Consolidated Annual Report & Accounts
Year ended 31 March 202 3
GROUP PLC
CONTENTS
Section
Company Information
Chairman’s Statement
Strategic Report
Report of the Directors
Corporate Governance Statement
Independent Auditor’s Report
Consolidated Statement of Comprehensive Income
Consolidated Balance Sheet
Consolidated Statement of Changes in Equity
Consolidated Cash flow Statement
Notes to the Consolidated Financial Statements
Company Balance Sheet
Company Statement of Changes in Equity
Notes to the Company Balance Sheet
Page
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44-77
78
79
80-87
Vianet Group plc
i
COMPANY INFORMATION
Directors
J W Dickson (Chairman and Interim CEO)
M H Foster (Chief Financial Officer)
D C Coplin (Non-Executive Director)
C Williams (Non-Executive Director) resigned 13 July 2022
S Panu (Non-Executive Director) appointed 13 July 2023
Secretary
M H Foster
Registered office
One Surtees Way
Surtees Business Park
Stockton on Tees
TS18 3HR
Registered number
05345684
Auditors
Bankers
Nominated Adviser
Stockbroker
Solicitors
Registrars
BDO LLP
Central Square
29 Wellington Street
Leeds
LS1 4DL
Lloyds Banking Group plc
1st Floor
Black Horse House
91 Sandyford Road
Newcastle
NE1 8HQ
Cenkos Securities plc
6. 7. 8. Tokenhouse Yard
London
EC2R 7AS
Cenkos Securities plc
6. 7. 8. Tokenhouse Yard
London
EC2R 7AS
Gordons LLP
Riverside West
Whitehall Road
Leeds
LS1 4AW
Link Group
Central Square
29 Wellington Street
Leeds
LS1 4DL
1
Vianet Group plc
WHO ARE WE
Vianet Group plc is a leading international Business
to Business (“b2b”) provider of internet enabled,
cloud based, telemetric services to the hospitality,
unattended retail vending, and remote asset
management sectors where we provide data services,
actionable management information, and business
insight. Combining data from our customers’ assets
with our smart, cloud-based, Internet of Things (‘IoT’)
solutions, we deliver critical insight and analysis that
drives superior operational performance.
With over 300 customers and nearly 210,000 connected
devices across the UK, Europe, and the US, Vianet’s
experience and knowledge form a powerful market-
leading proprietary technology and insight capability.
We connect customers to their assets via single or
multiple IoT smart devices which interface to the
asset, collecting the relevant data. The machine data
is sent to our cloud-hosted IoT platform, where it is
processed.
Vianet currently operates in two core business
verticals. Our Smart Machines solution is designed for
the unattended coffee, snack and soft drink vending
machine market, as well as emerging markets such
as petrol forecourts, and our Smart Zones solution
is designed for the pub and hospitality industry, both
connecting customers to their assets and delivering
powerful insights and analytics in real-time.
The Group’s Smart Zones division provides
unparalleled product quality and waste management,
business intelligence and stock management services
to the drinks retailing industry.
Our Smart Machines division provides innovative
real
time monitoring, software management
applications, business intelligence and data insights
for unattended vending machines that significantly
improve operational efficiency, stock control, sales,
and cash flow, whilst also reducing our customers’
carbon footprint. Smart Machines is one of the
largest b2b connected solutions providers in Europe
with established long-term relationships with major
industry players and growing recurring revenues...
By connecting customers to their assets, we gather
insight and analytics support
data from which
improves decision-making and enables our end-to-
end contactless payment solution. The outcome for
our clients is increased sales and asset utilisation,
reduced operating costs and improved operational
performance, with more informed customer decision-
making.
We achieve this by;
•
•
•
•
•
•
Increasing utilisation and significantly reducing
servicing costs by identifying asset performance
opportunities;
Maximising asset uptime and sales by
providing alerts on fault conditions and product
availability;
seamless
touchless
Providing
payment
solutions, reducing customer dependency, in
a COVID conscious world, on ‘dirty’ cash, and
providing the contactless payment solutions
that consumers increasingly desire;
cash
Improving
flow management and
resource planning by tracking real-time sales
performance and enabling more
frequent
invoicing; and
Defining potential new procedures, revenue
streams, and automation
services and
incorporating these into the customers’ existing
processes.
Real time capture and processing of machine
data from the installation base allows customers
to significantly improve the efficiency of re-
stocking and maintenance operations providing
substantial cost and sales benefits whilst also
reducing our customers’ carbon footprint.
In both divisions, the data collected is structured and
rendered through an advanced web portal and mobile
applications to provide the analytics and insight that
support better business decision making to improve
our customers’ asset utilisation and profitability.
technologies were developed
for
Whilst our
unattended retailing and hospitality, the flexibility
and functionality of our smart devices offer multiple
applications and can be connected to practically any
machine with a data output. The device used in our
Smart Machines division is the same used to connect
our contactless payment solution and communicate
payment terms to our cloud-based payment services
providers. Ongoing successful asset management
and contactless payment field trials and conversion
have been completed in other verticals such as
Fuel Forecourts, fast casual restaurant chains, and
environmental services.
As a business, we are passionate about developing
innovative solutions and employing talented people
focused on transforming business performance.
Our ambitions are underpinned by driving our
financial performance through long-term contracts
typically with recurring high cash margins and
scalable annuity revenue streams that facilitate
ongoing product development.
Vianet Group plc
2
FINANCIAL HIGHLIGHTS
TURNOVER PERFORMANCE
£3.11 MILLION ADJUSTED OPERATING PROFIT(a)
18000
16000
14000
12000
10000
8000
6000
4000
2000
0
0
-500
-1000
-1500
-2000
-2500
-3000
-3500
TURNOVER (£’000)
16,282
13,215
14,115
8,369
Mar-20
Mar-21
Mar-22
Mar-23
RECURRING REVENUE
89%
(2022: 88%)
3950
3850
3750
3650
3550
3450
3350
3250
3150
3050
2950
2850
5000
4000
3000
2000
1000
0
-1000
OPERATING PROFIT (£’000)
4,030
3,105
2,363
Mar-20
Mar-21
Mar-22
Mar-23
(687)
OPERATIONAL CASH GENERATION
PRE WORKING CAPITAL
CASH GENERATION PRE WC (£’000)
4,448
2,739
5000
4000
3,722
3000
2000
1000
0
-1000
Mar-20
(341)
Mar-21
Mar-22
Mar-23
NET DEBT OF £3.37 MILLION(b)
NET CASH/(DEBT) (£’000)
Mar-20
Mar-21
Mar-22
Mar-23
(952)
(2,661)
(2,999)
(3,373)
Note: Fy23 includes tax refund £922k
OPERATIONAL CASH GENERATION
POST WORKING CAPITAL
CASH GENERATION POST WC (£’000)
4,233
2,397
2,037
Mar-20
1,052
Mar-21
Mar-22
Mar-23
4500
4000
3500
3000
2500
2000
1500
1000
BASIC EPS
NEW CONNECTIONS
DIVIDENDS(c)
0.56p
(2022: 0.65p)
15,286
(2022: 16,927)
0.5p
(2022: nil)
Note:
a) Adjusted operating profit is profit before exceptional costs, amortisation, interest and share-based payments
b) Net debt includes a CBIL loan
c) Dividend reinstated
3
Vianet Group plc
OPERATIONAL HIGHLIGHTS
Our business currently has two divisions: Smart
Machines and Smart Zones.
The average recurring revenue per connected device
grew to £60.19 (2022: £54.02), 11.4% year on year
growth;
Smart Machines adjusted operating profit increased
10.4% to £2.01m (FY22: £1.82m), despite £0.45m of
stock premium costs;
Smart Machines added 11,062 new connected devices
(FY22: 12,895) despite the vending sector distraction
of planning related to the UK-wide 3G switch-off;
SmartContact Pro all-in-one contactless and
telemetry wins vending industry award as best
payment system and launch of SmartVend in H1 2023
strengthens Smart Machines’ offering;
75 new contract wins across various customer sizes,
and 16 contract renewal.
Smart Machines adjusted operating profit of £2.01
million (FY2022: £1.82 million) being a 31% increase
on pre-pandemic FY2020 of £1.53m but impacted by
c£0.45m of stock premium costs (FY2022: c£0.23m)
Smart Zones revenue increased 4.2% to £8.16m
(FY2022: £7.83m) with operating profit up 26.7% to
£3.79m (FY2022: £2.99m);
Smart Zones’ net installation base solid at 9,800 as
ongoing investment and a pipeline of new installations
offset a slowing rate of hospitality sector closures;
and
Post year-end acquisition of trade and assets of US
based Beverage Metrics Inc (BMI) and receipt of
HMRC tax refund of £0.92m.
CONNECTED DEVICES - TOTAL
Mar-23
154,216
53,758
Mar-22
166,804
48,165
0
50,000
100,000
150,000
200,000
250,000
Smart Zones
Smart Machines
Vianet Group plc
4
CHAIRMAN’S STATEMENT
James Dickson
Chairman
investment
In May 2020, a £3.5m Coronavirus Business
Interruption Loan (CBIL) was taken to support recovery
and
in technology and commercial
operations. Our strong operational cash generation
has permitted the relatively aggressive repayment of
£0.7m per annum plus interest, and the outstanding
balance stands at £2.1m at the end of May 2023.
Management is pleased to confirm that post year
end we successfully completed negotiation and due
diligence with HSBC on significantly improved finance
facilities which are in the process of completion and
are due to commence in Q2 FY2024. Given how the
lending market has tightened during 2023, the fact
that we have negotiated an increased facility on
improved terms shows the financial strength of the
business.
Dividend
The Group’s FY2023 results, high levels of customer
engagement, and commercial momentum provide
confidence that in FY2024, the Group will benefit
from solid revenue growth and high levels of cash
generation.
While semiconductor supply pressure is becoming
less of a concern there are still some uncertainties
regarding prolonged inflationary pressures. That said
the Group remains committed to achieving relatively
aggressive repayment of loans. The new HSBC facility
will offer flexibility to support ongoing investment in
the business, particularly in relation to the exciting
growth opportunities, including Vianet Americas
The Board has always considered the paying of a
dividend to shareholders an important constituent
of being a listed PLC, and, notwithstanding the
pressures alluded to above, is delighted to announce
our intention to reinstate our dividend policy. However,
the Board considers it prudent to prioritise the
preservation of the majority of cash for investment in
growth, but recognising the significance of dividends
as an important component of total shareholder
returns, the Board proposes a FY23 dividend of 0.5p
per share payable on 27 October 2023 to shareholders
on the register on 14 September 2023.
Board Changes and Staff
Following Chris Williams’ retirement from the Board
at the AGM, Stella Panu was appointed as a Non-
Executive Director and Chair of the Audit Committee.
Stella brings a wealth of financial expertise, City
experience, and a strong background in finance,
strategy, and M&A activity. Her valuable contributions
Introduction
I am delighted to report that the Group has continued
to build on positive commercial momentum in all
areas through FY2023. This positions us exceptionally
well to capitalise on the exciting growth opportunities,
not only in the UK but in the USA and Europe for
FY2024 and beyond.
Global semiconductor supply chain pressures,
high inflation resulting from the Ukraine conflict
and customers taking time to develop strategic
connectivity plans to address the mobile network
operators’ (‘MNO’) 3G switch-off were issues that had
to be navigated in FY2023. However, the underlying
trends remain strong, and given the visibility we
have, and the relationships we have nurtured, we
see FY2024 accelerating as it benefits from customer
estate upgrades to 4G LTE.
Encouragingly, sales grew c.7% to £14.1m (FY2022:
£13.2m), delivering an adjusted operating profit of
£3.11m compared to FY2022 £2.36m, representing
c.31% year-on-year growth. We have always had a
rigorous drive to grow the top line and on maximising
the business’ profitability which in return has enabled
reinstatement of dividend payments. All these are
true testaments to the team’s hard work.
We were delighted to announce the acquisition of the
trade and assets of Beverage Metrics Inc. (BMI) post
year-end. We have known the BMI team for some
years and believe that the comprehensive inventory
platform that they have developed will enhance our
existing draught beer management solution as well
as directly expanding our US footprint. Together
with SmartDraught, these form the most compelling
for
beverage management solution available
hospitality operators in the USA and UK.
5
Vianet Group plc
have been extremely helpful to the Board, and the
Executive team, as we remain committed to executing
on our growth strategy.
The Board and I have also agreed that I shall remain
as interim CEO to ensure we continue to establish and
maintain our strong sales, and growth momentum.
Having previously served as CEO, and being a
significant shareholder, I am committed to driving the
Company forward during this crucial time.
The Board regularly evaluates its composition and
effectiveness to ensure a balanced mix of experience
and independence, supporting the business and our
growth ambitions. The operational structure of the
Group continues to evolve to address the growth
opportunities, and I am pleased to report further
growth and development of the management team,
who continue to be highly motivated and focused on
delivery.
Our exceptional people consistently demonstrate
enthusiasm,
openness,
underpinning the Group’s excellent reputation among
customers, suppliers, and stakeholders.
commitment,
and
I take great pride and am extremely grateful for
the unwavering commitment of our executive team,
employees, and Board members in continuing to
drive the Group’s progress.
Conclusion and Outlook
FY2023 brought about positive outcomes in increased
sales, profit, and cash generation. However, what really
stands out is the remarkable customer engagement
and momentum generated by
introducing new
solutions, partnerships, and commercial initiatives.
This is particularly encouraging for the Company’s
future growth.
Our solutions empower customers to enhance their
business performance, fostering deeper stakeholder
sales
creating
relationships and
opportunities.
substantial
The Group is on track to deliver strong earnings
growth across our two divisions and maximise the
opportunities in new verticals for the financial year
ending March 2024 and beyond.
Smart Machines
its
comprehensive product suite, strengthened by new
releases of our SmartVend solution and the migration
industry with
leads
the
of existing customers to our exciting platform. Vianet
received accolades for Best Supplier Website and
Best Payment System at the vending industry awards,
where our SmartContact Pro all-in-one contactless
payment and telemetry solution prevailed over stiff
international competition. With a strong commercial
team, long-term contracts with major blue-chip
customers, and a strong presence in the UK and
European markets, we have a robust pipeline of
opportunities for telemetry and contactless sales and
data management.
•
•
•
fast-growing
The partnership between Vianet and Suresite
Group Ltd has bolstered our position
in
the
‘unattended’ contactless
payments sector. By combining Vianet’s
cutting-edge contactless payment hardware
with Suresite’s market-leading acquiring
services, we can now offer a competitive, user-
friendly, and highly secure payments solution
that effectively future-proofs any unattended or
automated retail business. This solution caters
to various applications, from charging points
and unmanned car washes to air and vacuum
stations.
In collaboration with Vendekin Technologies,
the Group has introduced an innovative mobile
payment solution based on QR codes offering
customers a fast, secure, and convenient
payment solution. Through this partnership,
we can expand our offerings and equip our
customers with the latest technology in the
unattended retail industry, to enhance the
customer experience and help drive growth.
in
Smart Zones has a pipeline of new site
installations
tenanted pub
leased and
companies. Integrating Vianet’s draught beer
management solution with the recently acquired
BMI inventory platform offers customers a
comprehensive drinks management solution
that enhances profitability by reducing costs,
improving productivity, and maximising sales.
The integration also provides brewers a cost-
effective brand monitoring and market insight
solution. While the US operation may be
initially loss-making in FY2024, it’s expected
to approach breakeven position by the year-
end. More importantly, this acquisition should
support Vianet’s growth in UK hospitality and
be a step forward in developing a profitable
footprint in the USA.
Vianet Group plc
6
Chairman’s Statement (continued)
•
•
•
Investing in our technology and commercial
activity has attracted strong
interest from
the environmental, catering, forecourt, and
tank monitoring sectors, with a breakthrough
expected in H1 FY2024.
The continued
in our cloud
investment
infrastructure and mobile technology will drive
the development of existing revenues in Smart
Machines and Smart Zones. This investment
will also enable scalability, flexibility, and speed,
which are crucial for supporting rapid growth in
both existing and new verticals.
The Group has consistently high contracted
recurring income and fully expects to generate
strong operating cash flow.
The Board remains confident in the Group’s long-
term growth strategy and ability to achieve earnings
growth and expand future strategic options. While
cash management is a priority, the Board’s primary
focus is on driving sales growth and seizing exciting
growth opportunities.
