REG - Vianet Group PLC - Final Results
11/06/2024 07:00
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RNS Number : 8650R Vianet Group PLC 11 June 2024
Vianet Group plc
("Vianet", "Company" or "the Group")
Unaudited Final Results for the year ended 31 March 2024
Good momentum with strong prospects
Dividend confirmed
Vianet Group plc (AIM: VNET), the leader in delivering actionable data and
business insights through an integrated ecosystem of hardware devices,
software platforms and smart insights portals, is pleased to announce its
unaudited results for the year ended 31 March 2024.
Financial Highlights
· Revenue for FY2024 increased by 7.6% to £15.18m (FY2023:
£14.12m).
· Recurring revenue increased further to £12.94m (FY2023
£12.52m), accounting for 85% of total revenue (FY2023: 89%), with hardware
sales up 40% to £2.24m (FY2023: £1.60m).
· Gross Margin has improved by 3.5% to 68.7% (FY2023: 66.4%).
· Adjusted EBITA (pre-exceptional and share-based payments) has
risen 11.6% to £3.47m (FY2023: £3.11m), ahead of market expectations as of
H1 2024.
· Profit before tax £0.78m (FY2023: £0.45m)
· Basic earnings per share rose to 2.72p (FY2023: 0.56p)
· A proposed final dividend of 0.75p, up 50% from prior year
· Normalised profit to cash conversion was 104.3% of EBITDA
· Net debt has been significantly reduced by 54.9% to £1.52m
(FY2023: £3.37m).
· Year-end cash reserves have risen to £1.82m (FY2023: £0.07m).
Commenting, James Dickson, Chairman of Vianet Group plc, said:
I am especially pleased with this set of results as it showcases the Company's
proactive measures, along with the dedication of our staff. This has
resulted in excellent financial results and strong sales momentum. The
combined challenges of supply chain pressures, the 3G switch off and
geopolitical uncertainties have been successfully navigated. I am confident
that Vianet will drive continued sales and profit growth from its core
markets, whilst also achieving expansion of our footprint into wider markets.
Smart Machine's unattended retail division is experiencing significant growth,
with key contract extensions and rollouts driving new connected devices. The
Smart Zones hospitality division continues to secure new business and contract
renewals while leveraging market data to drive customer profitability.
The current financial year has started strongly, and the Company is
well-positioned to enter new vertical markets and continue to drive its strong
subscription revenue and earnings growth.
Divisional & Operational highlights
Smart Machines unattended retail division
· Adjusted operating profit increased 22.2% to £2.46m (FY2023:
£2.01m).
· Added 8,900 new connected machines (FY2023: 6,554) despite sector
distraction of planning related to the UK-wide 3G switch-off.
· Key long-term contract wins and renewals with Baxter Storey, The
Vending People, Compass, and both Rontec and Wilcomatic in the fuel forecourt
market.
Smart Zones hospitality division
· Acquisition of trade and assets of US-based Beverage Metrics Inc
(BMI)
· Revenue increased 5.5% to £8.62m (FY2023: £8.16m) with operating
profit up 3.9% to £3.94m (FY2023: £3.79m) despite absorbing c £0.5m of
post-acquisition cost associated with BMI.
· Net installation base solid at c 9,640 (FY2023: 9,758) as ongoing
investment and a pipeline of new installations offset a slowing rate of
hospitality sector closures.
· We had several contract extensions, including Stonegate, and
post-year-end contract renewals, including Heineken.
- Ends -
James Dickson, Chairman & CEO, and Mark Foster CFO will provide a live
presentation relating to financial results for the year ended 31 March
2024 via the Investor Meet Company platform on 11th June 2024 at 10:30 am
GMT.
The presentation is open to all existing and potential shareholders. Questions
can be submitted pre-event via your Investor Meet Company dashboard up until 9
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Enquiries:
Vianet Group plc
James Dickson, Chairman & Interim CEO Tel: +44 (0) 1642 358 800
Mark Foster, CFO www.vianetplc.com (http://www.vianetplc.com)
Cavendish Capital Markets
Stephen Keys / Camilla Hume Tel: +44 (0) 20 7220 0500
www.cavendish.com (http://www.cavendish.com)
Investor enquiries:
Dale Bellis Tel: +44 (0) 20 7397 8900
CHAIRMAN'S STATEMENT
Introduction
I am delighted to report that the Group has continued to build positive sales
and commercial momentum in FY2024. We are exceptionally well placed to
capitalise on the opportunities in the UK and USA hospitality markets,
unattended retail in the UK and Europe, and the adjacent fuel forecourt
market.
Sales grew c.8% to £15.2m (FY2023: £14.1m), delivering an adjusted operating
profit of £3.47m (FY2023 £3.11m), representing c.12% year-on-year growth. We
have maintained a rigorous drive to grow the top line and maximise the
business's profitability, enabling progressive dividend payments. This is a
testament to the team's hard work.
Progress from the unattended retail and hospitality divisions has been
particularly strong, marked by key initiatives bringing in new customers,
strengthening existing relationships and expanding our service offering. The
initial delay in customers adapting to the 3G network switch-off was more than
offset as demand rebounded in Q4. The sharp acceleration in 4G LTE systems
upgrades, preventing connectivity issues on payment devices, has resulted in
numerous new contracts, enhancing our installation pipeline well into FY2025.
In addition, recent contract wins illustrate the successful expansion of our
business into new industry verticals and our ability to react swiftly to a
changing dynamic. We are building on these opportunities with key players in
the manufacturing and retail sectors of the forecourt industry.
Strategic Developments
Vianet has made significant strategic developments in the past year. One of
the key highlights is the acquisition and subsequent integration of Beverage
Metrics Inc. in May 2023. This has allowed Vianet to accelerate its product
roadmap in the hospitality sector by 18 months and expand its presence in the
US market. Through the integration of Beverage Metrics' comprehensive
inventory platform and Vianet's draught beer management solution, the Company
has created a compelling beverage management and inventory offering. Together
with the recent product integration with Fintech we are providing customers
with a complete procure and pay solution.
