REG - Vianet Group PLC - Interim Results <Origin Href="QuoteRef">VNET.L</Origin>
RNS Number : 3412YVianet Group PLC05 December 2017Press release 5 December 2017
Vianet Group plc
("Vianet", "Company" or "the Group")
Interim 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"), is pleased to announce its interim results for the six months ended 30 September 2017.
Financial summary
Revenue of 6.71 million (H1 2017: 7.06 million) with recurring revenues at 90% (H1 2017: 86%) of turnover
Adjusted operating profit* up 3.97% to 1.70 million (H1 2017: 1.64 million)
Pre-exceptional items, profit before tax was 1.29 million up from 1.26 million last year
Profit before tax 0.90 million (H1 2017: 1.13 million) after expensing 0.19 million of corporate acquisition costs
Basic earnings per share (pre-exceptional items) up 7.02% at 3.66p (H1 2017: 3.42p), including a deferred tax adjustment charge of 1.05p
Operational cash generation of 1.25 million (H1 2017: 1.50 million)
Net cash of 2.72 million (H1 2017: net cash 1.98 million)
Interim dividend of 1.70p (H1 2017: 1.70p)
Divisional highlights
Smart Zones adjusted operating profit of 2.27 million (H1 2017: 2.39 million)
Smart Machines adjusted operating profit of 0.47 million (H1 2017: 0.45 million)
Smart Machines growth continues with 2,395 new unit sales (H1 2017: 3,335 units), predominantly in coffee vending
Post H1 period end
Earnings-enhancing strategic acquisition of Vendman, the UK's leading unattended retail management software company
Smart Machines material long term contract win for the pan European and Australia and New Zealand operations of a leading international coffee company
Company reclassified as part of FTSE quarterly ICB classification changes to the ICB subsector of Telecommunication Equipment effective from 18 December 2017
* Adjusted operating profit is profit before exceptional costs, amortisation, interest and share based payments
Commenting on the interim results, James Dickson, Chairman of Vianet Group plc, said:
"I am pleased to report that the Group's continued focus on growth areas has resulted in a moderate increase in adjusted operating profits for the six months to 30 September 2017, with our recurring revenue streams being strengthened by growth in the Smart Machines division further enhancing the quality of the Group's earnings.
I was particularly pleased to report the acquisition of Vendman and a material contract win with a global coffee company post the year end as endorsement of the exciting growth prospects for our Smart Machines division. The revenue stream transition towards an annuity base will provide greater visibility and quality of future earnings for this division.
As we expand the iDraughtTM footprint, develop new revenues from further Pubco data analytics and deliver efficiencies from increased automation in our Smart Zone division, the Group believes that the division's contribution can be sustained notwithstanding the challenges of the end customers' market.
Further we were pleased that the company's focus on IOT and data analytics has been recognised by way of the reclassification of Vianet to the Technology Supersector as part of the FTSE ICB quarterly classification changes which becomes effective as from 18 December 2017. We believe this should also bring Vianet to the attention of a wider audience.
Underpinned by high levels of recurring revenue, Group cash flow is strong and there is a solid financial platform to facilitate further expansion and development. The Board remains confident that Vianet's long term strategy is appropriate and that the Group is capable of delivering consistent and sustained growth."
- Ends -
An audio cast of the interim results presentation, given by Stewart Darling (Chief Executive) and Mark Foster (Chief Finance Officer), was released this morning, Tuesday, 5 December 2017 at 07.00hrs and is available on the Group's website, www.vianetplc.com.
Enquiries:
Vianet Group plc
James Dickson, Chairman
Stewart Darling, CEO
Mark Foster, CFO
Tel: +44 (0) 1642 358 800
Cenkos Securities plc
Stephen Keys / Camilla Hume
Tel: +44 (0) 20 7397 8900
Media enquiries:
Yellow Jersey PR
Sarah Hollins
Tel: +44 (0)7764 947 137
Chairman's Statement
I am pleased to report that the Group's focus on growth areas has resulted in a moderate increase in adjusted operating profits for the six months to 30 September 2017, as compared to the same period last year. In addition, the Group's recurring revenue streams have been strengthened further by growth in the Smart Machines division.