James Dickson
Chairman
18 July 2023
7
Vianet Group plc
STRATEGIC REPORT
James Dickson
Chairman and Chief Executive
The year to March 2023 was a year of recovering
growth and re-establishing our market position.
Having emerged from the pandemic, we have
successfully navigated the global semiconductor chip
supply problems and are progressing well in a high-
inflation economy.
Our core business provides connectivity to assets,
enabling the collection of operational data and the
production of actionable analytics and insights to help
customers transform their business performance.
In a world increasingly reliant on Internet of Things
and AI we believe that we are at the forefront of our
industry, not only in providing solutions for today but
developing tools for the future.
With Vianet’s leading-edge contactless payment
capability supporting customer sales growth from
unattended retail machines, the business is well
placed to strengthen its position in this rapidly
developing area, with further contactless and data
opportunities on assets in marketplaces such as
petrol forecourts.
Our well invested cloud-based platform now supports
much greater flexibility of device connection and data
connectivity to the extent that it is possible to connect
a range of business-critical third-party devices, not
just those we supply.
In collaboration with customers and partners such
as Suresite and Vendekin in unattended retail, we
can
identify compelling end-to-end solutions to
address business opportunities. This combination of
capabilities will enable us to drive sustained business
growth over the coming years.
Whilst FY2023 has had its global challenges, the
Group has made excellent progress executing key
elements of our growth plan, including securing new
and renewed customer contracts over several years,
successfully launching SmartVend and our new
market data insights, and establishing ‘strategic go
to market’ partnerships. Via our contactless payment
and telemetry solutions, we have strengthened
customer relationships and helped secure new
business in existing new verticals, such as retail, fuel
forecourts and industrial kitchens.
Post year-end, we acquired the trade and assets
of BMI, which, combined with our draught beer
monitoring solution, establishes a comprehensive
beverage management platform. Whilst the combined
US operations will require
investment
during FY2024, the acquisition has accelerated our
hospitality-related development roadmap enabling
profitable expansion of our footprint in the USA and
UK beyond our legacy leased and tenanted customers.
initial
OPERATING REVIEW
Smart Zones
The Smart Zones division recovery continued strongly.
Revenues rose by 4.2% at £8.16m (FY2022: £7.83m),
with profit being up 26.7% at £3.79m (FY2022: £2.99m).
Sales
improved to 259 (FY2022: 252) new site
installations with 11 new contract wins, and 6 contract
renewals as customers’ needs and demand for data
and insights grew.
Our UK estate had 603 (FY2022: 535) pub closures
and 259 new installations, resulting in a net 344 site
reduction (FY2022: 357), taking our installed base
to c 9,800. Whilst it is difficult to predict the pace of
closure rates and new openings, we believe this is
now a sustainable leased and tenanted level.
The post year end trade and asset acquisition
from BMI will accelerate our penetration of the UK
hospitality sector beyond our current leased and
tenanted footprint.
Building on the customer engagement of the last
two years and the launch of SmartDraught and our
insights portal, we see an increased appetite for
market data insights. This is particularly relevant for
the provision of retail data for brewers. Through our
relationship with the Oxford Partnership, we deliver
ground-breaking insights that support consumer-
level decision-making for beer brands. We expect to
show further growth in this exciting area in FY2024.
Adding our compliance service and data insight
analytics to the BMI assets will result in a heightened
emphasis on
improving operational and retail
performance. This strategic approach aims to drive
value from pubs, especially those under private equity
ownership, by maximising their return potential.
CONNECTED DEVICES - SMART ZONES
Mar-23
135,588
9,871
2,919
5,838
Mar-22
145,585
10,710
3,503
7,006
130,000
140,000
150,000
160,000
170,000
Flowmeters
Panels
Cooler Sensors
Recirc Sensors
Machines
Vianet Group plc
8
Strategic Report (continued)
Vianet Americas Inc (“VAI”)
VAI saw losses increase to £150k for FY2023 (FY2022:
£127k loss), impacted by the pandemic related loss of
over 250 units with AMC Theatres.
The acquisition from BMI included customers, an
established inventory operating platform, software
IP, patents for barcode 3D scanning and advanced
technology for point-of-sale data integration.
The combination of Vianet’s SmartDraught draught
beer management solution with BMI’s inventory
platform provides a comprehensive one-stop drinks
management solution which enables operators to
reduce costs, improve productivity and maximise
sales, and drive improved profitability across the entire
drinks category. SmartDraught integration with the
inventory platform will also enable Vianet to provide
brewers with a more cost-effective and competitive
brand monitoring and market insight solution.
Together with our recent investment in SmartDraught,
this acquisition positions Vianet’s hospitality
operations firmly on the path to growth in the UK and
to establishing a profitable footprint in the USA, where
we benefit from direct access to a significant number
of national retail chains.
The opportunity for the Company in the US, the world’s
largest single-operator market, remains significant.
While the combined US operations will require
investment and is expected to be loss-making during
FY2024, we anticipate monthly loss to have narrowed
significantly by year-end and remain committed to
establishing a significant US profit centre.
Overall, the Board remains confident that the Smart
Zones division will see growth and deliver enhanced
turnover, profit, and cash returns to the Group.
Smart Machines
Our investment in sales and marketing, including a
new CRM system, resulted in solid business gains,
including 75 new customer contract wins, which
provides a healthy pipeline to underpin our growth
plans.
Turnover was up 10.5% at £5.95m (FY2022: £5.38m),
with operating profit up 10.4% at £2.01m (FY2022:
£1.82m).
The number of connected devices was 11,062 (FY2022:
12,895). Post machine rationalisation, the total
connected devices grew 11.6% to 53,800 at the year-
end (FY2022: 48,000).
The division made good progress despite short-term
challenges, namely:
•
•
•
component
semiconductor
supply
Global
pressure, whilst easing during the FY2023,
added £0.45m to our component costs, impacted
component supply chains and slowed down
our customers’ introduction of new vending
machines.
The continued uncertainty around the pace
of office re-openings and changing working
habits regarding remote working has made it
challenging for vending operators to determine
new site economics.
The MNO 3G sunset, or switch-off, is a short-
term distraction to vending operators developing
plans to upgrade machines from 3G to 4G LTE.
Whilst this has dampened short-term demand,
Vianet has developed the Vianet Assist hardware
support package, which will result in upgrade
activity and footprint expansion.
The division’s recurring revenues grew 16.5% YOY by
£0.63m and now represent 80% of turnover (FY2022:
77%).
As has been widely reported in the press, the trend
toward non-cash transactions is growing significantly,
with contactless payments giving a fast, easy, and
secure transaction in a world where fewer people
carry cash. Contactless payment solutions drive
increased machine utilisation and sales for our
customers, who benefit from the reduced cost of cash
handling, improved cash flow and assured payment.
We believe that there is a significant opportunity
to drive growth in the unattended retail market by
delivering market-leading analytics and insight into
premium coffee and unattended retail snack & can
channels from new device connections and the rollout
of contactless payment capability, as well as other
market verticals such as fuel forecourts.
The market opportunity for the Group is significant
even when limited to the immediately addressable
market of over 300,000 vending machines in the UK.
It is estimated that the wider addressable market
in mainland Europe is nearer 3 million devices, and
there are 15 million machines worldwide, of which
only c.30% have any form of connectivity.
9
Vianet Group plc
SMART MACHINE PENETRATION
53,758
826,242
Available
Penetration
Penetration
Available
Our contactless payment solution is supported by
leading industry partners Elavon, Worldpay and NMI
and is enhanced by establishing our PCI Master
Merchant service. This allows us to speed up the
onboarding of customers for payment capability
and provide a more cost-effective reconciliation and
payment service to our customers.
Contactless payment remains a desirable solution in
a market where traditional cash-only payments have
long inhibited vending-related usage, consumption,
and customer experience. We believe the evolution
and growth of contactless payment solutions, QR
code technology and the insight from our telemetry
firmware will materially change this dynamic and
attract more consumers to the vending vertical.
In summary, the growth prospects for our Smart
Machines business are positive, and there is a clear
line of sight toward a doubling of the business by the
end of FY2025.
R&D Investment
R&D investment is vital to maintaining the Group’s
market position and thus we have continued to invest
in delivering our product roadmap and operational
capabilities.
•
•
•
•
SmartVend vending management software
service module released in Q3 FY2023 with a
finance module due for release in Q1 FY2024.
Customer migrations should be complete by
spring 2024.
SmartDraught
software
hardware
development, partially in collaboration with
BMI, has resulted in enhanced features and
reduced the cost of both hardware and support.
and
SmartInsight market insight portal developed
and launched.
•
Speed and latency of our solutions has improved
with incremental hardware development to
adapt existing technology for new verticals.
Further product enhancements, migration of all
customers to SmartVend, integration of BMI, and
securing new market verticals for telemetry and
contactless payments on a cloud-based platform will
further boost our services to customers in existing
and new verticals.
The Board believes the investment in data capture
technology, our core data management capability,
and management software platforms will continue to
deliver growth and enhance the quality and visibility of
our recurring revenue streams.
LOOKING FORWARD
•
to
contactless payment,
Vianet has excellent momentum
take
advantage of opportunities in remote asset
management,
and
market data insights both in our core and new
markets, whilst the recent BMI acquisition will
enable growth in our hospitality operations. The
launch of the SmartVend management platform
in H2 2023 has been well received and will
generate further operational efficiencies for our
customers with complex migrations expected
to complete in Q4 2024. This will further cement
Smart Machines as the marketplace’s leading
end-to-end solution. Our highly motivated
sales and commercial team in Smart Machines
are continuing to accelerate growth from
the significant pipeline of opportunities from
existing and new customers in the c 3 million
machine UK and Europe vending machine
market. New business gains resulted in 75
customers being onboarded, helping us deliver
significant new device sales.
Smart Zones has a healthy sales pipeline in
its core UK leased and tenanted sector driven
primarily by our data capabilities. We expect
new system sales in FY2024 to more than
offset further pub closures. The combination of
BMI’s inventory platform and Vianet’s draught
beer monitoring creates a comprehensive and
affordable beverage management solution
which will also unlock opportunities for stock
management, enhanced analytics, and insight,
which will result in growth across all UK
pub sectors and the USA. Continued Private
Equity pub company ownership is expected
to drive greater focus on operating and retail
performance, where we are well placed to
deliver value for customers.
Vianet Group plc
10
Strategic Report (continued)
•
Growing demand for connectivity solutions,
data capture, insights, and payment systems
are driving new sales in our core hospitality
and unattended retail sectors. The recent
announcement of our partnership with Suresite,
a
forecourt retail specialist, and
Vendekin QR payment specialists, demonstrates
our progress toward leveraging our existing
technology to extend our growth in other sectors
such as catering and forecourt solutions where
we anticipate good growth.
leading
Whilst we are not immune from the global supply chain
challenges or the economic backdrop, increasing
demand for our highly relevant products will continue
to drive growth, high-quality recurring income, and
cash generation. Ongoing
in product
development and people is creating real momentum.
The Group is confident that the team, products, and
financial capabilities we have will continue delivering
growth of the business.
investment
The Board remains confident that momentum and
sales will continue to build as we execute our long-
term strategy and deliver sustainable earnings growth
and profitability.
Finally, our high-calibre, energised team, robust
strategy, and strong earnings visibility provides a
natural platform for growth as we expand our IoT
capability and deliver data and insight applications
that help our customers make better decisions about
their assets, to transform business performance.
11
Vianet Group plc
FINANCIAL REVIEW
Mark Foster
Chief Financial Officer
FINANCIAL PERFORMANCE
Group operating profit, pre-exceptional costs,
amortisation and share based payments was £3.11m
(FY2022: £2.36m), being c77% of pre-pandemic
performance, a strong momentum-based recovery
in the last two years from the loss of FY2021 being
the core pandemic year. It is important to recognise
we have been impacted by c£450k of stock premium
costs in the year, without which our operating profit
would have been c£3.56m, versus a like for like last
year of £2.59m allowing for c£230k of stock premium
costs in FY2022 - £0.96m growth, c37%.
OPERATING PROFIT (£’000)
new bank facilities. Going Concern is covered in more
detail in the Report of the Directors.
TURNOVER
Turnover
improved 6.8% by £0.9m to £14.11m
(FY2022: £13.22m), with Smart Machines continuing
its growth curve and best result to date, in addition to
Smart Zones continued strong recovery with growing
revenue and profit.
RECURRING REVENUE
Group contracted recurring revenue base remains
very robust and has been strengthened by several
new 3–5-year contracts, both from new customers
and contract renewals.
Recurring revenue is measured by taking full year
revenue from service packs, licenses, rentals and
technology upgrades, as per Note 3.
TURNOVER (£’000)
16,282
13,215
14,115
8,369
18000
16000
14000
12000
10000
8000
6000
4000
2000
0
3950
3850
3750
3650
3550
3450
3350
3250
3150
3050
2950
2850
5000
4000
3000
2000
1000
0
-1000
4,030
3,105
Mar-20
Mar-21
Mar-22
Mar-23
2,363
Consolidated recurring revenue across the two
divisions remained robust at 89% (FY2022: 88%),
despite new sales being more capex based, but
demonstrating the strength of a growing recurring
revenue footprint. Overall actual recurring revenue
grew 12% by £1.19m year on year, and it is set to
continue.
Mar-20
Mar-21
Mar-22
Mar-23
(687)
TURNOVER - MAR 23
1,597,164
in
Despite some stock premium cost headwinds
absorbed
the year, proactive management
delivered robust gross margins at c. 66% (FY2022:
65%) reflecting the strength of the margin enhancing
growing recurring revenue footprint.
As is required, the Board has considered “Going
Concern” and, coupled with a new more flexible
finance facility achieved post balance sheet, concluded
we have sufficient cash and reserves to get through
the 12 months post the signing date of the statutory
accounts, and beyond with associated committed
12,517,666
Hardware
Recurring
Vianet Group plc
12
Financial Review (continued)
The average recurring revenue per connected device
grew to £60.19 (FY2022: £54.02), 11.4% year on year
growth.
AVERAGE RECURRING REVENUE PER DEVICE (£)
DIVIDEND
As noted in the Chairman’s statement, the Board
has proposed re-instating a dividend policy with a
payment of 0.5p per share (FY22: nil).
Mar-23
60.19
CASH
5000
CASH GENERATION PRE WC (£’000)
Mar-22
54.02
4000
3,722
4,448
2,739
3000
2000
1000
0
-1000
4500
4000
3500
3000
2500
2000
1500
1000
0
-500
-1000
-1500
-2000
-2500
-3000
-3500
0
10.00
20.00
30.00
40.00
50.00
60.00
70.00
This KPI is measured by taking full year recurring
revenue and dividing by the total number of connected
devices at the year end.
PERFORMANCE SUMMARY
Profit before tax was £0.45m (FY2022: £0.17m loss),
being a material improvement from the low of FY2021
pandemic year. We took the opportunity to seek a tax
refund, which was received post year end, for accrued
R&D losses which has impacted the tax position in the
year, which shows a tax charge of £291k after all tax
movements. The table below shows the performance
of the Group.
FY2023
FY2022
Change
Revenue
Operating profit(a)
Profit/(loss) before tax
Basic EPS
Dividend per share
Net debt (b)
£14.11m £13.22m
£2.36m
(£0.17m)
0.65p
0p
£3.00m
£3.11m
£0.45m
0.56p
0p
£3.37m
6.7%
31.8%
11.0%
a) Pre-exceptional items, share based payments and amortisation
b) Refer to note 26
EXCEPTIONALS
People and office rationalisation
Network obsolescence costs
Contingent consideration release
Corporate Activity
Other items
Total
FY2023
‘£000
FY2022
‘£000
17
-
-
103
2
122
61
5
(76)
127
4
121
Largely comprising of staff rationalisation costs and
corporate activity reviews.
Mar-20
(341)
Mar-21
Mar-22
Mar-23
CASH GENERATION POST WC (£’000)
4,233
2,397
2,037
Mar-20
1,052
Mar-21
Mar-22
Mar-23
NET CASH/(DEBT) (£’000)
Mar-20
Mar-21
Mar-22
Mar-23
(952)
(2,661)
(2,999)
(3,373)
Net cash generation pre-working capital movements
was an inflow of £4.45m (2022: £2.74m) which includes
an accrued tax rebate of c£0.92m. Normalised cash
generation was £3.53m, 113.6% of EBITA, and 102.8%
of EBITDA – back at the healthy levels of profit to cash
conversion we were used to seeing pre-pandemic.
