Vianet Group plc
Consolidated Annual Report & Accounts
Year ended 31 March 2013
One Surtees Way, Surtees Business Park, Stockton on Tees, TS18 3HR
www.vianetplc.com
The market leading provider of real time monitoring systems and
data management services for the UK leisure and forecourt sectors
HigHligHts
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•
•
•
•
•
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Revenue for the year of £21.09 million (2012: £22.98 million)
Recurring revenues remained steady at 71% (2012: 70%)
Gross margins stable at 51% (2012: 53%)
Operating profit before amortisation of intangibles, share option and exceptional costs of £3.3 million (2012:
£3.9 million)
Profit before tax of £1.8 million (2012: £2.3 million)
Final dividend of 4.00 pence per share giving a full year total of 5.70 pence per share (2012: 5.67 pence per
share)
864 new installations, of which 828 were higher value iDraughtTM
Vianet Fuel Solutions (“VFS”) reduced losses by £0.6 million
Group administrative costs on a pre-exceptional basis successfully reduced by £0.8 million
since year end
•
•
•
Sale of Universe Group plc shareholding raising £0.6 million for a gain on investment of £90,000
Strategic partnership established with BigOil, the Petrol Retailer Association’s vehicle, providing VFS with
direct access to members and prospects with approximately 3,500 independent forecourts
Commenced activity on Gulf contract for VFS forecourt services
Vianet Group plc
i
contents
section
Company information
Chairman’s statement
Financial Review
Report of the Directors
Corporate Governance Statement
Report of the Independent Auditor
Consolidated Statement of Comprehensive Income
Consolidated Balance Sheet
Consolidated Statement of Changes in Equity
Consolidated Cashflow Statement
Notes to the Consolidated Financial Statements
Report of the Independent Auditor (Parent Company)
Company Balance Sheet
Notes to the Company Balance Sheet
Page
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26-54
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58-64
ii
Vianet Group plc
comPany information
directors
S W Darling (Chief Executive Officer)
J W Dickson (Executive Chairman)
M H Foster (Finance Director)
S C Gilliland (Non-Executive Director)
J H Newman (Non-Executive Chairman) (resigned 31 March 2013)
D J Noble (Director) (resigned 5 July 2012)
C Williams (Non-Executive Director) (appointed 20 May 2013)
secretary
M H Foster
registered office
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Surtees Business Park
Stockton on Tees
TS18 3HR
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auditors
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solicitors
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Vianet Group plc
1
cHairman’s statement
As Stewart Darling was only appointed Chief Executive
at the start of the current financial year the Board felt
it sensible that for this preliminary report alone, the
Chief Executive’s statement will be consolidated with
this, my first Chairman’s statement.
During the period under review, good operational
progress has been made in developing the Group’s
key businesses across various markets, including
the national launch of iDraughtTM USA. A combination
of increased investment in the US, delays to new
contracts and pressure in the leisure sector had a
detrimental impact on financial performance.
The Board is encouraged by recent contract wins in
the UK and the improved outlook for 2014. However,
the Board is conscious that uncertainty around
the Government’s proposed Statutory Code
for
Pub Companies may lead to delays in new orders
elsewhere. The actions taken to reduce costs,
particularly in the Fuel Solutions business, are also
now coming through to operating profits and further
cost reduction initiatives are being implemented
across the Group. It is against this backdrop and the
continued strong cash generation that the Board is
maintaining the dividend.
results
Full year pre-exceptional operating profit, before
amortisation and share based payments, of £3.3
million (2012: £3.9 million) was broadly in line with
the revised market expectations following February’s
trading update.
Revenue for the year of £21.09 million (2012: £22.98
million) was down 8.2%, in the main due to exiting
lower margin work in the Leisure and Fuel Solutions
divisions, and reduced new installations in the Vending
segment. Largely as a result of exiting lower margin
compliance cellar inspection activity in the period the
revenue in the Leisure division was down 7% at £16.27
million (2012: £17.53 million).
The level of contractual and recurring revenues
remains consistent at just over 70% of Group revenue
and the recent contract extensions, both in the Group’s
beer monitoring and vending sectors are expected to
ensure that this level of contractual business remains
steady in the current financial year.
The Group’s overall operating gross margins
remained stable at 51% (2012: 53%) and it is pleasing
to note that gross margins, net of direct core product
and engineering costs, remain at over 60% (2012:
60%) in the Leisure division which was achieved
through improved product mix and the reduction in
the cost base.
Costs associated with the decision taken in the Fuel
Solutions division to exit lower margin Liquefied
Petroleum Gas (“LPG”) work and the re-launch of
its ClearView wet stock management solutions,
resulted in a reduction in this division’s margins to
21% (2012: 22%).
Group profit before taxation amounted to £1.82 million
compared to £2.34 million in 2012. Basic earnings per
share post-exceptional costs decreased to 7.12 pence
from 8.00 pence in 2012.
dividend
Despite the trading performance in the year not
matching original expectations, the Board remains
confident of the longer term prospects for the Group
and is therefore maintaining its progressive dividend
policy. The Board is recommending the payment of a
final dividend of 4.00 pence per share in respect of the
year ended 31 March 2013.
2
Vianet Group plc
Together with the interim dividend of 1.70 pence
per share paid in January 2013, this makes a total
dividend of 5.70 pence per share, slightly ahead of the
5.67 pence per share paid in respect of the year ended
31 March 2012.
Subject to approval from shareholders at the Annual
General Meeting, to be held on 16 July 2013, the final
dividend will be paid on 2 August 2013 to shareholders
on the register as at 21 June 2013.
Board, senior management and corporate
governance
The culture and values of the Group help to ensure
that everyone at Vianet collectively and individually
always ‘seeks to do the right thing’ and this tone is set
from the Board down through the extended leadership
team to all staff using the Group’s development and
review frameworks.
Living and breathing ‘doing the right thing’ not only
underpins Vianet’s ethos and corporate governance,
but also the reputation for integrity and transparency
which is a key component of the Group’s customer
solutions.
On 15 January 2013 the Group announced a series
of Board changes which help position the Group for
the next stage of its development across key markets,
whilst further reducing the business dependence on
myself, and allowing scope for increased focus on
proactive investor communication.
At the end of the year James Newman retired as
Non-Executive Chairman and the Board would like
to thank him for his contribution to the business over
the past seven years. Having led Vianet as its CEO
since 2003, I have in turn moved to the position of
Executive Chairman. Stewart Darling, who has held
the role of Chief Operating Officer since 2009, with
primary responsibility for the core beer monitoring
and vending operations, became CEO.
The transfer of CEO responsibilities to Stewart is going
smoothly and will be completed with the handover
of executive responsibilities for Vianet Americas
towards the end of June, and Fuel Solutions later in
the calendar year.
The Group recently announced the appointment
of Chris Williams as a new independent Non-
Executive Director. Chris will enhance the knowledge
and expertise of the Board as Vianet develops its
businesses across UK and international markets.
During the year it is the Board’s intention to appoint
a further independent Non-Executive Director with a
technology background to complement the business
needs, whilst also improving the balance of the Board.
Following Stewart’s promotion, Steve Alton who
joined the Group from BT in 2011, has been promoted
to the role of Managing Director of Vianet Limited with
responsibility for the Leisure division comprising core
beer, vending and technology activities.
Responding to the increasing demands of dealing
with international blue chip customers, the Group
continues
to attract and develop high calibre
individuals to ensure that the organisational structure
is populated with leaders who can take the business
forward, particularly in sales and delivery execution.
This series of Board and senior management changes
reflects the transformation of Vianet and the strategic
changes that have been implemented to enable Vianet
to become a growing provider of data management
services across a number of sectors.
I would like to thank all of my Board colleagues,
senior management and staff for their continued
efforts and commitment on behalf of the Group over
the past year.
strategy and Business development
The Group’s strategic intent remains to extend its
data collection, management and support services
presence in its selected sectors where there is
considerable technical and operational overlap, and
to respond to new opportunities as they arise.
There is absolute focus on working in partnership
with key customers to introduce product sets which
will provide the customer with a compelling and
sustainable return on investment and, in turn, cement
a profitable long term trading relationship with Vianet.
Utilising the solid financial platform provided by its
core beer monitoring business, the Group has made
a series of prudent investments in acquiring and
developing its product set in the following areas:
•
•
Next generation beer monitoring technology for
the wider licensed trade;
Battle tested, cutting edge data capture and
machine to machine transmission technology
with potential for application across multiple
sectors;
Vianet Group plc
3
chairman’s statement (continued)
•
•
Market-leading end-to-end vending management
solutions; and
A unique ‘one stop shop’ forecourt product suite
and distribution for fuel asset management
solutions.
The Group provides solutions for complex customer
demands and has established an
impressive
reputation for its robust and innovative technology,
as well as the quality of its support to blue chip
customers who demand continuous world class
service and data accuracy, and the capacity to provide
this level of service to smaller companies as well.
Having transformed the shape of the business,
the management and staff are now focussed on
successfully exploiting the significant organic growth
opportunities which
the Board anticipates will
transform the earnings of the Group.
leisure solutions
The Leisure Solutions division achieved an operating
profit pre-amortisation and exceptional costs of £4.68
million. Amortisation, exceptional and financial costs
totalled £0.27 million.
core Beer monitoring
iDraughtTM,
The re-launch of
the Group’s bar
management solution, to drive profit and quality
and the introduction of the Group’s Nucleus Smart
Tills™ EPOS system were received very positively by
customers, many of whom have been carrying out
extensive evaluations of iDraughtTM on new sites and
as a replacement for standard legacy Brulines Beer
Monitoring systems.
Following a strong period of trading in H1, during
which the Group secured contract renewals with
several high profile customers, Vianet’s core beer
monitoring business traded less strongly in H2. This
was due to delays to several anticipated iDraughtTM
installation programmes and a reduced contribution
from traditional beer monitoring solutions as a result
of bottom end pub disposals and the uncertainty
that accompanies the disposal process. In addition,
there have been less favourable rates at the point
of contract renewals as a result of customers
transferring some non-core, lower margin support
services back
in-house. Whilst there has been
increased iDraughtTM penetration and good progress
in gaining new contracts to monitor gaming machines
in the pub sector, this has not been enough to offset
these issues.
overall
installation
Nevertheless,
progress
was encouraging despite some initial delays to
programmes. In total there were 864 new beer
monitoring installations, of which 828 were higher
value iDraughtTM. iDraughtTM is gaining penetration
across the on-premise draught beer market and
now accounts for almost fifteen per cent of Leisure
Solutions’ beer monitoring installation base.
Several major contract extensions, including the
introduction of iDraughtTM, have been secured with
customers such as Enterprise Inns, Punch Taverns,
and Marstons. Nucleus Smart TillsTM has gained good
sales traction with almost 500 installations.
The Board remains confident that the outlook for
further growth in the higher value iDraughtTM product
and service remains promising with many pub
retailers conducting extensive evaluations. Overall,
the Board does not expect significant further erosion
in the number of the Group’s installations, currently
at approximately 17,500 sites.
government’s proposed statutory code for Pub
companies
On 22 April 2013 the Secretary of State for Business,
Vince Cable, released a draft consultation document
(the “Consultation Document”) for a Statutory Code for
Pub Companies regarding their dealing with tenants.
Contained within the Consultation Document are
provisions for controlling the application of beer flow
monitoring for managing compliance with contracted
beer purchase obligations.
The Group believes these proposals are unjust and
that they are not based upon fact or any substantiated
evidence. As such the Board intends to formally
respond to the Secretary of State to reject the
proposals regarding beer flow monitoring and to
support the continued legal use of beer monitoring
products and services.
The reason given by the Consultation Document
for proposing a limitation on the use of beer
flow monitoring product is that it is considered
‘controversial’ by certain parties who have made
unproven accusations against our technology.
Vianet’s service has been subject to legal scrutiny by
the court of law on many occasions and has never
been shown to be unfit for purpose and accordingly as
a Board, we are extremely disappointed and frustrated
by the proposals contained within the Consultation
Document.
4
Vianet Group plc
Supported by strong legal advice from leading counsel
we will be responding to the Consultation Document in
order to robustly defend the Group’s beer monitoring
product. We will respond by 14 June 2013 when the
Consultation period is due to end. Although, at this
stage, the Consultation Document only contains
proposals the Board believes that if these proposals
were to be implemented into legislation they would
likely have a detrimental effect on the Company’s
business and therefore the Board is prepared to
challenge these proposals as forcibly as necessary
to prevent them being enacted into legislation. It is
somewhat ironic that the measures proposed by the
government will reduce transparency in the landlord
– lessee relationship, increase the risk to HMRC tax
revenues, and undermine beer quality for drinkers.
The Board looks forward to the Government exercising
proper due diligence and reviewing the facts and
evidence in this consultation and anticipates that if it
does so, the proposals will be amended satisfactorily.
Vianet americas inc.
As announced in the Interim Results in December
2012, the Group has identified an opportunity to
accelerate iDraughtTM investment in the USA and
extend the Vianet Americas Inc. footprint beyond the
Colorado on-premise beer market.
Vianet Americas’ roll out delivery capability has
advanced significantly, having established a USA
team and formed a strategic alliance with Micro Matic
USA for nationwide iDraughtTM installation, service
and sales support.
Following several months of set-up activity, the first
phase of a full USA launch commenced in February
with initial installations on both full commercial and
pilot contracts across ten states with several national
USA retail chains, who between them control over
2,000 bars.
The initial results have been encouraging and the
second phase of the launch took place at the National
Restaurant Association convention in Chicago on 16-
19 May 2013.
A loss of over £0.3 million was recorded compared to
the small profit originally expected with the Colorado-
only business, reflecting the increased start-up costs
of the enlarged opportunity. By March 2014, the Group
will have a good understanding of the likely scale
of the opportunity and be in a position confirm our
intentions for the USA.
Vending solutions
The Vending Telemetry business continued to trade at
around breakeven in H2, although the breakthrough in
revenue and profitability from an expected significant
order will now not materialise until late 2013/14 at the
earliest. Progress in finalising this contract has been
held back further by merger and acquisition activity in
this customer’s sector.
Performance of the Group’s Touch & PayTM cashless
and contactless payment solutions, which were used
successfully by Coca Cola and VISA at London 2012
Olympic Games, has also been constrained by delays
in gaining extension approvals.
Operating loss was £0.05 million pre-amortisation,
share based payments and exceptional costs, with
amortisation and exceptional costs being £0.20
million. Further initiatives reduced costs during the
year to the point where the business will trade at
breakeven whilst we await the delivery of the new
contracts.
for vending
Vending Solutions now offers the full end-to-end
product set
telemetry, comprising
Touch & Pay™ contactless payment solution, Vitel™
data capture and
telemetry and
VendExpert™ management software. These products
allow customers to achieve significant cost savings
and sales uplift.
transmission
Contactless payment is extremely well-suited to
the vending sector as it allows customers to pay for
low-value items by presenting their bank card or
near field communication (“NFC”) enabled mobile
phone to a special reader fitted on the front of the
vending machine, helping to reduce the time it takes
to pay. The growth of contactless-enabled cards
in circulation in the UK has been substantial, and
the figure of 32 million contactless-enabled cards
currently in circulation (source: UK Card Authority).
