RapidCloud full-year revenues but shares down as costs widen and margin falls

3rd Jun 2015 10:36

Shares in computing services group RapidCloud took a big hit on Wednesday after it reported an increase in costs in its full-year results.The group posted an increase of 57% in revenues to Malaysian Ringgit (MYR)17.8m from MYR11.3m and profits before tax rose marginally to MYR3.2m from MYR3.16m the year before.The gross margin fell to 54% from 75% resulting from cost of sales related to the Exxcelnet acquisition and costs related to the development of new products. Administrative expenses rose to MYR7.56m from MYR3.9m in 2013.RapidCloud acquired Exxelnet during the second half of the year for MYR4.59m, which enhanced earnings and opened its market in Singapore.Looking ahead, founder and managing director Raymond Chee said: "Our business continues to be profitable and cash generative and as the business executes its expansion strategy, the board expects a continued strong performance in 2015."WH Ireland analysts said: "We believe the company is strongly positioned for 2015 and beyond, as a result of the strategic decisions made by management during the past year.Shares fell 22.22% to 35p on Wednesday at 10:36.