13
Vianet Group plc
Working capital was closely managed, noting the
impact of semiconductor supply and stock premium
costs together with inflationary pressures, which
delivered a post working capital generation inflow of
£2.04m (FY2022: £2.40m).Excluding the one off effect
of the accrued tax refund of £0.92m, the underlying
operational working capital drawdown was £1.49m
(FY2022: £0.34m) which was significantly impacted by
stock investment to manage the global semiconductor
supply challenge and ensure we had stock on the
shelf to service customers, together with increased
trade debts from improving trade, and higher credit
outflows funding that stock and increased VAT. Q4
of H2 FY2023 has seen that stock investment start to
unwind which should continue in FY2024.
The cash generated was principally used to invest in
R&D technology spend (as noted in the Chairmans
and Strategic review), new recurring revenue rental
assets, some delayed vehicle fleet refreshment,
and servicing existing Lloyds bank debts, the CBIL,
and mortgage obligations in the main, and overdraft
interest costs. This resulted in an overall cash outflow
of £1.37m (FY2022: £1.63m).
Post year end, we concluded negotiations and due
diligence with HSBC on significantly improved finance
facilities that materially reduces debt repayment
requirements with a £5.44m facility blend of RCF
(£4m), new mortgage (£0.84m) and term loan (£0.6m),
allowing more of the cash generated to be invested
in our products and services, and if we so choose,
debt repayment, and dividend yield. The HSBC facility
contracts were completed on 23rd June and will be in
place on 1 August 2023.
At the year end, noting the stock premium costs
incurred in the year of c£450k, pre-mortgage, CBIL
and previous acquisition loans, the Group had gross
cash of £0.07m (FY2022: £1.57m) and net debt of
£3.37m (FY2022: £3.00m) – a solid position given those
premium costs, and a funded growth plan that should
deliver an improved cash generation bottom line.
The strong recovery over the last two years positions
us well for FY2024 and beyond. We have incurred c
£0.7m of stock premium costs in the last two financial
years, but despite this, delivered growing cash
generation to meet the needs of the business. This
together with the planned improved bank facilities
and the expected business plans we have developed
over three indicative years, we believe we have solid
cash runway forecasts well into 2024 and beyond,
which will underpin our business strategy and allow
for our growth plans.
DIVISIONAL PERFORMANCE
Currently
the Smart Zones division principally
consists of the core beer monitoring and insight
business services (including the US).
SMART ZONES
Turnover
Operating profit(a)
Profit/(loss) before tax
Connected devices
New site installations
YE Net premises(b)
iDraught penetration(b)
FY2023
FY2022
£8.16m
£3.79m
£2.97m
154,216
259
£7.83m
£2.99m
£2.23m
166,804
252
c. 9,758 c. 10,100
30.2%
28.9%
a) Pre-exceptional items, share based payments and amortisation
b) UK, USA and Europe
Turnover mix is shown below with recurring revenue
being 95% (2022: 96%).
SMART ZONES TURNOVER (£) - MAR 23
Hardware 398,565
Recurring 7,764,462
Hardware
Recurring
Recurring revenue per device has improved to £50.35
(2022: £44.89) 12.2%.
AVERAGE RECURRING REVENUE PER DEVICE (£)
Mar-23
50.35
Mar-22
44.89
0
10.00
20.00
30.00
40.00
50.00
60.00
Average operating profitability per device
is
measured by taking full year operating profit before
amortisation, share based payments and exceptional
items and dividing by the total number of connected
devices at the year end.
Average adjusted operating profit per device in the
year grew to £24.57 (FY2022: £17.93), 37.0% reflecting
a year of full billing.
Vianet Group plc
14
Financial Review (continued)
AVERAGE OPERATING PROFIT PER DEVICE (£)
Mar-23
24.57
Mar-22
17.93
0
5.00
10.00
15.00
20.00
25.00
30.00
The division has recovered well and ahead of what was
expected at the outset of the year demonstrating both
the customer engagement for the services we provided
and the resilience of the revenue model. The net estate
at the year-end was circa 9,800 sites (UK & Europe)
versus last year’s c. 10,100 (excluding USA), the
reduction stemming from disposals and C19 impact.
Despite this, we were able to maintain a Smart Zones
operating profit of £3.79m (FY2022: £2.99m), which
was 65.4% of pre-pandemic performance.
SMART MACHINES
The Smart Machines division consists of telemetry
insights and monitoring, and contactless payment
predominantly in the unattended vending retail and
coffee sector, as well as ERP and mobile connectivity
services.
FY2023
FY2022
Turnover
Operating profit (a)
Profit before tax (b)
New Telemetry connections
New Contactless connections
YE Net estate
£5.95m
£2.01m
£1.65m
2046
9,016
£5.38m
£1.82m
£1.59m
2,275
10,620
C53,758 C48,179
a) Pre-exceptional items, share based payments and amortisation on a continuing basis.
b) FY2023 includes £nil of deferred consideration release (2022: £0.76m)
Turnover mix is shown in the chart below. Recurring
revenues were c80% of turnover (FY2022: 77%)
reflecting the increasing recurring revenue footprint
despite more capex sales this year. Recurring revenue
grew c£630k year on year, c16.5%.
SMART MACHINES TURNOVER (£) - MAR 23
Hardware
1,198,599
Recurring 4,753,205
Hardware
Recurring
Semi-conductor component global supply, and some
change in working habits regarding remote working
did impact pace of new connected devices, but despite
that, new contactless connections in our Smart
Machines division continued to be achieved with 9,016
new contactless devices compared to 10,620 last
year. The estate figures in the table above reflect the
net movement which also includes some customers
refining their estates in light of the new normal office
working.
AVERAGE RECURRING REVENUE PER DEVICE (£)
Mar-23
88.42
Mar-22
85.57
0
20.00
40.00
60.00
80.00
100.00
Average recurring revenue per device grew 3.33%
to £88.42 (2022: £85.57), reflecting the increased
footprint and is despite most sales in the year being
capex based, and some customer estate refinement
which would impact recurring revenue overall levels.
As stated previously, this is an evolving growth story,
with overall turnover and profit growth trends being
driven by increased penetration of our contactless and
telemetry solutions and so these measures will flex
each year.
AVERAGE OPERATING PROFIT PER DEVICE (£)
Mar-23
Mar-22
37.45
37.75
0
5.00
10.00
15.00
20.00
25.00
30.00
35.00
40.00
Profit per device is on a par with last year £37.45
(FY2022: £37.75), reflecting the impact of the stock
premiums incurred during the year of around £450k
compared to last year-round £230k. Without that
impact, the year-on-year profit per device would have
been nearer £41.54, growth of c£3.81, 10.0%. Indeed,
the overall profit of £2.01m was held back by the stock
premium costs, without which results would have been
c£2.46m, representing a like for like growth of c20.1%.
Taxation
The Group has continued to utilise available tax
losses during the year resulting in no tax being paid
(FY2022, £nil). The Group will continue to utilise the
available tax losses carried forward into FY2024, but
we did elect to receive a refund of R&D tax losses for
FY2021 and FY2022 amounting to c£922k, which was
15
Vianet Group plc
received post balance sheet. The impact of this on the
brought forward tax losses and deferred tax position
contributed to an overall tax charge of £0.29m (FY2022
tax credit £0.36m) recognising the impact of the tax
losses available and being utilised.
Earnings per share
Basic EPS was 0.56p (FY2022: 0.65p). This reflects
the step forward in results and is impacted by the tax
charge this year, and the tax credit last year.
Balance sheet and cash flow
The Group balance sheet remains strong, very
capable of supporting our growth position and is
further enhanced post balance sheet by a more
flexible HSBC bank facility which in essence removes
the aggressive CBIL repayment terms and term.
The Group generated operating cash flow pre working
capital of £3.53m (FY2022: £2.74m) being 28.8%
growth year on year.
Post working capital covered above, there was a
net inflow of £2.02m (FY2022: £2.40m) impacted by
£0.45m of stock premium costs (FY2022: £0.23m).
The cash generated was used to continue to invest in
the Group’s technology plans to service borrowings
and acquire rental assets, alongside some delayed
vehicle fleet refreshment.
At the year-end, the Group had borrowings of £3.44m
(FY2022: £4.58m), including the CBIL facility and
overdraft, with net debt of £3.37m (FY2022: £3.00m).
Our resilient balance sheet and capacity to generate
cash provides the Company with a solid base to build on
the results of FY2023 results to pursue the significant
growth opportunities that have been identified.
Key performance indicators
Percentage of revenue from recurring income streams1
Gross Margin2
Employee Turnover3
Notes to KPIs
Business risk
The Board and senior management review business
risk two to three times per year. Naturally, over the last
two years C19 has had its well documented impact.
The last year has seen increased stock premium
costs and an increased inflationary environment. The
Directors had considered the areas of potential risk
in assessing the Group’s prospects. Based on their
review, and having considered various factors such
as market conditions, stock supply and premium
costs, inflation, financial plans and approved new
bank facilities, they believe that the business is of
sound financial footing and has a forward looking
sustainable operating future. They note that the
business has achieved a good recovery financially
in the year despite noting some of the hurdles they
have faced, set against overall market confidence in
liquidity and credit.
The Directors consider that material business risks
are limited to:
•
•
Inflation remaining for a long term period and a
return of stock premium costs.
The potential for a cyber security breach
where data security is compromised resulting
in unauthorised access to information which
is sensitive and/or proprietary to Vianet or its
customers. This threat is in common with most
technology businesses, however both short
term and long-term mitigation plans continue
to be in place. Payment Card Industry Data
Security Standard (PCI DSS - Level 1) highest
level of compliance has already been achieved
to support the Group’s contactless payment
solutions and by May 2022 all on premise
servers are in the cloud.
Target
80%
70%
2%
Actual
2023
88%
66%
3.8%
Actual
2022
88%
64%
3.5%
1 Percentage of revenue from recurring income streams = recurring income streams as a percentage of all income streams. Group trading
companies aim to increase shareholder value through growth in revenue, linked to profitability (see Gross Margin below). Source data is taken from
management information. The recurring contractual nature of the Company’s income stream has led to continued improvement in performance
versus target. The achievement of this target depends on the mix of new hardware sales versus on going recurring revenue.
2 Gross Margin = Gross profit as a percentage of revenue. Group trading companies aim to generate sufficient profit for both distribution to
shareholders and re-investment in the Company, as measured by Gross Margin.
3 Employee Turnover = Gross trading companies aim to be seen as a good, attractive employer with positive values and career prospects, measured
against internal People and Development reports. In addition to normal employee turnover, the figure also includes employees leaving as a result
of business rationalisation activity.
Vianet Group plc
16
REPORT OF THE DIRECTORS
The Directors present their report and the audited financial statements for the year ended 31 March 2023.
Business Risk
Business risk is discussed in the Chief Executive’s report pages 5 to 11.
Going Concern
The Directors, after having made appropriate enquiries, including (but not limited to) a review of the Group’s budget
for 2023/2024, three year plan, cash generating capacity at least 12 months from the date of signing (underpinned by
long term contracts in place and historical results), new bank facilities as follows - the Directors have confirmation
that new facilities have been agreed with HSBC on 23 June 2023 as follows:
1)
2)
3)
a £4m three year committed RCF
£0.84m fifteen year mortgage and,
£0.6m four year term loan
These facilities are in place. The bank transition will occur on 1 August 2023, and we have existing facilities in place
to 30 September 2023 and beyond to support the transition.
As a result, 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.
The financial statements are prepared on a going concern basis which the directors believe to be appropriate for the
following reasons.
Current Trading
•
The Group made an operating profit of £3.11 million for the year to March 2023. The underlying group retains
a strong track record of earnings and cash growth as demonstrated in the table below. We have delivered a
credible result to build from in what may be considered more normalised trading.
Vianet Group plc
March 23
March 2022
March 2021
March 2020
March 2019
March 2018
Turnover (£’000)
Recurring Revenue %
Operating Profit (£’000)
Cash Generation (£’000) *
Cash Generation (£’000) *
Cash Generation (£’000) ***
Basic EPS (p)
Dividend Cover (PAT)
14,115
89.0
3,105
4,448
3,526
2,037
0.56
N/A
13,215
88.0
2,363
2,738
2,738
2,397
0.65
N/A
8,369
89.0
(687)
(339)
(339)
1,052
(6.75)
N/A
16,282
92.0
4,030
3,739
3,739
4,233
8.56
N/A
15,683
94.0
3,855
3,990
3,990
2,036
8.87
1.23
14,561
90.0
3,621
3,523
3,523
2,974
6.55
1.16
* operational cash generation pre working capital movements (stock, debtors and creditors). Includes £922k tax refund provision in FY23.
** operational cash generation pre working capital movements (stock, debtors and creditors). Excluding £922k tax refund provision in FY23.
*** operational cash generation post working capital movements and LTIP tax payment
•
The Group has bank facilities up to £1.5 million of which £1.17 million is utilised at the year end, outstanding
loans of £2.27 million, and cash on hand of £0.07 million as at 31 March 2023. The Group took advantage of the
Government supported CBIL scheme in securing a £3.5 million loan in FY2021 to ensure the impact of COVID19
was managed and allow for continued investment. Also please refer to Net Debt table in note 24. The Directors
have confirmation that facilities have been renewed through to 30 September 2023, with the ability to extend
that period, with a post balance sheet transition to a new bank facility with HSBC. This covers a £4m three year
committed RCF, £0.84m fifteen year mortgage and £0.6m four year term loan. The transition will occur on 1
August 2023.
17
Vianet Group plc
•
The Directors have prepared prudent forecasts through to March 2024, built from the detailed Board approved
FY24 budget. Further forecasts through to March 2026 have also been prepared. The forecasts include a number
of assumptions in relation to sales volume, pricing, margin impact and potential new avenues of business and
associated bank facilities. These forecasts have been extended to March 26 as noted, to ensure the forecast
period covers 12 months from signing the financial statements.
•
The Group’s trading and cash flow forecasts have been prepared on the basis of assumptions based on more
normalised trading post COVID19, underpinned by historical performance noted above.
The Groups cash flow forecast and projections, show that the Group will be able to operate within the level of its
facilities for at least the next 12 months.
Statement by the Directors in performance of their statutory duties in accordance with s172(1)
Companies Act 2006
The Board of Directors of Vianet Group plc consider that, individually and collectively, they have acted in the way
which in good faith would be most likely to promote the success of the Company for the benefit of its stakeholders,
employees, customers, suppliers, local government and communities in accordance with the stakeholder and matters
noted in S172(1)(a-f) of the Act in the decisions taken during the year reported on, having regard to;
•
•
•
•
•
•
•
•
The likely consequences of any decision in the long term
The interests of the Company’s employees
The need to foster the Company’s business relationships with suppliers, customers and others
The need to regularly communicate with our Investor community
The impact of the Company’s operations on the community and the environment
The desirability of the Company maintaining a reputation for high standards of business conduct,
The need to act fairly as between members of the Company
The Directors have confirmation that facilities have been renewed through to 30th September 2023, with the
ability to extend that period, pending a post balance sheet transition to a new bank with new facilities which
includes a committed three year RCF of up to £4m. That transition is expected to occur on 1 August and at the
time if this report is very much underway.
The Board looked to promote the success of the Company, having regard to the long term, whilst taking into account
the interests of all stakeholders. Our strategy is designed to secure the long-term financial viability of the Company
to the benefit of its members and all stakeholders. A main feature of this is to continue to operate the business within
tight budgetary controls and in line with regulatory requirements. This was done in particular by reference to:
•
•
•
•
•
•
•
our continued and ongoing communication with our employees
our continued and ongoing communication with our investor community
our continued priority for health and safety improvement measured through ongoing risk assessments, the
KPIs on incidents and enhancement to health and safety across the business
our continued review towards environmental compliance and protection
the approval of our strategic objectives (‘our strategy’) for the Company
the business plan for the next financial year (‘our plan’)
the approval of terms to enter into significant contracts
Vianet Group plc
18
Report of the Directors (continued)
We engage with stakeholders through regular meetings and dialogue with employees, customers, suppliers and
investors. We undertake customer satisfaction surveys, employee Best Company engagement survey (retaining top
end of the 1 star rating) and host regular live employee Q&A sessions.
