Vianet Group PLC

Interim Results

RNS Number : 7477U
Vianet Group PLC
07 December 2021
 

7 December 2021

Vianet Group plc

 

("Vianet", "Company" or "the Group")

 

Interim Results

 

Vianet Group plc (AIM: VNET), the international provider of internet enabled, cloud based, telemetric services to the hospitality, unattended retail vending, and remote asset management sectors, is pleased to announce its unaudited results for the six months ended 30 September 2021.

 

Our Smart Zones division provides unique quality assurance, business intelligence and waste management services to the drinks retailing industry.

 

Our Smart Machines division provides innovative real-time monitoring, business intelligence and data insights for unattended vending machines maximising operational efficiency, stock control and cash flow whilst reducing our customers' carbon footprint.

 

The Group has seen a strong recovery in our Smart Zones division, aligned to the re-opening of pubs through Q2 2022, together with good growth in both new business and unit sales in our Smart Machines division. This has resulted in a good H1 2022 performance, improving the quality of our strong recurring revenue base.  Vianet has also made progress towards commercialising data capture in other verticals, which will provide the Group with a further growth engine.

 

H1 2022 has provided real momentum into H2 2022, and subject to global semiconductor chip supply chain and Covid-19 pressures, we expect to achieve FY2022 market expectations of £2.2 million of adjusted operating profit(a) and being back at pre-pandemic levels of trading in FY2023.

 

Financial highlights

 

Revenue of £6.34 million (H1 2021: £4.07 million, H1 2020: £8.41 million)

Recurring revenues at 83% (H1 2021: 87%, H1 2020: 82%). H1 2021 proportion of recurring increased due to reduction in hardware sales during hospitality lockdowns

Adjusted operating profit(a) of £0.82 million (H1 2021: adjusted operating loss (a) of £0.38 million, H1 2020: adjusted operating profit £2.00 million)

EBITDA(b) £0.99 million (H1 2021: £0.26 million loss, H1 2020: £2.33 million)

Operational cash generation, post working capital, was £1.40 million (H1 2021: £1.19 million, H1 2020: £2.44 million)

Basic loss per share at 1.15p (H1 2021: basic loss per share at 4.86p, H1 2020: basic profit per share 6.00p)

Net debt increased to £2.52 million (H1 2021: £1.15 million, H1 2020: £1.18 million) due to a combination of investment in a new sales and marketing team, continued product development, together with substantially reduced customer billing during lockdown in Q1 2022 and component premiums of over £200k in the period

Maintaining a prudent approach, the Board will not declare an interim dividend for the current financial year (H1 2021: nil, H1 2020: 1.70p)

 

Divisional highlights

 

Smart Machines new unit sales at 5,990 (H1 2021: 3,212 units) with estate increasing c. 12% to c.  42,400 units

New contactless payment device sales at 5,410 units (H1 2021: 2,152 units)

Smart Machines adjusted operating profit(a) at £0.71 million (H1 2021: £0.55 million, H1 2020: £0.78 million)

Investment in Smart Machines sales and commercial team is driving customer engagement with 22 new contracts and 5 renewals on 3-5-year terms

Smart Zones adjusted operating profit(a) at £1.31 million (H1 2021: £0.13 million, H1 2020: £2.32 million)

Smart Zones estate re-openings at 98% and now on full billing

Smart Zones had three long term contract renewals, including Stonegate and two new data contracts facilitated by Oxford Partnership

 

(a) Adjusted operating profit is profit before exceptional costs, amortisation, interest and share-based payments

(b) EBIDTA is earnings before interest, tax, depreciation, and amortisation

Commenting, James Dickson, Chairman and Interim Chief Executive Officer of Vianet Group plc, said:

"The first half has seen a return to operating profit with positive momentum in the second quarter going into H2.  

 

"Whilst we are not immune to the global supply chain and Covid-19 pressures, our H1 2022 results provide real momentum into H2 2022, with a clear line of sight towards meeting FY2022 market estimates of £2.2 million and giving rise to the Group's return to pre-pandemic levels of trading during early FY2023.

 

"The Group has been laying the foundations for growth and now has a strong pipeline of opportunities in several verticals where our data capture will allow customers to increase sales, improve efficiency and reduce their carbon footprint."   