Against a background of continued pub closures, adjusted operating profit in the Smart Zones division remained stable at 2.27 million (H1 2017: 2.39 million). Vianet Americas added a further 31 new sites helping to reduce H1 year on year adjusted operating losses to 0.07 million (H1 2017: 0.08 million) despite additional costs associated with continuing some key long term iDraught commercial evaluations by national operators.
Notwithstanding our focus on increasing the proportion of recurring revenues thereby reducing the number of capital sales, we were pleased with the 5.6% year on year growth in adjusted operating profit delivered by the Smart Machines division.
Results
Turnover of 6.71 million (H1 2017: 7.06 million) was down compared to last year largely due to the transition in Smart Machines from capital to annuity sales, and as described above, the effect of pub closures on Smart Zones.
The Group's profit before amortisation, share based payments and exceptional items increased to 1.70 million (H1 2017: 1.64 million) as a result of improved operational efficiencies and administrative cost reductions.
Group profit before taxation reduced to 0.90 million (H1 2017: 1.13 million) after expensing 0.19 million in corporateacquisition costs.
Group earnings per share before exceptional costs and deferred tax adjustment amounted to 4.71 pence (H1 2016: 4.63 pence), with a deferred tax adjustment of 0.29 million reducing earnings per share before exceptional costs and post deferred tax adjustment to 3.66 pence (H1 2017: 3.42 pence).
Dividend
Reflecting the Board's continued confidence in the Group's growth plans and recent strategic news flow, the Board is pleased to maintain the interim dividend at 1.70 pence per share (H1 2017: 1.70 pence per share), payable on 31 January 2018 to shareholders on the register as at 15 December 2017. A final dividend of 4.00 pence per share was paid in respect of the year ended 31 March 2017 on 28 July 2017.
Outlook
Whilst growth and profitability in the Smart Zones division continues to be influenced by the challenging backdrop to the UK pub sector, the Group has strong prospects and the Board is confident that the management team can deliver strong growth.
We are excited by the growth prospects for Smart Machines which look increasingly assured following the acquisition of Vendman and the European contract win for a leading international coffee company. Additionally the transition in this division's revenues towards a significantly greater level of annuity, provide greater visibility and quality of future earnings.
As we expand the iDraughtTM footprint, develop new revenues from further Pubco data analytics and deliver efficiencies from increased automation in our Smart Zone division, we are optimistic that the division's contribution can be sustained despite the challenges faced in its customers' core market of UK pub retailing.
Underpinned by high levels of recurring revenue, Group cash flow is strong and we have a solid financial platform to facilitate further expansion and development.
The Board were pleased with the recent FTSE ICB subsector reclassification of Vianet from Support Services to the Technology subsector of Telecommunications Equipment, effective from 18 December 2017, and believes this classification more accurately reflects the Group's IOT and data analytics driven business model. We believe that this should also bring Vianet to the attention of a wider audience which would be a favourable development.
The Board remains confident that Vianet's long term strategy is appropriate and that the Group is capable of delivering consistent and sustained growth, within the parameters of its influence and control.
James Dickson
Chairman
4 December 2017
Chief Executive and Chief Financial Officer Review
Underlying trading for the six months to 30 September 2017 has seen improvement as compared to the same period last year. The Group's strategy to achieve increased sales of newer products in Smart Zones and Smart Machines telemetry and contactless payment services has progressed in each area, albeit partially offset by the continued impact of pub disposals for Smart Zones and the Board's strategic decision to shift towards an annuity revenue model in Smart Machines. Whilst transitioning to an annuity model was expected to have an adverse impact on the revenue in the short term, the Board believes it will be more profitable for the business over the life of our contracts. The proportion of recurring service revenue has continued at high levels and exceptional costs, of 0.39 million (H1 2017: 0.14 million), were in line with our expectations and principally relate to costs of 0.19 million associated with corporate acquisitions and staff transitional costs.
Although good operational cash generation of 1.25 million (H1 2017: 1.50 million) was down on the previous period due to phasing of collections in the year to March 2017, the Group had an overall increase in its net cash position to 2.72 million at 30 September 2017 (H1 2017: 1.98 million). In summary, the Group continues to be highly cash generative which provides a strong financial base to invest in and grow the business.
Smart Zones
The underlying performance of the Group's core beer monitoring business remained stable over the period with further new iDraughtTM sales despite the pub industry headwinds. iDraughtTM continues to account for approximately 25% of the Group's beer monitoring base by number of installations. Over the period, Smart Zones secured 119 new beer monitoring installations (H1 2017: 166). Pub disposals resulted in a net reduction of circa 550 sites for the division to approximately 14,000 sites.
