combo and TotalWEB! Lite. The Group is also reliant on the internal processes and systems to protect such rights. Whilst the Directors believe that the Group's efforts to protect its proprietary rights in its proprietary systems, processes and software are adequate, there is a risk that they may not suffice to prevent misappropriation of its intellectual property and it may not be able to detect unauthorised use of or take appropriate steps to enforce, its intellectual property rights.
Directors
The directors of the Company who served during the year and to the date of this report were:
Chee Han Wen
Chew Man Fai
Chong Lip Kian
David Vernon Cotterell
Du Kiat Wai
Brian Wong Wye Pong
Cindy Choo (appointed 5 February 2015)
Directors' interests
Director's interests in the Company (inclusive of any beneficial interests) along with the percentage of total number of issued ordinary shares are as follows:
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As 31 December 2015
Name Number of Ordinary % of Ordinary
Shares Shares
Chee Han Wen (1) 1,389,041 6.27
Chew Man Fai (2) 319,408 1.44
Chong Lip Kian (3) 1,282,518 5.79
David Vernon Cotterell 170,605 0.77
Du Kiat Wai 516,109 2.33
Brian Wong Wye Pong 26,673 0.12
Cindy Choo - -
1. Chee Han Wen holds 1,389,041 ordinary shares in his own name. Additionally, he has a beneficial interest in a further 6,922,719 ordinary shares which are held by RapidCloud Holdings Ltd, a BVI company which is held as to 61 per cent. by Chee Han Wen, 22 per cent. by Chew Man Fai and 17 per cent. by Kenneth Cheng Ju Wan. In addition, Chee Han Wen is also interested in a further 1,282,518 ordinary shares held by his wife, Chong Lip Kian.
2. Chew Man Fai holds 319,408 ordinary shares in his own name. He also has a beneficial interest in a further 6,922,719 ordinary shares which are held by RapidCloud Holdings Ltd, a BVI company which is held as to 61 per cent. by Chee Han Wen, 22 per cent. by Chew Man Fai and 17 per cent. by Kenneth Cheng Ju Wan. In addition, Chew Man Fai is also interest in 238,908 ordinary shares held by his wife, Chan Siu Lee.
3. Chong Lip Kian holds 1,282,518 ordinary shares in her own name. In addition to these, her interest includes 1,389,041 ordinary shares in which her husband, Chee Han Wen holds in his own name together with a further 6,922,719 ordinary shares which Chee Han Wen is beneficially interested in and which are held by RapidCloud Holdings Ltd, a BVI company which is held as to 61 per cent. by Chee Han Wen, 22 per cent. by Chew Man Fai and 17 per cent. by Kenneth Cheng Ju Wan.
Subsequent events
Subsequent to the year end, SalesMAP Sdn. Bhd., a wholly owned subsidiary of SalesMAP Pte. Ltd., was established in Malaysia and SalesMAP Pte. Ltd., a wholly owned subsidiary of RapidCloud International Plc., was established in Singapore to market and sell the Company's flagship product, SalesMAP. SalesMap is an intelligent sales system and a platform to build a structured sales process and manage sales performance.
Going concern
The Board has a reasonable expectation that the Group has adequate resources to continue in operational existence for the foreseeable future. The Board will continue to monitor the progress of the development of its activities and the financial position in order to ensure that the Group continues to have sufficient funding to continue in business. For this reason, the Board continues to adopt the going concern basis in preparing the financial statements.
Statement of Directors' responsibilities
The Directors are responsible for preparing the Directors' Report and the financial statements in accordance with applicable laws and regulations.
Company law requires the Directors to prepare the financial statements for each financial year. Under that law, the Directors have prepared the financial statements in accordance with International Financial Reporting Standards (IFRS) as adopted by the European Union. Under company law, the Directors must not approve the financial statements unless they are satisfied that they give a true and fair view of the state of affairs of the Group as at the end of the financial year and profit or loss of the Group for the financial year then ended. In preparing these financial statements, the Directors are required to:
-- select suitable accounting policies and then apply them consistently; -- make judgements and accounting estimates that are reasonable and prudent;
-- state whether applicable IFRS as adopted by the European Union have been followed, subject to any material departures disclosed and explained in the financial statements; and
-- prepare the financial statements on the going concern basis unless it is appropriate to presume that the Group will not continue in business.
The Directors are responsible for keeping adequate accounting records that are sufficient to show and explain the Group's transactions and disclose with reasonable accuracy at any time the financial position of the Group. They 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.
Directors' disclosure to the auditors
The Directors confirm that:
-- to the best of each Director's knowledge and belief, there is no information relevant to the preparation of their report of which the Group's auditors are unaware; and
-- each Director has taken all the steps a Director might reasonably be expected to have taken to be aware of any relevant audit information and to establish that the Group's auditors are aware of the information.
Auditors
UHY Hacker Young LLP has indicated their willingness to continue in office and shall be deemed reappointed unless and until they are removed.
On behalf of the Board
David Cotterell
Chairman
29 June 2016
Remuneration Committee Report
For the year ended 31 December 2015
As an AIM quoted company, RapidCloud International Plc. has adopted a number of the best practices as proposed in the Remuneration Committee Guide for Smaller Quoted Companies of The Quoted Companies Alliance.
Remuneration Committee
The Remuneration Committee comprises:
David Cotterell Non-Executive Chairman, Chairman
of the Committee
Brian Wong Non-Executive Director
Wye Pong
Du Kiat Wai Non-Executive Director
The Remuneration Committee is responsible for determining the Group's policy on the remuneration of senior executives and specific remuneration packages for Executive Directors, including pension rights and compensation payments.
Meetings
Two (2) remuneration committee meetings were held in 2015. Details of attendances are set out below:
David Cotterell 2/2 Brian Wong Wye Pong 2/2 Du Kiat Wai 2/2
Remuneration policy
The objective of the remuneration policy is to attract, retain and motivate high calibre executives to deliver outstanding shareholder returns and at the same time maintain an appropriate compensation balance with the other employees of the Group.
Directors' remuneration
The normal remuneration arrangement for Executive Directors consists of base salary and other benefits as determined by the Board. Each Executive Director has a service agreement that can be terminated by either party giving to the other 6 months' written notice. Compensation for loss of office is restricted to base salary and benefits only.
The remuneration package for the Executive Directors comprise:
Base salary - annual review of the base salaries of the Executive Directors is conducted after taking into account the Executive Director's roles, responsibilities and contributions to Group performance.
Benefits - benefits include payments for provident funds that are mandatory and statutory pension payments as required by laws of the resident countries of the Executive Directors, health insurance and other benefits.
Non-Executive Directors
Remuneration of the Non-Executive Directors is currently solely in the form of director fees determined by the Board. Non-Executive Directors are not entitled to pensions, annual bonuses or employee benefits.
They are entitled to participate in share option arrangements relating to the Company's shares but no such share option arrangement is in place at this time. Each Non-Executive Director has a letter of appointment stating his annual fee and that the appointment is to continue unless terminated by the Company by giving 3 months' written notice or by the Non-Executive Director giving 6 months' notice.
Directors are not involved in specific discussions on their own remuneration.