Pilot testing of the integrated solution with leading brands in the US has
yielded encouraging results. This success has reinforced the potential for
Vianet to increase its installation footprint in the US and UK throughout
FY2025 and beyond.
Our focus on customer engagement has received positive feedback, demonstrating
our commitment to Vianet Americas. We have recently showcased the solution,
sharing a stand with Fintech at the National Restaurant Association show in
Chicago in May. The integrated offering was well received, providing valuable
exposure and generating promising sales leads. Vianet has also renewed and won
several contracts in the UK for the Beverage Metrics beer module, establishing
a solid foundation for revenue growth in FY2025.
Furthermore, Vianet completed its refinancing and transitioned to HSBC in
August 2023. This has resulted in lower finance costs, reflecting the strength
of the business and its ability to secure favourable financial arrangements.
These strategic developments have positioned the Company for continued growth
and success in the hospitality sector, both in the US and the UK.
Dividend
The high levels of customer engagement and commercial momentum provide
confidence that the Group will benefit from solid revenue growth and high
levels of cash generation in FY2025.
Despite uncertainties over inflationary and interest rate pressures, the new
HSBC facility offers flexibility to support ongoing investment in the
business. The Board recognises the significance of dividends for shareholders
and supports a progressive dividend policy, including the reinstatement of an
interim dividend at the earliest opportunity. For the full-year dividend, the
Board proposes 0.75p per share, payable on 2 August 2024 to shareholders on
the register on 21 June 2024.
Board and Staff
The Board has agreed that I shall remain as acting CEO to build on the success
of FY2024, maintain our strong sales momentum, and develop our strategic
options. I am committed to realising significant growth in shareholder value.
The Board regularly evaluates its composition and effectiveness to ensure a
balanced mix of experience and independence, supporting our business and
growth ambitions. The operational structure of the Group continues to evolve,
and I am pleased to report further development of the management team. They
are highly motivated and focused on delivery, providing a strong succession
pathway.
Our exceptional people consistently demonstrate enthusiasm, commitment, and
openness, underpinning the Group's excellent reputation among customers,
suppliers, and stakeholders.
I take considerable pride and am incredibly grateful for the unwavering
commitment of our executive team, employees, and Board members in continuing
to drive the Group's success.
Conclusion and Outlook
FY2024 saw increased sales, profit, cash generation & a reduction in net
debt. However, what really stands out is the excellent customer engagement and
momentum generated by our innovative solutions, partnerships, and commercial
initiatives. This provides a platform for the Company's future growth.
We empower customers to transform their business performance, fostering deeper
relationships and creating substantial sales opportunities. We enable
customers to do more with less to unlock excellent returns on their
investment.
The Group is on track to deliver strong earnings growth across both divisions
and maximise the opportunities in adjacent new verticals through FY2025 and
beyond.
· Smart Machines leads the industry with its comprehensive product
suite, strengthened by new SmartVend releases. We have a robust pipeline of
opportunities for telemetry, contactless sales and data management. This is
based on the strength of our commercial proposition, footprint extension in
existing long-term contracts with blue-chip customers, and a strong presence
in UK and European markets, where further contract wins reinforce our
progress.
· The partnership with Suresite Group Ltd has bolstered our position in
the fast-growing 'unattended' contactless payments sector. Combining our
hardware and end-to-end solution with Suresite's market-leading acquiring
services is unique. We can now offer a competitive, user-friendly, and highly
secure payments solution that future-proofs any unattended or automated retail
business. It caters to various applications, from charging points and unmanned
car washes to air and vacuum stations.
· Our proactive approach to the MNO 3G switch-off and transition to 4G
LTE will continue to pay dividends. Customers are upgrading to new,
predominantly 5-year contracts to achieve full estate connectivity with the
resulting productivity and sales gains.
· The integration and successful launch of Beverage Metrics has boosted
our UK hospitality growth and is a significant step forward in developing a
profitable footprint in the USA. There is a growing pipeline of new
installations in the UK, and our US operations are on track to deliver good
sales traction as it moves towards breakeven through FY2025.
· Our investments in technology and commercial activity have attracted
strong interest from the unattended retail and fuel forecourt sectors, and
further breakthroughs are expected in FY2025. Investment in cloud
infrastructure and mobile technology will drive revenues in both Smart
Machines and Smart Zones. This will enable scalability, flexibility, and
speed, which are crucial for supporting rapid growth in existing and new
verticals.
The Company maintains a strong contracted recurring revenue, which is higher
quality subscription rather than transaction-based and expects to generate
solid operating cash flow. The Board remains confident in the Group's
long-term growth strategy to achieve earnings growth and expand future
strategic options. While cash management is a priority, the Board's primary
focus is on driving sales growth and seizing exciting growth opportunities.
James Dickson
Chairman
11 June 2024
STRATEGIC REPORT
The year to March 2024 was building on the growth momentum from the previous
year and solidifying our position in the market. We have successfully
navigated both the global semiconductor chip supply problems and 3G switch-off
distractions to make sound progress in a high-inflation economy. We are
pleased to have exceeded the market expectations as at the time of our H1 2024
results in key measures such as revenue, EBITA and EBITDA, cash generation and
net debt.
Our core operations provide connectivity to assets, enabling the collection of
operational data and the production of actionable analytics and insights to
help customers transform their business performance. In a world increasingly
reliant on the Internet of Things and AI (Artificial Intelligence), we are at
the forefront of our industry, not only in providing solutions for today but
developing tools for the future. Vianet's leading-edge contactless payment
capability supports customer sales growth from unattended retail machines and
the business is well placed to strengthen its position in this rapidly
developing area. There are further contactless and data opportunities on
assets in marketplaces such as fuel forecourts, where we saw a breakthrough
with two announced orders totalling c1,800 units.