- Ends -

 

An analyst briefing given by James Dickson, Chairman and Interim Chief Executive Officer, and Mark Foster, Chief Financial Officer will be held today at 09.30hrs at Cenkos,  6-8 Tokenhouse Yard, London EC2R 7AS or online via Microsoft Teams. Please contact [email protected] for details.

 

Enquiries:

Vianet Group plc

 

James Dickson, Chairman and Interim CEO

Mark Foster, CFO

Tel: +44 (0) 1642 358 800

www.vianetplc.com

 

Cenkos Securities plc

 

Stephen Keys / Camilla Hume

Tel: +44 (0) 20 7397 8900

www.cenkos.com  

 

Media enquiries:

Yellow Jersey PR

 

Sarah Hollins

Henry Wilkinson 

[email protected]

  Tel: +44 (0)7764 947 137

  Tel: +44 (0)7951 402 336

www.yellowjerseypr.com

 

Chairman and Interim Chief Executive Officer's Statement

Last year I provided a comprehensive update on our proactive response to the Coronavirus ("C19") pandemic. This year the emphasis has shifted to the strength of our recovery and the clear sales and commercial momentum we have going into H2 2022, which I expect will see the Group back to pre-pandemic performance levels early in FY2023.  

 

Strong Q2 recovery resulted in an adjusted operating profit of £0.82 million. Together with the strong momentum going into H2 this gives us confidence that FY2022 market expectations of c. £2.2 million of adjusted operating profit will be achieved and that the Group will be back to pre-pandemic levels during early FY2023.

 

Whilst it has been challenging dealing with the uncertainty around the pace of hospitality sector and city centre office re-openings, I am delighted to report that the Group's performance continues to recover well. We are not immune to any reintroduction of Covid-19 restrictions, the global semi-conductor shortages and associated stock premium costs, or upwards inflationary pressure, but we are confident that momentum and sales will continue to grow.

 

Performance

The focus has been on cash management, customer engagement, continued investment in sales, and technology as we migrate to a fully cloud-native environment to support growth . This is allowing us to build momentum and accelerate our Smart Machines growth plans whilst developing Smart Zones contribution at the same time as commercialising data opportunities in new verticals.

 

Comparison is given against H1 2021 and H1 2020 to provide better context to our solid recovery.

 

Despite Covid-19 restrictions in Q1, turnover was at £6.34 million (H1 2021: £4.07 million, H1 2020: £8.41 million) being 75% of pre-pandemic performance levels.

 

The Group's adjusted operating profit was £0.82 million (H1 2021: £0.38 million loss, H1 2020: £2.00 million profit), representing over 40% of pre-pandemic performance.

 

Operating profit post exceptional items was £0.78 million (H1 2021: £0.52 million loss, H1 2020: £2.59 million profit). H1 2020 had a net £0.59 million exceptional credit, which included a £0.92 million deferred consideration release. The pre-tax loss was £0.36 million (H1 2021: £1.44 million loss, H1 2020: £1.77 million profit).

 

The Group's loss per share was 1.15 pence (H1 2021: loss 4.86 pence and H1 2020: earnings 6.00 pence).

 

New telemetry and contactless payment device sales helped our Smart Machines division to an adjusted operating profit of £0.71 million (H1 2021: £0.55 million, H1 2020: £0.78 million), representing over 90% of pre-pandemic performance. During H1 2022, the new sales team delivered over 25 new and re-signed contracts with increasing traction coming into H2.

 

Although Q1 was challenging due to the hospitality sector restrictions, Smart Zones division adjusted operating profit recovered to £1.31 million (H1 2021: £0.13 million, H1 2020: £2.32 million). The strong recovery in Q2 was helped by the strength of recurring income from long-term contracts in the active UK and Europe estate of c. 10,400 (FY2021: 10,800).  During the period, there was a net reduction of around 400 active sites, however some of these closures may be sites that are yet to re-open, especially in some city centres.

 

The growing demand for data and market insights is driving increased sales in our core hospitality and un-attended retail sectors. It is also allowing the Group to commercialise exciting growth opportunities in other sectors such as catering and forecourt solutions.