The interests of Directors (and their immediate family) over the ordinary shares of the Company are disclosed in the Directors' Report.
Directors' Remuneration
Salary/Fees Employee's 2015 2014
RM'000 Provident Fund/ Total Total
Retirement RM'000 RM'000
Fund
RM'000
------------- ----------------- -------- --------
Executive
Chee Han Wen 235 8 243 281
Chew Man Fai 240 10 250 270
Chong Lip
Kian 230 8 238 270
Cindy Choo 120 - 120 -
Non-Executive
David Cotterell 162 - 162 102
Du Kiat Wai 65 - 65 55
Brian Wong
Wye Pong 65 - 65 55
------------- ----------------- -------- --------
1,117 26 1,143 1,033
------------- ----------------- -------- --------
Approved by the Board and signed on its behalf
David Cotterell
Chairman of the Remuneration Committee
29 June 2016
Audit Committee Report
For the year ended 31 December 2015
Membership
The present members of the Audit Committee comprise:
Brian Wong Wye Non-Executive Director, Chairman Pong of the Committee David Cotterell Non-Executive Director Du Kiat Wai Non-Executive Director
Members of the Audit Committee are appointed by the Board, and must comprise a minimum of two members from amongst the non-executive Directors of the Company.
At least two members of the Audit Committee shall have recent and relevant financial experience, and all members should have sufficient competence to understand, analyse and, when necessary, challenge the management accounts and draft public financial statements.
Chairman
The Board shall appoint the chairman of the Audit Committee who shall chair the meetings of the Audit Committee. The chairman must be a Non-Executive Director. The chairman shall have the responsibility of liaising with the Board.
Frequency of meetings
The Audit Committee shall meet at least twice a year and at such other times as the chairman of the Audit Committee shall require.
Any member of the Audit Committee, or the external auditors may request a meeting if they consider that one is necessary.
Duties
The Audit Committee shall have access to sufficient resources in order to discharge its duties.
The Audit Committee is authorised by the Board to investigate any activity within its terms of reference. It is authorised to seek any information it reasonably requires from any employee and all employees are directed to co-operate with any reasonable request made by the Audit Committee.
The Audit Committee shall be responsible for:
Financial Reporting
-- monitoring the integrity of the financial statements of the Group, including its annual and interim accounts and reports, preliminary results' announcements and, any other formal announcements relating to the Group's financial performance, reviewing significant financial reporting judgements contained in them;
-- reviewing summary financial statements, significant financial returns to regulators and any financial information contained in certain other documents such as announcements of price sensitive information;
-- reviewing and challenging where necessary:
- the consistency of, and any changes to, accounting policies both on a year on year basis and across the Group;
- the methods used to account for significant or unusual transactions where different approaches are possible;
- whether the Group has followed appropriate accounting standards and made appropriate estimates and judgements, taking into account to the views of the external auditor;
- the clarity of disclosure in the company's financial reports and the context in which statements are made; and
- all material information presented with the financial statements, such as the operating and financial review and the corporate governance statement (in so far as it relates to the audit and risk management).
-- discussing whether the Audit Committee should recommend that the financial statements and accompanying reports should be approved by the Board in the Board meeting following the Audit Committee meeting and, if so, whether that approval should be granted subject to any matters discussed by the Audit Committee.
External Auditors
-- making recommendations to the Board, for it to put to the Shareholders for their approval in general meeting, in relation to the appointment, re-appointment and removal of the external auditor and approving the remuneration and terms of engagement of the external auditor and any matters relating to their resignation or dismissal;
-- reviewing and monitoring the external auditor's independence and objectivity as well as their qualifications, expertise and resources and the effectiveness of the audit process, taking into consideration relevant UK, Jersey, Malaysian, Singapore, Thai and Philippine legal and other relevant professional and regulatory requirements;
-- discussing the nature and scope of the audit with external auditors; co-ordinating the audit where more than one firm is involved; monitoring and reviewing any problems or reservations arising from the audit; and discussing any matters which the external auditor wishes to discuss, without executive Board members present;
-- discussing any difficulties, reservations or other matters arising from the external auditors' interim and final audits (in the absence of management, where necessary);
-- reviewing, prior to its consideration by the Board, the external auditors' report to the directors and management's response;
-- developing and implementing policy on the engagement of the external auditor to supply non-audit services, taking into account relevant ethical guidance regarding the provision of non-audit services by the external audit firm; and reporting to the Board, identifying any matters in respect of which it considers that action or improvement is needed and making recommendations as to the steps to be taken;
-- reviewing and approving the annual audit plan with the external auditor and ensuring that it is consistent with the scope of the audit engagement and the effectiveness of the audit;
-- reviewing the findings of the audit with the external auditor which shall include but not limited to discussing major issues which arose on the audit, any accounting and audit judgements, and levels of errors identified during the audit;
-- reviewing any representation letters and/or responses from the management before being given to the external auditor; and
-- meeting with the auditors at least twice a year, once at the planning stage, where the nature and scope of the audit will be considered, and once post audit at the reporting stage, and shall ensure that any auditor's management letters and management's responses are reviewed.
Internal Controls
-- reviewing the effectiveness of the Group's internal financial controls and, unless expressly addressed by a separate Board risk committee, or by the Board itself, to review the Group's internal control and risk management systems and review and approve the statements to be included in the Annual Report concerning internal controls and risk management; and
-- reviewing arrangements for employees to raise concerns, in confidence, about possible improprieties in financial reporting or other matters and ensuring that arrangements allow for the proportionate and independent investigation of such matters with appropriate follow up action.
Meetings
Two (2) audit committee meetings were held in 2015. Details of attendances are set out below:
Brian Wong Wye Pong 2/2 David Cotterell 2/2 Du Kiat Wai 2/2
Summary of activities
The following activities were carried out by the Audit Committee during the financial year under review:
i. Reviewed the annual and interim financial statements for recommendation to the Board; ii. Reviewed the external auditors' scope of work for the year; iii. Held discussions with the auditors at the planning and reporting stages of the audit; iv. Reviewed the compliance with accounting standards and other legal requirements.
Approved by the Board and signed on its behalf
Brian Wong Wye Pong
Chairman of the Audit Committee
29 June 2016
Independent Auditors' Report
To the members of Rapidcloud International plc
For the year ended 31 December 2015
We have audited the Group financial statements of RapidCloud International plc for the year ended 31 December 2015 which comprise the Consolidated Statement of Comprehensive Income, the Consolidated Statement of Financial Position, the Consolidated Statement of Changes in Equity, the Consolidated Statement of Cash Flows and the related notes. The financial reporting framework that has been applied in their preparation is applicable law and International Financial Reporting Standards (IFRS) as adopted by the European Union.
This report is made solely to the Company's members, as a body, in accordance with Article 113A of the Companies (Jersey) Law 1991. Our audit work has been undertaken so that we might state to the Company's members those matters we are required to state to them in an auditors' report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the company and the company's members as a body, for our audit work, for this report, or for the opinions we have formed.