Our continued confidence in the future growth prospects for iDraughtTM in the UK, despite the challenging backdrop of pub closures, is driven by installations for new customers and replacement systems for existing beer monitoring customers. In addition, our continued investment in new technology and the migration of data and services to the cloud has significantly increased the business opportunity for Smart Zones to roll-out enhanced insight and data services to our Pubco customers.
In the US, the roll out of iDraughtTM has increased the installation base to 247 sites and we are moving towards increasing the pace of the roll out. The increase in installation bases combined with a refined cost base contributed to a further small reduction in losses and we expect the loss position to narrow further as we drive improved sales traction.
Smart Machines
Smart Machines continued to increase new telemetry and contactless payment sales although the top line revenue growth was lower as a result of circa 70% of sales coming from our new annuity-based model. This transition from capital plus annuity based income streams to annuity only is a key part of our strategy. The Board believes that this model will be more profitable over the life of the contract and provides for a clearer projection of business performance as it lessens the impact of variable capital sales.
Post the period end we were pleased to announce both the acquisition of Vendman, one of our distributors, and the significant contract win with an existing global customer in the coffee market, both of which we expect to stimulate substantially increased momentum for Smart Machines as well as bringing greater scale to the division. Naturally, whilst negotiations with both of these were ongoing, orders were at a slower pace than during the previous year.
The acquisition of Vendman Systems, a leading Enterprise Resource Planning and mobile software provider for unattended retailing, is a highly complementary fit with the Smart Machines division, and offers a compelling strategic, commercial and financial rationale as it will:
Establish a comprehensive portfolio of market leading solutions for unattended retail through the combining existing expertise, products and services.
Create significant cross selling opportunities for the combined commercial team as it will:
o Provide a larger market for the sale of IOT connectivity and real-time data
o Accelerate the rollout of contactless payment technology for unattended retail
o Create new opportunities for the ERP and mobile platform capability
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
Combined with the major contract win, it is anticipated that the Smart Machines telemetry and contactless business growth will enhance earnings through accelerated growth in the coming year and further into the future.
Looking forward
The Board believes there is also substantial scope to maximise the potential of existing products and services as well as bringing new offerings to both Smart Machines and Smart Zones through continued accelerated investment in new technology. This investment, primarily in new infrastructure and cloud based capability, enables the creation and delivery of new data and insight based services and mobile applications which further enhance the value of the toolsets we can offer to customers.
Stewart Darling
Chief Executive
Mark Foster
Chief Financial Officer
4 December 2017
Consolidated Statement of Comprehensive Income
For the six months ended 30 September 2017
Before Exceptional
6 months
Exceptional
6 months
Total Unaudited
6 months
Unaudited
6 months
Audited
Year
Ended
Ended
Ended
Ended
Ended
30 Sept
30 Sept
30 Sept
30 Sept
31 March
2017
2017
2017
2016
2017
Note
'000
'000
'000
'000
'000
Continuing operations
Revenue
3
6,714
-
6,714
7,057
14,263
Cost of sales
(2,016)
-
(2,016)
(2,109)
(4,327)
Gross profit
4,698
-
4,698
4,948
9,936
Administration and other operating expenses
4
(2,995)
(388)
(3,383)
(3,445)
(7,585)
Operating profit pre amortisation and share based payments
3
1,703
(388)
1,315
1,503
2,351
Intangible asset amortisation
(344)
-
(344)
(347)
(693)
Share based payments
(73)
-
(73)
(24)
(206)