 

Dividend

While the Group's recovery is assured, Vianet is not immune from global supply issues or further Covid-19 restrictions impacting our markets. As such, we remain focused on managing our cash balances to fund working capital and invest in growth. As a result, the Board will remain prudent and refrain from re-introducing an interim dividend for H1 2022. However, s ubject to no further lockdowns or restrictions on the hospitality sector and no deterioration of semi-conductor supply, we expect H2 cash generation will enable the Board to reinstate a dividend in July for FY2022.

 

Outlook

The bounce-back experienced in Q2 2022 has continued to develop momentum into H2 2022, which should result in the Group meeting current market guidance for the full year.

 

Barring any further draconian restrictions on the hospitality sector or significant deterioration in global microchip supplies, the business is well placed to get back to pre-pandemic performance levels in early FY2023. 

 

As a result of working closely with our customers and suppliers, intelligent cash management, and uninterrupted investment, the Group is in a strong position to take advantage of the clear opportunities in remote asset management, contactless payment, and market data insights in our existing and new sectors.

· Smart Machines will continue to accelerate growth from the significant pipeline of opportunities in the UK and Europe from both existing and new customers. We have the leading end to end solutions for un-attended retail together with a highly motivated sales and commercial team who have real momentum. The H1 new business gains resulted in 22 customers being onboarded, which alone will result in significant new device sales in H2.

· Smart Zones has a healthy pipeline, including several major technology upgrade programmes, and will continue to recover through H2 2022 as new installation programmes are realised. Our investment in data insight and relationship with Oxford Partnership is allowing the Group to develop new revenue opportunities in hospitality which are expected to gain momentum through H2 into FY2023.

· Following successful field trials, using the Group's existing technologies, and commercial negotiations, we should see progress in establishing new growth in sectors such as environmental, catering, forecourts, and tank monitoring.

 

We are not immune from some of the well-publicised global supply chain challenges, but our high levels of contracted recurring revenue will continue to support our recovery and cash generation capability. Whilst Covid-19 and Brexit related challenges may endure for some time, our ongoing investment in product and people is creating real momentum, and I am confident that the Group has the team and financial wherewithal to drive growth for a sustained period, as the demand for both data and contactless solutions grows.  

 

The Board remains confident that momentum and sales will continue to grow as we execute our long-term growth strategy and deliver earnings growth as the world recovers from the pandemic.

 

James Dickson    

Chairman and Interim Chief Executive Officer     

7 December 2021

 

Chief Financial Officer's Review

 

Our strategy of delivering insight and analytics by connecting customers to their assets has been revalidated. Our customers are increasingly relying on the data we provide to help them navigate the pandemic. Smart Zones provides critical trading information for our hospitality customers, enabling senior level decision-making on business support and re-opening plans. This has led to further contracts and accelerated renewals.

 

Growth in contactless payments is driven by the perception of 'dirty cash' and the gradual trend towards phasing out of notes and coins. This is accelerating the strategic move to contactless solutions. With the recent increase in the contactless limit to £100 per transaction, we have seen further growth in units and net estate size with the installation of contactless payment devices in unattended retail machines. For many, this is being viewed as critical to business survival.

 

Operational cash generation, post working capital, was £1.40 million (H1 2021: £1.19 million, H1 2020: £2.44 million) being c. 57% of pre-pandemic performance. Q1 endured hospitality restrictions whilst Q2 was impacted by microchip stock premiums and inflationary costs. The cash position was helped by close management of our costs and continuing payments from our customers. Despite some of the broader economic challenges, we are confident that our cash trajectory is robust and adequately supports our business needs.

 

Exceptional costs amounted to £0.04 million (H1 2021: £0.14 million and H1 2020 was an exceptional credit of £0.58 million resulting from a deferred consideration release of £0.92 million).

 

The Group had an overall net debt position of £2.52 million at the half-year, compared to £1.15 million last year (H1 2020: £1.18 million), with gross debt of £4.45 million (H1 2021: £4.87 million, H1 2020: £3.02 million) taking account of the CBIL facility.  The net debt increase was primarily due to investment in our new sales and marketing team, maintaining product development spend through the pandemic and the introduction of significant one-off discounts to help our customers during the pandemic restrictions.

