REG - Vianet Group PLC - Trading Update

VianetAnnouncement

30/01/2025 07:00

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RNS Number : 1895V  Vianet Group PLC  30 January 2025

30 January 2025

Vianet Group plc

Trading Update

 

VIANET the international provider of actionable data, business insights, and
payment solutions through an integrated ecosystem of connected hardware
devices, software platforms and smart insights portals provides the following
trading update on the nine months to 31 December 2024.

During the period, the Group displayed a strong performance, achieving
consistent margins and increased recurring revenue growth by securing valuable
long-term contracts. This success reflected the effectiveness of our strategic
initiatives and robust market positioning.

Notwithstanding this, it has become increasingly evident that the general
economic uncertainty and shifts in the economic landscape have impacted
several contracts during the conversion phase. This has resulted in a
different mix of orders and products and some delays in contract completions
and pipeline conversion.

We have seen clients in the unattended retail division increasingly lean
towards rental models, rather than upfront payments for capex. Whilst this
gives us greater visibility and smoother earnings, it is having a short term
impact on revenues over the period.

Recent decisions in the UK budget have further exacerbated these challenges,
forcing our clients in hospitality and unattended retail to take time to
understand the cost impacts and reassess their Capex and Opex budgets; this
shift has contributed to delays in contract finalisations in the last quarter
of the fiscal year. The Board now expects revenue for FY25 to be approximately
£15.7million (FY24 £15.2m) and EBITA to be approximately £3.6million (FY24
£3.5m).

Following a comprehensive review, the Board remains optimistic about
year-on-year growth for FY25 across the Group, with many KPI's being ahead of
last year's performance, especially cash management and recurring revenue.
Despite these short-term challenges, the Group is steadfast in its commitment
to its long-term strategy and we are confident in our ability to achieve
sustained growth moving forward.

 

                                    FY25 FC ((a))  FY24 Actual  Variance
 Revenue                            £15.7m         £15.2m       3.2%
 Recurring revenue                  85%            85%
 Gross Margin                       68%            69%
 EBITA                              £3.6m          £3.5m        5.1%
 Net Debt ((b))                     £0.4m*         £1.5m

 Hospitality Revenue (excl. USA)    £9.2m          £8.5m        8.1%
 Hospitality EBITA (excl. USA)      £4.8m          £4.3m        10.4%

 Unattended Retail Revenue          £6.3m          £6.5m        (3.9%)
 Unattended Retail EBITA            £2.1m          £2.5m        (14.2%)
 Unattended Retail Devices          9,733          8,900        9.3%
 -     Of which 3G Replacement      2,410          1,746        38%
 -     Of which rental              3,953          1,803        219%

Note:

a)     Company's revised FY forecast estimate post December results.

b)    Net debt of £0.4m in FY25 FC is actual net debt on 31 December 2024
post £310k of funding for share buyback.

Unattended Retail

Driven by customers reassessing their Capex and Opex budgets following the UK
Budget in October, December and January saw a 219% increase in anticipated H2
rental sales, as many customers opted for rentals over upfront Capex
investments. While this shift reflects current economic challenges and impacts
margins in the short term, the total number of units placed in the market grew
strongly, aligning with management's expectations. Furthermore, the transition
towards rental agreements also strategically enhances the Group's long-term
recurring revenues, which remain a top priority. We are pleased to see
continued growth in recurring income, bolstered by successful contract
extensions with existing customers and an expanded footprint with valued new
clients like Lucozade. Our strong contract security, combined with increased
investments in our commercial team, positions the Group well for FY2026 and
beyond.

The anticipated 3G network shutdown, initially planned for December 2024 and
completed by Vodafone and EE, is now expected to extend into late 2025 due to
delays from Three and O2. This has driven increased urgency from both new and
existing customers, resulting in a 30% rise in new sales during the second
half of the year compared to the first half.

VIANET Americas

The inroads that we are making into the US market are proving to be highly
positive, as our key pilot projects are yielding encouraging outcomes for our
customers, demonstrating significant improvement across sales, cost savings,
quality and productivity. Notwithstanding this, our US operations are
projected to experience a loss of approximately £430K, in contrast to the
initially forecast profit of £170K, due primarily to delays in converting
these successful pilot projects into long-term commercial frameworks.
Encouragingly these positive pilot results have sparked extensive discussions
about enterprise-wide integrated solutions, underscoring a growing interest in
our offerings, albeit with typically longer lead times for implementation.
Consequently, the Board remains confident of securing long-term contracts and
in the potential for substantial future revenue, whilst recognising the
uncertainty surrounding the exact timing.

UK Hospitality

Our investment in technology and collaboration with The Oxford Partnership has
led to an agreement with a major brewing client. Our innovative draught beer
monitoring solution will be rolled out across the UK, providing valuable
insights into key brands and enabling the brewer to monitor performance
effectively. This agreement highlights Vianet's strategic solutions, enhances
our market share and strengthens our partnership with The Oxford Partnership.

The rollout, starting this financial quarter and continuing over the next
year, includes new installations of the Beverage Metrics monitoring solution,
which will expand our UK footprint by 5% within 18 months. This marks a
significant step in our growth within the hospitality sector, extending beyond
the Leased & Tenanted market.

Cash management

Our healthy cash generation and proactive cash management strategies allow us
to maintain flexibility. The Board will continue to review investment
opportunities, alongside maintaining our dividend and pursuing our share
buyback programme where appropriate, to maximise shareholder value.

This announcement contains inside information.

- Ends -

For more information please contact:

 Vianet Group plc
 James Dickson, Chairman & CEO      Tel: +44 (0) 1642 358 800

 Mark Foster, CFO                   www.Vianetplc.com (http://www.vianetplc.com/)
 Cavendish Capital Markets Limited
 Stephen Keys / Camilla Hume        Tel: +44 (0) 20 7220 0500
                                    www.cavendish.com (http://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
(http://www.vianetplc.com/)

 

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