The Group’s technology is at the forefront of these
developments as we work with large brand owners
and vending operators in our aim to become the clear
market leader in the provision of telemetry solutions
for the global vending market.
Vianet fuel solutions (“Vfs”)
The Group’s Fuel Solutions division continues to
benefit from a reduced cost base and some new
business gains. Whilst H2 was loss-making, arising
from poor trading in December/January and delays to
two significant contracts which have now commenced
Vianet Group plc
5
chairman’s statement (continued)
in April, the business did trade at just over breakeven
in Q4.
VFS losses were £0.35 million for the full year (as well
as £0.35 million exceptional costs), and whilst this
is almost £0.6 million better than the previous year,
the loss was higher than anticipated primarily due to
timing issues relating to new contract activity, which
will now be carried forward and benefit the current
year.
VFS also exited the non-contributing LPG market
which allowed further cost rationalisation. The
Board is pleased to report that VFS is gaining new
business as the market’s only end-to-end solution for
forecourt operators. The start to the current year with
the improved cost base indicates that VFS will trade
positively in 2014.
VFS continues to benefit from its five year contract
extension with Morrisons Supermarkets plc
(“Morrisons”) to provide Facilities and Compliance
Management solutions for its estate of over 300 petrol
forecourts and 12 distribution centre fuel depots as
Morrisons grows its fuel and convenience footprint.
Fuel Solutions now has the only fully integrated
‘one-stop-shop’ for leading fuel asset management
products and services. This has been a key facilitator in
securing the Group’s long term strategic partnership
with BigOil, the Petrol Retailer Association’s vehicle,
providing VFS with direct access to members
and prospects who control approximately 3,500
independent forecourts.
VFS now hosts the revamped Big Oil portal which
has been enhanced with our class leading suite of
wet stock analysis tools and the creation of a Margin
Management toolbox linking daily Platt’s prices to
the real-time recording of sales, inventory levels
and deliveries to create a suite of web-based tools
including real time profit reporting.
The initial response has been very positive and
positions VFS well to build a robust and exclusive
distribution of its products to the independent sector
Vianet technology solutions
Technology Solutions supports and manages the
R&D requirement for the Leisure and Fuel divisions
together with Group
infrastructure. Additionally,
utilising the Group’s data management expertise is
also succeeding in taking its leading data capture and
transmission technology to newer markets. Securing
relationships with Costa Coffee and Autotime are
two such examples of the Group’s potential to deliver
solutions to new markets.
summary and outlook
Within the Leisure division, the re-launch of iDraught™
has been successful with increased penetration
achieved within the on-premise draught beer market.
Further gains are expected in the current year.
The Group’s Vending Solutions business has made
excellent progress in developing significant new
sales opportunities with major global customers, and
although frustrated by delays we remain confident
that deeper relationships will develop into significant
traction and contract wins.
The Fuel Solutions division has completed its creation
of a ‘one-stop’ solution for the industry and, having cut
costs during the last year, is expected to contribute
positively to Group profits in the current year.
Having successfully completed a significant period
of development and change the Group has moved
successfully beyond being a one product company
operating in the tenanted pub market, now having
the competencies and technology base to benefit
from the continued growth in data services globally.
The Board looks forward to the future with confidence
as all of the divisions within the Group move towards
achieving growth and demonstrate the success of our
diversification strategy:
•
•
•
The core Leisure Solutions business already
provides visibility of strong earnings and
is expected to deliver organic growth as it
continues to gain traction for iDraughtTM,
Nucleus Smart Tills™ and Machine Insite across
the wider licensed on trade market. Although
in the early stages the recent national launch
of the iDraughtTM in the US has the potential to
significantly enhance the medium term growth
prospects.
The Vending Solutions business is now trading
at break even and is expected to move into
strong profit as and when new contracts are
realised.
Fuel Solutions is now trading close to breakeven
and the current sales pipeline should take the
division into profit this year.
6
Vianet Group plc
•
The Technology Solutions team has identified
horizontal market sales opportunities which
should allow it to move towards being cost
neutral in the medium term.
The Group has transformed the shape of the business
over the past few years and whilst there remain short
term challenges and economic conditions remain
challenging, the markets, products, customers and
people are now in place to deliver earnings growth for
the Group.
James dickson
executive chairman
11 June 2013
Vianet Group plc
7
financial reVieW
group trading result
Following the transition from the previous financial
year into the distinct Leisure (consisting of core
beer, Vending and Technology segments) and Fuel
divisions, the integration process continued during
the current year, with an on-going cost rationalisation
programme which will continue
into the new
financial year.
The general economic climate is well documented,
continues to be very challenging and has impacted
both the pub and leisure marketplaces, as well as
the fuel sector. Despite this background there has
been some good underlying progress in all segments
which provides a good platform moving into the new
financial year.
Total revenue for the year was £21.09 million (2012:
£22.98 million). Operating profit (before amortisation
of intangible assets, share based payments, and
exceptional items) amounted to £3.3 million (2012: £3.9
million). The results are shown after absorbing much
reduced losses in the Fuel Division, Vianet America’s
new company set up and further investment as well
as some Leisure division customers taking some
periphery support functions in house. The combined
impact of these factors is estimated at approximately
£1.3 million.
Blended recurring revenues for the Group are slightly
ahead of last year at 71% (2012: 70%), with continued
divisional results across all Leisure at 80%, core beer
remaining robust at 82% and Fuel Solutions improved
to over 40% from near 20% last year.
Exceptional costs of £0.7 million (2012: net £0.5 million)
principally relate to the cost of staff rationalisation,
fuel product rationalisation and associated exit costs
and US set up costs, resulting in Group operating
profit (pre intangible asset amortisation and share
based payments) of £2.5 million (2012: £3.4 million).
divisional performance
The Leisure division achieved revenue of £16.27 million
(2012: £17.53 million) and achieved gross margins
pre the cost of data management of 60%, in line with
last year. The core business delivered 864 (2012:
538) installations of which 828 (2012: 487) were the
higher value iDraughtTM systems, as well as 36 beer
monitoring systems. The active installation base after
pub company disposals, change of use and uplifted
systems
(2012: 18,500)
systems. Additionally, 483 Nucleus Smart Tills were
added (2012: 300). The pub market has continued to
face well documented challenges which will continue
but the further growth in iDraughtTM penetration in
the UK and move into the US enables the Board to
be confident about iDraughtTM growth, which currently
accounts for around 14% of the installation base.
is approximately 17,600
Vending made some solid progress in terms of product
development and cost rationalisation offsetting the
slower than desired growth in unit sales and revenue.
The Chairman’s report refers to the impact of major
delayed contracts, while other customers have
rationalised their estates in light of the economic
backdrop. As a result, Vending delivered 475 (2012:
2,576) additional units in the year, the installation
base now being near 10,000 configured units in the
field. Despite the lower number of installations, the
recurring revenue base of over 85% this year coupled
with lower cost base allowed a near break-even result
for Vending. The market opportunities that we have
identified and the products that the Group offers
position Vianet well to achieve growth in this space
and the Board’s confidence in attaining the aspirations
in this field is unabated.
8
Vianet Group plc
The Technology division continues to support the
Leisure and Fuel divisions with its Research and
Development,
infrastructure
requirements of the Group as well as having its own
income streams.
in addition
the
to
The final part of the Leisure division is the Machine
Insite brand which contributed approximately £0.2
million (2012: £0.1 million) this year and growth is
further expected in the new financial year.
The Fuel Solutions division operated as one company
this year offering a range of key products and services
to the forecourt industry. The transition and product
offering has taken longer than desired to bed in, and
also resulted in the exit from providing an LPG service
which was cost and margin prohibitive. Nevertheless,
the division delivered a much reduced loss in the period
under review. The division contributed £4.8 million
(2012: £5.4 million) in revenue and consistent gross
margins of 21% which are set to grow following the exit
from the LPG market. This resulted in a considerably
lower loss for the year before exceptional costs of £0.3
million (2012: £0.9 million) with final quarter trading
just in profit. The developments referred to in the
Chairman’s report for the forthcoming financial year
underpin the Board’s belief that the division will be
profitable for 2014.
overall group results
Group results, before amortisation of
intangible
assets, share based payments, option costs, and
exceptional costs, were an operating profit of £3.3
million as compared to £3.9 million at March 2012.
These results are stated after absorbing the reduced
Fuel losses, US
investment costs, and loss to
customers of some periphery services to in house
as referred to above of £1.3 million, as well as an
improved cost base yielding a year on year reduction
in operating expenses of approximately £0.8 million,
as previously expected. The results are in line with the
Trading Update issued in February 2013.
The table below shows the performance of the Group
(under IFRS), pre and post exceptional costs, as
follows:
Revenue
Gross profit
operating profit pre amortisation,
share based payments and
exceptional costs
PBT post exceptional costs
PBT pre-exceptional costs
FY 2013 FY 2012
£’000
£’000
21,085 22,975
10,810 12,235
(53%)
(51%)
3,265
1,820
2,558
3,896
2,341
3,080
divisional performance fy 2013
Revenue
Gross Profit
operating profit/(loss) pre amortisation,
share based payments and
exceptional costs
Leisure Division
£’000
Core
£’000
Vending
14,490
8,753
(60%)
907
641
(71%)
£’000
Tech
873
397
(46%)
£’000
Fuel
4,815
1,019
(21%)
£’000
Corp
-
-
-
£’000
Total
21,085
10,810
(51%)
4,682
(48)
(230)
(345)
(794)
3,265
Vianet Group plc
9
financial review (continued)
earnings per share
Basic earnings per share for the year ended 31 March
2013 before exceptional costs amounted to 9.84
pence compared to 9.93p at March 2012. Fully diluted
earnings per share (before exceptional costs), which
takes account of all dilutive share options, amounted
to 9.79 pence which compares to 9.83 pence last year.
taxation
The Group has attained a tax credit this year driven
by the Group’s use of historically-acquired losses. The
credit of £0.11 million (2012: charge £0.08 million)
relates to overprovision in prior periods along with
enhanced allowances for research and development
expenditure.
Balance sheet and cash flow
The Group’s balance sheet remains healthy with a
good working capital base supported by the good
cash generative trading performance in the year.
Operationally, the Group generated cash flow of £4.6
million (2012: £1.8 million) impacted by rationalised
operating expenses, customer up-front payments and
generally improved customer collections. The Leisure
business continued to be a healthy generator of cash
at over £6.0 million helping to fund the Corporate and
Technology segments, US investment and reduced
losses in fuel.
In addition to the above, the funds generated in the
year were utilised to invest in technology through
Research and Development, service borrowings,
purchase own shares and fund dividends. During
the year, the Group converted the core element of
the overdraft to a two year £1.5 million term loan. At
the year end, the Group had net borrowings of £3.0
million (2012: net borrowings of £3.4 million), having
completed the repayment of the five year £1.7 million
term loan supporting the Nucleus Data acquisition of
2008.
The balance sheet and cash generating capacity of
the Leisure division remains robust, Fuel is stepping
forward, and as such, the Board expects to be able
to capture some of the organic growth opportunities
that exist.
mark foster
finance director
11 June 2013
10
Vianet Group plc
rePort of tHe directors
The directors present their report and the audited financial statements for the year ended 31 March 2013.
Principal activities
The company is the holding company of a group, the principal activities of which are those of design, product
development, sale and rental of fluid monitoring and machine monitoring equipment, together with the provision of
data management and related services, both to the leisure and petrol forecourt trade.
review of business and future developments
The directors accept the results for the year ended 31 March 2013 which show a profit before tax and exceptional
items of £2.56m (2012 £3.08m).
The results for the year reflect the continued challenging economic circumstances and pressures in the leisure
marketplace. The fuel division, while still loss making, has stepped forward significantly with a £0.5m reduction in
its losses. Despite the overall lower result compared to last year, recurring revenues and margins remain healthy.
With the market opportunities that exist coupled with the on-going rationalisation of the cost reduction measures
the Directors are confident of a stronger year going forward. The group re-alignment in to two larger and stronger
trading divisions is a reflection of the Directors’ confidence and belief in our growth plans.
The Chairman’s Statement and the Financial Review provide further detail on the performance of the Group together
with an indication of future prospects.
Business risk
The directors have considered areas of potential risk to the business to assess its future. On the basis of their review
they consider the results and business projections taking into account market conditions that the business is of
sound financial footing and has a sustainable operating future. In particular they note that the business has achieved
an acceptable result in the year despite the difficult trading conditions, reduced losses in the Fuel division, impact of
cost rationalisation and overall market confidence in liquidity and credit.
The directors do not consider there to be any other material business risks other than general slowdown associated
with the current economic climate to a degree mitigated by the reduction in the cost base throughout the year.
Non financial risks are summarised in the Chairman’s Statement on pages 2 to 7.
Key performance indicators
Percentage of revenue from recurring income streams1
Gross Margin2
Employee Turnover3
notes to KPis
Target
70%
50%
2%
Actual
2013
71%
51%
3%
Actual
2012
70%
53%
3%
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.
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. Source data is taken from the
audited financial statements.
3 Employee Turnover = Group trading companies aim to be seen as a good, attractive employers with positive values and career
prospects.
Vianet Group plc
11
report of the directors (continued)
financial risk management
The Group’s operations expose it to a variety of financial risks including the effects of changes in interest rates on
debt, credit risk, exchange rate movement and liquidity risk.
While the Group does have a debt exposure, the positive cash generation from operations of the Group means we do
not have material exposures in any of the areas identified above and consequently do not use derivative instruments
to manage these exposures.
The Group’s main financial instruments comprise principally of sterling cash and bank deposits, bank loans and
overdrafts together with trade receivables and trade payables that arise directly from its operations. The Group’s
exposure to foreign exchange risk is minimal due to the low balances held which are disclosed in note 19.
The main risks arising from the Group’s financial instruments can be analysed as follows:
Price risk
The Group holds listed equity investments as follows:
Universe Group plc – ordinary shares of 5p
2013
2012
13,209,754
13,209,754
The Group has no significant exposure to securities price risk. The Group sold its investment in Universe Group plc
on 16 April 2013 at a price of 4.75p per share realising a profit on disposal of £90,049.
credit risk
The Group’s principal financial assets are bank balances, cash, inventory, and trade receivables which represent the
Group’s maximum exposure to credit risk in relation to financial assets.
The Group’s credit risk is primarily attributable to its trade receivables. Credit risk is managed by monitoring the
aggregate amount and duration of exposure to any one customer depending upon their credit rating. The amounts
presented in the balance sheet are net of allowances for doubtful debts, estimated by the Group’s management
based on prior experience and their assessment of the current economic environment.