 

Smart Machines

Smart Machines sales of new telemetry and contactless device connections continued, with overall sales of 5,990 units (H1 2021: 3,212 units, H1 2020: 7,634 units) with contactless payment sales of 5,410 units (H1 2021: 2,152 units, H1 2020: 4,796 units) being ahead of our pre-pandemic performance. The sales performance was very encouraging, especially given the slower recovery in UK offices and the brands and manufacturing sectors.  

 

Turnover was £2.63 million (H1 2021: £2.04 million, H1 2020: £2.71 million), representing c. 97% of pre-pandemic performance. Although two-thirds of new hardware sales were capital purchases, the recurring revenue remained strong at just over 70% (H1 2021: c. 82%, H1 2020: just under 70%). The H1 2021 sales mix was impacted by a significant reduction in both hardware and development recharges due to the first lockdown. 

 

During the period, industry recognition that contactless payment adoption will accelerate, and operating overheads needed to be reduced by visiting sites less frequently led us to sign 22 new contracts and 5 renewal contracts.

 

Momentum into H2 2022 has been encouraging as the sales team is starting to deliver on the new business pipeline we have identified. We are confident that the Smart Machines growth opportunity has been enhanced due to changing behaviour arising from the pandemic. Barring any further unforeseen national initiatives, the underlying opportunity remains strong, and we are confident it will enhance our future earnings growth.

 

Smart Zones

The underlying performance of the Group's core beer monitoring business was significantly impacted during the various national lockdowns over the last 18 months but has recovered strongly.

 

Turnover of £3.72 million (H1 2021: £2.03 million, H1 2020: £5.70 million) was c. 65% of pre-pandemic levels largely due to the hospitality restrictions and temporary discounts for customers in Q1. 

 

Recurring revenue remained strong at over 90%. Similar to the levels achieved in H1 2021 and marginally higher than the c. 87% we delivered H1 2020.

 

Pre-exceptional profit of £1.31 million (H1 2021: £0.13 million, H1 2020: £2.32 million) represents c. 56% of our pre-pandemic performance.

 

In the period, we successfully delivered several key contract renewals. Most notably, the Group signed long-term contract renewals with EIG/Stonegate and with the Oxford Partnership for data insights. 

 

There were 151 new system installations in H1 2022, compared to 41 in H1 2021. In addition, there were almost 500 system upgrades compared to around 140 in H1 2021.

 

Customers have embraced our trading performance insights and data analytics throughout the last 18 months. The Group's continued investment in new technology and the migration of data and services to the cloud has significantly increased the opportunities we see ahead in our Smart Zones division.

 

In the US, the impact of lockdown has significantly impacted the hospitality industry for our key customers and prospects. New sales stalled, which coupled with the support package we provided to customers, led to our US business suffering a £0.03 million loss in the period (H1 2021 £0.16 million loss and H1 2020: £0.01 million profit). As with all cinema chains, our largest US customer, AMC Theatres, has been affected by Covid-19 closures and remains seriously challenged despite their re-financing. Inevitably this will impact our H2 performance in the USA, but we remain confident in pursuing other avenues of opportunity in this large and exciting market.

 

Looking Forward

Our principal aim during the period has always been to come through the pandemic in the best possible shape and with the critical business growth drivers enhanced.

 

Whilst the impact of the pandemic may not yet be over, there has been a significant positive shift in customer behaviour, and we are confident of delivering both FY2022 market expectations and strong growth over the life of our three-year plan.

 

Mark Foster

Chief Financial Officer 

 

7 December 2021

 

 

 

 

 

 

Consolidated Statement of Comprehensive Income

For the six months ended 30 September 2021

 

 

 

 

 

Before Exceptional

6 months

Exceptional

6 months

Total Unaudited

6 months

 

 

 

Before

Exceptional

6 months

 

 

 

 

Exceptional

6 months

Unaudited

6 months

Audited

Year

 

 

Ended

Ended

Ended

Ended

Ended

Ended

Ended

 

 

30 Sept

30 Sept

30 Sept

30 Sept

30 Sept

30 Sept

31 March

 

 

2021

2021

2021

2020

2020

2020

2021

 

Note

£'000

£'000

£'000

£'000

£'000

£'000

£'000

 

 

 

 

 

 

 

 

 

Continuing operations

 

 

 

 

 

 

 

 