Respective responsibilities of directors and auditors
As explained more fully in the Statement of Directors' responsibilities, the Directors are responsible for the preparation of the financial statements and for being satisfied that they give a true and fair view. Our responsibility is to audit and express an opinion on the financial statements in accordance with applicable law and International Standards on Auditing (UK and Ireland). Those standards require us to comply with the Auditing Practices Board's (APB's) Ethical Standards for Auditors.
Scope of the audit of the financial statements
A description of the scope of an audit of financial statements is provided on the APB's website at www.frc.org.uk/apb/scope/private.cfm.
Opinion on financial statements
In our opinion the financial statements:
-- give a true and fair view of the state of the Group's affairs as at 31 December 2015 and of the Group's profit for the year then ended;
-- have been properly prepared in accordance with IFRSs as adopted by the European Union; and
-- have been properly prepared in accordance with the requirements of the Companies (Jersey) Law 1991.
Emphasis of matter - Recoverability of trade receivables
In forming our opinion on the financial statements, which is not qualified, we have considered the adequacy of the disclosure made in note 16 to the financial statements concerning the Group's ability to recover its trade receivables. As discussed in note 16, at 31 December 2015 the Group had trade receivables of RM14.6 million (2014: RM10.2 million), including RM4.7 million (2014: RM766,000) which had been outstanding for over one year at the year-end date.
The continued high level of long outstanding receivables indicates an increased degree of uncertainty as to whether the debts may be collectible in full and may cast doubt on the Group's policies and procedures for effective debt collection. The Directors have reviewed the outstanding receivables in detail and made impairment provisions of RM853,000 against receivables that they believe are at risk of not being received in full. The Directors therefore are of the opinion that the unprovided receivables will be collected in full and they are making efforts to do so.
The financial statements do not include adjustments that would result from further impairment of trade receivables if the Group were unable to collect its debts in full.
Matters on which we are required to report by exception
We have nothing to report in respect of the following matters where the Companies (Jersey) Law 1991 requires us to report to you if, in our opinion:
-- proper accounting records have not been kept, or proper returns adequate for our audit have not been received from branches not visited by us; or
-- the financial statements are not in agreement with the accounting records and returns; or -- we have not received any information or explanation that was necessary for our audit.
Colin Wright
Senior Statutory Auditor
for and on behalf of
UHY Hacker Young
Chartered Accountants and Statutory Auditors
Quadrant House
4 Thomas More Square
London E1W 1YW
29 June 2016
Consolidated Statement of Comprehensive Income
For the year ended 31 December 2015
Notes Year ended Year ended
31 December 31 December
2015 2014
RM'000 RM'000
------------- -------------
Continuing operations
Revenue 5 17,153 17,820
Cost of sales (7,307) (8,146)
------------- -------------
Gross profit 9,846 9,674
Other operating income 980 1,149
Administrative expenses (10,243) (7,559)
Operating profit 583 3,264
Finance costs (31) (26)
Profit before tax 552 3,238
Income tax expense 10 (53) (50)
------------- -------------
Profit for the year 7 499 3,188
Other comprehensive income
Exchange differences
on translation of foreign
operations 85 (100)
------------- -------------
Total comprehensive income 584 3,088
Profit attributable to:
Equity owners of the
parent company 856 3,671
Non-controlling interests (357) (483)
------------- -------------
499 3,188
Total comprehensive income
attributable to:
Equity owners of the
parent company 1,042 3,609
Non-controlling interests (458) (521)
------------- -------------
584 3,088
------------- -------------
Earnings per share
Basic (Sen) 11 4.20 20.59
Diluted (Sen) 11 4.07 19.86
------------- -------------
Consolidated Statement of Financial Position
As at 31 December 2015
Notes As at 31 As at 31
December December
2015 2014
RM'000 RM'000
---------- ----------
ASSETS
Non-current assets
Property, plant and equipment 12 7,708 5,215
Software development
assets 13 3,160 2,491
Intangible assets and
goodwill 15 5,839 5,839
16,707 13,545
---------- ----------
Current assets
Trade and other receivables 16 16,581 11,191
Cash and cash equivalents 17 6,794 3,931
Taxation recoverable - 68
---------- ----------
23,375 15,190
---------- ----------
Total assets 40,082 28,735
---------- ----------
LIABILITIES
Current liabilities
Trade and other payables 18 3,266 2,393
Hire purchase liabilities 19 92 62
Taxation payable 2 -
---------- ----------
3,360 2,455
---------- ----------
Non-current liabilities
Hire purchase liabilities 19 744 457
Deferred tax liability 20 98 86
---------- ----------
842 543
---------- ----------
Total liabilities 4,202 2,998
---------- ----------
Net assets 35,880 25,737
---------- ----------
Notes As at 31 As at 31
December December
2015 2014
RM'000 RM'000
---------- ----------
EQUITY
Capital and reserves
attributable to equity
holders
Share capital 21 35,105 24,609
Shares to be issued 14 2,074 2,074
Merger reserve (13,260) (13,260)
Currency translation
reserve 124 (62)
Retained earnings 12,975 13,056
---------- ----------
37,018 26,417
Non-controlling interests (1,138) (680)
---------- ----------
35,880 25,737
---------- ----------
The financial statements were approved by the Board of Directors on 29 June 2016 and signed on its behalf by:
David Cotterell
Director
Consolidated Statement of Cash Flows
For the year ended 31 December 2015
Year ended Year ended
31 December 31 December
2015 2014
Notes RM'000 RM'000
------------- -------------
Cash flows from operating
activities
Profit before tax 552 3,238
Adjustments for non-cash
items:
Depreciation 12 1,434 683
Amortisation of software
development assets 13 804 931
Amortisation of website
assets 15 - 1
Deposit written off 2 -
Gain on disposal of equipment (55) (60)
Equipment written off - 2
Impairment of trade receivables 16 252 62
Reversal of impairment
on trade receivables 16 (15) -
Foreign exchange loss - 46
Waiver of loan by subsidiary's
director - (862)
Finance income (5) (52)
Finance costs 31 26
------------- -------------
Operating profit before
working capital changes 3,000 4,015
Increase in trade and other
receivables 16 (5,283) (1,216)
Decrease in trade and other
payables 18 232 (1,262)
Cash (outflow)/inflow from
operations (2,051) 1,537
Interest paid (31) (26)
Interest received 5 52
Tax refund 75 -
Tax paid (208) (929)
------------- -------------
Net cash (outflow)/inflow
from operating activities (2,210) 634
------------- -------------
Cash flows from investing
activities
Purchase of property, plant
and equipment 12 (3,362) (2,060)
Proceeds from sale of property,
plant and equipment 156 78
Software development expenditure 13 (1,473) (1,204)
Acquisition of subsidiaries
(net of cash received) 14 - (2,465)
Net cash used in investing
activities (4,679) (5,651)
------------- -------------
Year ended Year ended
31 December 2015 31 December
RM'000 2014
Notes RM'000
----------------- ------------------------------
Cash flows from financing
activities
Dividends paid (207) (575)
Advances from subsidiary's
director - 529
Repayment of hire purchase
liabilities (229) (172)
Proceeds from issue of placing
shares (net of issue costs) 21 9,766 2,966
Net cash from financing
activities 9,330 2,748
----------------- ------------------------------
Net increase/(decrease)
in cash and cash equivalents 2,441 (2,269)
----------------- ------------------------------
Effect of exchange rate
changes on cash and cash
equivalents 422 (38)
----------------- ------------------------------
Cash and cash equivalents
at the beginning of the
year 3,931 6,238
----------------- ------------------------------
Cash and cash equivalents
at the end of the year 17 6,794 3,931
----------------- ------------------------------
Consolidated Statement of Changes in Equity
For the year ended 31 December 2015