The credit risk on liquid funds is limited because the counterparties are banks with high credit-ratings assigned by
international credit-rating agencies. The Group has no significant concentration of credit risk, with exposure spread
over a large number of counterparties and customers.
liquidity risk
The Group’s policy has been to ensure continuity of funding through arranging facilities for operations via medium-
term loans and additional revolving credit facilities to aid short-term flexibility.
cash flow interest rate risk
Interest bearing assets comprise cash and bank deposits, all of which earn interest at a rate of Bank of England base
rate or above. The interest rate on the bank loan and overdraft are at market rates. The Group’s policy is to maintain
other borrowings at fixed rates to fix the amount of future interest cash flows. The directors monitor the overall level
of borrowings and interest costs to limit any adverse effects on financial performance of the Group.
12
Vianet Group plc
dividends
The directors recommend the payment of a final dividend of 4.00p per share (2012: final 4.00p), taking the full year
dividend to 5.70p. (2012: 5.67p)
directors and their interests
The current directors of the company are shown below.
Those directors serving at the end of the period had interests in the share capital of the company at 31 March as
follows:
S W Darling
J W Dickson
M H Foster
S C Gilliland
C Williams
directors’ emoluments
Details of Directors’ emoluments for the year are as follows:
Ordinary
shares of
10p each
2013
-
4,287,219
75,000
26,000
-
Ordinary
shares of
10p each
2012
-
3,946,552
75,000
26,000
-
executive
J W Dickson
M H Foster
S W Darling
D J Noble
non-executive
J H Newman
S C Gilliland
total
Salary
and
fees
2013
£’000
Other
emoluments
2013
£’000
Total
emoluments
2013
£’000
167
142
129
59
44
32
573
43
30
29
6
-
-
108
210
172
158
65
44
32
681
Salary
and
fees
2012
£’000
159
130
116
114
36
30
585
Other
emoluments
2012
£’000
Total
emoluments
2012
£’000
41
28
28
26
-
-
123
200
158
144
140
36
30
708
1.
Executive remuneration is determined by the remuneration committee consisting of non-executive Directors JH
Newman (resigned 31 March 2013) replaced by C Williams on 20 May 2013 and S C Gilliland
2. No payments were made to any Director in respect of compensation for loss of office in 2013 or 2012
3.
Other emoluments received consist of the provision for private medical care, bonuses, motor car allowances and
pension contributions
4. J H Newman’s fees were paid to Westwood on Derwent Limited, a company of which he is a Director
5. S Gilliland fees are paid to SMDH Consulting Limited, a company of which he is a Director
6.
Pension contributions represent payments made to defined contribution schemes. Payments made are disclosed
within other emoluments. Non-executive Directors are not entitled to retirement benefits
7. JH Newman resigned on 31 March 2013
Vianet Group plc
13
report of the directors (continued)
directors’ share options
Details of the share options held by Directors are as follows:
J W Dickson
M H Foster
S W Darling
S C Gilliland
J H Newman
At
1 April
2012
75,000
31,000
150,000
65,000
31,000
100,000
31,000
24,000
30,000
36,000
30,000
At
31 March
2013
75,000
31,000
150,000
65,000
31,000
100,000
31,000
24,000
30,000
-
-
Option
price
Date granted
October 2006
123.0p
January 2011
96.5p
March 2006
67.2p
October 2006
123.0p
January 2011
96.5p
April 2009
125.0p
January 2011
96.5p
123.0p
October 2006
102.5p September 2009
123.0p
October 2006
102.5p September 2009
Share options are exercisable between nil and ten years from the date of the grant.
The market price of the Company’s shares at the end of the financial year was 87.5p and the range of market prices
during the year was between 87.5p and 124p.
Joint ownership Plan
The following awards over shares in the Company were made to the following Executive Directors of the Company on
25 September 2009 by a Joint Ownership Plan.
Director
J W Dickson
M H Foster
S W Darling
Number of Plan shares in which the Director has an interest
100,000
100,000
100,000
Awards were made by the Company’s Remuneration Committee through the Company’s employee benefit trust
operated by Halifax EES Trustees International Limited. The awards are subject to EPS performance targets
and dependant on performance vest on 31 March 2014. No value has been paid on grant of the Plan shares and
participants are entitled to growth over the Plan term.
donations
Charitable donations of £nil (2012: £nil) were made during the year. No political donations were made (2012: £nil).
14
Vianet Group plc
substantial shareholdings
The Company has been informed that on 23 May 2013 the following shareholders (excluding Directors) held
substantial holdings of the issued ordinary shares of the company:
AXA Framlington
ISIS Equity Partners
Octopus Investments Limited
Lazard Asset Management
Downing LLP
IS Partners AG
Amati Global Investors
Brewin Dolphin
Western Standard Partners
Artemis Fund Managers
Holding of
Ordinary shares
Number
Issued
Share capital
%
3,625,000
2,693,982
1,694,533
1,321,294
1,017,650
1,000,000
978,871
789,608
776,000
735,000
13.04
9.70
6.10
4.80
3.70
3.60
3.50
3.00
3.00
3.00
going concern
The Directors, after having made appropriate enquiries, including (but not limited to) a review of the Group’s budget
for 2013/2014, and cash generating capacity at least 12 months from the date of signing (underpinned by long term
contracts in place and historical results), have a reasonable expectation that the Group has adequate resources to
continue in operational existence for the foreseeable future. For this reason they continue to adopt the going concern
basis in preparing the financial statements.
Payment of Payables
The Group’s policy is to settle invoices promptly according to terms and conditions as far as it is practicable. Trade
payables at the balance sheet date represented 45 days purchases (2012: 45 days). As the company is a holding
company it has no trade payables and accordingly no disclosure is made of the year end creditor days for the company.
employees
The Group places great importance on the involvement of its employees, the majority of whom are able to work
closely with their managers on a daily basis. Employees are encouraged to be involved in the Group’s performance
through the use of share options. Employees have frequent opportunities to meet and have discussions with
management. The Group aims to keep employees regularly informed of the financial and economic factors affecting
the performance of the Group and its objectives in part through the Group intranet and website and in part through
regular communication.
The quality and commitment of our people overall has continued to play a major role in our business performance.
This has been demonstrated in many ways, including improvements in customer satisfaction, contract gains and
continued profitability, the development of customer offering and the flexibility they have shown in adapting to
changing business requirements and new ways of working. Employees’ performance is aligned to company goals
through an annual performance review process that is carried out with all employees. Employee turnover was 3%,
in line with the threshold we have set.
The Group’s policy is that, where it is reasonable and practicable within existing legislation, all employees, including
disabled persons are treated in the same way in matters relating to employment, training and career development.
research and development
The Group has a continuing commitment to levels of research and cost of ensuring systems perform optimally which
reflect the need to be at the forefront of technological advance to ensure future growth. During the year expenditure
on research and development was £753,000 (2012: £740,000) all of which £753,000 has been recognised as an asset
on the balance sheet (2012: £740,000)
Vianet Group plc
15
report of the directors (continued)
annual general meeting
The Annual General Meeting will be held on 16 July 2013 at 9am, at the offices of Vianet Group plc, One Surtees Way,
Surtees Business Park, Stockton on Tees, TS18 3HR.
Post balance sheet events
On 16 April 2013 the Group disposed of its 13,209,754 shareholding in Universe Group plc at a price of 4.75p per share
realising a profit on disposal of £90,049.
directors’ indemnity
Qualifying third party indemnity provisions are in force for the benefit of the directors
statement of directors’ responsibilities for the financial statements
The directors are responsible for preparing the Annual Report and the financial statements in accordance with
applicable law and regulations.
Company law requires the directors to prepare financial statements for each financial year. Under that law the
directors have elected to prepare financial statements in accordance with International Financial Reporting
Standards as adopted by the European Union and the parent company has elected to prepare company statements in
accordance with United Kingdom Accounting Standards (United Kingdom Generally Accepted Accounting Practice).
Under company law the directors must not approve the financial statements unless they are satisfied that they give
a true and fair view of the state of affairs of the Group and the parent company and of the profit or loss of the Group
for that period. In preparing these financial statements, the directors are required to:
•
select suitable accounting policies and then apply them consistently
• make judgements and accounting estimates that are reasonable and prudent
•
•
state whether applicable UK Accounting Standards/IFRS have been followed, subject to any material
departures disclosed and explained in the financial statements
prepare the financial statements on the going concern basis unless it is inappropriate to presume that the
company will continue in business
The directors are responsible for keeping adequate accounting records that are sufficient to show and explain the
company’s transactions and disclose with reasonable accuracy at any time the financial position of the company and
enable them to ensure that the financial statements comply with the Companies Act 2006. They are also responsible
for safeguarding the assets of the company and hence for taking reasonable steps for the prevention and detection
of fraud and other irregularities.
In so far as each of the directors is aware:
•
there is no relevant audit information of which the company’s auditor is unaware
•
the directors have taken all steps that they ought to have taken to make themselves aware of any relevant
audit information and to establish that the auditor is aware of that information
The directors are responsible for the maintenance and integrity of the corporate and financial information included on
the company’s website. Legislation in the United Kingdom governing the preparation and dissemination of financial
statements may differ from legislation in other jurisdictions.
16
Vianet Group plc
audit Partner rotation
The external auditor is required to rotate the lead audit partner responsible for the Group and subsidiary audit every
five years in accordance with Ethical Standard 3 (ES3) ‘Long association with the audit engagement’, issued by the
Auditing Practices Board. However, in certain circumstances it is permissible to extend that tenure.
The Board believes that following significant changes to the composition of the group, with five acquisitions made since
April 2010, audit quality would be compromised by introducing a new audit partner, because of the understanding of
the transactions that the incumbent partner has.
With the group still in the transitional phase of integration, the group needs to draw on the incumbent’s experience
and deep understanding of the business, so as to ensure that impairment reviews and other sensitive estimates
relating to the acquisitions are challenged robustly, but from a position of knowledge.
As a result, the Board and Audit Committee consider that now is not the right time for the lead audit partner to
change. Grant Thornton UK LLP and the Company have agreed to extend the term of the lead audit partner, in line
with ES3, for one year to 31 March 2013.
auditor
Grant Thornton UK LLP has indicated its willingness to continue in office. A resolution for its re-appointment as
independent auditor will be proposed at the AGM.
approval
The report of the directors was approved by the Board on 11 June 2013 and signed on its behalf by:
mark H foster
director
Vianet Group plc
17
corPorate goVernance statement
general Principle
The Group is committed to high standards of corporate governance in all its activities. Whilst the company is not
required to comply with the 2010 UK Corporate Governance Code, the Board recognises the value of the Code and
has regard to its requirements as far as practicable and appropriate for a public company of its size and nature.
the Board
The Board consists of three Executive and two Non-Executive Directors as follows:
executive directors
Stewart W Darling (Chief Executive Officer)
James W Dickson (Executive Chairman)
Mark H Foster (Finance Director & Company Secretary)
non-executive directors
Stewart C Gilliland
Chris Williams (appointed 20 May 2013)
All directors have access to the advice and services of the Company Secretary.
There is a clear division of responsibilities between the Chairman, who is responsible for the running of the Board,
and the Chief Executive Officer, who, together with the other Executive Directors, are responsible for running the
business.
The Board meets regularly, with no less than ten meetings planned in any one calendar year. Each director is
provided with sufficient information to enable them to consider matters in good time for meetings and enable them
to discharge their duties properly. There is a formal schedule of matters reserved for Board approval. In principle the
Board agrees the Group business plan, determines overall Group Strategy, acquisition, investment, human resource
and health and safety policies, as well as approval for major items of capital expenditure.
All directors have access to independent professional advice at the Group’s expense. The directors continually ensure
they are trained in association with duties and responsibilities of being a director of a listed company.
The independent non-executive directors bring an independent judgement to the management of the Group. They
are free from any business or other relationships which could interfere with the exercise of their judgement. The
non-executive directors fulfil a key role in corporate accountability.
Board committees
The Group has established a number of committees, details of which are set out below and all of which operate with
defined Terms of Reference:
audit committee
This consists of:
Stewart C Gilliland
Chris Williams (appointed 20 May 2013)
It meets at least three times in any year, and is usually attended as a minimum by the Chief Executive Officer and
Finance Director, as well as the Group’s External Auditor.
18
Vianet Group plc
The Audit Committee has terms of reference (which are available for inspection) to report on matters such as the
Group’s annual accounts, interim reports, major accounting issues and developments, the appointment of external
auditor and their fee, the objectivity of the auditor, the Group’s statement on internal control systems and the scope
and findings of external audit.
remuneration committee
This consists of:
Stewart C Gilliland (Chairman)
Chris Williams (appointed 20 May 2013)
The Remuneration Committee has terms of reference (which are available for inspection) and meets at least twice
per year, reviewing and advising upon the remuneration and benefit packages of the Executive Directors and other
senior management. The remuneration of the Chairman and non-executive Director is decided upon by the full
Board.
The Remuneration policy is to attract, retain and motivate high quality executives capable of achieving the Group’s
objectives and thereby enhancing shareholder value.
The remuneration of the Executive Directors consists of a basic salary and benefits, performance related bonuses
and share options. The non-Executive Directors are eligible for performance related share options.
nominations committee
This consists of:
James W Dickson (Chairman)
Stewart C Gilliland
Chris Williams (appointed 20 May 2013)
The Committee met as required during the course of the year. The Committee has terms of reference which are
available for inspection.
internal control and risk management
The Board has overall responsibility for the Group’s system of internal control and for reviewing its effectiveness, and
recognises these systems are designed to manage rather than eliminate the risk of material loss.
The Board monitors risk through ongoing processes and provides assurance that the significant risks faced by the
Group are being identified, evaluated and appropriately managed.
The main elements of the internal control systems are:
• management structure with clearly identified responsibilities
•
budget setting process including longer term forecast review
•
•
comprehensive monthly financial reporting system, with comparison to budget, supported by written report
from the Chief Executive Officer and Finance Director
report to the Audit Committee from the external auditor stating the material findings arising from the audit.
This report is also considered by the main Board and action taken where appropriate
Vianet Group plc
19
corporate governance statement (continued)
•
•
a framework for capital expenditure and controls including authorisation procedures and rules relating to
delegation of authority
risk management policies to manage issues relating to health and safety, environment, legal compliance,
insurance and security
•
day to day hands on involvement of the Executive Directors
As a result of the above systems and controls, and due to its current size, the Group does not operate an internal
audit function, but is keeping its position under review.
shareholder communication
The Group places a high level of importance on communicating with its shareholders and welcomes and encourages
such dialogue within the regulations governed by the London Stock Exchange. The Board are keen to encourage
the participation of a broad base of both institutional and private investors in the Group. Communication with
shareholders will be maintained through the Annual General Meeting, annual and interim reports, press releases
and periodic presentations.
share options
The share option plans in existence at 31 March 2013 were the EMI plan, the Executive plan, the Employee Plan,
the Employee Company Share Option Plan and an Executive Joint Ownership Plan. Share options will be issued at
appropriate intervals in order to motivate and retain Executive Directors, senior management and other key staff
whilst aligning their interests with those of the Group’s shareholders. Such grants are approved by the Remuneration
Committee.