Other key actions including delaying the dividend are covered in the Chairman’s and CEO report.
The Board have considered the impact of increased interest rates and inflationary economics. The expected new
bank facilities do help mitigate and manage interest rate exposure as the facilities carry a lower interest rate margin
above bank base rate, than the existing facilities have. The economy is expecting higher rates in 2023 but sentiment
suggests these will recede sometime in 2024.
While the company has faced increased cost of semi-conductor components, such high and extraordinary increases
have now reeded and are not expected to re-occur. Wage inflation has not affected the company, and fuel costs for
running our fleet have started to normalise.
The Board continually recognises that our employees are fundamental to the success of the Company and the delivery
of our plan and we are proud of how they have engaged over the last two very challenging year’s. We aim to be a
responsible employer in our approach to the pay and benefits our employees receive. The health, safety and well-
being of our employees is of primary concern in the way we do business and is monitored extensively by the Board.
As the Board of Directors, our intention is to behave responsibly to all stakeholders and to ensure that management
operate the business in a responsible manner, operating within the high standards of business conduct and good
governance expected for a business such as ours. Acting in this way will contribute to the delivery of our plan.
As the Board of Directors, our intention is also to make decisions which lead to the long-term success of the Company
whilst behaving responsibly towards our Shareholders, treating them fairly and equally, so they benefit from the
successful delivery of our strategy and plan.
Financial Instruments
Information about the use of financial instruments by the company and its subsidiaries and the Group’s financial risk
management policies is given in note 18.
Environment
The Group recognises the important role it plays in the environment and communities within which it operates. The
health, safety and wellbeing of our employees, compliance with regulations and monitoring of energy usage are
important business priorities for the Group. Vianet is committed to conducting its business operations in an open
and responsible manner and we recognise the need to continually improve our operations where practical to do so,
to reduce our impact on the environment; to continuously improve assets and processes; to ensure the safety and
welfare of our employees; and to act as a good neighbour, minimising the impact of our operations on the wider
community.
The Company is not defined as a large company required to meet the full reporting required under the Streamlined
Energy and Carbon Reporting (SECR) needs. That said, however, the company recognizes SECR and environmental
objectives are an important matter to continually seek to address.
The company is not directly involved in manufacturing - we are a people based global business operating from one UK
head office. As a company, however, we have embarked on an ESG programme that involved assessing how our office
we operate from influences the environment and what actions we can take to improve that impact.
A full external audit was undertaken which in summary confirmed we consume in the region of 300,000 KWH or
energy a year, or c66 tonnes of carbon.
19
Vianet Group plc
We have installed a full solar system during FY23, that along with several other initiatives, we expect to reduce that
c66 tonnes by up to c80% going into FY25.
Further work beyond those initiatives is underway to demonstrate how our products and services reduce the carbon
footprint significantly for some of our customer base, and these factors will help us determine by when we can be
confident of being a net zero carbon user.
The Group’s policy with regard to the environment today, and in particular Health and Safety requirements, is to
ensure that the Group’s operational subsidiaries understand and effectively operate in such a way that they comply
with all the legal requirements relating to the health and safety environments in which they operate. During the period
covered by this report, no Group company has incurred any fine or penalties or been investigated for any breach of
health and safety regulations.
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
regular performance management, live Q&A company-wide sessions and in the adoption of an open door policy of
engagement. 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,
despite several changes in personnel in the previous 12 months. This has been demonstrated in many ways, including
improvements in employee engagement survey, cost of living support, customer satisfaction, contract gains and
improved financial performance, 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 3.8%
on average per month, above the target of 2% 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.
We adopt an equal opportunities approach.
Research and Development
The Group has a continuing commitment to levels of research and investment in ensuring systems are at the forefront
of customer needs to ensure future growth. During the year expenditure on research and development was £1,699,000
(FY2022: £1,975,000) all of which has been capitalised as an asset on the balance sheet.
Dividends
The directors are proposing a final dividend in respect of the year ended 31 March 2023 of 0.5p per share payable
on 27 October 2023 to shareholders on the register on 14 September 2023. Total dividend payable 0.5p (FY2022: nil).
Capital Structure
Details of the authorised and issued share capital, together with details of the movements in the company’s issued
share capital during the year are shown in note 20. The company has one class of ordinary shares which carry no right
to fixed income. Each share carries the right to one vote at general meetings of the company.
There are no specific restrictions on the size of a holding nor on the transfer of shares, which are both governed by
the general provisions of the Articles of Association and prevailing legislation.
Vianet Group plc
20
Report of the Directors (continued)
The Directors are not aware of any agreements between holders of the company’s shares that may result in restrictions
on the transfer of securities or on voting rights.
Details of employee share schemes are set out in note 22 and no person has any special rights of control over the
company’s share capital and all issued shares are fully paid.
Directors’ Indemnity
Qualifying third party indemnity provisions are in force for the benefit of the directors.
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:
J W Dickson
M H Foster
S Panu
D Coplin
Directors’ emoluments
Details of Directors’ emoluments for the year are as follows:
Ordinary
shares of
10p each
2023
5,124,981
343,050
75,000
7,500
Ordinary
shares of
10p each
2022
5,054,981
343,050
-
7,500
Executive
M H Foster
Non-executive
J W Dickson
C Williams
D Coplin
Stella Panu
Total
Salary
and
fees
2023
£’000
Other
emoluments
2023
£’000
Total
emoluments
2023
£’000
Salary
and
fees
2022
£’000
Other
emoluments
2022
£’000
Total
emoluments
2022
£’000
241
39
280
221
39
260
247
11
32
20
551
-
-
-
-
39
247
11
32
20
590
213
32
32
-
498
-
-
-
-
39
213
32
32
-
537
1. Executive remuneration is determined by the remuneration committee consisting of non-executive Directors D
Coplin, S Panu and J W Dickson. Director remuneration is externally benchmarked to ensure it is appropriate for
the roles the directors undertake.
2. Other emoluments received consist of the provision for private medical care, motor car allowances and pension
contributions.
3. C Williams resigned on 13 July 2022.
4. S Panu was appointed on 13 July 2022.
5. S Panu fees for 2023 were paid to Heron Consulting Group Limited, a company of which she is a Director.
21
Vianet Group plc
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.
10. The company does not have a formal policy for directors notice periods, they are in line with best practice for an
AIM listed business.
11. M H Foster has 18 years’ service, J W Dickson 20 years’ service, C Williams 10 years’ service, D Coplin 6 years’
service, S Panu c1 year service.
Directors’ share options
Details of the share options held by Directors are as follows:
M H Foster
James Dickson
Dave Coplin
Stella Panu
* Unapproved
At
1 April
2022
135,000
124,000
100,000
-
-
-
-
At
31 March
2023
135,000
124,000
100,000
100,000
250,000
50,000
50,000
Option
price
Date granted
85.0p
May 2014
103.0p December 2015
February 2021
February 2023*
February 2023
February 2023*
February 2023*
72.0p
75.0p
75.0p
75.0p
75.0p
Share options are exercisable between nil and ten years from the date of the grant.
No options have been exercised by Directors in the current or prior year.
The market price of the Company’s shares at the end of the financial year was 73.5p and the range of market prices
during the year was between 92.5p and 49.0p.
Long Term Incentive Plan
Vianet adopted a new LTIP scheme on 17 December 2015. On 21 December 2015, awards were granted to five members
of staff, who each had a percentage entitlement in the overall awards pool. Further detail is provided on page 75. The
LTIP scheme remains in place for one member of staff. No awards were made during the year.
Substantial Shareholdings
The Company has been informed that on 10 May 2023 the following shareholders (excluding Directors) held substantial
holdings of the issued ordinary shares of the company:
Gresham House plc
Liontrust Asset Management
AXA SA
Interactive Investor Trading
Hargreaves Lansdown plc
City Asset Management
Teviot Partners LLP
Canaccord Genuity
Vianet Group plc
Holding of
Ordinary shares
Number
Issued
Share capital
%
5,022,286
2,465,942
1,716,000
1,529,097
1,207,245
1,010,130
923,470
821,778
17.43%
8.56%
5.96%
5.31%
4.19%
3.51%
3.21%
2.85%
22
Report of the Directors (continued)
Annual General Meeting
The Annual General Meeting will be held on 5 September 2023 at 12.00pm, at the company’s offices One Surtees Way,
Surtees Business Park, Stockton on Tees, TS18 3HR.
Post Balance Sheet Event
On 12 May 2023, the Company acquired the trade and assets of a US based business, BevMetrics Inc. (BMI).
BMI is based in Denver, being a USA based provider of inventory software solutions to the USA hospitality sector, and
wholly owned subsidiary of Identec AG.
The acquisition consisted of software IP and patents, an established operating platform, and minor customers. BMI’s
five employees will be incorporated into Vianet’s USA subsidiary Vianet Americas Inc. (“VAI”) which has worked closely
with BMI over the past couple of years.
The initial consideration payable to the BMI is £577,500 and will be satisfied in the form of the issue of 700,000 ordinary
Vianet shares at a price of 82.5p each with contingent consideration payable dependent on performance metrics. The
contingent consideration, to be calculated as 7% of net revenue of VAI for the period 1 April 2024 through 31 December
2028, will be payable in cash annually and is capped at a maximum future contingent consideration of £4 million. That
will be evaluated for the year ended March 2024.
The fair values of assets and liabilities acquired is noted in the table below:
Asset/(Liability)
Furniture F&F NBV
Computer equipment NBV
Patent related legal costs NBV
Trade Debts
Trade Creditors
Software and IP Intangible asset value
$
£ at $1.20/£1
804.18
3,411.92
80,397.23
22,074.63
(3,445.80)
589,757.84
670.15
2,843.27
66,997.69
18,395.53
(2,871.50)
491,464.87
Price Paid Vianet Group plc shares at 82.5p
693,000.00
577,500.00
The trade and assets from the acquisition were transferred immediately on completion of the transaction to the
Company’s US subsidiary, Vianet Americas Inc. (VAI). VAI will continue to trade with the existing BMI customers as
plans to expand evolve in the coming year.
Financing
At the time of publication, the company has agreed on 23 June 2023 to move banks from Lloyds to HSBC. The date of
change is 1 August 2023.
23
Vianet Group plc
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 the group and company financial statements in accordance with UK adopted International
Accounting Standards, (‘IFRS’) in conformity with the requirements of Companies Act 2006. 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 company and of the profit or loss of the group for that period. The directors are also
required to prepare financial statements in accordance with the rules of the London Stock Exchange for companies
trading securities on AIM.
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 they have been prepared in accordance with UK adopted international accounting standards
(IFRS) in conformity with the requirements of Companies Act 2006, 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 requirements of the Companies Act 2006.
They are also responsible for safe-guarding the assets of the company and hence for taking reasonable steps for the
prevention and detection of fraud and other irregularities.
Website publication
The directors are responsible for ensuring the annual report and the financial statements are made available on a
website. Financial statements are published on the company’s website in accordance with legislation in the United
Kingdom governing the preparation and dissemination of financial statements, which may vary from legislation in
other jurisdictions. The maintenance and integrity of the company’s website is the responsibility of the directors. The
directors’ responsibility also extends to the ongoing integrity of the financial statements contained therein.
Auditor
BDO 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 18 July 2023 and signed on its behalf by:
Mark Foster
Director
Vianet Group plc
24
CORPORATE GOVERNANCE STATEMENT
General Principle
The QCA Code
The Company has adopted the QCA Code in compliance with Aim Rule 26. A very in depth explanation on how Vianet
complies with the Code and the ten principles of the Code and how the Company addresses these can be found on
the Company Investor website link noted below;
https://vianetplc.com/wp-content/uploads/2023/03/VNET-Corporate-Governance-Statement-March-23.pdf
We summarise the key Corporate Governance features below and, in addition, we further comment on certain
principles of the Code as follows;
Principle 1: Establish a strategy and business model which promotes long terms value for
stakeholders
Narrative covering the strategy and business model of the Group is included in the Strategic Report to this Annual
Report and Financial statements, include key challenges in their execution.
Principle 8: Promote a culture that is based on our values and behaviours
The Board aims to lead by example and do what is in the best interests of the Company. The Group’s culture, values
and frameworks, whereby everyone at Vianet collectively and individually always ‘seeks to do the right thing’ for
customers, suppliers, colleagues, shareholders and other stakeholders, are fundamental to delivering business
growth.
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 solutions for customers.
The Board ensures that the company has the means to determine that values are recognised and respected through
its reward and recognition frameworks from performance and development review through to recognition awards
Over the period, general positive feedback has been received from shareholders in relation to the management.
There have been no other key governance matters to report during the year.
The Board
The below disclosures in respect of the makeup of the Board are considered to comply with Principle 5: Maintain the
board as a well-functioning balanced team led by the Chair:
The Board currently consists of one Executive and three Non-Executive Directors as follows:
Executive Directors
M H Foster (Chief Financial Officer and Company Secretary)
Non-Executive Directors
J W Dickson (Chairman/Interim CEO)
C Williams (resigned 13 July 2022)
D Coplin
S Panu (appointed 13 July 2022)
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 Director, are responsible for running the
business. At the current time, the Chairman is acting as the stand-in CEO, supported by the CFO.
25
Vianet Group plc
The Board meets regularly, with no less than eight meetings planned over 10 days in any one calendar year. All
Board members attended each meeting that was planned in the 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,
people and development and health and safety policies, as well as approval for major items of capital expenditure.
The Directors continually ensure they are trained in association with duties and responsibilities of being a Director
of a listed Company.
To add further detail in support of the QCA code;
Principle 6: Ensure that between them the Directors have the necessary up-to-date experience, skills
and capabilities
The Board is satisfied that, between the Directors, it has an effective and appropriate balance of skills and
experience, including in the areas of IOT, b2b, software as a service, finance, innovation, international trading,
ecommerce and marketing. All Directors receive regular and timely information on the Group’s operational and
financial performance. Relevant information is circulated to the Directors in advance of meetings. The business
reports monthly on its headline performance against its agreed budget, and the Board reviews the monthly update
on performance and any significant variances are reviewed at each meeting.
All Directors retire by rotation at regular intervals in accordance with the Company’s Articles of Association.
Appointment, removal and re-election of Directors
The Board makes decisions regarding the appointment and removal of Directors, and there is a formal, rigorous
and transparent procedure for appointments. The Company’s Articles of Association require that one-third of the
Directors must stand for re-election by shareholders annually in rotation; that all Directors must stand for re-
election at least once every three years; and that any new Directors appointed during the year must stand for
election at the AGM immediately following their appointment.
James Dickson, Chairman and acting CEO, retired by rotation this year and, being eligible for re-election were re-
appointed to the Board at the AGM on 5 September 2023.
Stella Panu, NED, was appointed on the date of last year’s AGM but a resolution to appoint Stella was not proposed
at last year’s AGM, so the appointment was formally confirmed at the AGM on 5 September 2023
Independent advice
All Directors are able to take independent professional advice in the furtherance of their duties, if necessary, at
the Company’s expense. In addition, the Directors have direct access to the advice and services of the Mark Foster,
Company Secretary and Chief Financial Officer who in turn may refer directly to the Group’s advisors, in particular
the company lawyers and auditors.
The Company Secretary is responsible for ensuring that the Board procedures are followed and that the Company
complies with all applicable rules and regulations, governing its operation
The Board and senior management from time to time seek advice on significant matters from external advisers.
These advisers include, amongst others, the Company’s nominated adviser and broker, public relations, external
auditors, legal advisers, capital advisory services and remuneration advisory services.
The independent non-executive Directors being James Dickson (Chairman), currently CEO, David Coplin and Stella
Panu, 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.
Vianet Group plc
26
Corporate Governance statement (continued)
The Board considers, after careful review, that the Non-Executive Directors bring an independent judgement to
bear. In particular, the Board has considered the independence of James Dickson, Non-Executive Chairman, now
CEO - who was CEO until 2013 and holds a shareholding of c17.8% and has concluded that his interests are fully
aligned to shareholders.
