Trading Update and Notice of Results

Vianet Group PLC

01 November 2023

 

1 November 2023

Vianet Group plc

("Vianet" or the "Group")

Trading Update and Notice of Results

Vianet Group plc (AIM: VNET), the international provider of actionable data and business insight through our ecosystem of connected hardware devices, management software platforms, and smart insights portal, today announces a trading update, and notifies that it will release its results for the six months ended 30 September 2023 on Tuesday, 12 December 2023.

Financial and Operational Update

The Group is starting to reap the benefits of its strong recurring revenues, which stand at 87%, and healthy gross margins with profit for H1 2024 in line with management's expectations, with 7.4% growth in EBITA to £1.30m (H1 2023: £1.21m) net of £0.2m support for newly acquired Beverage Metrics.

Highlights:

·    H1 2024 revenue increased to £7.19m (H1 2023: £7.18m)

·    Recurring revenue remained strong at 87% (H1 2023: 86%)

·    Gross Margin was very healthy and increased by 7.8% to 69% (H1 2023: 64%)

·    Loss Before Tax of £171k net of a £200k investment in the recently acquired Beverage Metrics

·    PBT on a like-for-like basis £29k (H1 2023: loss £106k)

·    Smart Machines division experienced modest revenue growth to £3.05m (H1 2023: £3.00m). This is very encouraging given the industry-wide delays due to the replacement plans for 3G being finalised. The management team is confident that 3G replacement is on plan.

In the period, we were delighted to receive a refund of £924,774 from HMRC, strengthening the Group's cash position. Furthermore, our recent re-financing agreement with HSBC for new banking facilities, including their commitment to support our growth agenda, further strengthens the Company's liquidity position as we pursue our growth strategy to deliver value to our shareholders.

Market Developments 

In H1 2024 the business traded in line with management's expectations. New initiatives are delivering new customers, solidifying existing relationships and broadening the range of services we offer. Our efforts to expand in new industry verticals are also proving successful and we continue to build on these exciting opportunities, and in particular with manufacturers and retailers in the forecourt sector.

The most recent success was October's significant contract win in partnership with Suresite Card Services, to supply c 800 Trio IQ Smart Contact Pro to an established forecourt retailer.

High inflation and customers' focus on addressing connectivity issues on the "3G switch-off" have had the anticipated impact of being a drag on new installations in H1. However, the underlying trends remain positive. Our strong customer relationships give us the visibility to see an acceleration in H2 revenue from both customer upgrades to 4G LTE and recent contract wins.

In Smart Machines, our response to the network operators' transition from 3G has been well received by customers. This has translated into new contracts and orders for 4G LTE readers from both our existing and new customers for delivery in H2 2024.

The continued collaboration with Oxford Partnership in Smart Zones has delivered positive results with the successful launch of a new insights and reporting portal. This initiative is proving extremely popular with hospitality industry customers. We have extended several existing agreements and secured several new contracts, which will benefit from in H2 2024.

James Dickson, Chair & CEO of Vianet commented:

"Over the past three years, the Group has strategically and deliberately taken actions aimed at reclaiming the Company's pre-Covid position and seizing the opportunities that emerged from the pandemic. Our investments in sales, technology, new market verticals, expanded product lines, and collaborations provide a solid platform for growth.

New partnerships with Vendekin Technologies, announced in March, and the agreement with Suresite are unlocking substantial new market opportunities with well-established participants. This presents the team with the opportunity to expand both market share and revenue. Although still in its early stages, we are very excited about the potential of the mobile checkout market for unattended retail in the UK, and our offered solutions are being positively received by our customers. This remains a very exciting opportunity for our Smart Machines division. The team anticipates strong H2 activity and is increasingly confident in our ability to double the size of this part of the business by the end of 2025.

The acquisition of US-based Beverage Metrics Inc was completed in May and is performing in line with our expectations. Whilst it remains loss-making in the short term, it has not only increased our presence in the USA but has fast-tracked our hospitality product roadmap by approximately 12-18 months. This will facilitate the expansion of our footprint in a large addressable market in the USA together with UK expansion.

As a result, the Group remains exceptionally well-positioned to continue to deliver growth in recurring revenues and earnings, generate strong free cash flow and distribute dividends. As we continue to execute our long-term strategic plan and explore future strategic opportunities for Vianet, I look forward to the future with much optimism and confidence."

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For more information please contact:

Vianet Group plc
James Dickson, Chairman & Inter CEO Mark Foster, CFO	Tel: [phone] www.vianetplc.com
Cavendish Capital Markets Limited
Stephen Keys / Camilla Hume	Tel: [phone]
	www.cavendish.com

About Vianet

Vianet Group is a leading provider of actionable management information and business insight created through combining data from our smart Internet of Things ('IOT') solutions and external information sources.

Since Admission to AIM in 2006, the Group has grown from its core beer monitoring business both organically and through strategic acquisitions to widen its offering and develop new businesses, especially in vending telemetry and contactless payment solutions particularly for the premium coffee sector.

Servicing over three hundred customers across the world and rendering live data to our IOT platform from over 250,000 connected machines daily, Vianet is one of the largest business to business (b2b) connected solutions providers in Europe with established long-term relationships with blue chip customers and growing recurring revenues which are over 85% of our total revenues.

In our Smart Machines division, we connect a single data gathering device with its own on-board communication capability to a customer's asset or system. The device then sends data back via our IOT platform to cloud based servers. The technology was originally developed for automated retailing machines; however, the flexibility and functionality of the device means the technology can be applied to any machine which has the capability to output data. The device is also used to connect our contactless payment solution and communicate payment terms to our cloud-based payment services providers where that application is also required.

The Smart Zones division is where we connect multiple data gathering devices into one or more systems or assets with the data from those devices being communicated back to our IOT platform and cloud-based servers via a single 3G communications hub. The technology was originally developed for flow monitoring devices, temperature sensors, and asset management in drinks retailing but any data gathering device with a digital output could be connected to the communications hub where required such as gaming machines, utilities management and EPOS.

For further information, please visit www.vianetplc.com

 

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