20
Vianet Group plc
indePendent auditor’s rePort to tHe
memBers of Vianet grouP Plc
We have audited the group financial statements of Vianet Group plc for the year ended 31 March 2013 which comprise
the consolidated statement of comprehensive income, the consolidated balance sheet, the consolidated statement
of changes in equity, the consolidated cash flow statement and the related notes. The financial reporting framework
that has been applied in their preparation is applicable law and International Financial Reporting Standards (IFRSs)
as adopted by the European Union.
This report is made solely to the company’s members, as a body, in accordance with Chapter 3 of Part 16 of the
Companies Act 2006. Our audit work has been undertaken so that we might state to the company’s members those
matters we are required to state to them in an auditor’s 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 and the company’s
members as a body, for our audit work, for this report, or for the opinions we have formed.
respective responsibilities of directors and auditors
As explained more fully in the Directors’ Responsibilities Statement the directors are responsible for the preparation
of the group financial statements and for being satisfied that they give a true and fair view. Our responsibility is to
audit and express an opinion on the group financial statements in accordance with applicable law and International
Standards on Auditing (UK and Ireland). Those standards require us to comply with the Auditing Practices Board’s
(APB’s) Ethical Standards for Auditors.
scope of the audit of the financial statements
A description of the scope of an audit of financial statements is provided on the APB’s website at www.frc.org.uk/
apb/scope/private.cfm
opinion on financial statements
In our opinion the group financial statements:
•
•
•
give a true and fair view of the state of the group’s affairs as at 31 March 2013 and of its profit for the year
then ended;
have been properly prepared in accordance with IFRS as adopted by the European Union; and
have been prepared in accordance with the requirements of the Companies Act 2006.
opinion on other matter prescribed by the companies act 2006
In our opinion the information given in the Directors’ Report for the financial year for which the group financial
statements are prepared is consistent with the group company financial statements.
matters on which we are required to report by exception
We have nothing to report in respect of the following matters where the Companies Act 2006 requires us to report to
you if, in our opinion:
•
certain disclosures of directors’ remuneration specified by law are not made; or
• we have not received all the information and explanations we require for our audit.
other matter
We have reported separately on the parent company financial statements of Vianet Group plc for the year ended 31
March 2013.
Andrew Wood
Senior Statutory Auditor
for and on behalf of Grant Thornton UK LLP
Statutory Auditor, Chartered Accountants
Leeds
11 June 2013
Vianet Group plc
21
COnsOlidatEd statEmEnt Of
COmPrEhEnsivE inCOmE
for the year ended 31 March 2013
Continuing operations
Revenue
Cost of sales
Gross profit
Note
3
Before
Exceptional
2013
£000
21,085
(10,275)
10,810
Exceptional
2013
£000
Total
2013
£000
-
-
-
21,085
(10,275)
10,810
Total
2012
£000
22,975
(10,740)
12,235
Administration and other operating expenses
(7,545)
(738)
(8,283)
(8,828)
Operating profit pre amortisation
and share based payments
Intangible asset amortisation
Share based payments
Operating profit post amortisation
and share based payments
Finance income
Finance costs
Profit before taxation
Income tax expense
Profit after tax and total comprehensive
income for the year attributable to
the owners of the parent
Earnings per share
– Basic
– Diluted
3,265
(738)
2,527
3,407
(591)
(52)
-
-
(591)
(52)
(952)
(57)
2,622
(738)
1,884
2,398
-
(64)
-
-
-
(64)
5
(62)
2,558
(738)
1,820
2,341
110
-
110
(82)
2,668
(738)
1,930
2,259
9.84p
9.79p
(2.72)p
(2.71)p
7.12p
7.08p
8.00p
7.90p
6
7
8
5
9
9
The accompanying accounting policies and notes form an integral part of these financial statements.
Details of the exceptional items are included in note 4.
22
Vianet Group plc
COnsOlidatEd BalanCE shEEt
at 31 March 2013
assets
non-current assets
Goodwill
Other intangible assets
Property, plant and equipment
Investments
total non-current assets
Current assets
Inventories
Trade and other receivables
Tax asset
Cash and cash equivalents
total assets
Equity and liabilities
liabilities
Current liabilities
Trade and other payables
Borrowings
non-current liabilities
Borrowings
Deferred tax
Equity attributable to owners of the parent
Share capital
Share premium account
Share based payment reserve
Own shares
Merger reserve
Retained profit
total equity
Note
2013
£000
2012
£000
11
12
13
14
15
16
17
18
18
20
21
17,723
2,179
3,812
533
24,247
1,875
3,661
140
1,196
6,872
17,723
1,990
3,662
533
23,908
1,903
4,157
213
105
6,378
31,119
30,286
4,548
899
5,447
2,146
157
2,303
2,827
11,182
345
(1,381)
310
10,086
23,369
3,400
1,985
5,385
1,526
157
1,683
2,825
11,174
333
(1,154)
310
9,730
23,218
total equity and liabilities
31,119
30,286
The Group financial statements were approved by the Board of Directors on 11 June 2013 and were signed on its
behalf by:
J dickson
director
The accompanying accounting policies and notes form an integral part of these financial statements.
Vianet Group plc
23
COnsOlidatEd statEmEnt Of ChanGEs in Equity
for the year ended 31 March 2013
at 1 april 2011
Dividends
Share based payments
Transactions with owners
Profit and total comprehensive
income for the year
Total comprehensive income
less owners transactions
Share
capital
£000
2,825
-
-
Share
premium
account
£000
11,174
-
-
Own
shares
£000
(1,154)
-
-
-
-
-
-
-
-
-
-
-
at 31 march 2012
2,825
11,174
(1,154)
At 1 April 2012
Dividends
Issue of shares
Exercised options re own shares
Purchase of own shares
Share based payments
Share option forfeitures
Transactions with owners
Profit and total comprehensive
income for the year
Total comprehensive income
less owners transactions
2,825
-
2
-
-
-
-
11,174
-
8
-
-
-
-
2
-
2
8
-
8
(1,154)
-
-
134
(361)
-
-
(227)
at 31 march 2013
2,827
11,182
(1,381)
Share
based
payment
reserve
£000
Merger
reserve
£’000
Retained
profit
£000
Total
£000
276
-
57
57
-
57
333
333
-
-
(3)
-
52
(37)
12
310
-
-
-
-
-
310
310
-
-
-
-
-
-
-
-
-
9,008
(1,537)
-
22,439
(1,537)
57
(1,537)
(1,480)
2,259
2,259
722
779
9,730
23,218
9,730
(1,547)
-
(64)
-
-
37
23,218
(1,547)
10
67
(361)
52
-
(1,574)
(1,779)
1,930
1,930
356
151
310
10,086
23,369
-
-
(227)
12
345
24
Vianet Group plc
COnsOlidatEd Cash flOw statEmEnt
for the year ended 31 March 2013
Cash flows from operating activities
Profit for the year
adjustments for
Interest receivable
Interest payable
Income tax expense
Amortisation of intangible assets
Impairment
Depreciation
Exceptional item
Payment of deferred consideration
Loss on sale of property, plant and equipment
Share based payments
Operating cash flows before changes in working capital and provisions
Change in inventories
Change in receivables
Change in payables
Change in provisions
Cash generated from operations
Income taxes refunded
Income taxes paid
net cash generated from operating activities
Cash flows from investing activities
Proceeds on disposal of property, plant and equipment
Purchases of property, plant and equipment
Purchases of intangible assets
Disposal of intangible assets
Purchase of subsidiary undertakings
Cash acquired with subsidiary
net cash used in investing activities
Cash flows from financing activities
Interest payable
Interest received
Issue of share capital
Purchase of own shares
Proceeds from disposal of own shares
Repayments of borrowings
New borrowings
Dividends paid
net cash used in financing activities
Net increase/(decrease) in cash and cash equivalents
Cash and cash equivalents at beginning of period
Cash and cash equivalents at end of period
Vianet Group plc
2013
£000
2012
£000
1,930
2,259
-
64
(110)
591
-
410
-
(18)
19
52
2,938
28
496
1,166
-
1,690
4,628
183
-
4,811
18
(597)
(856)
76
-
-
(5)
62
82
701
250
448
(808)
(12)
8
57
3,042
797
517
(2,368)
(164)
(1,218)
1,824
-
(853)
971
21
(495)
(740)
-
(377)
39
(1,359)
(1,552)
(64)
-
10
(361)
67
(435)
1,500
(1,547)
(830)
2,622
(1,426)
1,196
(62)
5
-
-
-
(511)
-
(1,537)
(2,105)
(2,686)
1,260
(1,426)
25
nOtEs tO thE finanCial statEmEnts
for the year ended 31 March 2013
significant accounting policies
1.
1.1 Basis of preparation
The financial statements have been prepared in accordance with International Financial Reporting Standards as
adopted by the EU (IFRS). IFRS includes Interpretations issued by the International Financial Reporting Interpretations
Committee.
The financial statements have been prepared on the historical cost convention with the exception of certain items
which are measured at fair value as disclosed in the principle accounting policies set out below. The measurement
bases and principal accounting policies of the Group are set out below. These policies have been consistently applied
to all years presented unless otherwise stated.
The preparation of financial statements in conformity with IFRS requires the use of estimates and assumptions that
affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts
of revenues and expenses during the reporting period. Although these estimates are based on management’s best
knowledge of the amount, event or actions, actual results ultimately may differ from these estimates.
The Directors, after having made appropriate enquiries, including (but not limited to) a review of the Group’s budget
for 2013/2014, and cash generating capacity at least 12 months from the date of signing (underpinned by long term
contracts in place and historical results), have a reasonable expectation that the Group has adequate resources to
continue in operational existence for the foreseeable future. For this reason they continue to adopt the going concern
basis in preparing the financial statements.
1.2 subsidiaries
The consolidated financial statements incorporate the results, assets, liabilities and cash flows of the company and
each of its subsidiaries for the financial year ended 31 March 2013.
Subsidiaries are entities controlled by the Group. Control is deemed to exist when the Group has the power, directly
or indirectly to govern the financial and operating policies of an entity so as to obtain benefits from its activities. The
results, assets, liabilities and cash flows of subsidiaries are included in the consolidated financial statements from
the date control commences until the date that control ceases.
Unrealised gains on transactions between the Group and its subsidiaries are eliminated. Unrealised losses are also
eliminated unless the transaction provides evidence of an impairment of the asset transferred. Amounts reported
in the financial statements of subsidiaries have been adjusted where necessary to ensure consistency with the
accounting policies adopted by the Group.
1.3 Business combinations
For business combinations occurring since 1 January 2010, the requirements of IFRS 3R have been applied. The
consideration transferred by the Group to obtain control of a subsidiary is calculated as the sum of the acquisition
date fair values of assets transferred, liabilities incurred and the equity interests issued by the Group, which includes
the fair value of any asset or liability arising from a contingent consideration arrangement. Acquisition costs are
expensed as incurred. The Group recognises identifiable assets acquired and liabilities assumed in a business
combination regardless of whether they have been previously recognised in the acquiree’s financial statements prior
to the acquisition. Assets acquired and liabilities assumed are generally measured at the acquisition date fair values.
1.4 revenue recognition
Revenue is measured at the fair value of the consideration received or receivable and represents the amounts
receivable for goods provided in the normal course of business, net of all related discounts and sales tax.
26
Vianet Group plc
significant accounting policies (continued)
1.
leisure including vending and technology
sale of dispense monitoring equipment
The revenue from the sale is recognised at the point of installation when the transfer of risk and reward is made to
the customer.
sale of support service packs
The revenue is recognised over the support term of the length of the service contract in accordance with the respective
customer’s agreements.
machine & vending monitoring sale of equipment
The revenue from the sale is recognised at the point of installation when the transfer of risk and reward is made to
the customer.
machine monitoring licence and support, vending service revenue
The revenue is recognised over the support term of the length of the service contract in accordance with the respective
customer’s agreements.
machine monitoring data management services
The revenue is recognised over the support term of the length of the service contract in accordance with the respective
customer’s agreements.
interest income
Interest income is accrued on a time basis using the effective interest method.
rental income
Income from equipment leased to customers is accounted for on a straight-line basis over the period to which
it relates. These arrangements are operating leases, where the risk and reward of the unit, which is capitalised,
remains with the Group.
deferred income
Deferred income is released over the term of the service contract to which it releates.
fuel solutions
fuel loss management and prevention (wetstock analysis)
The revenue is recognised over the support term of the length of the service contract in accordance with the respective
customer’s agreements.
Pump dispense calibration and verification services
The revenue from the sale is recognised at the point of calibration and verification when the transfer of risk and
reward is made to the customer.
facilities management, engineering and project management solutions
The revenue is recognised over the support term of the length of the service contract in accordance with the respective
customer’s agreements.
Vianet Group plc
27
Notes to the Financial Statements for the year
ended 31 March 2013 (continued)
1.
significant accounting policies (continued)
fuel management systems, tank gauging and lining solutions and liquefied petroleum gas and forecourt services
The revenue from the sale is recognised at the point of work being completed when the transfer of risk and reward
is made to the customer.
interest income
Interest income is accrued on a time basis using the effective interest method.
rental income
Income from equipment leased to customers is accounted for on a straight-line basis over the period to which
it relates. These arrangements are operating leases, where the risk and reward of the unit, which is capitalised,
remains with the Group.
1.5 foreign currencies
Transactions in foreign currencies are translated at the exchange rate ruling at the date of the transaction. Monetary
assets and liabilities in foreign currencies are translated at the rates of exchange ruling at the balance sheet date.
Non-monetary items that are measured at historical cost in a foreign currency are translated at the exchange rate
at the date of the transaction.
Any exchange differences arising on the settlement of monetary items or on translating monetary items at rates
different from those at which they were initially recorded are recognised in the profit or loss in the period in which
they arise.
1.6 Goodwill
Goodwill on acquisition of subsidiaries represents the excess of the cost of an acquisition over the fair value of
the Group’s share of the identifiable net assets of the acquired subsidiary. Goodwill is not amortised, but tested
at least annually for impairment, and carried at cost less accumulated impairment losses. Impairment losses are
immediately recognised in profit or loss and are not subsequently reversed.
Goodwill arising on acquisitions before the date of transition to IFRS has been retained at the previous UK GAAP
amounts subject to being tested for impairment at that date.
Tests have been undertaken using commercial judgements and a number of assumptions and estimates have been
made to support the carrying amount, assessed against discounted cash flows. The details of these assumptions
are set out in note 11.