Year ended 31 Share Shares Merger Foreign Retained Total Non-controlling Total
December capital to be reserve currency earnings RM'000 interests equity
2015: RM'000 issued RM'000 translation RM'000 RM'000 RM'000
RM'000 reserve
RM'000
---------- --------- ---------- ------------ ----------- --------- ----------------- ---------
Balance on 1
January
2015 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 10,334 - - - - 10,334 - 10,334
Share issue
costs (568) - - - - (568) - (568)
Dividends paid 730 - - - (937) (207) - (207)
---------- --------- ---------- ------------ ----------- --------- ----------------- ---------
Total
comprehensive
income
Profit for the
year - - - - 856 856 (357) 499
Other
comprehensive
income - - - 186 - 186 (101) 85
Balance at 31
December
2015 35,105 2,074 (13,260) 124 12,975 37,018 (1,138) 35,880
---------- --------- ---------- ------------ ----------- --------- ----------------- ---------
Year ended 31 Share Shares Merger Foreign Retained Total Non-controlling Total
December capital to be reserve currency earnings RM'000 interests equity
2014: RM'000 issued RM'000 translation RM'000 RM'000 RM'000
RM'000 reserve
RM'000
---------- --------- ---------- ------------ ----------- --------- ----------------- ---------
Balance on 1
January
2014 21,643 - (13,260) - 9,960 18,343 - 18,343
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 - - - - 3,671 3,671 (483) 3,188
Other
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
---------- --------- ---------- ------------ ----------- --------- ----------------- ---------
Notes to the Consolidated of Financial Statements
For the year ended 31 December 2015
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 1 BD.
The consolidated financial statements of RapidCloud International Plc and its subsidiaries (together the 'Group') are presented in Ringgit Malaysia ('RM'), which is the presentation currency for the consolidated financial statements. The functional currency for each individual entity is the local currency of each individual entity. The primary economic environment for the Group is Malaysia. All amounts are prepared to the nearest thousand (RM'000) except where otherwise indicated.
2. Adoption of new and revised IFRS standards
The Group has not applied in advance the following accounting standards and interpretations, including the consequential amendments that have been issued but are not yet effective. The transfer to these new or revised standards and interpretation is not expected to have a material impact on the financial statements.
Standard Effective Date IFRS 9 - Financial Instruments 1 January 2018 IFRS 15 - Revenue from Contracts 1 January 2018 with Customers Amendments to IAS 1 - Disclosure 1 January 2016 Initiative Amendments to IAS 16 and 1 January 2016 IAS 38 - Clarification of Acceptable Methods of Depreciation and Amortisation 3. Significant accounting policies 3.1 Statement of compliance
The consolidated financial statements have been prepared in accordance with International Financial Reporting Standards, as adopted by the European Union ('IFRS').
3.2 Basis of preparation
The consolidated financial statements have been prepared on the historical cost basis except for financial instruments that are measured at the 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.
3.3 Basis of consolidation
The consolidated financial statements incorporate the financial statements of the Company, 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.
Purchase method
Under the purchase method, the results of the subsidiaries acquired or disposed of are included from the date of acquisition or up to the date of disposal. At the date of acquisition, the fair values of the subsidiaries' net assets are determined and these values are reflected in the consolidated financial statements. The cost of acquisition is measured at the aggregate of the fair values, at the date of exchange, of assets given, liabilities incurred or assumed, and equity instruments issued by the Group in exchange for control of the acquire, plus any costs directly attributable to the business combination.
Intragroup transactions, balances and unrealised gains on transactions are eliminated; unrealised losses are also eliminated unless costs cannot be recovered. Where necessary, adjustments are made to the financial statements of subsidiaries to ensure consistency of accounting policies with those of the Group.
3.4 Goodwill
Goodwill represent the excess of the fair value of the purchase consideration over the Group's share of the fair values of the identifiable assets, liabilities and contingent liabilities of the subsidiaries at the date of acquisition.
Goodwill is measured at cost less accumulated impairment losses, if any. The carrying value of goodwill is reviewed for impairment annually. The impairment value of goodwill is recognised immediately in profit or loss. An impairment loss recognised for goodwill is not reversed in a subsequent period. If, after reassessment, the Group's interest in the fair values of the identifiable net assets of the subsidiaries exceeds the cost of the business combinations, the excess is recognised as income immediately in profit or loss.
For the purpose of impairment testing, assets 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 cash-generating units. Subject to operating segment ceiling test, for the purpose of goodwill impairment testing, cash-generating units to which goodwill has been allocated are aggregated so that the level at which impairment testing is performed reflects the lowest level at which goodwill is monitored for internal reporting purposes. The goodwill acquired in a business combination, for the purpose of impairment testing, is allocated to a cash-generating unit or a group
of cash-generating units that are expected to benefit from the synergies of the combination.
The recoverable amount of an asset or cash-generating unit is the greater of its value-in-use and its fair value less costs of disposal. 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 or cash-generating unit.
An impairment loss is recognised if the carrying amount of an asset or cash-generating unit exceeds its estimated recoverable amount. Impairment loss is recognised in profit or loss, unless the asset is carried at a revalued amount, in which such impairment loss is recognised directly against any revaluation surplus for the asset to the extent that the impairment loss does not exceed the amount in the revaluation surplus for that same asset. Impairment losses recognised in respect of cash-generating units are allocated first to reduce the carrying amount of any goodwill allocated to the cash-generating unit (group of cash-generating units) and then to reduce the carrying amounts of the other assets in the cash-generating unit (group of cash-generating units) 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 the end of each reporting period for any indications that the loss has decreased or no longer exists. An impairment loss is reversed only if there has been a change in the estimates used to determine the recoverable amount since the last impairment loss was recognised. The reversal is limited so that the carrying amount of the asset does not exceed its recoverable amount, nor exceed the carrying amount that would have been determined, net of depreciation or amortisation, had no impairment loss been recognised for asset in prior years. Such reversal is recognised in the profit or loss unless the asset is carried at a revalued amount, in which case the reversal is treated as a revaluation increase.
3.5 Foreign currency translation
Functional and presentation 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 Malaysia 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.
Foreign operations
Assets and liabilities of foreign operations are translated to RM at the rates of exchange ruling at the end of the reporting period. Revenues and expenses of foreign operations are translated at exchange rates ruling at the dates of the transactions. All exchange differences arising from translation are taken directly to other comprehensive income and accumulated in equity under the translation reserve. On the disposal of a foreign operation, the cumulative amount recognised in other comprehensive income relating to that particular foreign operation is reclassified from equity to profit or loss.