Revenue

3

6,340

-

6,340

4,066

-

4,066

8,369

Cost of sales

 

(2,306)

-

(2,306)

(1,497)

-

(1,497)

(3,307)

Gross profit

 

4,034

-

4,034

2,569

-

2,569

5,062

Administration and other operating expenses

4

 

 

(3,215)

 

 

(38)

 

 

(3,253)

 

 

(2,946)

 

 

(142)

 

 

(3,088)

 

 

(6,092)

Operating profit/(loss) pre amortisation and share based payments

3

 

 

 

819

 

 

 

(38)

 

 

 

781

 

 

 

(377)

 

 

 

(142)

 

 

 

(519)

 

 

 

(1,030)

Intangible asset amortisation

 

 

(1,050)

 

-

 

(1,050)

 

(837)

 

-

 

(837)

 

(1,669)

Share based payments

 

 

(35)

 

-

 

(35)

 

(48)

 

-

 

(48)

 

(73)

Operating loss post amortisation and share based payments

 

 

 

 

(266)

 

 

 

(38)

 

 

 

(304)

 

 

 

(1,262)

 

 

 

(142)

 

 

 

(1,404)

 

 

 

(2,772)

Net finance costs

 

 

(59)

 

-

 

(59)

 

(32)

 

-

 

(32)

 

(50)

Loss from continuing operations before tax

 

 

 

 

(325)

 

 

 

(38)

 

 

 

(363)

 

 

 

(1,294)

 

 

 

(142)

 

 

 

(1,436)

 

 

 

(2,822)

Income tax credit

5

30

-

30

30

-

30

867

Loss and other comprehensive income for the year

3

 

 

(295)

 

 

(38)

 

 

(333)

 

 

(1,264)

 

 

(142)

 

 

(1,406)

 

 

(1,955)

 

 

 

 

 

 

 

 

 

Loss per share

 

 

 

 

 

 

 

 

Continuing Operations

 

 

 

 

 

 

 

 

- Basic

6

 

 

(1.15p)

 

 

(4.86p)

(6,75)p

- Diluted

6

 

 

(1.15p)

 

 

(4.83p)

(6.75)p

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Consolidated Balance Sheet

At 30 September 2021

 

Unaudited

As at

30 Sept

2021

Unaudited

As at

30 Sept

 2020

Audited

As at

31 March 2021

 

 

£'000

£'000

£'000

Assets

 

 

 

 

 

 

 

 

 

23,956

23,708

24,040

 

3,290

3,610

3,391

 

265

510

236

Total non-current assets

 

27,511

27,828

27,667

Current assets

 

 

 

 

 

1,530

1,519

1,431

 

2,692

2,509

2,758

Cash and cash equivalents

 

1,932

3,721

1,894

 

 

6,154

7,749

6,083

 

 

 

 

 

Total assets

 

33,665

35,577

33,750

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

3,593

3,098

3,257

 

1,741

1,466

1,265

 

35

34

53

 

 

5,369

4,598

4,575

 

 

 

 

 

Non-current liabilities

 

 

 

 

Other payables

 

86

117

86

 

2,707

3,408

3,290

 

-

1,111

-

 

-

20

-

 

 

2,793

4,656

3,376

 

 

 

 

 

 

 

 

 

 

2,895

2,895

2,895

 

11,711

11,709

11,709

 

472

412

437

 

310

310

310

Retained profit

 

10,115

10,997

10,448

Total equity

 

25,503

26,323

25,799

 

 

 

 

 

Total equity and liabilities

 

33,665

35,577

33,750

 

 

 

 

 

 

 

 

Summarised Consolidated Cash Flow Statement

For the six months ended 30 September 2021

 

 

Unaudited

6 months

Unaudited

6 months

Audited

Year

 

 

Ended

Ended

Ended

 

 

30 Sept

30 Sept

31 March

 

 

2021

2020

2021

 

 

£'000

£'000

£'000

Cash flows from operating activities

 

 

 

 

Loss for the period

 

(333)

(1,406)

(1,955)

Adjustments for

 

 

 

 

Net Interest payable

 

59

32

50

Income tax credit

 

(30)

(30)

(867)

Amortisation of intangible assets

 

1,050

837

1,669

Depreciation

 