Our well-invested cloud-based platform now supports much greater flexibility
of data point connection and data connectivity to the extent that it is
possible to connect a range of business-critical third-party devices, enabling
entry to new vertical markets beyond those we currently supply. Through
collaboration with customers and partners, such as Suresite and Vendekin, in
unattended retail, we can identify compelling end-to-end solutions to address
business opportunities. This combination of capabilities will enable us to
drive sustained business growth over the coming years.
Whilst FY2024 has had its global challenges, the Group has made excellent
progress executing key elements of our growth plan, including securing new and
renewed customer contracts over several years, successfully launching
SmartVend and our new market data insights, and establishing 'strategic
go-to-market' partnerships. Our contactless payment and telemetry solutions
have strengthened customer relationships and helped secure new business in
existing new verticals, such as retail & fuel forecourts.
The acquisition of the trade and assets of BMI in May 2023, combined with our
draught beer monitoring solution, established a comprehensive beverage
management platform that is unrivalled in our view. The combined US operations
will require initial investment during FY2025, but the acquisition has
accelerated our hospitality-related development roadmap, enabling profitable
expansion of our footprint in the USA and UK beyond our legacy leased and
tenanted customers.
As outlined in our September interim results, our H1 financial position was
strengthened by a £927,774 tax refund and a new refinancing agreement with
HSBC, enhancing our liquidity and supporting our growth ambitions.
OPERATING REVIEW
Smart Machines - Unattended Retail Division
Investment in sales and marketing, including a new CRM system, resulted in
solid business gains, including 73 new customer contract wins, providing a
healthy pipeline to underpin our growth plans.
Turnover was up 10.3% at £6.56m (FY2023: £5.95m), with operating profit up
22.4% at £2.46m (FY2023: £2.01m).
The number of connected unattended retail machines was 8,900 (FY2023: 6,554).
Post machine rationalisation, the total machines grew 6.5% to 36,093 at the
year-end (FY2023: 33,900).
The division made good progress despite the challenges of the MNO 3G
switch-off, being a short-term distraction to vending operators developing
plans to upgrade machines from 3G to 4G LTE. Whilst this dampened short-term
demand, Vianet proactively supported our customers, and we saw a Q4 FY2024
acceleration of demand and associated new long-term contracts.
The division's recurring revenues grew 2% YOY by £0.09m and now represent c
74% of turnover (FY2023: 80%). As we have reported previously, this measure
will flex dependant on the number of new capex hardware sales compared to
rental-based sales. Regardless, this is a healthy level of recurring revenue
that has grown incrementally year-on-year and will continue to do so.
As has been widely reported in the press, the trend toward non-cash
transactions is growing significantly, with contactless payments giving a
fast, easy, and secure transaction in a world where fewer people carry cash.
Contactless payment solutions drive increased machine utilisation and sales
for our customers, who benefit from the reduced cost of cash handling,
improved cash flow and assured payment.
We believe that there is a continued significant opportunity to drive growth
in the unattended retail market by delivering market-leading analytics and
insight into premium coffee and unattended retail snack & can channels
from new device connections and the rollout of contactless payment capability,
as well as other market verticals such as fuel forecourts where we have seen a
breakthrough during the year.
The market opportunity for the Group is significant, even when limited to the
immediately addressable market of over 300,000 vending machines in the UK
alone. It is estimated that the wider addressable market in mainland Europe is
nearer 3 million devices, and there are 15 million machines worldwide, of
which only c.30% have any form of connectivity.
Vianet's contactless payment solution is supported by leading industry
partners Elavon, Worldpay and NMI and is enhanced by establishing our PCI
Master Merchant service. This allows us to speed up the onboarding of
customers for payment capability and provide a more cost-effective
reconciliation and payment service.
Contactless payment remains a compelling solution in a market where
traditional cash-only payments have long inhibited vending-related usage,
consumption, and customer experience. The evolution and growth of contactless
payment solutions, QR code technology and the insight from our telemetry
firmware will materially change this dynamic and attract more consumers to the
vending vertical.
In summary, the growth prospects for the Smart Machines business are positive,
and there is a clear line of sight toward significant growth in this sector
over the coming 2-3 years.
Smart Zones - Hospitality Division
The Hospitality division's recovery continued strongly. Revenues rose by 5.5%
at £8.62m (FY2023: £8.16m), with profit being up 4.0% at £3.94m (FY2023:
£3.79m).
Sales held strong with 260 (FY2023: 259) new site installations, 3 new
contract wins, and 8 contract renewals as customers' needs and demand for data
and insights grew.
Our UK estate had 454 (FY2023: 603) pub closures and 260 new installations
(FY2023: 259), resulting in a net 194 site reduction (FY2023: 344),
representing 43% less than last year, taking our installed base to c 9,650.
Whilst it is difficult to predict the pace of closure rates and new openings,
with our plans and opportunities, this is now a sustainable leased and
tenanted level to deliver growth.
The trade and asset acquisition from BMI will accelerate our penetration of
the UK hospitality sector beyond our current leased and tenanted footprint
and, more importantly, help unlock the significant marketplace that exists in
hospitality venues in the USA and support commercial traction during FY2025
and beyond.
We see an increased appetite for market data insights building on the customer
engagement of the last two years with the launch of BMI and the Smart Insights
portal. This is particularly relevant for the provision of retail data for
brewers. Through our relationship with the Oxford Partnership, we deliver
ground-breaking insights that support consumer-level decision-making for beer
brands. We expect to show further growth in this exciting area in FY2025.
Adding our compliance service and data insight analytics to the BMI assets is
resulting in a heightened emphasis on improving operational and retail
performance. This strategic approach drives value from pubs, especially those
under private equity ownership, by maximising their return potential.