3.6 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 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.
3.7 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 follow:
Fixtures and 5 years equipment 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.
3.8 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 the Company 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.
3.9 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.
3.10 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.
3.11 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. The Group recognises revenue when the amount of revenue can be reliably measured, it is probable that future economic benefits will flow to the Group and specific delivery criteria have been met.
Deferred revenue is recognised to the extent that services have been invoiced but have not yet been delivered and accordingly are recognised as a liability within accruals and deferred income in the statement of financial position.
3.12 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.
3.13 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.
3.14 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 realised 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 utilised.
4. Significant accounting judgements and estimates
The preparation of financial information in conformity with IFRSs requires management to make judgement, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets and liabilities, income and expenses. Judgements and estimates are continually evaluated and are based on historical experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances. The resulting accounting estimates may differ from the related actual results. The estimates and assumptions that have a risk of causing material adjustment to the carrying amounts of assets and liabilities within the future financial years are as follows:
Depreciation, useful lives and residual values of property, plant and equipment
The Directors estimate the useful lives and residual values of property, plant and equipment in order to calculate the depreciation charges. Changes in these estimates could result in changes being required to the annual depreciation charges in the statement of comprehensive income and the carrying values of the property, plant and equipment in the statement of financial position.
Amortisation, useful lives and residual values of software development assets
The Directors estimate the useful lives and residual values of software development assets in order to calculate the amortisation charges. Changes in these estimates could result in changes being required to the annual amortisation charges in the statement of comprehensive income and the carrying values of the software development assets in the statements of financial position.
Deferred tax liability
The Group estimates future profitability in arriving at the fair value of the deferred tax assets and liabilities. If the final tax outcome is different to the estimated deferred tax amount, the resulting changes will be reflected in the statement of comprehensive income, unless the tax relates to an item charged to equity in which case the changes in tax estimates will also be reflected in equity.
Judgements
In the process of applying the Group's accounting policies, management has made the following significant judgements, apart from those involving estimations, which may have a significant effect on amounts recognised in the financial statements:
-- impairment of assets (including receivables, goodwill, software development expenditure and property, plant and equipment);
-- timing of recognition of revenue on project contracts.
Impairment of receivables
The Group accesses at the end of each reporting period whether there is any objective evidence that a receivable is impaired. To determine whether there is objective evidence of impairment, the Group considers factors such as the probability of insolvency or significant financial difficulties of the receivables and default or significant delay in payments.
5. Revenue
Revenue represents the invoiced value of goods sold and services rendered, net of discounts and returns. Revenue is derived from the Group's principal activity of the provision of computer products and services using cloud computing technology along with the development of software to support the services.
Revenue analysed by geographical area was as follows;
2015 2014
RM'000 RM'000
-------- --------
Malaysia 13,078 13,598
Singapore 3,218 3,679
Thailand 215 97
Philippines 570 413
Indonesia 72 33
-------- --------
17,153 17,820
-------- --------
6. 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 year 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 Southeast Asia. All revenues therefore arise within Southeast Asia. No single external customer amounts to 10 per cent or more of the Group's revenue.
As the Group only has one reportable segment, no further segmental information is disclosed.
7. Profit for the year
Profit for the year has been arrived at after charging/(crediting):
2015 2014
RM'000 RM'000
---------------------------------- -------
Staff costs (note 9) 5,418 5,594
Depreciation (note 12) 1,434 683
Amortisation of software development
assets (note 13) 804 931
Operating lease rentals - premises 710 513
Impairment of trade receivables
(note 16) 252 62
Reversal on impairment of trade
receivables (note 16) (15) -
Bad debts written-off - 130
Loss on foreign exchange 101 38
---------------------------------- -------
8. Auditors' remuneration
During the year the Group obtained the following services from its auditors:
2015 2014
RM'000 RM'000
------- -------
Fees payable to the Group's
auditor and its member firms
for:
- statutory audit in respect
of the Company and Group 150 108
- statutory audit in respect
of the Company's subsidiaries 65 52
------- -------
215 160
------- -------
9. Staff costs
The average monthly number of persons employed (including Executive Directors) by the Group, analysed by category, was as follows:
2015 2014
Number Number
------- -------
Management 20 19
Staff 116 137
------- -------
136 156
------- -------
Their aggregate remuneration comprised:
2015 2014
RM'000 RM'000
------------------------------------ -------
Salaries, wages, bonuses and
allowances 6,354 6,355
Defined contribution pension
costs 537 443
Less: capitalised in software
development assets (note 13) (1,473) (1,204)
------------------------------------ -------
5,418 5,594
------------------------------------ -------
Included in staff costs above is the Group's Executive Directors' remuneration as follows:
2015 2014
RM'000 RM'000
------- -------
Salaries, wages, bonuses and
allowances 744 493
Defined contribution pension
costs 17 58
------- -------
761 551
------- -------
Directors' remuneration is included in the following:
2015 2014
RM'000 RM'000
------- -------
Staff costs 761 551
Capitalised under software development
costs (note 13) 90 270
Directors' fees (paid via service
agreements) 292 212
------- -------
1,143 1,033
------- -------
10. Income tax expense
2015 2014
RM'000 RM'000
------- -------
Corporation tax
Current year tax expense 1 15
Adjustments in respect of prior
years 40 22
------- -------
41 37
------- -------
Deferred tax expense
Current year 12 13
------- -------
53 50
------- -------
The Group's effective tax rate differs from the standard rate of corporation tax of 25% in 2015 (2014: 25%) due to the following differences:
2015 2014
RM'000 RM'000
Profit before tax 552 3,238
------- -------
Current taxation at standard
tax rate of 25% 138 810
Impact on taxation of:
Effect on different tax rate
in other jurisdictions 1 (48)
Income not subject to income
tax due to pioneer status (237) (940)
Income not chargeable for tax
purposes (8) (147)
Expenses not deductible for tax
purpose 600 389
Depreciation over capital allowances 2 2
Prior year adjustments 40 22
Other adjustments (483) (38)
------- -------
Total tax expense 53 50
------- -------
Average effective tax rate 9.6% 1.5%
------- -------
The government of Malaysia awarded Multimedia Super Corridor ("MSC") status to a subsidiary, RapidCloud (M) Sdn. Bhd. (formerly known as Emerge Systems (M) Sdn. Bhd.) on 28 June 2013, and was granted pioneer status by the Ministry of International Trade and Industry for services under the Promotion of Investment Act 1986 in which the statutory income is exempted from tax for a period of five (5) years from 28 June 2013.
11. Earnings per share
The calculation of the basic and diluted earnings per share is based on the following:
2015 2014
RM'000 RM'000
---------- ----------
Profit for the financial period
after tax and basic earnings
attributable to ordinary shareholders 856 3,671
---------- ----------
Number Number
---------- ----------
Weighted average numbers of ordinary
shares 20,401,402 17,831,934
---------- ----------
Sen Sen
---- -----
Earnings per share:
Basic 4.20 20.59
---- -----
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. (note 14) the dilutive earnings per share would be 4.07 Sen (2014: 19.86 Sen).