1.7
intangible assets
acquisition as part of a business combination
Identifiable intangible assets acquired as part of a business combination are initially recognised separately from
goodwill at their fair value, irrespective of whether the asset had been recognised by the acquiree before the business
combination. An intangible asset is considered identifiable only if it is separable or if it arises from contractual or
other legal rights, regardless of whether those rights are transferable or separable from the entity or from other
rights and obligations.
Intangible assets acquired as part of a business combination and recognised by the Group include customer contracts.
After initial recognition, intangible assets acquired as part of a business combination are carried at cost less
accumulated amortisation and any impairment losses recognised in administrative expenses in the statement of
comprehensive income.
28
Vianet Group plc
1.
significant accounting policies (continued)
amortisation
Intangible assets are amortised on a straight-line basis, to reduce their carrying value to their residual value, over
their estimated useful lives. The following useful lives were applied during the year:
Customer contracts and relationships
Patents
Order book
expected length of relationship
expected length of patent
expected length of contract
Methods of amortisation, residual values and useful lives are reviewed, and if necessary adjusted, at each balance
sheet date.
1.8 research and development
Expenditure on research (or the research phase of an internal project) is recognised as an expense in the period in
which it is incurred.
Development costs incurred on specific projects are capitalised when all the following conditions are satisfied:
•
•
•
•
•
completion of the intangible asset is technically feasible so that it will be available for use or sale
the Group intends to complete the intangible asset and use or sell it
the Group has the ability to use or sell the intangible asset
the intangible asset will generate probable future economic benefits. Among other things, this requires
that there is a market for the output from the intangible asset or for the intangible asset itself, or, if it is
to be used internally, the asset will be used in generating such benefits
there are adequate technical, financial and other resources to complete the development and to use or
sell the intangible asset, and
•
the expenditure attributable to the intangible asset during its development can be measured reliably
Development costs not meeting the criteria for capitalisation are expensed as incurred.
The cost of an internally generated intangible asset comprises all directly attributable costs necessary to create,
produce and prepare the asset to be capable of operating in the manner intended by management.
Directly attributable costs include employee (other than directors) costs incurred on development and directly
attributable overheads. The costs of internally generated software developments are recognised as intangible assets
and are subsequently measured in the same way as externally acquired licences. However, until completion of the
development project, the assets are subject to impairment testing only.
Capitalised development costs are amortised over the life of the product within cost of sales, which is usually no
more than five years.
1.9 Property, plant and equipment
Property, plant and equipment is stated at cost less accumulated depreciation and any impairment losses. Cost
comprises the purchase price of property, plant and equipment together with any directly attributable costs.
Vianet Group plc
29
Notes to the Financial Statements for the year
ended 31 March 2013 (continued)
significant accounting policies (continued)
1.
Subsequent costs are included in an asset’s carrying value or recognised as a separate asset, when it is probable
that future economic benefits associated with the additional expenditure will flow to the Group and the cost of the
item can be measured reliably. All other costs are charged to the statement of comprehensive income when incurred.
Depreciation commences when an asset is available for use. Depreciation is charged so as to write off the depreciable
amount of assets to their residual values over their estimated useful lives using a method that reflects the pattern in
which the assets’ future economic benefits are expected to be consumed by the Group.
Depreciation is charged in equal annual instalments over the following periods:
Freehold land and property
Plant and machinery
Equipment and vehicles
Fixtures and fittings
Rental systems
50 years
4 years
4 years
4 years
Term of hire
Methods of depreciation, residual values and useful lives are reviewed and adjusted, if appropriate, at each balance
sheet date.
The gain or loss arising from the disposal or retirement of an item of property, plant and equipment is determined
as the difference between the net disposal proceeds and the carrying amount of the item, and is included in the
consolidated statement of comprehensive income.
1.10 impairment
At each balance sheet date, the Group assesses whether there is any indication that its assets have been impaired.
If any such indication exists, the recoverable amount of the asset is estimated in order to determine the extent of the
impairment, if any. If it is not possible to estimate the recoverable amount of the individual asset, the recoverable
amount of the cash-generating unit to which the asset belongs is determined.
The recoverable amount of an asset or a cash-generating unit is the higher of its fair value less costs to sell and its
value in use. The value in use is the present value of the future cash flows expected to be derived from an asset or
cash-generating unit. This present value is discounted using a pre-tax rate that reflects current market assessments
of the time value of money and of the risks specific to the asset for which future cash flow estimates have not been
adjusted. If the recoverable amount of an asset is less than its carrying amount, the carrying amount of the asset is
reduced to its recoverable amount. That reduction is recognised as an impairment loss.
An impairment loss relating to assets carried at cost less any accumulated depreciation or amortisation is recognised
immediately in the income statement.
Goodwill acquired in a business combination is, from the acquisition date, allocated to each of the cash-generating
units or groups of cash-generating units that are expected to benefit from the synergies of the combination.
Goodwill is tested for impairment at least annually, and whenever there is an indication that the asset may be
impaired.
An impairment loss is recognised for cash-generating units if the recoverable amount of the unit is less than the
carrying amount of the unit. The impairment loss is allocated to reduce the carrying amount of the assets of the unit
by first reducing the carrying amount of any goodwill allocated to the cash-generating unit, and then reducing the
other assets of the unit pro rata on the basis of the carrying amount of each asset in the unit.
30
Vianet Group plc
significant accounting policies (continued)
1.
If an impairment loss subsequently reverses, the carrying amount of the asset is increased to the revised estimate of
its recoverable amount but limited to the carrying amount that would have been determined had no impairment loss
been recognised in prior years. A reversal of an impairment loss is recognised in profit or loss. Impairment losses on
goodwill are not subsequently reversed.
1.11 Operating leases
The costs of all operating leases are charged to the profit or loss on a straight-line basis at existing rental levels.
Incentives to sign operating leases are recognised in the profit or loss in equal instalments over the term of the lease.
1.12 Own shares
The costs of purchasing own shares are shown as a deduction against equity. The proceeds from the sale of own
shares held increase equity. Such amounts are shown in a separate reserve. Neither the purchase nor sale of own
shares leads to a gain or loss being recognised.
1.13 inventories
Inventories are stated at the lower of cost and net realisable value on a first in first out (FIFO) basis. Cost of finished
goods and work in progress includes materials and direct labour.
Net realisable value is the estimated selling price, which would be realised after deducting all estimated costs of
completion, and costs incurred in marketing, selling and distributing such inventory.
1.14 taxation
The tax expense represents the sum of current tax and deferred tax.
Current tax
Current tax is based on taxable profit for the year and is calculated using tax rates enacted or substantively enacted
at the balance sheet date. Taxable profit differs from accounting profit either because items are taxable or deductible
in periods different to those in which they are recognised in the financial statements or because they are never
taxable or deductible.
deferred tax
Deferred tax on temporary differences at the balance sheet date between the tax bases of assets and liabilities and
their carrying amounts for financial reporting purposes is accounted for using the balance sheet liability method.
Using the balance sheet liability method, deferred tax liabilities are recognised in full for all taxable temporary
differences and deferred tax assets are recognised to the extent that it is probable that taxable profits will be available
against which deductible temporary differences can be utilised. However, if the deferred tax asset or liability arises
from the initial recognition of goodwill or the initial recognition of an asset or liability in a transaction, other than
a business combination, that at the time of the transaction affects neither accounting nor taxable profit, it is not
recognised.
Deferred taxation is measured at the tax rates that are expected to apply when the asset is realised or the liability
settled based on tax rates and laws enacted or substantively enacted at the balance sheet date.
Deferred tax assets and liabilities are offset only when there is a legally enforceable right to set off current tax
amounts and when they relate to the same tax authority and the Group intends to settle its current tax amounts on
a net basis.
Current and deferred tax are recognised in the profit or loss except when they relate to items recognised directly in
equity, when they are similarly taken to equity.
Vianet Group plc
31
Notes to the Financial Statements for the year
ended 31 March 2013 (continued)
1.
significant accounting policies (continued)
Pension Costs
The Group operates a defined contribution pension scheme. The assets of these schemes are held separately from
those of the Group in an independently administered fund. The pension cost charge represents contributions payable
by the Group to the scheme for the year.
1.15 financial instruments
The Group classifies financial instruments, or their component parts, on initial recognition as a financial asset, a
financial liability or an equity instrument in accordance with the substance of the contractual arrangement.
Financial assets and financial liabilities are recognised on the Group’s balance sheet when the Group becomes party
to the contractual provisions of the instrument.
The particular recognition and measurement methods adopted for the Group’s financial instruments are disclosed
below:
investments
Investments are carried at fair value and are reviewed for impairment by reference to traded share prices.
trade receivables and Cash and cash equivalents
Trade receivables and cash and cash equivalents are categorised as loans and receivables, which are recognised
initially at fair value and are measured subsequent to initial recognition at amortised cost using the effective interest
method, less provision for impairment. Cash and cash equivalents comprise cash on hand and demand deposits,
together with other short-term, highly liquid investments that are readily convertible into known amounts of cash
and which are subject to an insignificant risk of changes in value.
trade payables and borrowings
Trade payables and borrowings are recorded initially at fair value, net of direct issue costs, and subsequently are
recorded at amortised cost using the effective interest method.
1.16 dividends
Final dividends are recognised as a liability in the period in which they are approved by the company’s shareholders.
Interim dividends are recognised when they are paid.
1.17 Employee share option schemes
All share-based payment arrangements granted after 7 November 2002 are recognised in the financial statements.
IFRS 2 has been applied to grants before 7 November 2002 only where the group has disclosed publicly the fair value
of those equity instruments, determined as at the grant date in accordance with IFRS 2.
All goods and services received in exchange for the grant of any share-based payment, including awards made
under the Joint Ownership Plan (an equity settled scheme) are measured at their fair values. Where employees are
rewarded using share-based payments the fair values of employees’ services are determined indirectly by reference
to the fair value of the instrument granted to the employee. This fair value is appraised at the grant date and excludes
the impact of non-market vesting conditions (for example, profitability and sales growth targets).
All equity-settled share-based payments are ultimately recognised as an expense in the profit or loss with a
corresponding credit to “Share based payment reserve”.
32
Vianet Group plc
significant accounting policies (continued)
1.
If vesting periods or other non-market vesting conditions apply, the expense is allocated over the vesting period,
based on the best available estimate of the number of share options expected to vest. Estimates are subsequently
revised if there is any indication that the number of share options expected to vest differs from previous estimates.
Any cumulative adjustment prior to vesting is recognised in the current period. No adjustment is made to any expense
recognised in prior periods if share options ultimately exercised are different to that estimated on vesting.
Upon exercise of share options the proceeds received net of attributable transaction costs are credited to share
capital, and where appropriate share premium.
1.18 Equity
Equity comprises the following:
•
•
•
•
•
“Share capital” represents the nominal value of equity shares.
“Share premium” represents the excess over nominal value of the fair value of consideration received for
equity shares, net of expenses of the share issue.
“Share based payment reserve” represents equity-settled share-based employee remuneration until
such share options are exercised.
“Own shares reserve” represents the costs/ proceeds of purchasing/ selling own shares.
“Merger reserve” represents the excess over nominal value of fair value of consideration attributed to
equity shares issued in part settlement for subsidiary company shares acquired.
•
“Retained earnings reserve” represents retained profits.
1.19 new ifrs standards and interpretations not applied
New standards and interpretations currently in issue but not effective that will have an impact on the financial
statements are listed below. These will affect presentation only:
•
•
•
•
•
•
•
•
IFRS 9 Financial Instruments (effective 1 January 2015)
IFRS 10 Consolidated Financial Instruments (effective 1 January 2013)
IFRS 13 Fair Value Measurement (effective 1 January 2013)
IAS 19 Employee Benefits (effective 1 January 2013)
Deferred Tax Recovery of Underlying assets – Amendments to IAS12 Income Taxes (effective 1 January
2012)
IAS 27 (revised) Separate Financial Statements (effective 1 January 2013)
Presentation of Items of Other Comprehensive Income – Amendments to IAS 1 (effective 1 July 2012)
Offsetting Financial Assets and Financial Liabilities – Amendments to IAS 32 (effective 1 January 2014)
The directors anticipate that the adoption of these standards and interpretations in future periods will have no material
impact on the financial statements of the Group except for additional disclosure and presentational requirements.
Vianet Group plc
33
Notes to the Financial Statements for the year
ended 31 March 2013 (continued)
significant accounting policies (continued)
1.
1.20 Exceptional items
The Group seeks to highlight certain items as exceptional operating income or costs. These are considered to be
exceptional in size and/or nature rather than indicative of the underlying trading of the Group. These may include
items such as acquisition costs, restructuring costs, material profits or losses on disposal of property, plant and
equipment, profits or losses on the disposal of subsidiaries and inventory write downs associated with acquisition
balance sheets. All of these items are charged or credited before calculating operating profit or loss. Material profits
or losses on disposal of property, plant and equipment are shown as separate items in arriving at operating profit or
loss whereas other exceptional items are charged or credited within operating costs and highlighted by analysis. The
Directors apply judgement in assessing the particular items, which by virtue of their size and nature are disclosed
separately in the Statement of Comprehensive Income and the notes to the financial statements as exceptional
items. The Directors believe that the separate disclosure of these items is relevant to understanding the Group’s
financial performance.
2. Critical accounting judgements and key sources of estimation uncertainty
2.1 significant judgements and key sources of estimation uncertainty
The preparation of the financial statements in conformity with IFRS requires management to make estimates and
assumptions that affect the application of policies and reported amounts of assets, liabilities, income, expenses and
related disclosures. The estimates and underlying assumptions are based on historical experience and various other
factors that are believed to be reasonable under the circumstances. This forms the basis of making the judgements
about carrying values of assets and liabilities that are not readily apparent from other sources.
Actual results may however differ from these estimates. The estimates and underlying assumptions are reviewed on
an ongoing basis. Changes in accounting estimates may be necessary if there are changes in the circumstances on
which the estimate was based, or as a result of new information or further information. Such changes are recognised
in the period in which the estimate is revised.
Certain accounting policies are particularly important to the preparation and explanation of the Group’s financial
information. Key assumptions about the future and key sources of estimation uncertainty that have a risk of causing
a material adjustment to the carrying value of assets and liabilities over the next twelve months are set out below.
impairment of intangible assets and property, plant and equipment
The Group tests goodwill at least annually for impairment, and whenever there is an indication that the asset may be
impaired. All other intangible assets and property, plant and equipment are tested for impairment when indicators
of impairment exist. Impairment is determined with reference to the higher of fair value less costs to sell and value
in use. Value in use is estimated using adjusted future cash flows. Significant assumptions are made in estimating
future cash flows about future events including future market conditions and future growth rates. Changes in these
assumptions could affect the outcome of impairment reviews. See notes 11 to 13.
intangible assets acquired in a business combination
Intangible assets acquired in a business combination including customer contracts and customer lists are
recognised when they are identifiable or arise from contractual or other legal rights and their fair value can be
reliably measured. Fair value is estimated using risk adjusted future cash flows. Significant assumptions are made
in estimating future cash flows about future events including future market conditions and future growth rates.