Vianet Americas Inc ("VAI")
VAI reported losses at pre-amortisation and exceptional items of £387k
(FY2023: £150k loss), impacted by the acquisition costs and integration of
BMI principally due to staff and licence costs.
The acquisition included customers, an established inventory operating
platform, software IP, patents for barcode 3D scanning and advanced technology
for point-of-sale data integration.
The combination of Vianet's SmartDraught draught beer management solution with
BMI's inventory platform provides a comprehensive one-stop drinks management
solution which enables operators to reduce costs, improve productivity and
maximise sales, driving improved profitability across the entire drinks
category. SmartDraught integration with the inventory platform will allow
Vianet to provide brewers with a more cost-effective and competitive brand
monitoring and market insight solution.
Alongside recent investment in our draught beverage monitoring solution, this
acquisition positions Vianet's hospitality operations firmly on the path to
growth in the UK and to establishing a profitable footprint in the USA, where
we benefit from direct access to a considerable number of national retail
chains.
The opportunity for the Company in the US, the world's largest single-operator
market, remains significant, with several conversations and commercial
opportunities at advanced stages. While the combined US operations will
require investment and are expected to be loss-making during FY2025, we
anticipate monthly losses to have narrowed significantly by year-end and
remain committed to establishing a significant US profit centre.
Overall, the Board remains confident that the Smart Zones division will see
growth and deliver enhanced turnover, profit, and cash conversion to the
Group.
R&D Investment
R&D investment is vital to maintaining the Group's market position, and
thus, we have continued to invest in delivering our product roadmap and
operational capabilities.
· SmartVend vending management software service module was released in
Q3 FY2023, and following the finance module in FY2024, customer migrations
should be completed during FY2025.
· SmartDraught hardware and software development, including BMI, has
resulted in enhanced features and reduced the cost of both hardware and
support.
· SmartInsight market insight portal developed and launched.
· Speed and latency of our solutions have improved with incremental
hardware development to adapt existing technology for new verticals.
Further product enhancements, migration of all customers to SmartVend,
leverage of BMI products and services, and securing new market verticals for
telemetry and contactless payments on a cloud-based platform will further
boost our services to customers in existing and new verticals.
The Board believes the investment in data capture technology, our core data
management capability, and management software platforms will continue to
deliver growth and enhance the quality and visibility of our recurring revenue
streams.
Looking forward
Vianet has an exciting outlook with excellent momentum to take advantage of
opportunities in remote asset management, contactless payment and market data
insights both in our core and new markets, and the end-to-end product suite
with BMI is enabling growth in our hospitality operations.
· The launch of the SmartVend management platform in H2 2023 has been
well received and will generate further operational efficiencies for our
customers, with complex migrations expected to be completed in FY2025. This
will further cement Smart Machines as the marketplace's leading end-to-end
solution. The highly motivated sales and commercial team in Smart Machines are
continuing to accelerate the conversion from the significant pipeline of
opportunities from existing and new customers in the c 3 million machine UK
and Europe vending machine market. New business gains resulted in 73 customers
being onboarded, helping us deliver significant new machine sales.
· Smart Zones has a healthy sales pipeline in its core UK leased and
tenanted sector driven primarily by our data capabilities. We expect new
system sales in FY2025 to more than offset further pub closures. The
combination of BMI's inventory platform and Vianet's draught beer monitoring
creates a comprehensive and affordable beverage management solution which will
also unlock opportunities for stock management, enhanced analytics, and
insight. This will result in growth across all UK pub sectors, and we are
already seeing enthusiastic engagement in the USA. Continued Private Equity
pub company ownership is expected to drive greater focus on operating and
retail performance, where we are well placed to deliver value for customers.
· Growing demand for connectivity solutions, data capture, insights,
and payment systems are driving new sales in our core hospitality and
unattended retail sectors. The recent announcement of our partnership with
Suresite, a leading forecourt retail specialist with two core contract wins,
and Vendekin QR payment specialists demonstrates our progress toward
leveraging our existing technology to extend our growth in sectors such as
catering and forecourt solutions where we anticipate good growth.
Whilst we are not immune from the global supply chain challenges or the
inflationary economic backdrop, increasing demand for our highly relevant
products will continue to drive growth, high-quality recurring revenue at 85%,
cash generation and reducing net debt. Ongoing investment in product
development and people is creating real momentum. The Group is confident that
the team, products, and financial capabilities we have will continue
delivering growth for the business.
The Board remains confident that momentum and sales will continue to build as
we execute our long-term strategy and deliver sustainable earnings growth and
profitability.
Finally, our high-calibre, energised team, robust strategy, and strong
earnings visibility provide a natural platform for growth as we expand our IoT
capability and deliver data and insight applications that help our customers
make better decisions about their assets to transform business performance.
James Dickson
Chairman and Chief Executive
FINANCIAL REVIEW
Financial Performance
Group operating profit, pre-exceptional costs, amortisation and share-based
payments was £3.47m (FY2023: £3.11m), c12% year-on-year growth. It is
important to recognise these results are net of post-acquisition BMI people
and licence costs of nearly £0.5m.
Proactive management delivered robust gross margins at c69% (FY2023: 66%),
reflecting the strength of the margin- enhancing growing incremental recurring
revenue footprint.
Revenue & Recurring Revenue
Turnover improved by 7.6% by £1.08m to £15.18m (FY2023: £14.12m), with
Smart Machines continuing its growth curve and best result to date, in
addition to Smart Zones growing revenue and profit.
Group contracted recurring revenue base remains very robust and has been
strengthened by several new 3-5-year contracts, both from new customers and
contract renewals.
Recurring revenue is measured by taking full-year revenue from service packs,
licenses, rentals, and technology upgrades, as per Note 3.