244

309

563

Loss on sale of property, plant and equipment

 

67

7

126

Share-based payments expense

 

35

48

73

Operating profit/(loss) before changes in

working capital and provisions

 

 

1,092

 

(203)

 

(341)

Change in inventories

 

(97)

(28)

60

Change in receivables

 

66

1,035

786

Change in payables

 

337

389

547

 

 

306

1,396

1,393

Net cash from operating activities

 

1,398

1,193

1,052

Cash flows from investing activities

 

 

 

 

Purchases of property, plant and equipment

 

(211)

(131)

(268)

Purchase of intangible assets

 

(966)

(1,185)

(2,348)

Net cash used in investing activities

 

(1,177)

(1,316)

(2,616)

Cash flows from financing activities

 

 

 

 

Net Interest payable

 

(59)

(32)

(50)

Issue of share capital

 

2

-

-

Repayment of leases

 

(18)

(45)

(64)

Repayments of borrowings

 

(606)

-

(319)

New borrowings

 

-

3,540

3,540

Payment of deferred consideration

 

-

-

(31)

Net cash (used in)/from financing activities

 

(681)

3,463

3,076

 

 

 

 

 

Net (decrease)/increase in cash and cash equivalents

 

(460)

3,340

1,512

 

 

 

 

 

Cash and cash equivalents at beginning of period

 

1,893

381

381

 

 

 

 

 

Cash and cash equivalents at end of period

 

1,433

3,721

1,893

 

 

 

 

 

Reconciliation to the cash balance in the Consolidated Balance Sheet

Cash balance as per consolidated balance sheet

 

1,932

3,721

1,893

Bank overdrafts

 

(499)

-

-

Balance per statement of cash flows

 

1,433

3,721

1,893

 

Statement of changes in equity

 

Six months ended 30 September 2021

 

 

Share

capital

Share

premium

account

Share based payment reserve

Merger

reserve

Retained profit

Total

 

£000

£000

£000

£000

£000

£000

At 1 April 2021

2,895

11,709

437

310

10,448

25,799

Share based payment

-

-

35

-

-

35

Issue of share capital

-

2

-

-

-

2

Transactions with owners

-

2

35

-

-

37

Loss and total comprehensive income for the period

-

-

-

-

(333)

(333)

Total comprehensive income less owners transactions

-

2

35

-

(333)

(296)

At 30 September 2021

2,895

11,711

472

310

10,115

25,503

 

 

Six months ended 30 September 2020

 

 

Share

capital

Share

premium

account

Share based payment reserve

Merger

reserve

Retained profit

Total

 

£000

£000

£000

£000

£000

£000

At 1 April 2020

2,895

11,709

364

310

12,403

27,681

Share based payment

-

-

48

-

-

48

Transactions with owners

-

-

48

-

-

48

Loss and total comprehensive income for the period

-

-

-

-

(1,406)

(1,406)

Total comprehensive income less owners transactions

-

-

48

-

(1,406)

(1,358)

At 30 September 2020

2,895

11,709

412

310

10,997

26,323

 

 

12 months ended 31 March 2021

 

 

Share

capital

Share

premium

account

Share based payment reserve

Merger

reserve

Retained profit

Total

 

£000

£000

£000

£000

£000

£000

At 1 April 2020

2,895

11,709

364

310

12,403

27,681

Share based payment

-

-

73

-

-

73

Transactions with owners

-

-

73

-

-

73

Loss and total comprehensive income for the year

-

-

-

-

(1,955)

(1,955)

Total comprehensive income less owners transactions

-

-

73

-

(1,955)

(1,882)

At 31 March 2021

2,895

11,709

437

310

10,448

25,799

 

 

 

 

 

 

 

 

 

 

Notes to the interim report

 

1.  Statutory information

 

The interim financial statements are neither audited nor reviewed and do not constitute statutory accounts within the meaning of Section 434 of the Companies Act 2006.

 

The financial information for the year ended 31 March 2021 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

 

The interim financial statements have been prepared in accordance with the AIM Rules for Companies and on a basis consistent with the accounting policies and methods of computation as published by the Group in its Annual Report for the year ended 31 March 2021, which is available on the Group's website.