Changes in these assumptions could affect fair values.
income taxes
The determination of the Group’s tax liabilities requires the interpretation of tax law. The Group obtains appropriate
professional advice from its tax advisors in relation to all significant tax matters. The directors believe that the
judgements made in determining the Group’s tax liabilities are reasonable and appropriate, however, actual
experience may differ and materially affect future tax charges.
34
Vianet Group plc
2. Critical accounting judgements and key sources of estimation uncertainty (continued)
development costs
Careful judgement by the directors is applied when deciding whether the recognition requirements for development
costs have been met. This is necessary as the economic success of any product development is uncertain and may
be subject to future technical problems at the time of recognition. Recognition is based on judgements at the time
expenditure is incurred. In addition, all internal activities related to the research and development of new software
products are continuously monitored by the directors.
segment reporting
3.
Business segments
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. Leisure services is
analysed in to three segments – Leisure, Vending and Technology highlighting the three key divisions within leisure.
Vending and Technology do not meet the quantitative thresholds required for segmental reporting. However, these
have been split out for the first time this year as management believes this information is useful to the users of the
financial statements.
The products/services offered by each operating segment are:
Leisure: design, product development, sale and rental of fluid monitoring and machine monitoring equipment
together with the provision of data management and related services.
Fuel Solutions: wetstock analysis and related services.
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, 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.
Vianet Group plc
35
Notes to the Financial Statements for the year
ended 31 March 2013 (continued)
segment reporting (continued)
3.
2013
Continuing Operations
(post exceptional items)
Total revenue
Pre-exceptional segment result
Exceptional costs
Post exceptional segment result
Finance income
Finance costs
Profit/(loss) before taxation
Taxation
Profit for the year from
continuing operations
Other information
Additions to property, plant,
equipment and intangible assets
Depreciation and amortisation
Segment assets
Unallocated assets
total assets
Segment liabilities
Unallocated liabilities
total liabilities
Leisure
Services
£’000
14,490
4,563
(128)
4,435
-
(23)
4,412
Vending
£’000
Technology
£’000
907
(231)
(17)
(248)
-
-
(248)
873
(264)
(11)
(275)
-
-
(275)
Fuel
Solutions
£’000
4,815
Corporate
£’000
Total
£’000
-
21,085
(397)
(350)
(747)
-
(1)
(748)
(1,049)
(232)
(1,281)
-
(40)
(1,321)
2,622
(738)
1,884
-
(64)
1,820
110
1,930
579
368
247
322
293
151
207
159
30
1
1,356
1,001
Leisure
Services
£’000
10,748
-
10,748
6,686
-
6,686
Vending
£’000
Technology
£’000
Fuel
Solutions
£’000
-
-
-
-
-
-
-
-
-
-
-
-
1,800
-
1,800
638
-
638
Corporate
£’000
32
18,539
18,571
269
157
426
Total
£’000
12,580
18,539
31,119
7,593
157
7,750
The asset base of the Leisure division cannot be split across Vending and Technology.
36
Vianet Group plc
segment reporting (continued)
3.
2012
Continuing Operations
(post exceptional items)
Total revenue
Pre-exceptional segment result
Exceptional costs
Post exceptional segment result
Finance income
Finance costs
Profit before taxation
Taxation
Profit for the year from
continuing operations
Other information
Additions to property, plant,
equipment and intangible assets
Depreciation and amortisation
Segment assets
Unallocated assets
total assets
Segment liabilities
Unallocated liabilities
Total liabilities
analysis of revenue by category
Continuing operations
Sale of goods
- leisure
- fuel
Rendering of services
- leisure
- fuel
Finance income
- leisure
- fuel
Vianet Group plc
Leisure
Services
£’000
Vending
£’000
Technology
£’000
Fuel
Solutions
£’000
Corporate
£’000
Total
£’000
14,978
1,455
1,098
5,444
-
22,975
5,507
(348)
5,159
2
(37)
5,124
276
(185)
91
-
-
91
(4)
(80)
(84)
-
-
(84)
(956)
(504)
(1,460)
1
(4)
(1,686)
378
(1,308)
2
(21)
(1,463)
(1,327)
3,137
(739)
2,398
5
(62)
2,341
(82)
2,259
307
447
364
286
440
168
124
498
355
-
1,590
1,399
Leisure
Services
£’000
7,945
-
7,945
5,529
-
5,529
Vending
£’000
Technology
£’000
Fuel
Solutions
£’000
-
-
-
-
-
-
-
-
-
-
-
-
1,882
-
1,882
1,050
-
1,050
Corporate
£’000
1
20,245
20,246
119
157
276
Total
£’000
9,828
20,245
30,073
6,698
157
6,855
2013
£000
2012
£000
3,077
-
13,193
4,815
-
-
2,614
-
14,917
5,444
5
-
21,085
22,980
37
Notes to the Financial Statements for the year
ended 31 March 2013 (continued)
4.
Exceptional items
Deferred consideration release
Corporate restructuring and transitional costs
2013
£000
-
738
738
2012
£000
(808)
1,297
489
Exceptional items include subsidiary office closure costs, group people restructuring costs, business segment
closure costs and new company start up costs.
5. Profit for the year
The following items have been included in arriving at profit for the year:
Employee benefits expense (note 22)
Depreciation of property, plant and equipment (note 13)
Amortisation of intangible assets (note 12)
Loss on disposal of property, plant and equipment
Operating lease rentals payable
Impairment of goodwill
auditor’s remuneration
Services to the company and its subsidiaries
Fees payable to the company’s auditor for the audit of the annual financial statements
Fees payable to the company’s auditor and its associates for other services:
Audit of the financial statements of the company’s subsidiaries pursuant to legislation
Other services relating to tax - compliance and advice
Other services – principally IFRS advice, half year reporting and accounting advice
6.
finance income
Interest on bank deposits
7.
finance costs
Interest payable on bank borrowings
2013
£000
8,238
410
591
19
300
-
2013
£000
12
39
20
73
144
2013
£000
-
-
2013
£000
64
64
2012
£000
9,045
448
701
8
243
250
2012
£000
16
37
16
103
172
2012
£000
5
5
2012
£000
62
62
38
Vianet Group plc
taxation
8.
analysis of (credit)/charge in period
Current tax (credit)/expense
– UK corporation tax on profits of the period
– Amounts in respect of prior periods
Deferred tax expense:
– Temporary differences
Income tax (credit)/expense
2013
£000
-
(110)
(110)
-
(110)
2012
£000
298
10
308
(226)
82
reconciliation of effective tax rate
The tax for the period is lower (2012 lower) than the standard rate of corporation tax in the UK (24%/26%). The
differences are explained below:
Profit before taxation
– Continuing operations
Profit before taxation multiplied by rate of corporation tax in the UK of 24% (2012: 26%)
Effects of:
Other expenses not deductible for tax purposes
Amortisation of intangibles
Utilisation of losses
Disposal of investment
Adjustments for prior years
Research and development
Amortisation of intangibles
Movement on losses not recognised
Total tax (credit)/expense
2013
£000
1,820
437
38
149
(691)
-
(110)
(486)
-
553
(110)
2012
£000
2,341
609
21
36
-
-
10
(247)
(547)
200
82
Vianet Group plc
39
Notes to the Financial Statements for the year
ended 31 March 2013 (continued)
Earnings per share
9.
Basic earnings per share are calculated by dividing the earnings attributable to ordinary shareholders 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
Reconciliations of the earnings and weighted average number of shares used in the calculations are set out below.
Profit attributable to equity shareholders
1,930
7.12p
7.08p
2,259
8.00p
7.90p
2013
Basic
earnings
per share
Earnings
£000
Diluted
earnings
per share
Earnings
£000
2012
Basic
earnings
per share
Diluted
earnings
per share
Weighted average number of ordinary shares
Dilutive effect of share options
Diluted weighted average number of ordinary shares
10. Ordinary dividends
2013
Number
2012
Number
27,098,352
172,940
28,248,164
330,000
27,271,292
28,578,164
Final dividend for the year ended 31 March 2012 of 4.0p (year ended 31 March 2011: 3.98p)
Interim dividend paid in respect of the year of 1.70p (2012: 1.67p)
Amounts recognised as distributions to equity holders
2013
£000
1,089
458
1,547
2012
£000
1,083
454
1,537
In addition, the directors are proposing a final dividend in respect of the year ended 31 March 2013 of 4.00p per share.
If approved by shareholders, it will be paid on 2 August 2013 to shareholders who are on the register of members on
21 June 2013. Total dividend payable 5.70p (2012: 5.67p).
11. Goodwill
Group
Cost
At 1 April
Additions
At 31 March
Accumulated impairment losses
At 1 April
Impairment loss during period
At 31 March
Net book amount 31 March
2013
£000
17,973
-
17,973
(250)
-
(250)
2012
£000
17,618
355
17,973
-
(250)
(250)
17,723
17,723
Goodwill is tested for impairment annually or when events or changes in circumstances that the carrying amount
may not be recoverable. The goodwill impairment test is performed by comparing the carrying value of the CGU and
associated goodwill with the aggregate recoverable amount.
40
Vianet Group plc
11. Goodwill (continued)
The carrying value of goodwill is allocated to the following cash generating units:
Leisure Services
Technology
Vending
Fuel Solutions
Carrying amount 31 March
2013
£000
15,503
-
-
2,220
17,723
2012
£000
15,503
-
-
2,220
17,723
Following a restructure undertaken during the year the goodwill has been allocated to the relevant CGU’s and the
prior year information presented on the same basis.
The recoverable amounts attributed are based on value in use calculations. The key assumptions made in undertaking
the value in use calculations are set out below.
Budgeted profit and cash flow forecasts for the financial year ending 31 March 2014 were extrapolated for a six
year period using sector growth assumptions and used as the basis for the impairment review. The key assumption
included within these is a return/improvement in profitability in the future of a number of subsidiary companies,
based on committed (medium to long term contracts) and pipeline orders.
Basis of budgets and assumptions are based around historical track record and committed medium to long term
contracts.
Sector growth assumptions, applied to the leisure services segments: 3% based on estimates of specific industry
rates, where available.
Sector growth assumptions, applied to the fuel solutions segments: between 3% and 7.5% based on estimates of
specific industry rates, where available.
Discount rate assumptions, applied to both the leisure services and fuel solutions segments: 10% based on
management’s view of risks specific to the group.
If sector growth assumption rates were applied at 0% and a discount rate assumption of 10% was applied, the leisure
services segment would require no impairment, but the fuel solutions segment would require an impairment of
£489,000.
If sector growth assumption rates were applied at 3% and a discount rate assumption of 15% was applied, the leisure
services segment would require no impairment, but the fuel solutions segment would require an impairment of
£1,133,000.
If sector growth assumption rates were applied at 0% and a discount rate assumption of 15% was applied, the leisure
services segment would require no impairment, but the fuel solutions segment would require an impairment of
£1,452,000.
The Directors are confident that the restructuring and exit of loss making services in fuel solutions result in no
impairment being required. This is continually reviewed by the Directors.
Vianet Group plc
41
Notes to the Financial Statements for the year
ended 31 March 2013 (continued)
12. Other intangible assets
Group
Cost
At 1 April 2011
Arising from business combinations
Internally generated development costs
at 31 march 2012
Internally generated development costs
Disposals
at 31 march 2013
amortisation
At 1 April 2011
Charge for the year
at 31 march 2012
Charge for the year
at 31 march 2013
net book amount
at 31 march 2013
at 31 march 2012
Capitalised
development
£000
Order
book
£000
Customer
contracts
£000
Patents
£000
1,112
-
740
1,852
829
(76)
2,605
108
210
318
362
680
1,925
1,534
281
-
-
281
-
-
281
144
107
251
27
278
3
30
1,826
310
-
2,136
-
-
2,136
1,341
382
1,723
199
1,922
214
413
21
3
-
24
27
-
51
9
2
11
3
14
37
13
Total
£000
3,240
313
740
4,293
856
(76)
5,073
1,602
701
2,303
591
2,894
2,179
1,990
Where appropriate, intangible assets identified in business combinations have been recognised in accordance with
the provisions of IFRS 3 (Business Combinations) and IAS 38 (Intangible Assets). Intangible assets have only been
recognised where they have identifiable future economic benefits that are controlled by the entity, it is probable that
these benefits will flow to the entity and their fair value can be measured reliably.
The £829,000 of capitalised development costs represents expenditure that fulfils the requirement of IAS 38. These
costs will be amortised over the future commercial life of the product, commencing on the sale of the first commercial
unit.
42
Vianet Group plc
13. Property, plant and equipment
Group
Cost
At 1 April 2011
Additions
Disposals
at 31 march 2012
Additions
Disposals
at 31 march 2013
accumulated depreciation
At 1 April 2011
Charge for the year
Disposals
at 31 march 2012
Charge for the year
Disposals
at 31 march 2013
net book amount
at 31 march 2013
at 31 march 2012
14.
investments
Valuation:
Other shares
At 1 April
At 31 March
Freehold
Land and
buildings
£000
Plant,
vehicles and
equipment
£000
Fixtures and
fittings
£000
3,104
6
-
3,110
1
-
3,111
289
61
-
350
60
-
410
2,701
2,760
588
89
(110)
567
329
(41)
855
256
94
(82)
268
92
(18)
342
513
299
2,101
400
-
2,501
267
(24)
2,744
1,605
293
-
1,898
258
(10)
2,146
598
603
2013
£000
533
533
Total
£000
5,793
495
(110)
6,178
597
(65)
6,710
2,150
448
(82)
2,516
410
(28)
2,898
3,812
3,662
2012
£000
533
533
The Group held 13,209,754 ordinary 5p shares in Universe Group plc, an AIM listed company which represents 7.04%
(2012: 11.52%) of the share capital as at 31 March 2013. See post balance sheet note 26.
Vianet Group plc
43
Notes to the Financial Statements for the year
ended 31 March 2013 (continued)
15.
inventories
Raw materials
Write down on raw materials
Work in progress
2013
£000
2,054
(272)
93
1,875
2012
£000
2,208
(472)
167
1,903
No reversal of previous write-downs was recognised as a reduction of expense in 2012 or 2013. In 2013 £3,199,743
(2012: £4,473,573) was included in the statement of comprehensive income under cost of sales. None of the
inventories are pledged as securities for liabilities.
The Group’s inventories are comprised of products, which are not generally subject to rapid obsolescence on account
of technological, deterioration in condition or market trends. Consequently management considers that there is little
risk of significant adjustments to the Group’s inventory assets within the next financial year.
16. trade and other receivables
Trade receivables
Other receivables
Prepayments and accrued income
2013
£000
3,184
36
441
3,661
2012
£000
3,683
18
456
4,157
The directors consider that the carrying amount of trade and other receivables approximates their fair value. All of
the Group’s trade and other receivables have been reviewed for indicators of impairment.