Consolidated recurring revenue across the two divisions remained robust at 85%
(FY2023: 89%) despite recent sales being more capex based, demonstrating the
strength of a growing incremental recurring revenue footprint. Overall actual
recurring revenue grew by 3.3% by £0.42m year on year, and it is set to
continue.
The absolute recurring revenue increased year on year, with the average
recurring revenue per connected device remaining flat at £284.02 (FY2023:
£286.72), impacted only by the revenue mix.
This KPI is measured by taking full year recurring revenue and dividing it by
the total number of connected venues and machines at the year end.
Performance Summary
Profit before tax was £0.78m (FY2023: £0.45m), a material improvement from
the low of the FY2021 pandemic year. For FY2023, we took the opportunity to
seek a tax refund, which was received during FY2024, for historic accrued
R&D losses. FY2024 shows a tax credit of £17k after all tax movements.
The table below shows the performance of the Group.
FY2024 FY2023 Change
Revenue £15.18m £14.12m 7.6%
Operating profit((a)) £3.47m £3.11m 11.6%
Profit before tax £0.78m £0.45m 73.3%
EBITDA((b)) £4.01m £3.62m 10.8%
Basic EPS 2.72p 0.56p 385.7%
Dividend per share 0.75p 0.5p 50.0%
Net debt ((c)) £1.52m £3.37m 54.9%
a) Pre-exceptional items, share-based payments and amortisation
b) Pre-exceptional items and share-based payments
c) Refer to note 26
Exceptionals
FY2024 FY2023
'£000 '£000
People and office rationalisation 65 17
3G Network obsolescence costs 25 -
Corporate Activity and BMI acquisition costs 346 66
Recovered corporate costs (350) -
Bank Refinance costs 59 37
Other items - 2
Total 145 122
Corporate activity and acquisition costs relate to fees paid to corporate
advisors with respect to prospective acquisitions and corporate evaluations.
During the year, the Company recovered costs associated with a previous
historic matter that is the subject of a Confidentiality Agreement
Dividend
As noted in the Chairman's statement, the Board has proposed a final dividend
payment of 0.75p per share (FY2023: 0.50p).
Cash
Net cash generation pre-working capital movements was an inflow of £3.93m
(2023: £4.45m, which includes an accrued tax rebate of c£0.92m. Normalised
cash generation was £3.53m), 113.6% of pre-exceptional EBITA, and 104.2% of
net EBITDA (97.9% of pre-exceptional EBITDA) - very healthy levels of profit
to cash conversion.
Working capital was proactively managed, with a more normalised draw of
£0.26m in the year as expected, which delivered a post-working capital
generation inflow of £3.67m (2023: £2.04m).
We received a c.£922k tax rebate in the year, which meant cash generated
overall post working capital was £4.59m.
The cash generated was principally used to invest in R&D technology spend
(as noted in the Chairman's and Strategic review), new recurring revenue
rental assets, new leased engineer vehicles alongside the impact of the bank
facility refinance and move to HSBC. This resulted in an overall cash inflow
of £2.92m (2023: £1.37m cash outflow) - a strong cash rebound generated from
cash generative results, tax rebate and bank refinance to more flexible
facilities.
At the year-end, the Group had gross cash of £1.82m (2023: £0.07m) and net
debt of £1.52m (2023: £3.37m) - a significant step forward in the cash
strength of the business.
The strong results and cash base on the business, together with the expected
business progress outlined in the Chair and CEO report, serve to underline our
belief in our business strategy and allow for our growth plans.
Divisional performance
Smart Machines
The Smart Machines division consists of telemetry insights and monitoring and
contactless payment predominantly in the unattended vending retail and coffee
sector, as well as ERP and mobile connectivity services.
FY2024 FY2023
Turnover £6.56m £5.95m
Operating profit ((a)) £2.46m £2.01m
Profit before tax £2.40m £1.65m
New Telemetry machines 3,644 2,046
New Contactless machines 5,256 4,508
YE net machine estate c36,083 c33,900
a) Pre-exceptional items, share-based payments and amortisation on a
continuing basis.
Recurring revenues were c 74% of turnover (2023: 80%), reflecting the mix of
capex to recurring revenue, but with an underlying increase in recurring
revenue growth of 2.2%.
Machine unit estate grew c6.4% year on year to an estate size of 36,083, with
unit sales growth of c35.8% pre any customer estate refinement.
Average recurring revenue per machine unit was £133.95 (FY2023: £140.21),
reflecting a growing footprint in larger customers who attract keener pricing,
but absolute recurring revenue is increasing, nevertheless. As stated
previously, this is an evolving growth story, with overall turnover and profit
growth trends being driven by increased penetration of our contactless and
telemetry solutions, and so these measures will flex each year.
Profit per device increased 14.8% to £68.16 (FY2023: £59.38), reflecting the
footprint growth, associated recurring revenue and cost base. As a result,
profit grew to £2.46m from £2.01m last year, representing a growth of
c22.4%.
Smart Zones (Hospitality)
Currently, the Smart Zones division principally consists of the core beer
monitoring and insight business services (including the US).
FY2024 FY2023
Turnover £8.62m £8.16m
Operating profit((a)) £3.94m £3.79m
Profit before tax £2.76m £2.97m
New site installations 260 259
YE net premises((b)) c. 9,638 c. 9,758
a) Pre-exceptional items, share-based payments and amortisation.
b) UK, USA, and Europe.
Turnover mix is shown below, with recurring revenue being 94% (2023: 95%).
Recurring revenue per device has improved to £840.52 (2023: £795.70), an
increase of 5.6%.
Average operating profitability per venue is measured by taking full-year
operating profit before amortisation, share-based payments and exceptional
items and dividing it by the total number of venues at the year-end.
Average adjusted operating profit per venue in the year grew to £408.28
(2023: £388.30), 5.1% year-on-year growth.