Operating profit post amortisation and share based payments
1,286
(388)
898
1,132
1,452
Net finance income/(costs)
1
-
1
(3)
(5)
Profit from continuing operations before tax
1,287
(388)
899
1,129
1,447
Income tax expense
5
(287)
-
(287)
(330)
(417)
Profit from continuing operations
1,000
(388)
612
799
1,030
Profit from discontinued operations:
-
-
-
-
100
Profit and other comprehensive income for the year
3
1,000
(388)
612
799
1,130
Earnings per share
Continuing Operations
- Basic
6
2.24p
2.93p
3.77p
- Diluted
6
2.23p
2.91p
3.76p
Discontinued Operations
- Basic
6
0.0p
0.0p
0.37p
- Diluted
6
0.0p
0.0p
0.36p
Consolidated Balance Sheet
At 30 September 2017
Unaudited
As at
30 Sept
2017
Unaudited
As at
30 Sept
2016
Audited
As at
31 March 2017
'000
'000
'000
Assets
Non-current assets
Intangible assets
17,946
17,440
17,503
Property, plant and equipment
3,078
3,058
3,069
Total non-current assets
21,024
20,498
20,572
Current assets
Inventories
1,012
1,666
1,308
Trade and other receivables
2,995
3,155
2,708
Deferred tax asset
173
152
460
Cash and cash equivalents
3,864
3,834
4,549
8,044
8,807
9,025
Total assets
29,068
29,305
29,597
Equity and liabilities
Liabilities
Current liabilities
Trade and other payables
3,578
3,239
3,728
Borrowings
443
996
325
Provisions
-
-
62
4,021
4,235
4,115
Non-current liabilities
Borrowings
699
858
778
Provisions
-
-
48
Deferred tax
395
-
395
1,094
858
1,221
Equity attributable to owners of the parent
Share capital
2,843
2,843
2,843
Share premium account
11,287
11,287
11,287
Share based payment reserve
466
235
418
Own shares
(1,115)
(1,221)
(1,221)
Merger reserve
310
310
310
Retained profit
10,162
10,758
10,624
Total equity
23,953
24,212
24,261
Total equity and liabilities
29,068
29,305
29,597
Summarised Consolidated Cash Flow Statement
For the six months ended 30 September 2017
Unaudited
6 months
Unaudited
6 months
Audited
Year
Ended
Ended
Ended
30 Sept
30 Sept
31 March
2017
2016
2017
'000
'000
'000
Cash flows from operating activities
Profit for the period
612
799
1,130
Adjustments for
Net Interest (received)/payable
(1)
3
5
Income tax expense
287
330
417
Amortisation of intangible assets
344
347
693
Depreciation
177
177
348
Loss on sale of property, plant and equipment
7
45
(50)
Share-based payments
73
24
207
Operating profit before changes in
working capital and provisions
1,499
1,725
2,750
Change in inventories
296
145
502
Change in receivables
(288)
409
857
Change in payables
(149)
(777)
(289)
Change in provisions
(110)
-
110
(251)
(223)
1,180
Cash generated from operations
1,248
1,502
3,930
Income tax refunded
-
-
-
Net cash from operating activities
1,248
1,502
3,930
Cash flows from investing activities
Proceeds on disposal of subsidiary division
-
-
100
Purchases of property, plant and equipment
(193)
(137)
(325)
Purchase of intangible assets
(788)
(302)
(711)
Net cash used in investing activities
(981)
(439)
(936)
Cash flows from financing activities
Net Interest receivable/(payable)
1
(3)
(5)
Share options exercised
103
-
-
Repayments of borrowings
(245)
(244)
(488)
Dividends paid
(1,096)
(1,092)
(1,557)
Net cash used in financing activities
(1,237)
(1,339)
(2,050)
Net (decrease)/increase in cash and cash equivalents
(970)
(276)
944
Cash and cash equivalents at beginning of period
4,549
3,605
3,605
Cash and cash equivalents at end of period
3,579
3,329
4,549
Statement of changes in equity
Six months ended 30 September 2017
Share
capital
Share
premium
account
Share based payment reserve
Own shares
Merger
reserve
Retained profit
Total
000
000
000
000
000
000
000
At 1 April 2017
2,843
11,287
418
(1,221)
310
10,624
24,261
Dividends
-
-
-
-
-
(1,096)
(1,096)
Share based payment
-
-
73
-
-
-
73
Share option forfeitures
-
-
(26)
-
-
26
-
Exercise of options
-
-
1
106
-
(4)
103
Transactions with owners
-
-
48
106
-
(1,074)
(920)
Profit and total comprehensive income for the period
-
-
-
-
-
612
612
Total comprehensive income less owners transactions
-
-
48
106
-
(462)
(308)
At 30 September 2017
2,843
11,287
466
(1,115)
310
10,162
23,953
Six months ended 30 September 2016
Share
capital
Share
premium
account
Share based payment reserve
Own shares
Merger
reserve
Retained profit
Total
000
000
000
000
000
000
000