The Group has chosen not to adopt IAS 34 'Interim Financial Statements' in preparing these interim financial statements and therefore the Interim financial information is not in full compliance with International Financial Reporting Standards.

 

Having considered current trading performance, the Directors have a reasonable expectation that the Company and the Group have adequate resources to continue in operational existence for the foreseeable future. Financial forecasts and projections, taking account of reasonably possible changes and sensitivities in future trading performance and the market value of the Group's assets, have been prepared and show that the Group is expected to be able to operate within the level of cash and the available headroom on the current banking facility.

 

The Directors are confident that the Company will be able to meet its liabilities as they fall due over the next 12 months. As a result, this financial information has been prepared on a going concern basis.

 

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 bars) and Smart Machines (mainly adopted in the vending sector (particularly in unattended retail vending machines) supported by Corporate/Technology & stores costs.

 

The products/services offered by each operating segment are:

 

· Smart Zones: Data insight & actionable data services, design, product development, sale and rental of fluid monitoring equipment.

 

· Smart Machines: Data insight & actionable data services, design product development, sale and rental of machine monitoring and contactless payment equipment and services.

 

· Corporate/Technology: Centralised Group overheads along with technology and stores 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 2021 are as follows:

 

 

 

Continuing Operations

 

 

 

 

Smart Zones

 

 

Smart Machines

 

 

Corporate/Technology

 

 

 

Total

 

 

 

£'000

£'000

£'000

£'000

 

 

 

 

 

 

 

Total revenue

 

 

3,715

2,625

-

6,340

 

 

 

 

 

 

 

Profit/(loss) before amortisation, share based payments and exceptional costs

 

 

 

1,314

 

714

 

(1,209)

 

819

 

 

 

 

 

 

 

Pre-exceptional segment result

 

 

1,008

601

(1,875)

(266)

Exceptional costs

 

 

(3)

(22)

(13)

(38)

Post exceptional segment result

 

 

1,005

579

(1,888)

(304)

Finance income

 

 

-

-

-

-

Finance costs

 

 

(53)

(6)

-

(59)

Profit/(loss) before taxation

 

 

952

573

(1,888)

(363)

Taxation

 

 

 

 

 

30

Loss for the year from continuing operations

 

 

 

 

 

(333)

 

 

 

 

 

 

 

 

 

 

 

 

 

Smart Zones

 

 

Smart Machines

 

 

Corporate/Technology

 

 

 

Total

 

 

 

£'000

£'000

£'000

£'000

Segment assets

 

 

27,403

4,083

1,914

33,400

Unallocated assets

 

 

-

-

265

265

Total assets

 

 

27,403

4,083

2,179

33,665

Segment liabilities

 

 

7,897

-

265

8,162

Unallocated assets

 

 

-

-

-

-

Total liabilities

 

 

7,897

-

265

8,162

 

 

 

 

 

 

 

 

 

 

 

 

Notes to the interim report (continued)

 

The segmental results for the six months ended 30 September 2020 are as follows:

 

 

 

Continuing Operations

 

 

 

 

Smart Zones

 

 

Smart Machines

 

 

Corporate/Technology

 

 

 

Total

 

 

 

£'000

£'000

£'000

£'000

 

 

 

 

 

 

 

Total revenue

 

 

2,025

2,041

-

4,066

 

 

 

 

 

 

 

Profit/(loss) before amortisation, share based payments and exceptional costs

 

 

 

132

 

550

 

(1,059)

 

(377)

 

 

 

 

 

 

 

Pre-exceptional segment result

 

 

(76)

430

(1,616)

(1,262)

Exceptional costs

 

 

(12)

(39)

(91)

(142)

Post exceptional segment result

 

 

(88)

391

(1,707)

(1,404)

Finance income

 

 

-

-

1

1

Finance costs

 

 

(19)

(14)

-

(33)

(Loss)/profit before taxation

 

 

(107)

377

(1,706)

(1,436)

Taxation

 

 

 

 

 

30

Loss for the year from continuing operations

 

 

 

 

 

(1,406)

 

 

 

 

 

 

 

 

 

 

 

 

 

Smart Zones

 

 

Smart Machines

 

 

Corporate/Technology

 

 

 

Total

 

 

 

£'000

£'000

£'000

£'000

Segment assets

 