The Board is satisfied that it has a suitable balance between independence on the one hand, and knowledge of the
Company and markets on the other, to enable it to discharge its duties and responsibilities effectively. All Directors
are encouraged to use their independent judgement and to challenge all matters, whether strategic or operational.
The Chairman holds regular update meetings with each Director to ensure they are performing as they are required
and comfortable that they are allowed to do so independently in an inclusive environment. During the year nine
Board meetings took place including two two-day Performance & Strategy Reviews with senior management. All
Board members attended all meetings.
Key Board activities this year included:
-
-
-
-
-
-
-
-
-
-
Input into our strategic priorities and accelerating the growth plan
Ongoing open dialogue with the investment community, including follow up meetings with the Chairman.
Considered our financial and non-financial policies.
Discussed the Group’s capital structure and financial strategy, including capital investments, shareholder
returns and the dividend policy
Reviewed the investment justification and progress of the Group’s technology platform and infrastructure
development.
Discussed internal governance processes
Reviewed the Group risk register
Reviewed feedback from shareholders post full and half year results
Ongoing review and monitoring of Health & Safety, GDPR and Cyber Security
Discussed and supported the Group’s response to the Coronavirus pandemic including a Going Concern review.
Time commitments and meetings attended by directors is available in the Company’s annual report however the
Company’s Non-Executive Directors are expected to commit between 15-18 days per year to the Company and the
Chairman is expected to commit at least 40 days per year to the Company, however as the Chairman has been acting
as the Interim CEO since December 2020, he is full time
Directors’ conflict of interest
The Company has effective procedures in place to monitor and deal with conflicts of interest. The Board is aware
of the other commitments and interests of its Directors, and changes to these commitments and interests are
reported to and, where appropriate, agreed with the rest of the Board.
As regards evaluating Board performance, we adopt Principle 7 of the QCA code, noted below;
Principle 7: Evaluate Board performance based on clear and relevant objectives, seeking continuous
improvement
The Chairman assesses the individual contributions of each of the members of the team on an ongoing basis to
ensure that:
Their contribution is relevant and effective
That they are committed
Where relevant, they have maintained their independence
-
-
-
27
Vianet Group plc
The chairman holds regular individual reviews with each board member to discuss matters reserved for the Board
and matters impacting Board effectiveness.
The last internal Board effectiveness evaluation sought anonymous feedback from Directors and senior managers
covering areas including structure & skills, operating effectiveness, quality & timeliness of information, and board
development. This exercise identified a number of areas for positive action including a modest increase in the
number of Board meetings from 6 to 9 comprising:
-
-
Two two-day Board meetings incorporating Performance & Strategy reviews with senior management
attending
7 one day Board meetings. The majority of which have been online MS Teams meetings
This resulted in greater exposure between management and Non-Executive Directors, and also enables the board
to have more in depth discussions with more timely decision making and action.
The evaluation also concluded that the Chairman, whilst occasionally direct, has an open, inclusive leadership style,
demonstrates independence and objectivity, and has a strong understanding of the business.
The next Board Effectiveness Review is due in September 2023, when we intend to review the performance of the
team as a unit to ensure that the members of the board collectively function in an efficient and productive manner
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. All committees operate within those terms of reference and where appropriate pay due
regard to the Companies risk register as needed in discharging the responsibilities of their roles.
As regards evaluating Board committees, we adopt Principle 10 of the QCA code, noted below;
Audit Committee
This consists of:
S Panu (Chairman)
J W Dickson
D Coplin
It meets at least twice in any year and is usually attended as a minimum by the Chief Executive Officer and the Chief
Financial Officer, as well as the Group’s External Auditor. All members attended each meeting that occurred during
the year.
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.
The Audit Committee business covers Full and Interim audit results, review of half and full year results
announcements, key audit findings and a review of the risk register. All of the Committee’s duties were discharged
during the period by a review of all these business areas. An audit committee meeting was held on 7 June 2022 in
respect of the full year results to 31 March 2022 with BDO LLP. An Audit Committee was held on 28 November 2022
for the half year results. The external auditors plan for the audit of these Group financial statements was approved
and an Audit Committee meeting was held on 6 June 2023 to review and discuss the financial statements, including
the external auditors detailed audit completion report including the consideration of key audit matters and risks.
Vianet Group plc
28
Corporate Governance statement (continued)
Remuneration Committee
This consists of:
D Coplin (Chairman)
J W Dickson
S Panu
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 Directors is normally decided upon
by the Board’s Executive Directors, however the Chairman’s remuneration for the additional responsibility on the
interim CEO was decided by the non-executive directors and the CFO. All members attended each meeting that
occurred during the year.
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. Information
on Directors share interests, Directors remuneration & emoluments, Directors share options and share option
schemes can be found above in the Report of the Directors on pages 21 and 22.
Nominations Committee
This consists of:
J W Dickson (Chairman)
S Panu
D Coplin
The Committee has met two times during the course of the year with particular focus on senior management
structure. The Committee has terms of reference which are available for inspection. All members attended each
meeting that occurred during the year.
Internal Control and Risk Management
The below disclosures in respect of the internal control and risk management are considered to comply with
Principle 4: Embed effective risk management, considering opportunities and threats, throughout the organisation:
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
•
•
•
29
budget setting process including longer term forecast review and plans
comprehensive monthly financial reporting system, with comparison to budget, supported by written report
from the Chief Executive Officer and Chief Financial Officer
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
•
•
•
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. We believe these are key areas of risk under Companies Act
2006 s414C (2) and are noted below;
Risk description
Mitigation
General economic risk
The performance of the business is linked to economic
activity in two vertical markets currently, the pub
retailing market and unattended retail vending
Cyber Security
A cyber security breach where customer data security
is compromised resulting in unauthorised access to
sensitive/proprietary customer information.
Environmental sustainability
The company is seeking to address a sustainability
agenda around health, safety and wellbeing, operating
efficiently giving due regard
to environmental
responsibility.
Price Risk
Price pressure from suppliers in the semi-conductor
commodity market
Technological factors
Technological risk factors may cause technology in
use to become obsolete or too costly to maintain
Ukraine/Russia risk
While the impact currently is minimal, the Board will
monitor events and sanctions as they unfold and act
accordingly.
•
Pub retailing market has been severely
hampered due to national Covid19 lockdown
measures in the year
•
Ongoing PCI-DSS compliance – Level 1
•
See above section.
•
Agree forward buying of components
•
•
•
Vianet has a full technology strategy both
commercially and infrastructure wise
Employ strategic planning to make timely
investments in existing and new equipment
Company
The
all
recommended review actions and has support
contracts ready to implement if needed
implemented
has
Shareholder and Stakeholder Communication
The Group places a high level of importance on communicating with its shareholders and key stakeholders including
customers, suppliers and employees. The Group welcomes and encourages such dialogue with all such parties
and with the investor community in compliance with the regulations governed by the London Stock Exchange. The
Group actively engages directly with shareholders and works closely with Cenkos its nominated advisor and broker,
Weston Advisors and H2Glenfern, investor communications and corporate finance & relations advisors.
While attending to full and half year investor meetings and follow up, the Directors actively engage in new and
existing investor contact throughout each reporting period. This is also the case with customers and suppliers as
needed, and very importantly with employees, undertaking an annual engagement survey to determine employee
engagement and views on the company and actions that may need to be considered to build upon that engagement.
Vianet Group plc
30
Corporate Governance statement (continued)
Whilst the pandemic and the emerging matters from it such as the semi-conductor chip supply issues have been
challenging it has afforded the Board and management with a great opportunity to demonstrate leadership and
engage proactively with all stakeholders. Many of the activities and actions have been covered in recent Chairman’s
report, however it is worthy to note that employee engagement and welfare management has been exceptionally
good, including regular live all business MS Teams question and answer sessions attended by over 90% of employees
with the recording available to those who were unable to join.
The Group prides itself on pro-active communication across all interested parties where appropriate as our
relationships with investors, customers, suppliers and employees form core foundations upon which the businesses
success is built, and it is the Directors considered view that we treat all such parties fairly and impartially.
Share Options
The share option plans in existence on 31 March 2023 were the EMI plan, the Executive plan, the Employee Plan,
and a Long-Term Incentive 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.
31
Vianet Group plc
INDEPENDENT AUDITOR’S REPORT TO
THE MEMBERS OF VIANET GROUP PLC
In our opinion:
•
•
•
•
the financial statements give a true and fair view of the state of the Group’s and of the Parent Company’s affairs
as at 31 March 2023 and of the Group’s profit for the year then ended;
the Group financial statements have been properly prepared in accordance with UK adopted international
accounting standards;
the Parent Company financial statements have been properly prepared in accordance with United Kingdom
Accounting Standards; and
the financial statements have been prepared in accordance with the requirements of the Companies Act 2006.
We have audited the financial statements of Vianet Group plc (the ‘Parent Company’) and its subsidiaries (the ‘Group’)
for the year ended 31 March 2023 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 notes to the financial statements, the Company Balance Sheet, the Company Statement of Changes in Equity,
notes to the Company Balance Sheet including a summary of significant accounting policies.
The financial reporting framework that has been applied in the preparation of the Group financial statements
is applicable law and UK adopted international accounting standards. The financial reporting framework that has
been applied in the preparation of the Parent Company financial statements is applicable law and United Kingdom
Accounting Standards, including Financial Reporting Standard 101 Reduced Disclosure Framework (United Kingdom
Generally Accepted Accounting Practice).
Basis for opinion
We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK)) and applicable law.
Our responsibilities under those standards are further described in the Auditor’s responsibilities for the audit of
the financial statements section of our report. We believe that the audit evidence we have obtained is sufficient and
appropriate to provide a basis for our opinion.
Independence
We remain independent of the Group and the Parent Company in accordance with the ethical requirements that are
relevant to our audit of the financial statements in the UK, including the FRC’s Ethical Standard as applied to listed
entities, and we have fulfilled our other ethical responsibilities in accordance with these requirements.
Conclusions relating to going concern
In auditing the financial statements, we have concluded that the Directors’ use of the going concern basis of accounting
in the preparation of the financial statements is appropriate. Our evaluation of the Directors’ assessment of the Group
and the Parent Company’s ability to continue to adopt the going concern basis of accounting included:
•
•
•
Obtaining and examining the Board’s Going concern paper, alongside supporting forecasts for the period of at
least twelve months from when the financial statements are authorised for issue..
Challenging Director’s assumptions, such as revenue pipeline, as used in the forecast period through review of
the historic forecast accuracy, comparing forecasts to post year end results, cost performance, current business
trends and pipeline/contract analysis.
Considering the Board’s probable scenarios of sensitivities, to understand the robustness of the forecast trading
model and the headroom available to the Group and Parent Company.
Vianet Group plc
32
Independent auditor’s report (continued)
•
•
Review of the available cash and financing facilities within the Group, and evaluation of the Directors’ downside
sensitivities on cash flow headroom, incorporating a review of financial covenants compliance and headroom
analysis throughout the forecast period. This included consideration of the new facilities and the renewal of the
existing facilities which occurred between May to July 2023.
Review of the disclosures made in the financial statements.. We assessed whether these adequately disclose the
basis of the judgements taken and the view formed by the Directors with respect to going concern.
Based on the work we have performed, we have not identified any material uncertainties relating to events or conditions
that, individually or collectively, may cast significant doubt on the Group and the Parent Company’s ability to continue
as a going concern for a period of at least twelve months from when the financial statements are authorised for issue.
Our responsibilities and the responsibilities of the Directors with respect to going concern are described in the relevant
sections of this report.
Overview
Coverage
100% of Group profit before tax
100% of Group revenue
100% of Group total assets*
Key audit matters
2023
2022
*excluding the £0.3m cost base in the non-significant components
Valuation of non-current assets
X
Capitalisation of development costs
X
X
Capitalisation of development costs is no longer considered to be a key
audit matter having regard that no new R&D projects have commenced
in the year.
Materiality
Group financial statements as a whole
£212k (2022: £132k) based on 1.5% on revenue (2020: 1% of revenue)
An overview of the scope of our audit
Our Group audit was scoped by obtaining an understanding of the Group and its environment, including the Group’s
system of internal control, and assessing the risks of material misstatement in the financial statements. We also
addressed the risk of management override of internal controls, including assessing whether there was evidence of
bias by the Directors that may have represented a risk of material misstatement.
The Parent Company and Vianet Limited were considered to be significant components and were subject to a full
scope audit by the Group audit team, covering 100% of the revenue of the Group for the year.
Non-significant components (being Vianet Americas Inc and Brulines Group Limited), were subject to specified audit
procedures and relevant analytical procedures. The cost base included in these non-significant components was
approximately £0.3m which was audited by the group audit team.
33
Vianet Group plc
Key audit matters
Key audit matters are those matters that, in our professional judgement, were of most significance in our audit of the
financial statements of the current period and include the most significant assessed risks of material misstatement
(whether or not due to fraud) that we identified, including those which had the greatest effect on: the overall audit
strategy, the allocation of resources in the audit, and directing the efforts of the engagement team. These matters
were addressed in the context of our audit of the financial statements as a whole, and in forming our opinion thereon,
and we do not provide a separate opinion on these matters.
Key audit matter
Valuation of non-
current assets
Group’s
The
policies
accounting
and
goodwill
on
intangibles are shown
in notes 1.6 - 1.8 and
2.1 to the financial
and
statements
disclosures
related
are included in notes
10 and 11.
line with the requirements of
In
the relevant accounting standards,
management test non-current assets
annually for impairment.
The non-current assets impairment
assessment model prepared by
management, based on the expected
present value of future cash flows to
be generated from both the Smart
Zones and Smart Machines cash
generating units, is underpinned by a
number of estimates including future
cash flows, growth assumptions and
the discount rate.
The impairment assessment model
prepared by management is sensitive
the assumptions
to changes
in
adopted. There
is also additional
uncertainty in predicting future cash
flows due to inflationary pressures in
the macro-economic environment.
Due to the assumptions
involved
we considered this to be a key
audit matter, alongside the related
disclosures to ensure compliance
with relevant accounting standards;
in particular in relation to the level of
estimation uncertainty inherent in the
assessment .
How the scope of our audit addressed the key audit
matter
We assessed the underlying methodology for the impairment
assessment to check it was in accordance with the requirements
of accounting standards.
We performed procedures to assess and challenge the
impairment
underpinning management’s
assumptions
assessment model including:
•
•
•
•
•
•
Testing the mathematical accuracy of the calculations and
the integrity of the underlying data;
Agreeing forecast cash flows to Board approved budgets
(as reviewed in the going concern review) and reviewing the
reasonableness of the assumptions adopted against our
understanding of past performance, market opportunities
available to the Group and wider sector growth expectations;
the growth assumptions
Challenging
adopted by
management for future periods to market expectations and
considering the sensitivity to changes in the assumptions;
Considering the short-term and long-term impacts of
inflationary pressures in the macro-economic environment
and how this has been factored into forecast cash flows;
Assessing the discount rate applied including consideration
of whether it appropriately takes account of additional risks
arising from inflationary pressures in the macro-economic
environment;
Assessing the disclosures made in relation to goodwill
and other non-current assets, to ensure compliance with
relevant accounting standards, in particular in relation to the
level of estimation uncertainty inherent in the assessment.
Key observations
Based on the procedures performed we did not identify any
issues with the assumptions underpinning management’s
assessment of the valuation non-current assets, and consider
the associated disclosures to be reasonable.
Vianet Group plc
34
Independent auditor’s report (continued)
Our application of materiality
We apply the concept of materiality both in planning and performing our audit, and in evaluating the effect of
misstatements. We consider materiality to be the magnitude by which misstatements, including omissions, could
influence the economic decisions of reasonable users that are taken on the basis of the financial statements.
In order to reduce to an appropriately low level the probability that any misstatements exceed materiality, we use a
lower materiality level, performance materiality, to determine the extent of testing needed. Importantly, misstatements
below these levels will not necessarily be evaluated as immaterial as we also take account of the nature of identified
misstatements, and the particular circumstances of their occurrence, when evaluating their effect on the financial
statements as a whole.