At 1 April 2016
2,843
11,287
217
(1,221)
310
11,045
24,481
Dividends
-
-
-
-
-
(1,092)
(1,092)
Share based payment
-
-
24
-
-
-
24
Share option forfeitures
-
-
(6)
-
-
6
-
Transactions with owners
-
-
18
-
-
(1,086)
(1,068)
Profit and total comprehensive income for the period
-
-
-
-
-
799
799
Total comprehensive income less owners transactions
-
-
18
-
-
(287)
(269)
At 30 September 2016
2,843
11,287
235
(1,221)
310
10,758
24,212
12 months ended 31 March 2017
Share
capital
Share
premium
account
Share based payment reserve
Own shares
Merger
reserve
Retained profit
Total
000
000
000
000
000
000
000
At 1 April 2016
2,843
11,287
217
(1,221)
310
11,045
24,481
Dividends
-
-
-
-
-
(1,557)
(1,557)
Share based payment
-
-
207
-
-
-
207
Share option forfeitures
-
-
(6)
-
-
6
-
Transactions with owners
-
-
201
-
-
(1,551)
(1,350)
Profit and total comprehensive income for the year
-
-
-
-
-
1,130
1,130
Total comprehensive income less owners transactions
-
-
201
-
-
(421)
(220)
At 31 March 2017
2,843
11,287
418
(1,221)
310
10,624
24,261
Notes to the interim report
1. Statutory information
The interim financial statements are unaudited and do not constitute statutory accounts within the meaning of Section 435 of the Companies Act 2006. The auditor's review report on the interim financial information for the six months ended 30 September 2017 is set out on page 16.
The financial information for the year ended 31 March 2017 has been derived from the published statutory accounts. A copy of the full accounts for that period, on which the auditor issued an unmodified report that did not contain statements under 498(2) or (3) of the Companies Act 2006, has been delivered to the Registrar of Companies.
These interim financial statements will be posted to all shareholders and are available from the registered office at One Surtees Way, Surtees Business Park, Stockton on Tees, TS18 3HR or from our website at www.vianetplc.com/investors
2. Accounting policies
These interim financial statements are for the six months ended 30 September 2017. As is permitted, the Group has chosen not to adopt IAS 34 'Interim Financial Statements' and therefore the interim financial information is not in full compliance with International Financial Reporting Standards but have been prepared using consistent accounting policies as applied in the full year accounts to 31 March 2017. The accounts have been prepared on a going concern basis and are presented to the nearest 000 except as otherwise stated. They have been prepared using the recognition and measurement principles of IFRS as adopted by the European Union using the historic cost convention.
3. Segmental information
An operating segment is a component of an entity that engages in business activities from which it may earn revenues and incur expenses. The segment operating results are regularly reviewed by the Chief Operating Decision Maker to make decisions about resources to be allocated to the segment and assess its performance. Vianet Group is analysed into to two trading segments (defined below) being Smart Zones (mainly adopted in the leisure sector, including US (particularly in pubs and gaming)) and Smart Machines (mainly adopted in the vending sector (particularly in vending machines)) supported by Corporate/Technology costs.
The products/services offered by each operating segment are:
Smart Zones: design, product development, sale and rental of fluid monitoring equipment, data insights and related services
Smart Machines: design product development, sale and rental of machine monitoring equipment, data insights and related services.
Corporate/Technology: Centralised Group overheads along with technology related costs for the Group
The inter-segment sales are immaterial. Segment results, assets and liabilities include items directly attributable to a segment as well as those that can be allocated on a reasonable basis. Unallocated assets and liabilities comprise items such as cash and cash equivalents, certain intangible assets, taxation, and borrowings. Segment capital expenditure is the total cost incurred during the year to acquire segment assets that are expected to be used for more than one period.