The division performed well from robust recurring revenue streams, new venue
sales and a declining rate of pub disposals, coupled with the addition of the
venues and their revenue streams from the USA BMI acquisition, demonstrating
both the customer engagement for the services we provided and the resilience
of the revenue model. The net estate at the year-end was circa 9,640 sites
(UK, USA & Europe) versus last year's c.9,760.
Smart Zones operating profit of £3.94m (2023: £3.79m), c4% growth despite
the increased USA losses post-acquisition.
Taxation
The Group has continued to utilise available tax losses during the year
resulting in no tax being paid (FY2023: £nil). The Group will continue to
utilise the available tax losses carried forward into FY2025. The impact of
tax movements in the year, including the tax rebate for prior year surrendered
losses, contributed to an overall tax credit of £0.02m (FY2023 tax charge
£0.29m), recognising the impact of the tax losses available and being
utilised.
Earnings per share
Basic EPS was 2.72p (2023: 0.56p). This reflects the step forward in results.
Balance sheet and cash flow
The Group balance sheet remains strong, very capable of supporting our growth
position and is further enhanced by the more flexible HSBC bank facility we
now have.
The Group generated operating cash flow pre-working capital of £3.93m (2023:
£3.53m) being 12.46% growth year on year.
Post working capital draw of £0.26m but receipt of a £0.922m tax rebate,
there was a net inflow of £4.59m (2023: £2.04m), working capital movement
being more normalised in the year.
The cash generated was used to continue to invest in the Group's technology
plans, service less onerous borrowings, and acquire rental assets alongside
some vehicle fleet refreshment.
At the year-end, the Group had borrowings of £3.34m (2023: £3.44m) across an
RCF (Revolving Credit Facility), term loan and mortgage, with net debt of
£1.52m (2023: £3.37m).
Our resilient balance sheet and capacity to generate cash provides the Company
with a solid base to build on the results of FY2024 to pursue the significant
growth opportunities that have been identified.
Mark Foster
Chief Financial Officer
Business risk
The Board and senior management review business risk two to three times per
year. The last year has seen an increased inflationary environment. The
Directors had considered the areas of potential risk in assessing the Group's
prospects. Based on their review and having considered a range of factors such
as market conditions, stock supply and premium costs, inflation, financial
plans, and new bank facilities, they believe that the business is of sound
financial footing and has a forward looking sustainable operating future. They
note that the business has achieved financial results ahead of market
expectation as at H1 2024 and prior year, set against overall market
confidence in liquidity and credit.
The Directors consider that material business risks are limited to:
· Inflation remaining for a further period.
· The potential for a cyber security breach where data security is
compromised resulting in unauthorised access to information which is sensitive
and/or proprietary to Vianet or its customers. This threat is in common with
most technology businesses, however both short term and long-term mitigation
plans continue to be in place. Payment Card Industry Data Security Standard
(PCI DSS - Level 1) highest level of compliance has already been achieved to
support the Group's contactless payment solutions and by May 2022 all on
premise servers are in the cloud.
Going Concern
As is required, the Board has considered "Going Concern" and, coupled with a
new more flexible finance facility with HSBC, concluded we have sufficient
cash and reserves see us through the 12 months post the signing date of the
statutory accounts, and beyond with associated committed bank facilities.
Going Concern is covered in more detail in the Report of the Directors.
Key performance indicators
Actual Actual
Target 2024 2023
Percentage of revenue from recurring income streams(1) 80% 85% 88%
Gross Margin(2) 70% 69% 66%
Employee Turnover(3) 2% 1.7% 3.8%
Notes to KPIs
(1) Percentage of revenue from recurring income streams = recurring income
streams as a percentage of all income streams. Group trading companies aim to
increase shareholder value through growth in revenue, linked to profitability
(see Gross Margin below). Source data is taken from management information.
The recurring contractual nature of the Company's income stream has led to
continued improvement in performance versus target. The achievement of this
target depends on the mix of new hardware sales versus on going recurring
revenue.
(2) Gross Margin = Gross profit as a percentage of revenue. Group trading
companies aim to generate sufficient profit for both distribution to
shareholders and re-investment in the Company, as measured by Gross Margin.
(3) Employee Turnover = Gross trading companies aim to be seen as a good,
attractive employer with positive values and career prospects, measured
against internal People and Development reports. In addition to normal
employee turnover, the figure also includes employees leaving as a result of
business rationalisation activity.