Based on our professional judgement, we determined materiality for the financial statements as a whole and
performance materiality as follows:
Materiality
Basis for determining materiality
Rationale for the benchmark
applied
Parent company financial
statements
2023
£k
115
2022
£k
79
54% of Group
materiality
60% of Group
materiality
Calculated as
a percentage
of
Group
m a t e r i a l i t y
given
the
a s s e s s m e n t
of aggregation
risk
Calculated as
a percentage
of
Group
m a t e r i a l i t y
given
the
a s s e s s m e n t
of aggregation
risk
Group financial statements
2022
£k
132
1% of revenue
We considered
to
revenue
be
the most
a p p r o p r i a t e
measure
of
performance
for users of
the
financial
s t a t e m e n t s ,
given
the
volatility in loss
before tax.
2023
£k
212
1.5% of
revenue
We considered
to
revenue
be
the most
a p p r o p r i a t e
measure
of
p e r f o r m a n c e
for users of
the
financial
s t a t e m e n t s ,
given
the
volatility in profit
before tax.
The
change
in basis from
using 1% 2022,
to using 1.5%
current
year
revenue in 2023
was as a result
of there being
no change
in
the ownership
s t r u c t u r e ,
operations or
other key areas
in
business
since the prior
year.
Performance materiality
159
92
86
85
Basis for determining performance
materiality
75% (2022: 70%) of materiality, based upon there being a limited number
of areas subject to significant estimation uncertainty and no significant
errors identified in the prior period.
35
Vianet Group plc
Component materiality
Component materiality for the significant component, other than the Parent Company, was £201k (2022: £116k),
being 95% (2022: 88%) of Group materiality, which was based on the size and our assessment of the risk of
material misstatement of that component. We further applied performance materiality levels of 75% (2022: 70%)
of the component materiality to our testing to ensure that the risk of errors exceeding component materiality was
appropriately mitigated.
Reporting threshold
We agreed with the Audit Committee that we would report to them all individual audit differences in excess of £6,300
(2022: £3,000). We also agreed to report differences below this threshold that, in our view, warranted reporting on
qualitative grounds.
Other information
The directors are responsible for the other information. The other information comprises the information included in
the Consolidated Annual Report and Accounts, other than the financial statements and our auditor’s report thereon. Our
opinion on the financial statements does not cover the other information and, except to the extent otherwise explicitly
stated in our report, we do not express any form of assurance conclusion thereon. Our responsibility is to read the
other information and, in doing so, consider whether the other information is materially inconsistent with the financial
statements or our knowledge obtained in the course of the audit, or otherwise appears to be materially misstated. If we
identify such material inconsistencies or apparent material misstatements, we are required to determine whether this
gives rise to a material misstatement in the financial statements themselves. If, based on the work we have performed,
we conclude that there is a material misstatement of this other information, we are required to report that fact.
We have nothing to report in this regard.
Other Companies Act 2006 reporting
Based on the responsibilities described below and our work performed during the course of the audit, we are required
by the Companies Act 2006 and ISAs (UK) to report on certain opinions and matters as described below.
Strategic report
and Directors’
report
Matters on which
we are required
to report by
exception
In our opinion, based on the work undertaken in the course of the audit:
•
the information given in the Strategic report and the Directors’ report for the financial
year for which the financial statements are prepared is consistent with the financial
statements; and
•
the Strategic report and the Directors’ report have been prepared in accordance with
applicable legal requirements.
In the light of the knowledge and understanding of the Group and Parent Company
and its environment obtained in the course of the audit, we have not identified material
misstatements in the strategic report or the Directors’ report.
We have nothing to report in respect of the following matters in relation to which 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
36
Independent auditor’s report (continued)
Responsibilities of Directors
As explained more fully in the Statement of Directors’ responsibilities for the financial statements, the Directors are
responsible for the preparation of the financial statements and for being satisfied that they give a true and fair view,
and for such internal control as the Directors determine is necessary to enable the preparation of financial statements
that are free from material misstatement, whether due to fraud or error.
In preparing the financial statements, the Directors are responsible for assessing the Group’s and the Parent
Company’s ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using
the going concern basis of accounting unless the Directors either intend to liquidate the Group or the Parent Company
or to cease operations, or have no realistic alternative but to do so.
Auditor’s responsibilities for the audit of the financial statements
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from
material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion.
Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with
ISAs (UK) will always detect a material misstatement when it exists. Misstatements can arise from fraud or error
and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the
economic decisions of users taken on the basis of these financial statements.
Extent to which the audit was capable of detecting irregularities, including fraud
Irregularities, including fraud, are instances of non-compliance with laws and regulations. We design procedures in
line with our responsibilities, outlined above, to detect material misstatements in respect of irregularities, including
fraud. The extent to which our procedures are capable of detecting irregularities, including fraud is detailed below:
Non-compliance with laws and regulations
Based on:
•
•
•
Our understanding of the Group and the industry in which it operates;
Discussion with management and those charged with governance; and
Obtaining and understanding of the Group’s policies and procedures regarding compliance with laws and
regulations;
we considered the significant laws and regulations to be the applicable accounting framework, UK tax legislation, and
AIM Listing Rules.
The Group is also subject to laws and regulations where the consequence of non-compliance could have a material
effect on the amount or disclosures in the financial statements, for example through the imposition of fines or litigations.
We identified such laws and regulations to be the health and safety legislation, GDPR, PAYE and VAT legislation.
Our procedures in respect of the above included:
•
•
•
•
•
37
Review of minutes of meeting of those charged with governance for any instances of non-compliance with laws
and regulations;
Review of correspondence with regulatory and tax authorities for any instances of non-compliance with laws and
regulations;
Review of financial statement disclosures and agreeing to supporting documentation;
Involvement of tax specialists in the audit; and
Review of legal expenditure accounts to understand the nature of expenditure incurred.
Vianet Group plc
Fraud
We assessed the susceptibility of the financial statements to material misstatement, including fraud. Our risk
assessment procedures included:
•
•
•
•
•
•
Enquiry with management and those charged with governance regarding any known or suspected instances of
fraud;
Obtaining an understanding of the Group’s policies and procedures relating to:
o
o
Detecting and responding to the risks of fraud; and
Internal controls established to mitigate risks related to fraud.
Review of minutes of meeting of those charged with governance for any known or suspected instances of fraud;
Discussion amongst the engagement team as to how and where fraud might occur in the financial statements;
Performing analytical procedures to identify any unusual or unexpected relationships that may indicate risks of
material misstatement due to fraud; and
Considering remuneration incentive schemes and performance targets and the related financial statement
areas impacted by these.
Based on our risk assessment, we considered the areas most susceptible to fraud to be management override of
controls and revenue recognition.
Our procedures in respect of the above included:
•
•
•
Testing a sample of journal entries throughout the year, which met a defined risk criteria, by agreeing to
supporting documentation;
Assessing significant estimates made by management for bias (including the valuation of non-current assets -
refer to key audit matters above); and
Testing a sample of revenue transactions across the year to check these are recorded in the correct period and
were not fictitious in nature.
We also communicated relevant identified laws and regulations and potential fraud risks to all engagement team
members who were all deemed to have appropriate competence and capabilities and remained alert to any indications
of fraud or non-compliance with laws and regulations throughout the audit.
Our audit procedures were designed to respond to risks of material misstatement in the financial statements,
recognising that the risk of not detecting a material misstatement due to fraud is higher than the risk of not detecting
one resulting from error, as fraud may involve deliberate concealment by, for example, forgery, misrepresentations
or through collusion. There are inherent limitations in the audit procedures performed and the further removed non-
compliance with laws and regulations is from the events and transactions reflected in the financial statements, the
less likely we are to become aware of it.
A further description of our responsibilities is available on the Financial Reporting Council’s website at: www.frc.org.
uk/auditorsresponsibilities. This description forms part of our auditor’s report.
Vianet Group plc
38
Independent auditor’s report (continued)
Use of our report
This report is made solely to the Parent 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 Parent 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 Parent Company and the Parent
Company’s members as a body, for our audit work, for this report, or for the opinions we have formed.
Mark Langford (Senior Statutory Auditor)
For and on behalf of BDO LLP, Statutory Auditor
Leeds, UK
18 July 2023
BDO LLP is a limited liability partnership registered in England and Wales (with registered number OC305127).
39
Vianet Group plc
CONSOLIDATED STATEMENT OF
COMPREHENSIVE INCOME
for the year ended 31 March 2023
Revenue
Cost of sales
Gross profit
Administration and other
operating expenses
Operating profit/loss pre
amortisation and share
based payments
Intangible asset amortisation
Share based payments
Total administrative expenses
Operating profit/(loss)
Finance costs
Profit/(loss) before tax
Income tax (charge)/credit
Profit/(loss) and other
comprehensive
income for the year
Earnings per share
Total
- Basic
- Diluted
Note
3
Before
Exceptional
2023
£000
Exceptional
2023
£000
14,115
(4,737)
9,378
-
-
-
Total
2023
£000
14,115
(4,737)
9,378
Before
Exceptional
2022
£000
Exceptional
2022
£000
13,215
(4,654)
8,561
-
-
-
Total
2022
£000
13,215
(4,654)
8,561
(6,273)
(122)
(6,395)
(6,198)
(121)
(6,319)
3,105
(2,254)
(71)
(8,598)
780
(206)
574
(291)
(122)
-
-
(122)
(122)
-
(122)
-
2,983
(2,254)
(71)
(8,720)
658
(206)
452
(291)
2,363
(2,195)
(83)
(8,476)
85
(138)
(53)
361
(121)
-
-
(121)
(121)
-
(121)
-
2,242
(2,195)
(83)
(8,597)
(36)
(138)
(174)
361
283
(122)
161
308
(121)
187
0.56p
0.56p
0.65p
0.63p
6
5
7
8
8
All operations are continuing. Total comprehensive income being attributable to equity holders of the parent.
The accompanying accounting policies and notes form an integral part of these financial statements.
Details of the exceptional items are included in note 4.
Vianet Group plc
40
CONSOLIDATED BALANCE SHEET
at 31 March 2023
Assets
Non-current assets
Goodwill
Other intangible assets
Property, plant and equipment
Deferred tax asset
Total non-current assets
Current assets
Inventories
Trade and other receivables
Cash and cash equivalents
Total assets
Equity and liabilities
Liabilities
Current liabilities
Trade and other payables
Leases
Borrowings
Non-current liabilities
Leases
Borrowings
Deferred tax liability
Equity attributable to owners of the parent
Share capital
Share premium account
Capital redemption
Share based payment reserve
Merger reserve
Retained profit
Total equity
Note
2023
£000
2022
£000
10
11
12
19
13
14
24
15
16
17
17
19
20
1.18
1.18
17,856
5,425
3,370
-
26,651
2,275
3,781
69
6,125
17,856
5,976
3,262
386
27,480
1,573
2,690
1,583
5,846
32,776
33,326
2,348
70
1,925
4,343
122
1,517
827
2,466
2,880
11,711
15
563
310
10,488
25,967
2,983
25
2,310
5,318
-
2,273
-
2,273
2,880
11,711
15
499
310
10,320
25,735
Total equity and liabilities
32,776
33,326
The Group financial statements were approved by the Board of Directors on 18 July 2023 and were signed on its
behalf by:
J Dickson
Director
The accompanying accounting policies and notes form an integral part of these financial statements.
41
Vianet Group plc
CONSOLIDATED STATEMENT OF
CHANGES IN EQUITY
for the year ended 31 March 2023
Share
based
payment
reserve
£000
Own
shares
£000
Merger
reserve
£’000
Capital
Redemption
£000
Retained
profit
£000
At 1 April 2021
Issue of shares
Cancellation of shares
Share based payments
Share option forfeitures
Transactions with owners
Profit and total comprehensive
income for the year
Total comprehensive income
less owners’ transactions
At 31 March 2022
At 1 April 2022
Share based payments
Share option forfeitures
Transactions with owners
Profit and total comprehensive
income for the year
Total comprehensive income
less owners’ transactions
Share
capital
£000
2,895
-
(15)
-
-
(15)
-
(15)
Share
premium
account
£000
11,709
2
-
-
-
2
-
2
2,880
11,711
2,880
-
-
11,711
-
-
-
-
-
-
-
-
At 31 March 2023
2,880
11,711
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
437
-
-
83
(21)
62
-
62
499
499
71
(7)
64
-
64
563
310
-
-
-
-
-
-
-
310
310
-
-
-
-
-
Total
£000
25,589
2
(126)
83
-
10,238
-
(126)
-
21
-
-
15
-
-
15
(105)
(41)
-
187
187
15
15
15
-
-
-
-
-
82
146
10,320
25,735
10,320
-
7
25,735
71
-
7
71
161
161
168
232
310
15
10,488
25,967
Vianet Group plc
42
CONSOLIDATED CASH FLOW STATEMENT
for the year ended 31 March 2023
Cash flows from operating activities
Profit for the year
Adjustments for
Interest payable
Interest receivable
Income tax charge/(credit)
Amortisation of intangible assets
Depreciation
Contingent consideration release
Disposal of property, plant and equipment and businesses
Share based payments
Operating cash flows before changes in working capital and provisions
Change in inventories
Change in receivables
Change in payables
Operating cash flows post changes in working capital and provisions
Cash generated from operations
Net cash generated from operating activities
Cash flows from investing activities
Purchases of property, plant and equipment
Capitalisation of development costs
Purchases of other intangible assets
Proceeds from disposal of property, plant and equipment
Note
6
11
12
5
12
11
11
Net cash used in investing activities
Cash flows from financing activities
Net interest payable
Net interest receivable
Repayment of leases
Repayments of borrowings
Payment of contingent consideration
New leases
Issue of share capital
Cancellation of shares
Net cash used in financing activities
Net decrease in cash and cash equivalents
Cash and cash equivalents at beginning of period
Cash and cash equivalents at end of period
Reconciliation to the cash balance in the Consolidated Balance Sheet
Cash balance as per consolidated balance sheet
Bank overdrafts (see note 17)
Balance per statement of cash flows
2023
£000
161
236
(30)
1,213
2,254
519
-
24
71
4,448
(702)
(1,091)
(618)
(2,411)
2,037
2,037
(651)
(1,699)
(4)
-
(2,354)
(236)
30
(65)
(992)
(16)
231
-
-
(1,048)
(1,365)
266
(1,099)
69
(1,168)
(1,099)
2022
£000
187
138
-
(361)
2,195
489
(76)
83
83
2,738
(142)
68
(267)
(341)
2,397
2,397
(465)
(1,975)
(12)
22
(2,430)
(138)
-
(28)
(1,289)
(16)
-
2
(126)
(1,595)
(1,628)
1,894
266
1,583
(1,317)
266
43
Vianet Group plc
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 31 March 2023
Significant accounting policies
1.
1.1 Basis of preparation and Going Concern
Vianet Group plc is incorporated in England and Wales and quoted on the London Stock Exchange’s Alternative
Investment Market. The registered address is One Surtees Way, Surtees Business Park, Stockton on Tees, TS18
3HR. Further copies of these financial statements will be available at the Company’s registered office: which is
detailed in the Company Information page of this Annual Report, page 1.
The principal activities for the Group are detailed in the Strategic report’.
The financial statements have been prepared in accordance with UK adopted International Accounting Standards
(‘IFRS’) in conformity with the requirements of Companies act 2006.
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 principal 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 as a result of
for example unforeseen inflationary pressures or global supply and stock price premium impacts.
In considering the going concern aspect of the business, the Directors paid due regard to their financial forecasts
over the next 3 years, increasing contracted revenue streams, recovery from Covid 19, and new bank facilities as
follows - the Directors have confirmation that new facilities have been agreed with HSBC on 23 June 2023 as follows:
1)
2)
3)
a £4m three year committed RCF
£0.84m fifteen year mortgage and,
£0.6m four year term loan
These facilities are in place. The bank transition will occur on 1 August 2023 and we have existing facilities in place
to 30 September 2023 and beyond to support the transition.
As a result of the above actions and bank facilities, the Directors have produced revised forecasts have also
considered possible downside impacts alongside having made appropriate enquiries, including (but not limited to) a
review of the Group’s budget for 2023/2024, and cash generating capacity at least 12 months from the date of signing
(underpinned by long term contracts in place and historical results). Such possible downside impact include stock
premium costs and any sensitivity on income levels.
Together with both the comments noted in the Chairman’s report and Strategic and Director reports, and a formal
going concern paper submitted to the auditors we 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 2023.