 

29,089

4,083

1,895

35,067

Unallocated assets

 

 

-

-

510

510

Total assets

 

 

29,089

4,083

2,405

35,577

Segment liabilities

 

 

7,780

-

363

8,143

Unallocated assets

 

 

-

-

1,111

1,111

Total liabilities

 

 

7,780

-

1,474

9,254

 

 

 

 

 

 

 

 

 

 

 

 

 

Notes to the interim report (continued)

 

The segmental results for the 12 months ended 31 March 2021 are as follows:

 

 

 

Continuing Operations

 

 

 

 

Smart Zones

 

 

Smart Machines

 

 

Corporate/ Technology

 

 

 

Total

 

 

 

£'000

£'000

£'000

£'000

 

 

 

 

 

 

 

Total revenue

 

 

3,953

4,416

-

8,369

 

 

 

 

 

 

 

Profit/(loss) before amortisation, share based payments and exceptional costs

 

 

 

503

 

1,102

 

(2,292)

 

(687)

 

 

 

 

 

 

 

Pre-exceptional segment result

 

 

85

858

(3,372)

(2,429)

Exceptional costs

 

 

(81)

(147)

(115)

(343)

Post exceptional segment result

 

 

4

711

(3,487)

(2,772)

Finance income

 

 

-

-

1

1

Finance costs

 

 

(28)

(23)

-

(51)

Profit/(loss) before taxation

 

 

(24)

688

(3,486)

(2,822)

Taxation

 

 

 

 

 

867

Profit for the year from continuing operations

 

 

 

 

 

(1,955)

 

 

 

 

 

 

 

 

 

 

 

 

 

Smart Zones

 

 

Smart Machines

 

 

Corporate/ Technology

 

 

 

Total

 

 

 

£'000

£'000

£'000

£'000

Segment assets

 

 

27,534

4,083

1,897

33,514

Unallocated assets

 

 

-

-

236

236

Total assets

 

 

27,534

4,083

2,133

33,750

Segment liabilities

 

 

7,466

-

485

7,951

Unallocated assets

 

 

-

-

-

-

Total liabilities

 

 

7,466

-

485

7,951

 

 

 

 

 

 

 

 

 

 

 

Notes to the interim report (continued)

 

4.   Exceptional items

 

 

 

6 months

6 months

Year

 

 

Ended

Ended

Ended

 

 

30 Sept

30 Sept

31 March

 

 

2021

2020

2021

 

 

£'000

£'000

£'000

 

 

 

 

 

Corporate restructuring and transitional costs

 

  23

59

154

Disposal costs

 

  -

-

101

Network Obsolescence costs

 

  1

-

8

Other

 

  14

83

80

 

 

38

142

343

 

 

Corporate restructuring and transitional costs relate to the transition of people and management to ensure we have the succession and calibre of people on board to deliver the strategic aims and aspirations of the Group.

 

5.   Tax

 

 

The credit for tax is based on the loss for the period and comprises:

 

 

 

6 months

6 months

Year

 

 

Ended

Ended

Ended

 

 

30 Sept

30 Sept

31 March

 

 

2021

2020

2021

 

 

£'000

£'000

£'000

 

 

 

 

 

United Kingdom corporation tax

 

30

30

867

 

 

The tax credit 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.   Loss per share 

 

Basic loss per share is calculated by dividing the earnings attributable to ordinary shareholders (loss of £333k) by the weighted average number of ordinary shares outstanding during the period.

 

Diluted earnings per share are calculated on the basis of loss 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 per share result.

 

 

30 September 2021

30 September 2020

 

(Loss)

 

 

£000

Basic (loss) per share

Diluted (loss) per share

Earnings

 

 

£000

Basic earnings per share

Diluted earnings per share

Post-tax loss attributable to equity shareholders

(333)

(1.15p)

(1.15p)

(1,406)

(4.86p)

(4.83p)

 

 

 

 

30 Sept

2021

Number

30 Sept

2020

Number

Weighted average number of ordinary shares

28,953,818

28,953,414

Dilutive effect of share options

-

172,967

Diluted weighted average number of ordinary shares

28,953,818

29,126,381

 

Due to the loss in the period no dilutive effect of share options is required to be calculated.

 

 

 

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