Consolidated Statement of Comprehensive Income for the year ended 31 March
2024
Total Before Exceptional 2023 Exceptional 2023 Total
Before Exceptional 2024 £000 £000 2023
2024 Exceptional 2024 £000 £000
£000 £000
Note
Continuing operations
Revenue 15,176 - 15,176 14,115 - 14,115
Cost of sales (4,745) - (4,745) (4,737) - (4,737)
Gross profit 10,431 - 10,431 9,378 - 9,378
Administration and other operating expenses
(6,962) (145) (7,107) (6,273) (122) (6,395)
Operating profit pre amortisation and share based payments
3,469 (145) 3,324 3,105 (122) 2,983
Intangible asset amortisation (2,164) - (2,164) (2,254) - (2,254)
Share based payments (100) - (100) (71) - (71)
Total administrative expenses (9,226) (145) (9,371) (8,598) (122) (8,720)
Operating Profit 1,205 (145) 1,060 780 (122) 658
Net finance costs (276) - (276) (206) - (206)
Profit before tax 929 (145) 784 574 (122) 452
Income tax credit/(charge) 1
17 - 17 (291) - (291)
Profit and other comprehensive income for the year
946 (145) 801 283 (122) 161
Earnings per share
Total
- Basic 3 2.72p 0.56p
- Diluted 3 2.69p 0.56p
Consolidated Balance Sheet at 31 March 2024
2024 2023
£000 £000
Assets
Non-current assets
Goodwill 17,856 17,856
Other intangible assets 5,884 5,425
Property, plant and equipment 3,327 3,370
Total non-current assets 27,067 26,651
Current assets
Inventories 2,185 2,275
Trade and other receivables 3,873 3,781
Cash and cash equivalents 1,822 69
7,880 6,125
Total assets 34,947 32,776
Equity and liabilities
Liabilities
Current liabilities
Trade and other payables 3,061 2,348
Leases 123 70
Borrowings 177 1,925
3,361 4,343
Non-current liabilities
Leases 157 122
Borrowings 3,159 1,517
Deferred tax liability 810 827
Contingent consideration 268 -
4,394 2,466
Equity attributable to owners of the parent
Share capital 2,940 2,880
Share premium account 11,748 11,711
Capital redemption reserve 32 15
Share based payment reserve 583 563
Merger reserve 818 310
Retained profit 11,071 10,488
Total equity 27,192 25,967
Total equity and liabilities 34,947 32,776
Consolidated Statement of Changes in Equity for the year ended 31 March 2024
Share capital Share premium Share Retained profit Total
account based
payment Merger Capital Redemption Reserve
reserve reserve
At 1 April 2022 2,880 11,711 499 310 15 10,320 25,735
Share based payments - - 71 - - - 71
Share option forfeitures - - (7) - - 7 -
Transactions with owners
- - 64 - - 7 71
Profit and total comprehensive income for the year
- - - - 161 161
Total comprehensive income less owners transactions - - 64 - - 168 232
At 31 March 2023 2,880 11,711 563 310 15 10,488 25,967
At 1 April 2023 2,880 11,711 563 310 15 10,488 25,967
Share based payments - - 100 - - - 100
Share option forfeitures - - (80) - - 80 -
Dividends - - - - - (148) (148)
Share capital issued 77 37 - 508 - - 622
Shares cancelled (17) 17 (150) (150)
Transactions with owners 60 37 20 508 17 (218) 424
Profit and total comprehensive income for the year
- - - - - 801 801
Total comprehensive income less owners transactions 60 37 20 508 17 583 1,225
At 31 March 2024 2,940 11,748 583 818 32 11,071 27,192
Consolidated Cash Flow Statement for the year ended 31 March 2024
Note 2024 2023
£000 £000
Cash flows from operating activities
Profit for the year 801 161
Adjustments for
Net interest payable 276 206
Income tax (credit)/charge (17) 291
Amortisation of intangible assets 2,164 2,254
Depreciation 544 519
Loss on impairment of property, plant and equipment and businesses 61 24
Tax receivable - 922
Share based payments 100 71
Operating cash flows before changes in working capital and provisions 3,929 4,448
Change in inventories 91 (702)
Change in receivables (996) (1,091)
Change in payables 646 (618)
(259) (2,411)
Cash generated from operations 3,670 2,037
Income Taxes refunded 922 -
Net cash generated from operating activities 4,592 2,037
Cash flows from investing activities
Purchases of property, plant and equipment (577) (651)
Capitalisation of development costs (1,724) (1,699)
Purchases of intangible assets (8) (4)
Proceeds from disposal of property, plant and equipment - -
Net cash used in investing activities (2,309) (2,354)
Cash flows from financing activities
Net interest payable (276) (206)
Repayment of leases (84) (65)
Issue of share capital 44 -
New leases 190 231
Cancellation of shares (150) -
Payment of contingent consideration - (16)
Dividends paid (148) -
New borrowings 3,440 -
Repayments of borrowings (2,378) (992)
Net cash received/(used) in financing activities 638 (1,048)
Net increase/(decrease) in cash and cash equivalents 2,921 (1,365)
Cash and cash equivalents at beginning of year (1,099) 266
Cash and cash equivalents at end of year 1,822 (1,099)
Notes to the financial statements
1. Taxation
Analysis of tax (credit)/charge in year
2024 2023
£000 £000
Current tax credit
- Amounts in respect of the current year - -
- Amounts in respect of prior periods - (922)
- (922)
Deferred tax (credit)/ charge:
- Amounts in respect of the current year (82) 1,213
- Amounts in respect of prior periods 65 -
Income tax (credit)/charge (17) 291
Reconciliation of effective tax rate
The tax for the 2024 year is higher (2023: was lower) than the standard rate
of corporation tax in the UK (2024: 25% and 2023: 19%). The differences are
explained below:
2024 2023
£000 £000
Profit before taxation 784 452
- Continuing operations
Profit before taxation multiplied by rate of corporation tax in the UK of 25% 196 86
(2023: 19%)
Effects of:
Other expenses not deductible for tax purposes 26 (17)
Non-taxable income (377) (44)
Gains/(losses) not provided for 380 (355)
Adjustments for prior years 65 922
Amortisation of intangible assets 512 427
Research and development (819) (728)
Total tax (credit)/charge (17) 291
2. Ordinary dividends
2024 2023
£000 £000
Final dividend for the year ended 31 March 2023 (year ended 31 March 2022: 148 -
nil)
Interim dividend paid in respect of the year of nil (2023: nil) - -
Amounts recognised as distributions to equity holders 148 -
In addition, the directors are proposing a final dividend in respect of the
year ended 31 March 2024 of 0.75p per share payable on 2 August 2024 to
shareholders on the register on 21 June 2024. Total dividend payable 0.75p
(2023: 0.5p).
3. Earnings per share
Earnings per share for the year ended 31 March 2024 was 2.72p (2023: 0.56p).
Basic earnings per share are calculated by dividing the earnings attributable
to ordinary shareholders being a profit of £801k (2023: £161k) by the
weighted average number of ordinary shares outstanding during the year.
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.