12. Property, plant and equipment
Furniture Office Computers Motor Renovation Signboard Sun Total
and fittings equipment RM'000 Vehicles RM'000 RM'000 Microsystems RM'000
RM'000 RM'000 RM'000 equipment
RM'000
-------------- ----------- ---------- ---------- ----------- ---------- ------------- --------
Year ended 31
December 2015
Cost
At 1 January
2015 1,003 740 2,516 657 2,463 32 465 7,876
Additions 10 33 3,269 596 - - - 3,908
Disposals - - - (244) - - - (244)
Exchange
difference 9 18 9 - 117 - - 153
-------------- ----------- ---------- ---------- ----------- ---------- ------------- --------
At 31 December
2015 1,022 791 5,794 1,009 2,580 32 465 11,693
-------------- ----------- ---------- ---------- ----------- ---------- ------------- --------
Charge for the
year
At 1 January
2015 134 104 1,465 196 272 25 465 2,661
Charge for the
year 121 115 801 175 219 3 - 1,434
Disposals - - - (143) - - - (143)
Exchange
difference 5 7 6 - 15 - - 33
-------------- ----------- ---------- ---------- ----------- ---------- ------------- --------
At 31 December
2015 260 226 2,272 228 506 28 465 3,985
-------------- ----------- ---------- ---------- ----------- ---------- ------------- --------
Net book value
-------------- ----------- ---------- ---------- ----------- ---------- ------------- --------
At 31 December
2015 762 565 3,522 781 2,074 4 - 7,708
-------------- ----------- ---------- ---------- ----------- ---------- ------------- --------
Included within property, plant and equipment are motor vehicles acquired under hire purchase agreements with carrying values of RM781,000 (2014: RM461,000).
Furniture Office Computers Motor Renovation Signboard Sun Total
and equipment RM'000 Vehicles RM'000 RM'000 Microsystems RM'000
fittings RM'000 RM'000 equipment
RM'000 RM'000
---------- ---------- ---------- ---------- ----------- ---------- ---------------- --------
Year ended31
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 2,128
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
---------- ---------- ---------- ---------- ----------- ---------- ---------------- --------
Included within property, plant and equipment are motor vehicles acquired under hire purchase agreements with carrying values of RM461,000 (2013: RM632,000).
13. Software development assets
2015 2014
RM'000 RM'000
-------- --------
Cost
At the beginning of the
year 5,299 4,095
Additions 1,473 1,204
-------- --------
At the end of the year 6,772 5,299
-------- --------
Accumulated amortisation
At the beginning of the
year 2,808 1,877
Charge for the financial
year 804 931
-------- --------
At the end of the year 3,612 2,808
-------- --------
Carrying amount
At the end of the year 3,160 2,491
-------- --------
Included in additions to software development assets during the financial year were the following:
2015 2014
RM'000 RM'000
-------- --------
Directors' remuneration
(note 9) 90 270
Employee benefits expenses
(note 9) 1,383 934
-------- --------
1,473 1,204
-------- --------
Software development assets comprise capitalised development costs on software products. These costs are internally generated wages and salaries 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 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 asset that 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 financial year under review.
14. Subsidiaries (a) Group entities
Details of RCI's subsidiary companies are as follows:
Subsidiary companies Place Equity Principal activities
of interests
incorporation 2015 2014
% %
--------------- ------ ----- ---------------------
Holding company
for Malaysia,
Thailand &
RapidCloud Asia Philippines
Sdn. Bhd. Malaysia 100 100 subsidiaries
RapidCloud (M) Sdn.
Bhd.
(formerly known
as Emerge Systems Computer network
(M) Sdn. Bhd.) Malaysia 100 100 and web solutions
Emerge Software
Solutions
(M) Sdn. Bhd. Malaysia 100 100 Software development
PT RapidCloud Indonesia Indonesia 100 100 Computer programming
Internet advertising
services and
to provide
an Internet
related services
and business
such as e-commerce,
website designing
and any other
RapidCloud Singapore computer related
Pte. Ltd. Singapore 100 100 services
Operation of
website, management
of service
server and
Emerge Systems (Thailand) electronic
Ltd Thailand 49 49 business solutions
Provision of
various internet,
e-commerce
Sharksurf Philippines and m-commerce
Incorporated Philippines 40 40 services
There are no significant restrictions on the ability of the subsidiaries to transfer funds to the Group in the form of cash dividends or repayment of loans and advances.
(b) Acquisition of subsidiaries
i) Emerge Systems (Thailand) Ltd and Sharksurf Philippines Incorporated
Although the Group owns less than half of the ownership interest in Emerge Systems (Thailand) Ltd ('EST') and Sharksurf Philippines Incorporated ('SPI') and less than half of their voting powers, the Directors have determined that the Group controls these two entities. On 1 January 2014, the Group obtained control of EST and SPI by virtue of written undertakings with other shareholders of EST and SPIand the Group now has full and absolute control of the management and business operations of EST and SPI.
Goodwill was recognised as a result of the associates becoming subsidiaries as follows:
2014
RM'000
-------
Carrying value of associate companies 1,071
Non-controlling interest, based on
their proportionate interest in the
recognised amounts of assets and liabilities
of the acquiree (159)
Fair value of identifiable assets and
liabilities at 1 January 2014 302
-------
Goodwill arising on EST and SPI becoming
subsidiaries 1,214
-------
ii) PT RapidCloud Indonesia
On 15 January 2014, the Group incorporated a new subsidiary, PT RapidCloud Indonesia, with share capital of RM994,156 (IDR3,657,300,000). This entity is 100% owned by the Group.
iii) RapidCloud Singapore Pte. Ltd.
On 23 July 2014, the Group acquired Exxelnet Solutions Pte. Ltd. On 30 October 2014, Exxelnet Solutions Pte. Ltd. was renamed to RapidCloud Singapore Pte. Ltd. ('RCSG').
Goodwill was recognised as a result of the RCSG acquisition as follows:
2014
RM'000
-------
Fair value of consideration at acquisition 2,520
Fair value of deferred contingent consideration 2,074
Fair value of identifiable assets acquired
and liabilities acquired 31
-------
Goodwill arising on acquisition 4,625
-------
RCSG was acquired in 2014 at a cash consideration of RM2,520,000 payable to the sellers and with deferred consideration (contingent on future profitability over 36 months following the acquisition date) to be settled by up to 650,000 new shares of RCI, which is estimated to be at RM2,074,000.
The goodwill recognised above comprises expected synergies, revenue growth and future product and market developments. These benefits are not recognised separately from goodwill because they do not meet the criteria for separately identifiable intangible assets.