All trade and other receivables have been reviewed for indicators of impairment. Certain trade receivables were
found to be impaired and a provision of £14,504 (2012: £19,792) has been recorded accordingly (note 19)
In addition some of the unimpaired trade receivables are past due as at the reporting date. The age of financial assets
past due but not impaired is as follows:
Not more than three months
More than three months but not more than six months
More than six months but not more than one year
More than one year
2013
£000
1,012
97
34
-
1,143
2012
£000
1,458
66
107
5
1,636
44
Vianet Group plc
17. trade and other payables
Trade payables
Other taxation and social security
Accruals and deferred income
Deferred consideration
2013
£000
929
723
2,829
67
4,548
The directors consider that the carrying amount of trade and other payables approximates their fair value.
18. Borrowings
Current
Bank overdraft
Bank loans
Hire purchase
Non-current
Bank loans
Hire purchase
2013
£000
-
898
1
899
2013
£000
2,146
-
2,146
2012
£000
1,210
728
1,100
362
3,400
2012
£000
1,531
444
10
1,985
2012
£000
1,525
1
1,526
Bank loans are denominated in £ sterling and bear interest based on Bank of Scotland Base Rate plus a rate of
between 1% and 3%. The bank loans are secured by a fixed charge over the land and buildings of the Group.
The weighted average effective interest rates on the Group’s borrowings were as follows:
Bank overdrafts – floating rates
Bank borrowings – floating rates
The maturity profile of the Group’s non-current bank loans and hire purchase was as follows:
Between one and two years
Between two and five years
More than five years
2013
%
2.5
1.5
2013
£000
900
438
808
2012
%
2.5
1.5
2012
£000
130
436
960
2,146
1,526
The Group’s bank borrowings bear interest at floating rates, which represent prevailing market rates. The Directors
have not considered the impact of interest on these commitments given the levels of cash in the Group and facilities
the Group has. The cash generative nature of the Group and hence any interest rate change would be mitigated
to a degree by interest earned. The directors consider therefore that the carrying amount of bank borrowings
approximates their fair value.
Vianet Group plc
45
Notes to the Financial Statements for the year
ended 31 March 2013 (continued)
19. financial instruments
The Group is exposed on a minimal basis to market risk through its use of a US Dollar and a Euro account. The Group’s
risk management is co-ordinated by the directors who focus actively on securing the Group’s short to medium term
cash flows through regular review of all the operating activities of the business. Long term financial investments are
managed to generate lasting returns.
The Group does not actively engage in the trading of financial assets for speculative purposes nor does it write
options. The most significant financial risks to which the Group is exposed are described below.
foreign currency sensitivity
Exposures to currency exchange rates arise from the Group’s overseas activities, all of which are denominated in US
Dollars and Euros.
Due to the non material nature of the Group’s exposure to foreign currency risk, sensitivity analyses to movement in
exchange rates are not produced.
Foreign currency denominated financial assets and liabilities are set out below.
Financial assets
Financial liabilities
Financial assets
Financial liabilities
2013
$000
351
-
351
2013
a000
36
-
36
2012
$000
33
-
33
2012
a000
21
-
21
The Group has no long term foreign exchange exposure.
At the beginning and end of the year, the Group had no unexpired forward foreign exchange contracts.
Credit risk analysis
The Group’s exposure to credit risk is limited to the carrying amount of financial assets recognised at the balance
sheet date and which are set out below.
Cash and cash equivalents
Trade and receivables
2013
£000
1,196
3,184
4,380
2012
£000
105
3,683
3,788
The Group continuously monitors credit risk of customers and other counterparties and incorporates this information
into its credit risk controls. The Group takes up trade references on all new customers and its policy is to deal only
with credit worthy companies.
The movement on the bad debt provision in the period is analysed below. The Group provides for bad debts on a
specific basis with reference to the age profile of the trade receivables held at the year end
46
Vianet Group plc
19. financial instruments (continued)
Credit risk analysis (continued)
Bad debt provision at 31 March 2012
Amounts utilised
Amounts provided
Bad debt provision at 31 March 2013
£000
20
(20)
15
15
Management considers that all the above financial assets are of good credit quality, including those that are past due.
None of the Group’s financial assets are secured by collateral or other credit enhancements.
In respect of trade and other receivables, the Group is not exposed to any significant credit risk exposure to any
single counterparty or any group of counterparties having similar characteristics. The credit risk for liquid funds is
considered negligible, since the counterparty is a reputable bank with a high quality external credit rating.
liquidity risk analysis
The Group manages its liquidity needs by carefully monitoring all scheduled cash outflows. Liquidity needs are
monitored in various time bands, on a day-to-day and week to week basis, as well as on the basis of a rolling eight week
projection. Longer term needs are monitored as part of the Group’s regular rolling monthly reforecasting process.
loans and receivables
Current Assets
Cash and cash equivalents
Trade and receivables
Non-Current Assets
Available for sale financial assets
Current Liabilities
Financial liabilities measured at amortised cost
non Current liabilities
Financial liabilities measured at amortised cost
Net financial assets/(liabilities)
2013
£000
1,196
3,184
4,380
2013
£000
533
533
2013
£000
1,827
2,146
3,973
940
2012
£000
105
3,683
3,788
2012
£000
533
533
2012
£000
3,184
1,526
4,710
(389)
The Directors have not disclosed an interest rate sensitivity analysis note given the levels of cash in the Group, and the
cash generative nature of the Group, hence any interest rate change would be mitigated to a degree by interest earned.
The carrying value of the above assets and liabilities is equal to their fair value.
Vianet Group plc
47
Notes to the Financial Statements for the year
ended 31 March 2013 (continued)
19. financial instruments (continued)
Capital management policies and procedures
The Group’s capital management objectives are to ensure its ability to continue as a going concern and to provide an
adequate return to shareholders by pricing products and services commensurately with the level of risk.
The Group monitors capital on the basis of carrying amount of equity less cash and cash equivalents as presented on
the face of the balance sheet. Capital for the reporting periods under review is set out below.
Total equity
Less cash equivalents
2013
£000
23,369
(1,196)
22,173
2012
£000
23,218
(105)
23,113
The Group is not subject to external imposed capital requirements, other than the minimum capital requirements
and duties regarding reduction of capital as imposed by the Companies Act 2006 for all public limited companies.
20. deferred tax
Deferred tax is calculated in full on temporary differences under the liability method using a tax rate of 24% (2012:
26%).
The movement on the deferred tax account is as shown below:
At 1 April
Profit and loss charge
Acquisition
At 31 March
2013
£000
157
-
-
157
2012
£000
303
(226)
80
157
The movements in deferred tax assets and liabilities (prior to the offsetting of balances within the same jurisdiction
as permitted by IAS 12) during the period are shown below:
net deferred tax liability
Group
At 31 March 2013
At 31 March 2012
£000
157
157
Deferred tax has been recognised during the year in respect of tax losses in certain of the group’s subsidiaries as
the directors believe there is sufficient certainty over the extent and timing of their recovery to do so. Included in the
amount of £157k (2012: £157k) are amounts of £nil relating to tax losses (2012: £nil).
48
Vianet Group plc
21.
issued share capital
Issued and fully paid
Ordinary shares of 10p each: 28,268,164 (2012: 28,248,164)
2013
£000
2012
£000
2,827
2,825
Own shares
The Group accounts for its own shares held by the Trustees of the employee option scheme as a deduction from
shareholders equity. At 31 March 2013, the Trust owned 818,470 shares (2012: 818,470 shares) with a nominal value
of £81,847 (2012: £81,847).
At 31 March 2013, Vianet Group plc owned 456,000 shares (2012: 216,000 shares) with a nominal value of £45,600
(2012: £21,600), all held in treasury.
Dividends payable on these shares have been waived.
No shares have been conditionally gifted to certain employees as at 31 March 2013.
22. Employees and directors
Employee benefit expense during the period
Wages and salaries
Social security costs
Pension costs
Share based payments
average monthly number of people (including directors) employed
2013
£000
7,246
735
205
52
8,238
2012
£000
7,879
863
246
57
9,045
2013
Number
2012
Number
Sales
Engineering
VRS
Management
Administration
Key management personnel - directors
Short term employment benefits
Pension contributions
12
81
7
11
146
257
2013
£000
614
67
681
During the year four (2012: four) directors had benefits accruing under defined contribution pension schemes.
Vianet Group plc
11
68
7
14
160
260
2012
£000
634
74
708
49
Notes to the Financial Statements for the year
ended 31 March 2013 (continued)
22. Employees and directors (continued)
highest paid director
Short term employment benefits
Pension contributions
2013
£000
181
29
210
2012
£000
174
26
200
23. Operating lease commitments
The Group lease various motor vehicles and property under non-cancellable operating leases. The leases have been
entered into under normal commercial terms.
Total future minimum lease payments under non-cancellable operating leases:
Group 2013
Within one year
After one year and less than five years
Motor
Vehicles
£000
Land and
Buildings
£000
232
236
468
75
130
205
2013
Total
£000
307
366
673
2012
Total
£000
348
304
652
24. share-based payments
There are five share option plans in place the EMI Plan, the Executive Plan, the Employee Plan, an Employee Company
Share Option Plan and an Executive Joint Ownership Plan. Under the share option plans, the directors can grant
options over shares in the company to employees. Options are granted with a fixed exercise price equal to the market
value of the shares at the date of grant. The contractual life of an option is 10 years. Options granted under the EMI
share option plans will become exercisable immediately, and options granted under the Executive Plan and the
Employee Plan will become exercisable on the third anniversary of the date of grant. Exercise of an option is subject
to continued employment.
Details of share options outstanding during the period (including those held by directors) are set out below:
At 1 April
Granted
Exercised
Forfeited
At 31 March
Exercisable at 31 March
2013
2012
Number of
share options
1,926,250
-
(140,000)
(165,000)
1,621,250
1,021,750
Weighted
average
exercise
price p
102.9
-
54.9
118.6
105.4
115.2
Number of
share options
1,884,250
110,000
-
(68,000)
1,926,250
1,136,750
Weighted
average
exercise
price p
105.2
82.6
-
134.0
102.9
108.0
50
Vianet Group plc
24. Share-based payments (continued)
Name of director /
senior employee
Date of grant
Number of
options
Exercise
price
Exercise
date
D J Noble
M H Foster
D J Noble
J W Dickson
M H Foster
S C Gilliland
S Darling
S C Gilliland
J W Dickson
M H Foster
S Darling
31/03/06
31/03/06
31/03/06
26/10/06
26/10/06
26/10/06
07/04/09
25/09/09
27/01/11
27/01/11
27/01/11
80,000
150,000
40,000
75,000
65,000
24,000
100,000
30,000
31,000
31,000
31,000
50.0p
67.2p
67.2p
123.0p
123.0p
123.0p
125.0p
102.5p
96.5p
96.5p
96.5p
11/01/13
-
18/01/13
-
-
-
-
-
-
-
-
Weighted
average
share price
at date of
exercise
101.0p
-
101.0p
-
-
-
-
-
-
-
-
Gain on
exercise
£40,800
-
£13,520
-
-
-
-
-
-
-
-
Exercise
period
01/04/06 to 31/03/16
01/04/06 to 31/03/16
01/04/06 to 31/03/16
27/10/09 to 26/10/16
27/10/09 to 26/10/16
27/10/09 to 26/10/16
08/04/12 to 07/04/19
26/09/12 to 25/09/19
28/01/14 to 27/01/20
28/01/14 to 27/01/21
28/01/14 to 27/01/21
Vianet Group plc
51
Notes to the Financial Statements for the year
ended 31 March 2013 (continued)
24. Share-based payments (continued)
The fair value per option and the assumptions used in the calculation were as follows:
Share price at grant date
Exercise price
Shares under option
Vesting period – EMI Options (years)
Vesting period – Executive/Employee Scheme (years)
Option life (years)
Expected life (years)
Expected volatility
Risk free rate – 31 March 2006
Risk free rate – 19 October 2006
Risk free rate – 6 December 2006
Expected dividends expressed as a dividend yield
Fair value per option – EMI Options (50.0p)
Fair value per option – EMI Options (67.2p)
Fair value per option – Executive/Employee Scheme (123.0p)
Fair value per option – Executive/Employee Scheme (147.5p)
34.8p (March 2006)
123.0p (October 2006)
147.5p (December 2006)
148.5p (January 2008)
154.0p (July 2008)
155.5p (August 2008)
123.0p (November 2008)
125.0p (April 2009)
102.5p (September 2009)
50.0p (March 2006)
67.2p (March 2006)
123.0p (October 2006)
147.5p (December 2006)
148.5p (January 2008)
151.5p (July 2008)
151.5p (August 2008)
132.5p (November 2008)
143.8p (January 2010)
126.5p (April 2010)
119.0p (June 2010)
115.0p (September 2010)
111.0p (November 2010)
96.5p (January 2011)
102.0p (February 2011)
1,621,250
0
3
10
3
30%
4.39%
4.75%
4.58%
3%
3.2p
1.3p
25.0p
30.0p
52
Vianet Group plc
24. Share-based payments (continued)
Expected volatility was determined by discounting the weighted average volatility of comparable listed companies to
a comparable private company volatility. The share price of £0.348 was agreed with HMR&C as the fair value of Vianet
Group plc shares at the time of grant of the EMI options. The fair value of the other shares was as per market value
at date of grant as shown above. The risk free rate of return is the yield on zero coupon UK government bonds of a
term consistent with the assumed option life.
The fair value on the EMI Plan, the Executive Plan, the Employee Plan and the Employee Company Share Option Plan
were all calculated under the Black Scholes model.
The Group recognised an expense of £52,000 (2012: £57,000) in relation to equity settled share-based payment
transactions in the year.
Joint Ownership Plan
The following awards over shares in the Company were made to the following Executive Directors of the Company on
25 September 2009 by a Joint Ownership Plan.
Director
J W Dickson
M H Foster
S Darling
Number of Plan shares in which the Director has an interest
100,000
100,000
100,000
Awards were made by the Company’s Remuneration Committee through the Company’s employee benefit trust
operated by Halifax EES Trustees International Limited. The awards are subject to EPS performance targets
and dependant on performance vest on 31 March 2014. No value has been paid on grant of the Plan shares and
participants are entitled to growth over the Plan term. The fair value on the Joint Ownership plan was calculated
under the Black Scholes model.
Vianet Group plc
53
Notes to the Financial Statements for the year
ended 31 March 2013 (continued)
25. Related party transactions
IAS 24 (Related party transactions) requires the disclosure of the details of material transactions between reporting
entities and related parties. Transactions with group entities are eliminated on consolidation. J H Newman, a non-
executive director invoiced Vianet Group plc for fees totalling £43,371 (2012: £43,601). As at 31 March 2013, there
was £nil outstanding (2012: £3,821). S Gilliland, a non-executive director invoiced Vianet Group plc for fees totalling
£29,025 (2012: £34,161). As at 31 March 2013, there was £2,500 outstanding (2012: £2,485).