2024 2023
Earnings Basic earnings per share Diluted earnings per share Earnings Basic earnings per share Diluted earnings per share
£000 £000
Post-tax profit attributable to equity shareholders 801 2.72p 2.69p 161 0.56p 0.56p
2024 2023
Number Number
Weighted average number of ordinary 29,493,637 28,808,914
shares
Dilutive effect of share options 250,533 66,673
Diluted weighted average number of ordinary shares 29,744,170 28,875,587
4. Exceptional items
2024 2023
£000 £000
Corporate activity and BMI acquisition costs 346 66
Recovered corporate costs (350) -
Staff transitional costs 65 17
3G Project (4G swap) 25 -
Bank refinance costs 59 37
Other - 2
145 122
Corporate activity and acquisition costs relate to fees paid to corporate
advisors in respect of prospective acquisitions and corporate evaluations.
During the year the company recovered costs associated with a previous
historic matter that is the subject of a Confidentiality Agreement.
Staff transitional costs relate to the transition of people and management to
ensure we have to succession and calibre of people on board to deliver the
strategic aims and aspirations of the Group.
5. Basis of preparation
In accordance with the Companies Act 2006, this preliminary report based on
the unaudited financial statements has been prepared and approved by the
Directors in accordance with UK adopted international accounting standards,
and in accordance with the AIM rules and is not therefore in full compliance
with IFRS. The company prepares its parent company financial statements in
accordance with FRS 101.
The financial information for the year ended 31 March 2023 does not constitute
statutory accounts as defined in section 434 of the Companies Act 2006. A copy
of the statutory accounts for that year has been delivered to the Registrar of
Companies. The independent auditors' report on the full financial statements
for the year ended 31 March 2023 was unqualified and did not contain an
emphasis of matter paragraph or any statement under section 498 of the
Companies Act 2006. This preliminary announcement does not constitute the
Group's full financial statements for the year ended 31 March 2024.
The Group's full financial statements will be approved by the Board of
Directors and reported on by the auditors on 20 June 2024. Accordingly, the
financial information for the year ended 31 March 2024 is presented unaudited
in the preliminary announcement.
The consolidated financial statements have been prepared on an historical cost
basis, except for derivative financial instruments that have been measured at
fair value. The consolidated financial statements are presented in pounds
sterling and all values are rounded to the nearest hundred thousand, expressed
in millions to one decimal point, except when otherwise indicated.
The Directors have prepared this financial information on the fundamental
assumption that the Group is a going concern and will continue to trade for at
least 12 months following the date of approval of the financial information.
In determining whether the Group's accounts should be prepared on a going
concern basis the Directors have considered the factors likely to affect
future performance.
6. Notes supporting statement of cashflows
Borrowings Borrowings Total
due within due after £000
one year one year
£000 £000
Net debt as 1 April 2022 (993) (2,273) (3,266)
Cash flows 236 756 992
Non cash-flows
- Interest accruing in the year - - -
Net debt at 31 March 2023 (757) * (1,517) (2,274)
Cash flows 580 (1,642) (1,062)
Non cash-flows
- Interest accruing in the year - - -
Net debt at 31 March 2024 (177) (3,159) (3,336)
* The net debt as at 31 March 2023 for borrowing due within one year of £757k
as stated here, does not agree to the Balance Sheet amount of £1,925k, as
this does not include the bank overdraft of £1,168k as at 31 March 2023.
Cash and cash equivalents for the purpose of the statement of cash flows
comprises
2024 2023
£000 £000
Cash at bank available on 1,822 69
demand
Cash on hand - -
Adjusted net cash generation 1,822 69
Non- cash transactions from financing activities are shown in the
reconciliation of liabilities from financing transactions in Note 6.
7. Alternative Performance Measures
In the reporting of financial information, the Directors have adopted the APMs
"Adjusted operating (loss)/profit", "Adjusted operating cash generation", and
"Adjusted net cash generation", (APMs were previously termed 'Non-GAAP
measures'), which is not defined or specified under International Financial
Reporting Standards (IFRS).
These measures are not defined by IFRS and therefore may not be directly
comparable with other companies' APMS, including those in the Group's
industry. APMs should be considered in addition to, and are not intended to be
a substitute for, or superior to, IFRS measurements.
Purpose
The Directors believe that these APMs assist in providing additional useful
information on the underlying trends, performance and position of the Group.
These APMs are also used to enhance the comparability of information between
reporting periods and business units, by adjusting for non-recurring or
uncontrollable factors which affect IFRS measures, to aid the user in
understanding the Group's performance.
Consequently, APMs are used by the Directors and management for performance
analysis, planning, reporting and incentive setting purposes and this remains
consistent with the prior year. Adjusted APMs are used by the Group in order
to understand underlying performance and exclude items which distort
compatibility, as well as being consistent with public broker forecasts and
measures.
2024 2023
£000 £000
Operating profit (IFRS 1,060 658
measure)
Add back:
Amortisation charge 2,164 2,254
Share based payment charge 100 71
Exceptional items charge 145 122
Adjusted operating profit 3,469 3,105
8. Asset Acquisition
On 12 May 2023, the Group acquired the trade and assets of Beverage Metrics
Inc (BMI) from Identec Inc, a company based in the USA through Vianet
Americas. The purchase price was settled for £577,500 in shares and £332,221
in contingent consideration.
Details of the acquisition are set out below:
Carrying values pre acquisition IFRS 3 Concentration Test Adjustment Fair Value
£000 £000 £000
Intangible assets
- Software - 891 891
Property, plant and equipment 3 - 3
Trade and other receivables 18 - 18
Trade and other payables (3) - (3)
Taxation
- Current - - -
- Deferred - - -
Cash and cash equivalents - - -
Net assets acquired 18 891 909
Goodwill -
Consideration 909
Consideration satisfied by:
Shares 577
Contingent Consideration 332
909
All intangible assets were recognised at their respective fair values.
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