15. Intangible assets and goodwill
Goodwill Website Total
RM'000 cost RM'000
RM'000
Cost
At 1 January 2015 5,839 11 5,850
Acquisition of subsidiaries - - -
At 31 December 2015 5,839 11 5,850
--------- -------- --------
Accumulated amortisation
At 1 January 2015 - 11 11
Acquisition of subsidiaries - - -
At 31 December 2015 - 11 11
--------- -------- --------
Carrying amount
At 31 December 2015 5,839 - 5,839
--------- -------- --------
At 31 December 2014 5,839 - 5,839
--------- -------- --------
Goodwill acquired in a business combination is allocated for impairment testing to the cash-generating units (CGUs) that are expected to benefit from that business combination, as follows:
2015 2014
RM'000 RM'000
Thailand division 1,006 1,006
Philippines division 208 208
Singapore division 4,625 4,625
------- -------
5,839 5,839
------- -------
Impairment testing of goodwill
RCI tests goodwill annually for impairment, or more frequently if there are indications that goodwill might be impaired. The recoverable amounts of the CGU's are determined from value-in-use calculations. The key assumptions for the value-in-use calculations are those regarding the discount rates, growth rates and expected changes to forecast profitability. These assumptions have been revised in the year to take account of the current economic environment. Management estimates discount rates using pre-tax rates that reflect the current market assessments of the time value of money and the risks specific to each CGU. Future cash flows are derived from the most recent financial budget approved by management for the next two years, beyond that period cash flows are extrapolated using a growth rate of 3%. The rate used to discount forecast future cash flows is 10% which represents the pre-tax weighted average cost of capital. The test result for each CGU shows the recoverable amount is greater than its value in use.
In 2015 no impairment charge has been made against goodwill for any CGU (2014: nil) as the impairment tests resulted in headroom for each CGU indicating the recoverable amount is greater than the value in use. The Company has conducted a sensitivity analysis on the impairment test of each CGU's carrying value by sensitizing the discount rate and reducing the long term growth rate to 0% and the results do not indicate the need to create an impairment charge in any CGU.
16. Trade and other receivables
2015 2014
RM'000 RM'000
-------- --------
Trade receivables 14,617 10,293
Less: impairment provision (853) (601)
Add: reversal of impairment 15 -
provision
-------- --------
Net trade receivables 13,779 9,692
Other receivables 714 262
Prepayments 2,088 1,237
-------- --------
16,581 11,191
-------- --------
The Group's normal trade credit term range from 30 to 60 days. Other credit terms are assessed and approved on case-by-case basis. The Group has no significant concentration of credit risk that may arise from exposure to a single debtor. Exposure to credit and currency risks related to trade and other receivables is disclosed in note 23. The Directors consider the carrying amount of trade and other receivables to be approximate to their fair values.
Analysis of the trade receivables ageing is as follows:
2015 2014
RM'000 RM'000
-------- --------
Neither past due nor impaired 3,224 2,523
Past due not impaired:
Less than 30 days past due 2,983 1,927
31 to 60 days past due 1,325 1,587
61 to 90 days past due 1,013 1,575
90 days to one year past
due 1,334 1,915
More than one year past due 4,738 766
14,617 10,293
Less: impairment provision (853) (601)
Add: reversal of impairment 15 -
provision
-------- --------
Balance at end of year 13,779 9,692
-------- --------
At 31 December 2015 the Group had trade receivables of RM14.6 million (2014: RM10.2 million), including RM4.7 million (2014: RM766,000) which had been outstanding for over one year at the year-end date (see below). The continued high level of long outstanding receivables indicates an increased degree of uncertainty as to whether the debts may be collectible in full.
Trade receivables above include amounts that are past due at the year-end but against which no allowance for doubtful receivables has been made. All of the Group's trade receivables have been reviewed for indicators of impairment and impairment provisions of RM853,000 have been made against receivables thought to be at risk of not being received in full. The Directors believe that the unprovided receivables will be collected in full and they are making every effort to do so. The Directors are also putting in place improved debt collection procedures and a formal debt provision policy.
17. Cash and cash equivalents
Cash and cash equivalents in the statement of financial position comprise the following:
2015 2014
RM'000 RM'000
-------- --------
Cash at bank 6,775 3,931
Fixed deposits 19 -
-------- --------
6,794 3,931
-------- --------
The Group's exposure to interest rate risk for financial assets and liabilities is disclosed in note 23.
The interest rate of deposits during the financial year was 2.90% (2014: 2.90%) per annum and the maturities of deposits are 30 days (2014: 30 days).
18. Trade and other payables
2015 2014
RM'000 RM'000
-------- --------
Trade payables 471 910
Other payables 722 410
Accruals 545 93
Deferred income 1,528 980
-------- --------
3,266 2,393
-------- --------
The normal trade credit terms granted to the Group range from 30 to 60 days. Exposure to liquidity and currency risks related to trade and other payables is disclosed in note 23. The Directors consider that the carrying amount of trade and other payables approximates their fair values.
19. Hire purchase liabilities
2015 2014
RM'000 RM'000
-------- --------
Current liabilities
Hire purchase liability 92 62
-------- --------
Non-current liabilities
Hire purchase liability 744 457
-------- --------
Total hire purchase liabilities 836 519
-------- --------
The financial commitments arising from the hire purchase agreements are disclose in note 22.
20. Deferred tax liabilities
2015 2014
RM'000 RM'000
-------- --------
Deferred tax liabilities
At 1 January 86 73
Charge in statement of comprehensive
income 12 13
-------- --------
At 31 December 98 86
-------- --------
The net deferred taxation
liability arises as a result
of:
Accelerated capital allowances 12 13
-------- --------
12 13
-------- --------
The net deferred tax liability and assets after appropriate offsetting are as follows:
2015 2014
RM'000 RM'000
-------- --------
Deferred tax liabilities 98 86
Deferred tax assets (unrecognised) (430) (220)
-------- --------
(332) (134)
-------- --------
21. Share capital
Authorised at 31 December 2015
An unlimited number of ordinary shares
of nil par value each
Number
At 1 January 2015 18,480,083
New shares issued 3,669,003
-----------
At 31 December 2015 22,149,086
-----------
On 5 June 2015, the Group completed a placing and subscription of 3,231,138 ordinary shares of nil par value at 54p per placing share, raising GBP1.74 million (or an equivalent of RM10,333,664). Share issue expenses amounted to RM567,935 resulting in net cash proceeds of RM9,765,729.
On 29 December 2015, the Group completed an interim scrip dividend by issuing 437,865 ordinary shares at a share price of 25.85p (or an equivalent of RM730,000).
22. Commitments (a) Capital commitments
There were no capital commitments contracted for at 31 December 2015 but not yet incurred (2014: Nil).
