28 April 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 year ended 31 March 2022 on Tuesday, 14 June 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.

The Group's Smart Zones division provides unparalleled product quality and waste management, business intelligence and stock management services to the drinks retailing industry.

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

Market Developments 

The positive momentum experienced by the Smart Zones division in Q2 as COVID-19 restrictions eased has continued through H2. The majority of the Group's customers are now fully operational and, although conditions remain difficult for operators in some segments of the hospitality industry, this has resulted in a strong rebound in our revenues over the second half of the year.

In the Smart Machines division, two material contract wins, the gradual re-opening of city centres and the continued demand for cashless vending solutions have resulted in new sales and an increase of over 20% in total connected devices. This has further contributed towards our strong H2 performance.

We continue to work with our suppliers to mitigate the impact of the global semi-conductor supply shortages on customer installation programmes. Whilst supply is being maintained, we are now paying increasingly higher premiums for certain components of our hardware, and this is expected to continue through FY2023. Where customer terms allow, we seek to recoup these additional hardware costs however the overriding commercial imperative is to keep the sales pipeline flowing to grow the installation footprint and corresponding recurring income.

Operational and Financial Updates

We are pleased to confirm the strong recovery in the Group's revenues through H2, with full year turnover expected to be up 55% to almost £13.0m (FY 2021: £8.4m and FY 2020: £16.3m). This is a welcome result given that hospitality restrictions ran longer into the year than anticipated and whilst ongoing city centre economic recovery remains muted.

New contract wins and device sales are encouraging and the recurring revenues from long term customers remains high at over 85% of turnover.

Operating profit is anticipated to be £2.2m (FY 2021: £0.7m loss and FY 2020: £4.0m) which is in line with market expectations.

Over the past two years, we have worked closely with our customers, and focused on managing our cash whilst maintaining investment. We remain committed to our strategy of the development and delivery of our product roadmap to improve the quality of our existing revenue streams, and to take advantage of the exciting growth opportunities we see ahead.

The Group's strong recurring revenue base and new sales momentum will underpin the funding required to support our ongoing business requirements as well as our planned investment for a sustained period.

Whilst cash generation continues to improve, the Board is mindful that the well-publicised deterioration of semi-conductor supply globally will result in component premiums through FY2023. In these circumstances the Board believes it is prudent to preserve cash to invest in stock to underpin new sales and drive continued growth in quality recurring income. We therefore expect to delay reinstating a dividend until we have clear line of sight on a return to more normal semi-conductor supply.

James Dickson, Chairman of Vianet, commented:

"Against a challenging backdrop I am pleased that the full year sales line recovered to over 80 per cent. of pre-pandemic levels despite the longer than expected timeframe of restrictions being in place and importantly we have maintained strong momentum into the current year.

"Whilst component supply chain pressures are likely to have some impact on hardware installation margins into 2023, we are excited about our sales pipeline and the opportunity we have to significantly grow our high-quality recurring income streams." 

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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 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 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