The segmental results for the six months ended 30 September 2017 are as follows:
Continuing Operations
Smart Zones
Smart Machines
Corporate/Technology
Total
'000
'000
'000
'000
Total revenue
5,662
1,052
-
6,714
Profit/(loss) before amortisation, share based payments and exceptional costs
2,270
473
(1,040)
1,703
Pre-exceptional segment result
2,185
318
(1,217)
1,286
Exceptional costs
(229)
(161)
2
(388)
Post exceptional segment result
1,956
157
(1,215)
898
Finance income
-
-
7
7
Finance costs
(6)
-
-
(6)
Profit/(loss) before taxation
1,950
157
(1,208)
899
Taxation
(287)
Profit for the year from continuing operations
612
Smart Zones
Smart Machines
Corporate/Technology
Total
'000
'000
'000
'000
Segment assets
24,888
-
4,007
28,895
Unallocated assets
173
-
-
173
Total assets
25,061
-
4,007
29,068
Segment liabilities
4,384
-
336
4,720
Unallocated liabilities
395
-
-
395
Total liabilities
4,779
-
336
5,115
The asset base of the Vianet Group plc cannot be split across Smart Zones, Smart Machines or Technology, so has been allocated to Smart Zones.
Notes to the interim report (continued)
The segmental results for the six months ended 30 September 2016 are as follows:
Continuing Operations
Smart Zones
Smart Machines
Corporate/Technology
Total
'000
'000
'000
'000
Total revenue
5,866
1,191
-
7,057
Profit/(loss) before amortisation, share based payments and exceptional costs
2,385
448
(1,195)
1,638
Pre-exceptional segment result
2,313
272
(1,318)
1,267
Exceptional costs
(68)
-
(67)
(135)
Post exceptional segment result
2,245
272
(1,385)
1,132
Finance income
-
-
5
5
Finance costs
(8)
-
-
(8)
Profit/(loss) before taxation
2,237
272
(1,380)
1,129
Taxation
(330)
Profit for the year from continuing operations
799
Smart Zones
Smart Machines
Corporate/Technology
Total
'000
'000
'000
'000
Segment assets
25,438
-
3,715
29,153
Unallocated assets
152
-
-
152
Total assets
25,590
-
3,715
29,305
Segment liabilities
4,709
-
384
5,093
Unallocated liabilities
-
-
-
-
Total liabilities
4,709
-
384
5,093
The asset base of the Vianet Group plc cannot be split across Smart Zones, Smart Machines or Technology, so has been allocated to Smart Zones.
Notes to the interim report (continued)
The segmental results for the 12 months ended 31 March 2017 are as follows:
Continuing Operations
Smart Zones
Smart Machines
Corporate/Technology
Total
'000
'000
'000
'000
Total revenue
11,935
2,328
-
14,263
Profit/(loss) before amortisation, share based payments and exceptional costs
4,822
891
(2,398)
3,315
Pre-exceptional segment result
4,677
539
(2,800)
2,416
Exceptional costs
(325)
(25)
(614)
(964)
Post exceptional segment result
4,352
514
(3,414)
1,452
Finance income
-
-
-
-
Finance costs
(17)
-
12
(5)
Profit/(loss) before taxation
4,335
514
(3,402)
1,447
Taxation
(417)
Profit for the year from continuing operations
1,030
Smart Zones
Smart Machines
Corporate/Technology
Total
'000
'000
'000
'000
Segment assets
25,350
-
3,787
29,137
Unallocated assets
460
-
-
460
Total assets
25,810
-
3,787
29,597
Segment liabilities
4,584
-
357
4,941
Unallocated liabilities
395
-
-
395
Total liabilities
4,979
-
357
5,336
The asset base of the Vianet Group plc cannot be split across Smart Zones, Smart Machines or Technology, so has been allocated to Smart Zones.
Notes to the interim report (continued)
4. Exceptional items
6 months
6 months
Year
Ended
Ended
Ended
30 Sept
30 Sept
31 March
2017
2016
2017
'000
'000
'000
Exceptional costs
388
135
864
388
135
864
Exceptional costs principally relate to employee transition costs and corporate transaction costs.
5. Tax
The charge for tax is based on the profit for the period and comprises:
6 months
6 months
Year
Ended
Ended
Ended
30 Sept
30 Sept
31 March
2017
2016
2017
'000
'000
'000
United Kingdom corporation tax
287
330
417
The tax charge reflects the utilisation of brought forward trading losses, which had previously been recognised as a deferred tax asset, against the taxable profit for the period within Vianet Limited
6. Earnings per share
Earnings per share has been impacted by the reversal of a deferred tax asset provision realised in previous years.
Basic earnings per share are calculated by dividing the earnings attributable to ordinary shareholders (612k) by the weighted average number of ordinary shares outstanding during the period.