(b) Operating lease commitments
The Group leases various assets under non-cancellable operating lease agreements. These leases have varying terms, conditions and renewal rights. The lease expenditure charge to the statement of comprehensive incomes is shown in note 7. The future aggregate minimum lease payments under these agreements are as follows:
2015 2014
RM'000 RM'000
-------- --------
Less than one year 356 472
Between one and five years 39 746
-------- --------
Future minimum lease payments 395 1,218
-------- --------
(c) Hire purchase commitments
The Group leases various assets under non-cancellable hire purchase agreements. These lease have varying terms, conditions and renewal rights. The future aggregate minimum lease payments under these agreements are as follows:
2015 2014
RM'000 RM'000
-------- --------
Less than one year 131 84
Between one and five years 526 337
More than five years 339 185
-------- --------
996 606
Less: Future finance charges (160) (87)
-------- --------
Present value of hire purchase
liabilities 836 519
-------- --------
23. Financial instruments
Loan and Financial Total
receivables liabilities RM'000
RM'000 at amortised
cost
RM'000
------------- -------------- ---------
Classification of
financial instruments
Year ended 31 December
2015
Financial Assets
Trade receivables 13,779 - 13,779
Other receivables 2,802 - 2,802
Fixed deposit with
a licensed bank 19 - 19
Total financial assets 16,600 - 16,600
------------- -------------- ---------
Financial Liabilities
Trade payables - 471 471
Other payables - 2,795 2,795
Share capital payables - 2,074 2,074
Hire purchase payables - 836 836
------------- -------------- ---------
Total financial liabilities - 6,176 6,176
------------- -------------- ---------
Loan and Financial Total
receivables liabilities RM'000
RM'000 at amortised
cost
RM'000
------------- -------------- ---------
Classification of
financial instruments
Year ended 31 December
2014
Financial Assets
Trade receivables 9,692 - 9,692
Other receivables 1,499 - 1,499
Fixed deposit with - - -
a licensed bank
Total financial assets 11,191 - 11,191
------------- -------------- ---------
Financial Liabilities
Trade payables - 910 910
Other payables - 1,483 1,483
Share capital payables - 2,645 2,645
Hire purchase payables - 519 519
------------- -------------- ---------
Total financial liabilities - 5,557 5,557
------------- -------------- ---------
Financial Risk Management Objectives and Policies
The Group's financial risk management policy seeks to ensure that adequate financial resources are available for the development of the Group's business whilst managing its risks. The Group does not engage in speculative transactions or hedging transactions.
The Group's principal financial instruments consist of cash and cash equivalents. The main purpose of these financial instruments is to finance the Group's operations. The Group has other financial instruments such as receivables and payables that arise directly from its operations.
The Directors have overall responsibility for the establishment and oversight of the Group's risk management and they recognise that financial risk management is an area in which they may need to develop specific policies should the Group become exposed to further financial risks as the business develops.
The main risks arising from the Group's financial instruments are credit risk, liquidity risk, market price risk, foreign currency risk and interest rate risk. This note presents information about the Group's exposure to each of these risks. The Board reviews and agrees policies for managing each of these risks as and when they arise. Further quantitative disclosures are included throughout the financial information.
Credit Risk
Credit risk arises mainly from the inability of customers to make payments when due. The Group has adopted a policy of only dealing with counterparties that the Directors consider to be credit worthy. Receivables are monitored on an on-going basis via Group's management reporting procedures and action will be taken for long outstanding debts deemed irrecoverable.
The carrying amounts of the financial assets recorded on the statement of financial position at the end of the reporting period represents the Group's maximum exposure to credit risk in relation to financial assets. Cash at banks are placed with financial institutions that the Directors consider to be credit worthy.
The Group's credit risk exposure relates to the Group's debts and is discussed in greater detail in note 16.
Liquidity Risk
Liquidity risk is the risk that the Group will not be able to meet its financial obligations as they fall due. As part of its overall prudent liquidity risk management, the Group actively manages its cash flows and ensures that sufficient funding is in place to meet the obligations as and when they fall due.
The following table analyses the remaining contractual maturity for financial liabilities. The tables been drawn up based on the undiscounted cash flows of financial liabilities based on the earliest date on which the Group can be required to pay.
On demand 1 to 2 to 3 to 4 to After Total
or within 2 3 4 5 5 RM'000
1 year years years years years years
RM'000 RM'000 RM'000 RM'000 RM'000 RM'000
----------- -------- -------- -------- -------- -------- --------
2015
Trade payables 471 - - - - - 471
Other payables 2,795 - - - - - 2,795
Hire purchase
payables 92 131 131 132 132 218 836
----------- -------- -------- -------- -------- -------- --------
3,358 131 131 132 132 218 4,102
----------- -------- -------- -------- -------- -------- --------
On demand 1 to 2 to 3 to 4 to After Total
or within 2 3 4 5 5 RM'000
1 year years years years years years
RM'000 RM'000 RM'000 RM'000 RM'000 RM'000
----------- -------- -------- -------- -------- -------- --------
2014
Trade payables 910 - - - - - 910
Other payables 1,483 - - - - - 1,483
Hire purchase
payables 84 84 84 84 85 185 606
----------- -------- -------- -------- -------- -------- --------
2,477 84 84 84 85 185 2,999
----------- -------- -------- -------- -------- -------- --------
Interest Rate Risk
The carrying amounts of the Group financial instruments that are exposed to interest rate risk are as follows:
2015 2014
RM'000 RM'000
-------- --------
Fixed deposit with licensed 19 -
banks
-------- --------
Currency Risk
The Group is exposed to foreign currency risk on transactions and balances that are denominated in currencies other than RM. The currencies giving rise to this risk are primarily Singapore Dollar. Foreign currency risk is monitored closely on an ongoing basis to ensure that the net exposure is at an acceptable level.
The carrying amounts of the Group's foreign denominated financial assets are as follows:
2015 2014
RM'000 RM'000
-------- --------
Trade receivables - 2
Others receivables 2 85
2 87
-------- --------
A 10% strengthening of Ringgit Malaysia against assets held in foreign currencies at the end of the reporting period would have an insignificant impact on the profit before taxation and other comprehensive income.
Market Price Risk
Market price risk is the risk that changes in market prices will affect the Group's income. The objective of market price risk management is to manage and control market risk exposures within acceptable parameters, while optimising the return on risk.
Fair values
Generally, the carrying amounts of all financial assets and liabilities of the Group as disclosed in the notes to the financial information approximate their faire values.
Capital Risk Management
The Group's objectives when managing capital are to safeguard the Group's ability to continue as a going concern in order to provide returns for shareholders, benefits for other stakeholders and to maintain an optimal capital structure to reduce the cost of capital with an appropriate level of leverage for the size of the business so as to maintain investor, creditor and market confidence and to sustain future development of the business. In order to maintain or adjust the capital structure, the Group may return capital to shareholders, issue new shares or sell assets to reduce debts. There have been no changes to the Group's approach to capital management during the year ended 31 December 2015.
The Company and Group are not subject to any externally imposed capital requirements.
24. Contingent liabilities
The Group had no contingent liabilities at 31 December 2015.
25. Subsequent events
Subsequent to the year end, SalesMAP Sdn. Bhd., a wholly owned subsidiary of SalesMAP Pte. Ltd., was established in Malaysia and SalesMAP Pte. Ltd., a wholly owned subsidiary of RapidCloud International Plc., was established in Singapore to market and sell the Company's flagship product, SalesMAP. SalesMap is an intelligent sales system and a platform to build a structured sales process and manage sales performance.
26. 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:
2015 2014
RM'000 RM'000
-------- --------
Short-term employee benefits 1,308 1,975
Other long-term benefits 30 189
-------- --------
1,338 2,164
-------- --------
27. Ultimate controlling party
There is no ultimate controlling party.
This information is provided by RNS
The company news service from the London Stock Exchange
END
FR EALKNASLKEFF
(END) Dow Jones Newswires
June 29, 2016 10:58 ET (14:58 GMT)
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