26. Events after the balance sheet date
On 16 April 2013 the Group disposed of its entire shareholding in Universe Group plc at a price of 4.75p per share
realising a profit on disposal of £90,049.
54
Vianet Group plc
INDEPENDENt AuDItOR’S REPORt tO thE
MEMbERS Of VIANEt GROuP PlC
We have audited the parent company financial statements of Vianet Group plc for the year ended 31 March 2013
which comprise the Company balance sheet and the related notes. The financial reporting framework that has been
applied in their preparation is applicable law and United Kingdom Accounting Standards (United Kingdom Generally
Accepted Accounting Practice).
This report is made solely to the company’s members, as a body, in accordance with Chapter 3 of Part 16 of the
Companies Act 2006. Our audit work has been undertaken so that we might state to the company’s members those
matters we are required to state to them in an auditor’s 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 and the company’s
members as a body, for our audit work, for this report, or for the opinions we have formed.
Respective responsibilities of directors and auditors
As explained more fully in the Directors’ Responsibilities Statement the directors are responsible for the preparation
of the parent company financial statements and for being satisfied that they give a true and fair view. Our responsibility
is to audit and express an opinion on the parent company financial statements in accordance with applicable law
and International Standards on Auditing (UK and Ireland). Those standards require us to comply with the Auditing
Practices Board’s (APB’s) Ethical Standards for Auditors.
Scope of the audit of the financial statements
A description of the scope of an audit of financial statements is provided on the APB’s website at www.frc.org.uk/
apb/scope/private.cfm
Opinion on financial statements
In our opinion the parent company financial statements:
•
give a true and fair view of the state of the company’s affairs as at 31 March 2013;
•
have been properly prepared in accordance with United Kingdom Generally Accepted Accounting Practice;
and
•
have been prepared in accordance with the requirements of the Companies Act 2006.
Opinion on other matter prescribed by the Companies Act 2006
In our opinion the information given in the Directors’ Report for the financial year for which the financial statements
are prepared is consistent with the parent company financial statements.
Matters on which we are required to report by exception
We have nothing to report in respect of the following matters where the Companies Act 2006 requires us to report to
you if, in our opinion:
•
adequate accounting records have not been kept by the parent company, or returns adequate for our audit
have not been received from branches not visited by us; or
•
the parent company financial statements are not in agreement with the accounting records and returns; or
•
certain disclosures of directors’ remuneration specified by law are not made; or
• we have not received all the information and explanations we require for our audit.
Vianet Group plc
55
Independent auditor’s report to the members
of Vianet Group plc (continued)
Other matter
We have reported separately on the group financial statements of Vianet Group plc for the year ended 31 March 2013.
Andrew Wood
Senior Statutory Auditor
for and on behalf of Grant Thornton UK LLP
Statutory Auditor, Chartered Accountants
Leeds
11 June 2013
56
Vianet Group plc
COMPANy bAlANCE ShEEt
at 31 March 2013
fixed assets
Investments in subsidiaries
Other intangible assets
Property, plant and equipment
Investments
Current assets
Debtors
Cash at bank and in hand
Creditors: amounts falling due within one year
Net current assets
Net assets
Capital and reserves
Ordinary share capital
Share premium
Share based payment reserve
Own shares
Merger reserve
Retained earnings
total equity
Note
2
3
4
5
6
7
8
9
9
9
9
9
9
2013
£000
5,170
22
7
533
5,732
14,831
4
14,835
(239)
14,596
20,328
2,827
11,182
345
(1,081)
310
6,745
20,328
2012
£000
20,323
-
-
533
20,856
2,998
-
2,998
(667)
2,331
23,187
2,825
11,174
333
(851)
310
9,396
23,187
The balance sheet was approved by the Board on 11 June 2013 and signed on its behalf by:
J W Dickson
Director
Company number: 5345684
The accompanying accounting policies and notes form an integral part of the financial statements.
Vianet Group plc
57
NOtES tO thE COMPANy bAlANCE ShEEt
1. Principal accounting policies
1.1 basis of preparation
This balance sheet has been prepared under the historic cost convention and in accordance with UK Generally
Accepted Accounting Practice.
The principal accounting policies of the company are set out below and have remained unchanged from the previous
year.
1.2 taxation
Deferred tax is provided, except as noted below, on timing differences that have arisen but not reversed by the
balance sheet date, where the timing differences result in an obligation to pay more tax, or a right to pay less tax, in
the future. Timing differences arise because of differences between the treatment of certain items for accounting
and taxation purposes.
In accordance with FRS19 deferred tax is not provided on timing differences arising from gains on the sale of non-
monetary assets, where on the basis of all available evidence it is more likely than not that the taxable gain will be
rolled over into replacement assets.
Deferred tax assets are recognised to the extent that it is regarded as more likely than not that they will be recovered.
Deferred tax is measured at the tax rates that are expected to apply in the periods when the timing differences are
expected to reverse, based on tax rates and law enacted or substantively enacted at the balance sheet date. Deferred
tax assets and liabilities are not discounted.
Where law or accounting standards require gains and losses to be recognised in the statement of total recognised
gains and losses, the related taxation is also taken directly to the statement of total recognised gains and losses in
due course.
Investments
1.3
Investments in subsidiary undertakings and other entities are stated at cost net of impairments.
1.4 Employee share option schemes
All share-based payment arrangements granted after 7 November 2002 that had not vested prior to 1 April 2006 are
recognised in the financial statements.
All goods and services received in exchange for the grant of any share-based payment are measured at their fair
values. Where employees are rewarded using share-based payments, the fair values of employees’ services are
determined indirectly by reference to the fair value of the instrument granted to the employee. This fair value is
appraised at the grant date and excludes the impact of non-market vesting conditions (for example, profitability and
sales growth targets).
All equity-settled share-based payments are ultimately recognised as an expense in the profit and loss account with
a corresponding credit to “share based payment” reserve.
Upon exercise of share options the proceeds received net of attributable transaction costs are credited to share
capital, and where appropriate share premium.
58
Vianet Group plc
1.5 Property, plant and equipment
Property, plant and equipment is stated at cost less accumulated depreciation and any impairment losses. Cost
comprises the purchase price of property, plant and equipment together with any directly attributable costs.
Subsequent costs are included in an asset’s carrying value or recognised as a separate asset, when it is probable
that future economic benefits associated with the additional expenditure will flow to the Group and the cost of the
item can be measured reliably. All other costs are charged to the consolidated statement of comprehensive income
when incurred.
Depreciation commences when an asset is available for use. Depreciation is charged so as to write off the depreciable
amount of assets to their residual values over their estimated useful lives using a method that reflects the pattern in
which the assets’ future economic benefits are expected to be consumed by the Group.
Depreciation is charged in equal annual instalments over the following periods:
Fixtures and fittings
4 years
Methods of depreciation, residual values and useful lives are reviewed and adjusted, if appropriate, at each balance
sheet date.
The gain or loss arising from the disposal or retirement of an item of property, plant and equipment is determined
as the difference between the net disposal proceeds and the carrying amount of the item, and is included in the
consolidated statement of comprehensive income.
Intangible Assets
1.6
Separately acquired intangible assets
The Group does not operate any purchased computer software. All such software is licensed and expensed.
Amortisation
Intangible assets are amortised on a straight-line basis, to reduce their carrying value to their residual value, over
their estimated useful lives. The following useful lives were applied during the year:
Patents
4 years
Methods of amortisation, residual values and useful lives are reviewed, and if necessary adjusted, at each balance
sheet date.
2.
Investments in subsidiary
Company
Cost and net book amount:
Shares in subsidiaries
At 1 April
Additions
Transfer to group undertakings
At 31 March
2013
£000
2012
£000
20,323
85
(15,238)
5,170
20,323
-
-
20,323
The company owns the whole of the issued ordinary share capital of the following operating subsidiaries:
Vianet Group plc
59
Notes to the Company Balance Sheet (continued)
2.
Investments in subsidiary (continued)
Subsidiary
Shareholding
Country of
incorporation
Brulines Trustee Company Limited
Edis Limited
Bruline Limited
Nucleus Data Limited
Nucleus Data Holdings Limited
Vianet Americas Inc
Vianet Fuel Solutions Limited
Vianet Limited
100%
100%
100%
100%
100%
100%
100%
100%
UK
UK
UK
UK
UK
USA
UK
UK
Principal activity
Employee Trust
Dormant
Dormant
Dormant
Dormant
Leisure Solutions
Forecourt Solutions
Leisure Solutions
On 1 April 2012 the company transferred the entire share capital of Energy Level Systems and Retail & Forecourt
Solutions to Vianet Fuel Solutions at investment value. The company also transferred the entire share capital
of Brulines Limited, Machine Insite Limited, Coin Metrics Limited and Viatelemetry Limited to Vianet Limited at
investment value.
No impairment of the investments was carried out as the trade of each business was hived in to its respective new
owner.
Energy Level Systems Limited, Retail & Forecourt Solutions Limited and LBI Installations Limited are indirect
investments via Vianet Fuel Solutions Limited in Fuel solutions. Brulines Limited, Machine Insite Limited, Coin
Metrics Limited, Viatelemetry Limited and Lookout Solutions Limited are indirect investments via Vianet Limited in
Leisure.
3. Other intangible assets
Cost
At 1 April 2011
Additions
At 31 March 2012
Additions
At 31 March 2013
Amortisation
At 1 April 2011
Charge for the year
At 31 March 2012
Charge for the year
At 31 March 2013
Net book amount
At 31 March 2013
At 31 March 2012
60
Patents
£000
-
-
-
23
23
-
-
-
1
1
22
-
Vianet Group plc
4. Property, plant and equipment
Cost
At 1 April 2011
Additions
Disposals
At 31 March 2012
Additions
Disposals
At 31 March 2013
Accumulated depreciation
At 1 April 2011
Charge for the year
Disposals
At 31 March 2012
Charge for the year
Disposals
At 31 March 2013
Net book amount
At 31 March 2013
At 31 March 2012
5.
Investment
Company
Cost and net book amount:
Other shares
At 1 April
Additions
At 31 March
Fixtures
and fittings
£000
-
-
-
-
8
-
8
-
-
-
-
1
-
1
7
-
2012
£000
533
-
533
2013
£000
533
-
533
The Group currently held 13,209,754 ordinary 5p shares in Universe Group plc, an AIM listed company which
represents 7.04% (2012: 11.52%) of its share capital as at 31 March 2013. See note 26 in Group accounts.
Vianet Group plc
61
Notes to the Company Balance Sheet (continued)
6. Debtors
Amounts due from subsidiaries
Other debtors
Other taxation
2013
£000
14,796
21
14
14,831
2012
£000
2,998
-
-
2,998
All intercompany debt is repayable on demand, however Vianet Group plc will not insist on repayment in the next
twelve months.
7. Creditors: amounts falling due within one year
Amounts owed to subsidiaries
Other payables
Accruals and deferred income
8.
Issued share capital
2013
£000
-
35
204
239
2013
£000
2012
£000
547
54
66
667
2012
£000
Issued and fully paid
Ordinary shares of 10p each: 28,268,164 (2012: 28,248,164)
2,827
2,825
Allotments during the year
Since the end of the financial year no shares have been issued under the share option scheme.
62
Vianet Group plc
9. Reserves
At 1 April 2011
Profit for the year
Share based payment
Dividends
At 31 March 2012
Loss for the year
Share capital issued
Purchase own shares
Share option exercise
Share based payment
Share option forfeiture
Dividends
At 31 March 2013
10. Dividends
Share based
payment
reserve
£000
Own
shares
£000
Merger
reserve
£000
Retained
earnings
£000
Share
capital
£000
2,825
-
-
-
2,825
-
2
-
-
-
-
-
Share
premium
£000
11,174
-
-
-
11,174
-
8
-
-
-
-
-
2,827
11,182
(1,081)
(851)
-
-
-
(851)
-
-
(321)
91
-
-
-
276
-
57
-
333
-
-
-
(3)
52
(37)
-
345
310
-
-
-
310
-
-
-
-
-
-
-
310
Total
£000
19,632
5,035
57
(1,537)
23,187
(1,093)
10
(321)
40
52
-
(1,547)
5,898
5,035
-
(1,537)
9,396
(1,093)
-
-
(48)
-
37
(1,547)
6,745
20,348
2012
£000
1,089
458
1,547
2011
£000
1,083
454
1,537
Final dividend for the year ended 31 March 2012 of 4.0p (year ended 31 March 2011: 3.98p)
Interim dividend paid in respect of the year of 1.70p (2012:1.67p)
Amounts recognised as distributions to equity holders
In addition, the directors are proposing a final dividend in respect of the year ended 31 March 2013 of 4.00p per share.
If approved by shareholders, it will be paid on 2 August 2013 to shareholders who are on the register of members on
21 June 2013.
11. Employees and directors
Employee benefit expense during the period
Wages and salaries
Social security costs
Pension costs
Share based payments
Average monthly number of people (including directors) employed
Management
Vianet Group plc
2013
£000
387
49
47
52
535
2012
£000
-
-
-
-
-
2013
Number
2012
Number
4
4
-
-
63
Notes to the Company Balance Sheet (continued)
12. Directors
Directors’ emoluments
Pension contribution
The amounts in respect of the highest paid director are as follows:
Directors’ emoluments
Pension contribution
2013
£000
412
46
458
2013
£000
181
29
210
2012
£000
315
43
358
2012
£000
174
26
200
Other Directors’ emoluments see Group accounts, Report of the Directors.
13. Share-based payments
The company disclosures required under UK GAAP are identical to those required under IFRS. See Group accounts,
note 24 for details.
14. Parent Company Profit and loss Account
The parent company has taken advantage of section 408 of the Companies Act 2006 and has not included its own
profit and loss account in these financial statements. The parent company’s loss for the financial year was £1,093,000
(2012: profit £5,035,000).
15. Related Party transactions
Non-executive director payments were incurred in the company during this year.
J H Newman, a non-executive director invoiced Vianet Group plc for fees totalling £43,371 (2012: £43,601). As at 31
March 2013, there was £nil outstanding (2012: £3,821). S Gilliland, a non-executive director invoiced Vianet Group plc
for fees totalling £29,025 (2012: £34,161). As at 31 March 2013, there was £2,500 outstanding (2012: £2,485).
See Group accounts, Report of the Directors for details of non-executive directors’ emoluments.
The company has taken advantage of the FRS 8 exemption not to disclose related party transactions between wholly
owned group undertakings as these will be eliminated within the consolidated financial statements.
64
Vianet Group plc
One Surtees Way, Surtees Business Park, Stockton on Tees, TS18 3HR
www.vianetplc.com
The market leading provider of real time monitoring systems and
data management services for the UK leisure and forecourt sectors