Subsidiaries are entities controlled by the Group. The Group controls an entity if and only if the Group has all of the
following elements:
•
power over the entity, i.e. the Group has existing rights that give it the ability to direct the relevant activities (the
activities that significantly affect the entity’s returns)
•
exposure, or rights, to variable returns from its involvement with the entity
Vianet Group plc
44
Notes to the Financial Statements for the year
ended 31 March 2023 (continued)
1.
•
Significant accounting policies (continued)
the ability to use its power over the entity to affect the amount of the Groups returns
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 parent 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 3 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.
Under IFRS 3 ‘Business Combinations’ and IFRS 9 ‘Financial Instruments’, management should account for
contingent consideration by fair valuing the balance at each reporting date. Any changes in fair value shall be
recognised in profit or loss. Please refer to Exceptional cost note 4 in the Financial Review.
1.4 Revenue recognition
Revenue arises from the provision of actionable data and business insight services through connected devices. To
determine whether to recognise revenue, the Group follows a 5-step process as follows:
1.
2.
3.
4.
5.
Identifying the contract with a customer
Identifying the performance obligations
Determining the transaction price
Allocating the transaction price to the performance obligations
Recognising revenue when/as performance obligation(s) are satisfied
Revenue is measured at transaction price, stated net of VAT and other sales related taxes. There is no return or
refund obligation. Typical payment terms are 30 days from date of invoice and terms do not include a significant
financing component.
Smart Zones and Smart Machines
Customer income is recognised at the point of installation or delivery in respect of outright sale or rental of the
connected device, in accordance with contractual terms which can include payments in advance for which we
would defer the appropriate amount of income over the length of the contract until a point in time when control is
transferred to the customer. Accrued income can arise in relation to customers who are on different billing cycles
to a calendar month. Data insight is recognised over time, based upon the timing of data collected from customers
connected devices.
Smart Zones
There are two performance obligations with customers, one being the provision of data insight from data collected
from customers connected devices and the other being either the outright sale or rental of the connected device to
collect the data. Data insight involves web based reporting and business asset performance for our customers and
potential marketing insight to the respective industries.
45
Vianet Group plc
Significant accounting policies (continued)
1.
Therefore, as such, there are separately identifiable transaction prices for either performance obligation. The
transaction prices are set out in the customers’ contract and is made up of either a fixed charge for the outright
sale of the connected device or a fixed element in the form of a monthly income in respect of the data insight or the
rental of the connected device. Revenue is recognised when the performance obligations have been satisfied in line
with the contract.
There are no unusual or variable payment terms in relation to performance obligations offered to customers.
The customer may from time to time request a repair to their equipment. Revenue is recognised when the
performance obligation has been satisfied.
Smart Machines
There are two performance obligations with customers, one being the provision of data insight from data collected
from customers connected devices and the other being either the outright sale or rental of the connected device to
collect the data.
Therefore, as such, there are separately identifiable contracted transaction prices for either performance obligation
noted in each customer’s contract. The transaction prices are set out in the customers’ contract and is made up of
either a fixed charge for the outright sale of the connected device or a fixed element in the form of a monthly income
in respect of the data insight or the rental of the connected device. Revenue is recognised when the performance
obligations have been satisfied in line with the contract.
There are no unusual or variable payment terms in relation to performance obligations offered to customers.
The customer may spontaneously request a repair to their equipment. Revenue is recognised when the obligation
has been satisfied.
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 of 1 January 2010 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 10.
Vianet Group plc
46
Notes to the Financial Statements for the year
ended 31 March 2023 (continued)
1.
1.7
Significant accounting policies (continued)
Intangible assets: business combinations
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, patents and order book.
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.
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
Software
Trademarks
Order book
2 to 5 years
5 years
10 years
2 to 5 years
Methods of amortisation, residual values and useful lives are reviewed, and if necessary adjusted, at each balance
sheet date.
Intangible assets: Research and development
1.8
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.
Capitalised development costs are amortised over a period which is usually no more than five years. Amortisation
commences once an asset is available for use, in line with IAS38.
47
Vianet Group plc
Significant accounting policies (continued)
1.
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.
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 profit or loss 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 buildings
Freehold Land
Plant, vehicles and equipment
Fixtures and fittings
10 - 50 years
Nil
3 - 5 years
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 profit
or loss.
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 profit or loss.
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.
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.
Vianet Group plc
48
Notes to the Financial Statements for the year
ended 31 March 2023 (continued)
Significant accounting policies (continued)
1.
1.11 Leased assets
The Group as a lessee
For any new contracts entered into, the Group considers whether a contract is, or contains a lease. A lease is defined
as ‘a contract, or part of a contract, that conveys the right to use an asset (the underlying asset) for a period of time
in exchange for consideration’. To apply this definition the Group assesses whether the contract meets three key
evaluations which are whether:
•
•
•
the contract contains an identified asset, which is either explicitly identified in the contract or implicitly
specified by being identified at the time the asset is made available to the Group
the Group has the right to obtain substantially all of the economic benefits from use of the identified asset
throughout the period of use, considering its rights within the defined scope of the contract
the Group has the right to direct the use of the identified asset throughout the period of use. The Group assess
whether it has the right to direct ‘how and for what purpose’ the asset is used throughout the period of use
Measurement and recognition of leases as a lessee
At lease commencement date, the Group recognises a right-of-use asset and a lease liability on the balance sheet.
The right-of-use asset is measured at cost, which is made up of the initial measurement of the lease liability, any
initial direct costs incurred by the Group, an estimate of any costs to dismantle and remove the asset at the end of the
lease, and any lease payments made in advance of the lease commencement date (net of any incentives received).
The Group depreciates the right-of-use assets on a straight-line basis from the lease commencement date to the
earlier of the end of the useful life of the right-of-use asset or the end of the lease term. The Group also assesses
the right-of-use asset for impairment when such indicators exist.
At the commencement date, the Group measures the lease liability at the present value of the lease payments
unpaid at that date, discounted using the interest rate implicit in the lease if that rate is readily available or the
Group’s incremental borrowing rate.
Lease payments included in the measurement of the lease liability are made up of fixed payments (including in
substance fixed), variable payments based on an index or rate, amounts expected to be payable under a residual
value guarantee and payments arising from options reasonably certain to be exercised.
Subsequent to initial measurement, the liability will be reduced for payments made and increased for interest. It is
remeasured to reflect any reassessment or modification, or if there are changes in in-substance fixed payments.
When the lease liability is remeasured, the corresponding adjustment is reflected in the right-of-use asset, or profit
and loss if the right-of-use asset is already reduced to zero.
The Group has elected to account for short-term leases and leases of low-value assets using the practical expedients.
Instead of recognising a right-of-use asset and lease liability, the payments in relation to these are recognised as an
expense in profit or loss on a straight-line basis over the lease term.
On the statement of financial position, right-of-use assets have been included in property, plant and equipment and
lease liabilities have been shown separately.
1.12 Inventories
Inventories are stated at the lower of cost and net realisable value on an average pricing 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.
49
Vianet Group plc
Significant accounting policies (continued)
1.
1.13 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, calculated on an undiscounted basis, 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.
1.14 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.
Financial Assets
Initial recognition and measurement
In accordance with IFRS 9, ‘Financial Instruments’ the Group has classified its financial assets through the following
categories:
•
•
•
Amortised cost
Fair value through profit or loss (FVPL)
Fair value through other comprehensive income (FVOCI)
For either year presented the Group does not have any financial assets classified as FVOCI.
Vianet Group plc
50
Notes to the Financial Statements for the year
ended 31 March 2023 (continued)
Significant accounting policies (continued)
1.
The Group determines the classification of its financial assets at initial recognition based on the contractual cash
flow characteristics of the financial assets.
All financial assets are recognised initially at fair value plus transaction costs that are attributable to the acquisition
of the financial asset.
Subsequent measurement
The subsequent measurement of financial assets depends on their classification as described below:
Financial assets carried at amortised cost
This category applies to trade and other receivables due from customers in the normal course of business. Trade
and other receivables are initially recorded at fair value and thereafter are measured at amortised cost using the
effective interest rate. A loss allowance for expected credit losses is recognised based upon an amount equal to
the 12-month expected credit loss. This assessment is performed on a trade receivables and contract assets basis
considering forward-looking information, including the use of macroeconomic information, around our customer
contracts and payment history. The credit risk of financial instruments has not considered to have changed since
initial recognition. Please see note 14 which relates to expected credit loss
The group classifies its financial assets as at amortised cost only if both of the following criteria are met:
(i)
the asset is held within a business model with the objective of collecting the contractual cash flows; and
(ii)
the contractual terms give rise on specified dates to cash flows that are solely payments of principal and
interest on the principal outstanding.
Cash and cash equivalents
Cash and cash equivalents comprise cash on hand and demand deposits, short term overdrafts, 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.
Financial liabilities
Initial recognition and measurement
Financial liabilities are initially measured at fair value, and, where applicable, adjusted for transaction costs unless
the Group designated a financial liability at fair value through profit or loss.
Subsequent measurement
Subsequently, financial liabilities are measured at amortised cost using the effective interest method except for
financial liabilities designated at FVTPL, which are carried subsequently at fair value with gains or losses recognised
in profit or loss. All interest related charges are included within finance costs or finance income.
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.
Contingent consideration is measured at fair value through profit or loss. The contingent consideration is fair valued
and represents management’s estimate of the contingent consideration which will be paid and is discounted. Further
details on the contingent consideration balance is included in notes 15 and 16.
51
Vianet Group plc
Significant accounting policies (continued)
1.
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 are recognised in the financial statements 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”.
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.
“Capital redemption” represents the nominal value of shares repurchased and cancelled.
“Share based payment reserve” represents equity-settled share-based employee remuneration until such
share options are exercised.
“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
A number of new standards, amendments and interpretations are effective for the year ended 31 March 2023. These
are considered either not relevant or to have no material impact on the Group.
There are no standards that are issued but not yet effective that would be expected to have a material impact on the
Group in the current or future reporting periods or on foreseeable future transactions.
Vianet Group plc
52
Notes to the Financial Statements for the year
ended 31 March 2023 (continued)
1.
Significant accounting policies (continued)
IASB
mandatory
effective date
(UK/EU
mandatory
effective date)
UK Adoption
status (EU
pre-31
December
2020)
EU
Endorsement
Status
01-Jan-23
Adopted by
UKEB
Endorsed
01-Jan-24
TBC
TBC
Issued date
New Standards
IFRS 17 Insurance contracts
including Amendments to IFRS 17
(issued on 25 June 2020)
18-May-2017
and
25-June-2020
Amendments to Existing Standards
Amendments to IAS 1:
Classification of Liabilities as
Current or Non-current
23-Jan-20
31-Oct-22
(Final
amendments)
14-May-20
01-Jan-22
Adopted by
UKEB
Endorsed
14-May-20
01-Jan-22
Adopted by
UKEB
Endorsed
Amendments to:
•
•
IFRS 3 Business Combinations;
IAS 16 Property, Plant and
Equipment;
IAS 37 Provisions, Contingent
Liabilities and Contingent
Assets
•
Annual Improvements to IFRSs
(2018-2020 Cycle):
•
•
•
IFRS 1
IFRS 9
Illustrative Examples
accompanying IFRS 16
IAS 41
•
Amendments to IAS 8 - Definition of
Accounting Estimates
Amendments to IAS 1 and IFRS
Practice Statement 2 - Disclosure
of Accounting policies
Amendments to IAS 12 - Deferred
Tax related to Assets and Liabilities
arising from a Single Transaction
Amendment to IFRS 17 - Initial
Application of IFRS 17 and IFRS 9 -
Comparative Information
Amendments to IFRS 16 Leases:
Lease Liability in a Sale and
Leaseback
12-Feb-21
01-Jan-23
12-Feb-21
01-Jan-23
TBC
TBC
Endorsed
Endorsed
07-Feb-21
01-Jan-23
TBC
Endorsed
09-Dec-21
01-Jan-23
Adopted by
UKEB
22-Sep-22
01-Jan-24
TBC
TBC
TBC
1
2
3
4
5
6
7
8
9
53
Vianet Group plc
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, frequency and/or nature rather than indicative of the underlying day to day trading of the Group.
These may include items such as acquisition costs, restructuring costs, obsolescence costs, employee exit and
transition costs, legal costs, corporate activity costs, material profits or losses on disposal of property, plant and
equipment, profits or losses on the disposal of subsidiaries, loan impairment, contingent consideration fair value
or pandemic costs. All of these items are charged or credited before calculating overall 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.
1.21 Government Grants and Other Government Assistance
Government grants shall be recognised when there is reasonable assurance that:
(a)
(b)
the entity will comply with the conditions attaching to them; and
the grants will be received.
Grants related to income are presented as part of profit or loss and are deducted in reporting the related expense.
Government grants are recognised in profit or loss on a systematic basis over the periods in which the Group
recognises as an expense the related costs for which the grants are intended to compensate.
The Group received a received a capital grant for carbon saving equipment from the SME Energy Efficiency Scheme
(SMEES) - GOV.UK (www.gov.uk) during the year for 55% of the capital cost of the equipment.
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 significant 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 (Judgement)
The Group tests goodwill at least annually for impairment, as required by IAS36. 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 or value in use. Value in use is estimated using
adjusted future cash flows and referenced to WACC/discount rate of 15.04%. 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 10 to 12.
Vianet Group plc
54
Notes to the Financial Statements for the year
ended 31 March 2023 (continued)
2. Critical accounting judgements and key sources of estimation uncertainty (continued)
Development costs (Judgement)
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.
3.
Segment reporting
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. Vianet Group is analysed
into to two trading segments (defined below) being Smart Zones (mainly adopted in the leisure sector, including US
(particularly in pubs)) and Smart Machines (mainly adopted in the vending sector (particularly in vending machines))
supported by Corporate/Technology & stores costs.
The products/services offered by each operating segment are:
Smart Zones: Data insight & actionable data services, design, product development, sale and rental of fluid
monitoring equipment.
Smart Machines: Data insight & actionable data services, design product development, sale and rental of machine
monitoring and contactless payment equipment.
Corporate/Technology: Centralised Group overheads along with technology and stores related costs for the Group.
The inter-segment sales are immaterial. Segment results, assets and liabilities include items directly attributable to
a segment as well as those that can be allocated on a reasonable basis. Unallocated assets and liabilities comprise
items of deferred tax. 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.
55
Vianet Group plc
Segment reporting (continued)
3.
2023
Continuing Operations
(post exceptional items)
Total revenue
Of which is recurring
Pre-exceptional segment result
Exceptional costs
Post exceptional segment result
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
Smart
Zones
£000
8,163
7,746
3,174
-
3,174
(206)
2,968
Smart
Machines
£000
Corporate/
Technology
£000
5,952
4,753
1,667
(19)
1,648
-
1,648
-
-
(4,061)
(103)
(4,164)
-
(4,164)
Total
£000
14,115
12,499
780
(122)
658
(206)
452
(291)
161
762
728
687
664
905
1,381
2,354
2,773
Recurring revenue is contracted revenue payable monthly over the length of the customer contract
Segment assets
Unallocated assets
Total assets
Segment liabilities
Unallocated liabilities
Total liabilities
Smart
Zones
£000
28,593
-
28,593
5,743
-
5,743
Smart
Machines
£000
Corporate/
Technology
£000
4,083
-
4,083
-
-
-
100
-
100
239
827
1,066
Total
£000
32,776
-
32,776
5,982
827
6,809
Vianet Group plc
56
Notes to the Financial Statements for the year
ended 31 March 2023 (continued)
Segment reporting (continued)
3.
