Vianet Grp Regulatory News (VNET)

Vianet Group plc

("Vianet" or the "Group")

Acquisition of the UK's leading Unattended Retail Management Software Company

Earnings enhancing strategic acquisition in the unattended retail market

Vianet Group plc (AIM: VNET), the international provider of actionable data and business insight through devices connected to its Internet of Things ("IOT") platform, is pleased to announce the acquisition of Vendman Systems Ltd ("Vendman"), a leading Enterprise Resource Planning ("ERP") and mobile software provider for unattended retailing, for a total consideration (including an earn out), of up to £4.25 million, payable in cash.

Vendman, which is based in Hazel Grove, Cheshire, develops, manages, and supports integrated software and mobile applications for the unattended retailing industry. Its solutions include stock control, pricing information, data management, account analysis and route planning. Vendman is UK market leader and provides management services for over 200,000 machines in the UK and European unattended retail markets and has a track record of growth. Unaudited accounts for the 12 months ended 31 March 2017 recorded revenues of £1.8 million, over 90% of which were recurring, and an operating profit of £0.27 million with net assets of £0.28 million.

The initial cash consideration payable for Vendman is £2 million (subject to customary completion adjustments), on completion, with an earn-out element of up to £2.25 million based on the achievement of EBIT targets in the first two years. The initial £2 million of consideration is to be funded by a bank loan with a current blended rate of c. 3% and it is envisaged that the earn-out will be funded from cash reserves.

Vendman is a highly complementary fit with Vianet's existing business and has successfully partnered with Vianet's Smart Machines division, where we have introduced our IOT connectivity and contactless payment solutions to Vendman customers.

The Board believes that the Vendman acquisition has a compelling strategic, commercial and financial rationale as it will:

· Establish a comprehensive portfolio of market leading solutions for unattended retail through the combination of Vianet's existing expertise with the products and services of Vendman;

· Create significant cross selling opportunities for the combined commercial team:

o through the sale of Vianet IOT connectivity and real time data to Vendman customers;

o accelerates the rollout of Vianet contactless payment technology to Vendman customers; and

o enables the sale of Vendman ERP and mobile platform to Vianet customers

· Unlock incremental big data revenue opportunity through building market leading analytics and insight from combined data sets

· Significantly enhance route to market and distribution opportunities across Continental Europe through establishing a strong network and footprint

· Enhance earnings in FY2019 the first full year of combined operations

Commenting on the acquisition, Stewart Darling, CEO of Vianet Group plc, said:

"We are delighted to announce this significant strategic acquisition of a valued existing partner, and we look forward to accelerating business growth with the highly experienced and respected Vendman team. I believe the combination of Vendman ERP and mobile software products with Vianet IOT connectivity, data analytics and contactless payment solutions creates an unparalleled portfolio with strong presence in the UK and Europe. This is positive news for both sets of customers as we continue to extend our capability, delivering increased value to the unattended retail sector, and in doing so accelerating our pan European growth plans. "

James Dickson, Chairman of Vianet Group plc commented:

"This is an important acquisition which greatly advances our strategy for growth and is a hugely complementary fit for our business on several fronts and takes it to the next level. The fact that Vendman has chosen to deal with Vianet is a strong endorsement of our capability, vision and strategy for the Smart Machines division.

As businesses increasingly seek and rely on actionable data, business intelligence and insights, Vianet's expansion of proven IOT capability shows that we are well placed to deliver compelling results for our customers and accelerate our own growth in what are rapidly evolving markets".

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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 also develop new businesses, especially IOT connectivity devices and contactless payment solutions particularly for the unattended retailing in the premium coffee sector.

Servicing over 300 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 practically 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 practically 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