Vianet Grp Regulatory News (VNET)

Final

26 October 2022

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 devices connected to its Internet of Things platform ("IOT"), today announces the following trading update and notifies that it will release its results for the six months ended 30 September 2022 on Tuesday, 6 December 2022.

About Us and What We Do

Vianet is an international provider of internet-enabled, cloud-based, telemetric services to the hospitality, unattended retail vending and remote asset management sectors. We enable customers to maximise the conversion of inventory and services into sales, cash, and profit growth.

The Group's Smart Zones division provides product quality, waste management, business intelligence and inventory management services to the on-premise drinks retailing industry.

Our Smart Machines division provides innovative real-time monitoring, software management applications, contactless payment systems, business intelligence and data insights for unattended vending machines that significantly improve operational efficiency, inventory control, sales, and cash flow whilst reducing our customers' carbon footprint.

Market Developments 

The positive momentum in our Smart Zones division in FY2022, as COVID-19 restrictions eased, has continued through H1 2023. The Group's hospitality sector customers are now fully operational on 100% billing, and this has resulted in a strong rebound in year-on-year revenues.

UK-wide hospitality staff shortages, supply chain pressures and the current high cost of living mean that conditions remain challenging for operators. This has, however, led to an increased demand for our data and analysis as the requirement for operators to have a detailed understanding of actual trading at the outlet level is particularly acute during challenging times.

In the Smart Machines division, the team continue to win new contracts and build the Group's order pipeline. Continued demand for our end-to-end vending management solution and cashless vending solutions has resulted in a footprint of 52,490 vending connections in H1 2023, up almost 24% on H1 2022. 

Financial and Operational Update

Trading in H1 2023 produced a substantial turn-around against last year with c 48% growth in EBITA to £1.21m (H1 2022: £0.81m)

· H1 2023 revenue of £7.18m, an uplift of 13.3% year on year (H1 2022: £6.34m)

· Recurring revenue increased to 86% (H1 2022: 83%)

· Gross Margin remains strong at 64%

· PBT was a £106k loss (H1 2022: loss £363k) following the final write-down of £178k relating to the Vendman acquisition.

The improved results were primarily driven by revenue growth of 14.5% in Smart Machines and 12.4% in Smart Zones, with a recovery in activity levels in the Company's major end-user markets gathering momentum. We are confident that our sales will continue to grow and that we will return to pre-pandemic monthly run rates in FY2023.

Despite pressure on global semi-conductor supply chains, management action has resulted in no material impact on delivery schedules; however, certain component costs have increased significantly, and this is expected to continue into FY2024. Our overriding commercial imperative is to keep the sales pipeline flowing to grow the installation footprint and corresponding recurring income, and we actively seek to recoup additional costs wherever terms allow.

Stable gross margins in H1 2023 reflect the focus on extending our installation footprint to drive recurring income and develop a valuable data lake which we are beginning to monetise.

The Board expects further improved results and sales growth in H2 2023. A significant new product release is scheduled for November and will establish SmartVend as the industry-leading vending management software platform.

The Group's cash generation continues to improve, although the deterioration of semi-conductor supply chain globally will result in component premiums through FY2023. As such, for now, the Board believes it is prudent to preserve cash to invest in stock to underpin new sales and drive continued growth in quality recurring revenues. We hope to have a clear line of sight on a more normal level of semiconductor supply ahead of our FY results announcement at which time the Board will review its aspiration to resume payment of a full year dividend.

James Dickson, Chairman & CEO of Vianet, commented:

"A strong team performance has meant we could deliver our goals for this period despite increasing supply chain and market challenges.

Against this difficult economic backdrop, I am pleased that half-year sales recovered to over 85 per cent. of pre-pandemic levels, with good momentum into the second half.

Component supply chain pressures are likely to have some impact on hardware margins into FY2024 and whilst we cannot escape the impact of that, the whole team is working hard to mitigate any such impact. Importantly, we have an exciting sales pipeline and the opportunity to significantly grow our high-quality recurring income streams. We are in good shape to move forward and deliver further improved results in the second half of this financial year and beyond." 

- Ends -

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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 Internet of Things ('IOT') solutions and external information sources.

Since its 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 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 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 4G 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 POS.

For further information, please visit www.vianetplc.com