Diluted earnings per share are calculated on the basis of profit for the year after tax divided by the weighted average number of shares in issue in the year plus the weighted average number of shares which would be issued if all the options granted were exercised
The table below shows the earnings pre and post the impact of the movement in the deferred tax asset.
30 September 2017
30 September 2016
Earnings
000
Basic earnings per share
Diluted earnings per share
Earnings
000
Basic earnings per share
Diluted earnings per share
Pre-tax profit attributable to equity shareholders
899
3.29p
3.27p
1,129
4.14p
4.11p
Post-tax profit attributable to equity shareholders
612
2.24p
2.23p
799
2.93p
2.91p
Pre-tax, pre-exceptional profit attributable to equity shareholders
1,287
4.71p
4.68p
1,264
4.63p
4.61p
Post-tax, pre-exceptional profit attributable to equity shareholders
1,000
3.66p
3.64p
934
3.42p
3.40p
30 Sept
2017
Number
30 Sept
2016
Number
Weighted average number of ordinary shares
27,302,694
27,302,694
Dilutive effect of share options
184,041
142,164
Diluted weighted average number of ordinary shares
27,486,735
27,444,858
7. Business combinations after the reporting period
On 3 October 2017, the group acquired 100% of the share capital of Vendman Systems Limited for a total consideration of 4.0 million, comprising cash of 1.9 million and estimated contingent consideration of 2.1 million that will become payable by January 2019 and January 2020.
Principal reasons for the acquisition have been covered in the Executive Review.
The assets acquired from Vendman Systems Limited were as follows. As the acquisition took place after the end of the accounting period, the directors have yet to complete their initial accounting. Accordingly the book and fair values presented below are provisional and goodwill is not presented separately from other intangibles that may be identified.
Provisional book and provisional fair value
'000
Non-current assets
155
Trade and other receivables
479
Cash and cash equivalents
11
Trade and other payables
(513)
Borrowings
(74)
Total identifiable assets
58
Goodwill and other intangibles
3,946
Total consideration
4,004
During the period to 30 September 2017, Vendman Systems Limited recorded turnover of 1,015,095 and an operating profit before exceptional items of 104,191.
INDEPENDENT REVIEW REPORT TO VIANET GROUP PLC
Introduction
We have been engaged by the company to review the financial information in the half-yearly financial report for the six months ended 30 September 2017 which comprises the consolidated statement of comprehensive income, the consolidated balance sheet, the summarised consolidated cash flow statement, the statement of changes in equity and the related explanatory notes. We have read the other information contained in the half yearly financial report which comprises only the Chairman's Statement, and the Chief Executive and Chief Financial Officer Review and considered whether they contain any apparent misstatements or material inconsistencies with the information in the condensed set of financial statements.
This report is made solely to the company in accordance with guidance contained in ISRE (UK and Ireland) 2410, 'Review of Interim Financial Information performed by the Independent Auditor of the Entity'. Our review work has been undertaken so that we might state to the company those matters we are required to state to them in a review report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the company, for our review work, for this report, or for the conclusion we have formed.
Directors' responsibilities
The half-yearly financial report is the responsibility of, and has been approved by, the directors. The AIM rules of the London Stock Exchange require that the accounting policies and presentation applied to the financial information in the half-yearly financial report are consistent with those which will be adopted in the annual accounts having regard to the accounting standards applicable for such accounts.
As disclosed in note 2, the annual financial statements of the group are prepared in accordance with IFRSs as adopted by the European Union. The financial information in the half-yearly financial report has been prepared in accordance with the basis of preparation in note 2.
Our responsibility
Our responsibility is to express to the company a conclusion on the financial information in the half-yearly financial report based on our review.
Scope of review
We conducted our review in accordance with International Standard on Review Engagements (UK and Ireland) 2410, 'Review of Interim Financial Information Performed by the Independent Auditor of the Entity' issued by the Auditing Practices Board for use in the United Kingdom. A review of interim financial information consists of making enquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with International Standards on Auditing (UK and Ireland) and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion.
Conclusion
Based on our review, nothing has come to our attention that causes us to believe that the financial information in the half-yearly financial report for the six months ended 30 September 2017 is not prepared, in all material respects, in accordance with the basis of accounting described in note 2.
GRANT THORNTON UK LLP
AUDITORLEEDS
4 December 2017
This information is provided by RNSThe company news service from the London Stock ExchangeENDIR USONRBBAURAA
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