2022
Continuing Operations
(post exceptional items)
Total revenue
Of which is recurring
Pre-exceptional segment result
Exceptional costs
Post exceptional segment result
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
Smart
Zones
£000
7,831
7,491
1,887
(7)
1,880
(130)
1,750
Smart
Machines
£000
Corporate/
Technology
£000
5,384
4,121
1,564
32
1,596
(8)
1,588
-
-
(3,366)
(146)
(3,512)
-
(3,512)
Total
£000
13,215
11,612
85
(121)
(36)
(138)
(174)
361
187
374
751
909
527
1,169
1,406
2,452
2,684
Recurring revenue is contracted revenue payable monthly over the length of the customer contract
Segment assets
Unallocated assets
Total assets
Segment liabilities
Unallocated liabilities
Total liabilities
Analysis of revenue by category
Continuing operations
Sale of goods
- Smart Zones and Smart Machines
Rendering of services
- Smart Zones and Smart Machines
Smart
Zones
£000
27,489
-
27,489
7,187
-
7,187
Smart
Machines
£000
Corporate/
Technology
£000
4,083
-
4,083
-
-
-
1,368
386
1,754
404
-
404
Total
£000
32,940
386
33,326
7,591
-
7,591
2023
£000
2022
£000
1,597
1,606
Included in rendering of services is £2,375,000 (2022: £2,189,000) of income related to lessor income
Geographical analysis
- United Kingdom
- Rest of Europe
- United States/Canada
12,700
1,396
19
14,115
99% (2022: 99%) of the Rest of Europe revenue is derived from the Netherlands
12,518
14,115
11,609
13,215
10,800
2,237
178
13,215
57
Vianet Group plc
Segment reporting (continued)
3.
Major Clients
In 2023 there were two major customers that individually accounted for at least 10% each of total revenues (2022:
two customers). The revenues relating to these customers in 2023 was £3.7m (2022: £3.04m)
Both customers are in the Smart Zones segment (2022: Smart Zone Segment)
4.
Exceptional items
Corporate activity and Acquisition costs
Staff transitional costs
Contingent consideration release
Network obsolesce costs
Other
2023
£000
103
17
-
-
2
122
2022
£000
127
61
(76)
5
4
121
Corporate activity and acquisition costs relate to fees paid to corporate advisors in respect of prospective acquisitions
and corporate evaluations.
Staff transitional costs relate to the transition of people and management to ensure we have to succession and
calibre of people on board to deliver the strategic aims and aspirations of the Group.
5. Profit/(loss) for the year
The following items have been included in arriving at profit/(loss) for the year:
Employee benefits expense (note 21)
Depreciation of property, plant and equipment (note 12)
Depreciation of property, plant and equipment – right of use assets (note 12)
Amortisation of intangible assets (note 11)
Loss on disposal of property, plant and equipment
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 – taxation compliance services
Other services relating to tax – taxation advisory services
Other services – corporate activity
Other services – interim review
2023
£000
6,056
477
42
2,254
24
2023
£000
30
68
13
74
-
3
2022
£000
6,330
462
27
2,195
83
2022
£000
30
51
12
20
7
-
188
120
Vianet Group plc
58
Notes to the Financial Statements for the year
ended 31 March 2023 (continued)
6. Net finance costs
Interest payable on bank borrowings
Interest payable on leasing arrangements
Interest receivable on bank deposits
Interest receivable on other loans
Net Interest Payable
2023
£000
210
26
236
2023
£000
-
30
30
206
2022
£000
131
7
138
2022
£000
-
-
-
138
Screenreach was a company which the Group historically provided a loan to. Interest receivable on this loan valued
at £30,000 (2022 - £nil) is due from Screenreach Interactive Limited
Taxation
7.
Analysis of charge/(credit) in period:
Current tax expense
- Amounts in respect of the current year
- Amounts in respect of prior periods
Deferred tax credit
- Amounts in respect of the current year
- Amendment re-recognition of losses
Income tax charge/(credit)
2023
£000
-
(922)
-
1,213
-
291
2022
£000
-
-
-
(390)
29
(361)
59
Vianet Group plc
Taxation (continued)
7.
Reconciliation of effective tax rate
The tax for the 2023 period is higher (2022 was lower) than the standard rate of corporation tax in the UK (2022: 19%).
The differences are explained below:
Profit/(loss) before taxation - Continuing operations
Loss before taxation multiplied by rate of corporation tax in the UK of 19% (2022:19%)
Effects of:
Other expenses not deductible for tax purposes
Non-taxable income
Losses not provided for
Adjustments for prior years
Amortisation of intangible assets
Research and development
Other differences
Total tax charge/(credit)
2023
£000
452
86
(17)
(44)
(355)
922
427
(728)
-
291
2022
£000
(174)
(33)
(20)
(33)
129
29
-
(488)
55
(361)
Unutilised Trading Losses
The Group continues to carry forward unutilised trading losses of £2,844k (2022: £8,460k). The Directors did elect to
receive a refund of R&D tax losses for FY2021 and FY2022 amounting to c£922k, which was received post balance
sheet in May 2023. The refund was elected for to reduce net debt knowing the refund would be processed broadly
within 3 months of the election being made at the end of March 2023. The impact of the tax refund, provisional tax
calculation for FY2023 and relevant deferred tax movements including the impact of tax losses adjustment for the
tax refund resulted in a tax charge of £0.29m. A Deferred Tax Asset of £711k (2022: £1,607k) has been recognised
as at 31 March 2023 in respect of the unutilised trading losses. No further Deferred Tax Asset has been recognised
because the Board envisages that a significant period of time will be required to generate sufficient profits to utilise
the trading losses carried forward.
No deferred tax asset has been provided for in relation to the loss making US subsidiary.
Deferred Tax Assets of £711k is recognised in respect of unutilised trading losses and short-term timing differences.
Deferred Tax Liabilities of £1,538k arise on timing differences in the carrying value of certain of the Company’s
assets for financial reporting purposes and for corporation tax purposes. These will reverse as the fair value of the
related assets are depreciated over time. Deferred Tax balances have been calculated at the rate of 25%.
Earnings per share
8.
Earnings per share for the year ended 31 March 2023 was 0.56p (2022: earnings per share 0.65p)
Basic earnings per share are calculated by dividing the earnings attributable to ordinary shareholders being a profit
of £161k (2022: Profit £187k) 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.
Vianet Group plc
60
Notes to the Financial Statements for the year
ended 31 March 2023 (continued)
8.
Earnings per share (continued)
2023
Basic
earnings
per share
Diluted
earnings
per share
Profit
£000
2022
Basic
earnings
per share
Diluted
earnings
per share
Profit
£000
Post-tax profit attributable to equity shareholders
161
0.56p
0.56p
187
0.65p
0.63p
Weighted average number of ordinary shares
Dilutive effect of share options
Diluted weighted average number of ordinary shares
9. Ordinary dividends
Final dividend for the year ended 31 March 2022 of nil (year ended 31 March 2021: nil)
Interim dividend paid in respect of the year of nil (2022: nil)
Amounts recognised as distributions to equity holders
2023
Number
2022
Number
28,808,914
66,673
28,949,491
703,085
28,875,587
29,652,576
2023
£000
-
-
-
2022
£000
-
-
-
In addition, the directors are proposing a final dividend in respect of the year ended 31 March 2023 of 0.5p per share
payable on 27 October 2023 to shareholders on the register on 14 September 2023. Total dividend payable 0.5p (2022: nil).
10. Goodwill
Group
Cost
At 1 April and 31 March
Accumulated impairment losses
At 1 April and 31 March
Net book amount
2023
£000
2022
£000
17,856
17,856
-
-
17,856
17,856
Goodwill is tested for impairment annually as required by IAS36. The goodwill impairment test is performed by
comparing the carrying value of the CGU including associated goodwill with the aggregate recoverable amount.
The carrying value of goodwill is allocated to the following cash generating units:
Smart Zones
Smart Machines
Carrying amount 31 March
2023
£000
15,384
2,472
17,856
2022
£000
15,384
2,472
17,856
61
Vianet Group plc
10. Goodwill (continued)
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 ended 31 March 2024, together with a two year forecast
to March 26, with company forecast growth rates and terminal value were used as the basis for the impairment
review. The key assumption included within these is an improvement in profitability, based on committed (medium
to long term contracts) and pipeline orders akin to pre-covid-19 trading performance.
Budgets and assumptions are based around historical track record and committed medium to long term contracts.
All property, plant and equipment and other intangibles have been allocated to their respective cash generating unit.
Research & Development, as well as other intangibles and Property, Plant and Equipment, has been allocated to the
respective Smart Zone and Smart Machine divisions. The impairment review uses a WACC rate of 15.04% following
an independent review of the impairment model used. Headroom identified using these base case assumptions
amounted to £8.35m for Smart Zones and £25.62m for Smart Machines.
Both business divisions were then further tested to identify at what point a question mark over whether impairment
may be required. In respect of Smart Machines division, the WACC under this sensitivity was 23.5%, while for the
Smart Zones division the WACC was 17.0%. Whilst the downside sensitivities calculated severely restricted the
trading results and growth rates applied to the forecast period, the inclusion of a terminal value calculation which
had previously been omitted, added significant headroom overall to the calculations. Given the remaining headroom
available under the downside sensitivities prepared, in management’s opinion, there are no reasonably possible
scenarios under which future impairment has been noted, and thus no further sensitivity disclosures have been
included.
These breaking points, in managements opinion, do not raise any requirement for impairment nor represent
scenarios which are considered reasonably possible and thus further sensitivity disclosures have not been included.
Whilst Smart Machines had significant headroom under the base case model, Smart Zones is somewhat lower
under the base case model and is justified as follows:
1)
2)
Smart Zones division regularly throws off profit and cash in broadly equal measure
Has a robust 10,000 unit estate that is largely owned by PE houses i.e. our main customers are PE backed and
they have invested for a reason – they see the bottom end of the older estates as now divested and investment
in expected
3) We have new customers and existing customers investing in new systems so potential to grow the estate back
4)
5)
The managed market place represents a c12,000 pub opportunity in the UK
There is a freehold market representing c4,000 to 5,000
6) We have identified off the shelf software solutions within stock control management which would accelerate
the managed market opportunity
7)
Ongoing performance is in line with expectations which delivers profit and cash generation.
Vianet Group plc
62
Notes to the Financial Statements for the year
ended 31 March 2023 (continued)
11. Other intangible assets
Group
At 31 March 2021
Internally generated development costs
Additions
At 31 March 2022
Internally generated development costs
Additions
At 31 March 2023
Amortisation
At 31 March 2021
Charge for the year
At 31 March 2022
Charge for the year
At 31 March 2023
Net book amount
At 31 March 2023
At 31 March 2022
Capitalised
development
£000
Order
book
£000
Software
£000
Customer
contracts
£000
Patents
£000
12,016
1,975
-
13,991
1,699
-
15,690
6,508
1,777
8,285
2,048
10,333
5,357
5,706
281
-
-
281
-
-
281
281
-
281
-
281
-
-
451
-
-
451
-
-
451
375
38
413
20
433
18
38
3,229
-
-
3,229
-
-
3,229
2,691
356
3,047
182
3,229
-
182
143
-
12
155
-
4
159
81
24
105
4
109
50
50
Total
£000
16,120
1,975
12
18,107
1,699
4
19,810
9,936
2,195
12,131
2,254
14,385
5,425
5,976
The £1,699,000 of capitalised development costs represents expenditure developing technological advancements to
ensure the group is at the forefront of technology that fulfils the requirement of IAS 38.
Included within the net book value of capitalised development is £nil (2022: £nil) relating to research and development
technology roadmaps in various stages of progress which is being amortised in accordance with the policies in note
1.7.
63
Vianet Group plc
12. Property, plant and equipment
Group
Cost
At 31 March 2021
Additions
Disposals
At 31 March 2022
Additions
Disposals
At 31 March 2023
Accumulated depreciation
At 31 March 2021
Charge for the year
Disposals
At 31 March 2022
Charge for the year
Disposals
At 31 March 2023
Net book amount
At 31 March 2023
At 31 March 2022
Freehold
Land and
buildings
£000
Leasehold
Land and
buildings
£000
Plant,
vehicles and
equipment
£000
Fixtures and
fittings
£000
3,163
47
(23)
3,187
139
-
3,326
889
60
-
949
65
-
1,014
2,312
2,238
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
2,476
381
(371)
2,486
459
(60)
2,885
1,507
358
(289)
1,576
394
(37)
1,933
952
910
2,217
37
-
2,254
53
(1)
2,306
2,069
71
-
2,140
60
-
2,200
106
114
Total
£000
7,856
465
(394)
7,927
651
(61)
8,517
4,465
489
(289)
4,665
519
(37)
5,147
3,370
3,262
Included in the net carrying amount of property, plant and equipment as at 31 March 2023, are right-of-use assets
as follows:
Motor vehicles
As at 31 March 2022, right-of-use assets were as follows:
Motor vehicles
Carrying
amount
£’000
Depreciation
expense
£’000
Impairment
£’000
213
213
42
42
-
-
Carrying
amount
£’000
Depreciation
expense
£’000
Impairment
£’000
24
24
27
27
-
-
The right-of-use assets are included in the same line item as where the corresponding underlying assets would be
presented if they were owned.
The bank has a fixed and floating charge over all assets of the Group.
Vianet Group plc
64
Notes to the Financial Statements for the year
ended 31 March 2023 (continued)
13.
Inventories
Finished goods
Provision on finished goods
2023
£000
2,353
(78)
2,275
2022
£000
1,629
(56)
1,573
No reversal of previous write-downs was recognised as a reduction of expense in 2023 or 2022. In 2023 £2,546,000
(2022: £2,711,000) 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 comprise 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.
14. Trade and other receivables
Trade receivables
Other receivables
Corporation Tax receivable
Prepayments
Contract Assets
2023
£000
2,165
4
922
327
363
3,781
2022
£000
2,171
5
-
365
149
2,690
The Directors consider that the carrying amount of trade and other receivables approximates their fair value.
The company took advantage of an opportunity to reclaim tax for historic R&D tax losses for FY21 and FY22. A claim
was made in March 23 for £922k and was received in May 23.
The carrying amounts of trade and other receivables are considered to be reasonable approximations to fair value.
The Group’s trade receivables have been reviewed for expected credit losses. Provisions have been made amounting
to £89,000 (2022: £83,000). It is considered that expected credit loss for receivables balances less than six months is
immaterial. Movements on provisions for doubtful debts on trade receivables are as follows:
Loss allowance as at 1 April 2022 calculated under IFRS9
Loss allowance unused and reversed during the year
Loss allowance provided
Loss allowance as at 31 March 2023
The expected credit loss for trade receivables as at 31 March 2023 was determined as follows:
Expected credit loss rate
Gross carrying amount
Lifetime expected credit loss
Current
Less than 3
months
Less than 6
months
More than 6
months
0%
977
-
0%
1,040
-
3%
153
5
100%
84
84
£000
83
(83)
89
89
Total
-
2,254
89
65
Vianet Group plc
14. Trade and other receivables (continued)
The expected credit loss for trade receivables as at 31 March 2022 was determined as follows:
Current
0%
1,276
-
Expected credit loss rate
Gross carrying amount
Lifetime expected credit loss
15. Trade and other payables
Trade payables
Other taxation and social security
Accruals
Contract Liabilities
Contingent consideration
Less than 3
months
Less than 6
months
More than 6
months
0%
737
-
6%
169
11
100%
72
72
2023
£000
929
497
661
261
-
2,348
Total
-
2,254
83
2022
£000
1,194
477
1,074
222
16
2,983
The Directors consider that the carrying amount of trade and other payables approximates their fair value.
Contract Liabilities arises when a customer pays the Group in advance (in advance is defined at more than one monthly
period) for unfulfilled performance obligations relating to data insight. The entity has contracts spanning from two
to four years at the year end. The deferred income will be released to the income statement as the performance
obligations are met. Revenue recognised in the reporting period that was included in the contract liability balance
at the beginning of the period was £222k (2022: £414k). No revenue has been recognised in the reporting period in
respect of performance obligations satisfied in previous periods.
The Group had one contingent consideration liability, from the acquisition of Lookoutsolutions Limited in October
2011. The final payment in respect of liability of £16k was paid on 14 October 2022. No further contingent liabilities
exist.
The contingent consideration period for Lookoutsolutions Limited was 10 years to March 2022. The expected cash
outflows in respect of the Lookoutsolutions Limited contingent consideration have not been discounted (2022: were
not discounted)
16. Leases
Current
Lease liability
Non-current
Lease liability
Vianet Group plc
2023
£000
70
70
2023
£000
122
122
2022
£000
25
25
2022
£000
-
-
66
Notes to the Financial Statements for the year
ended 31 March 2023 (continued)
16. Leases (continued)
During the year, the group capitalised £232k (2022: £nil) of right of use assets. These were capitalised in accordance
with IFRS16 and are amortised over the remaining length of the lease.
The Group has leases for some vehicles. With the exception of a short-term property lease, each lease is reflected
on the balance sheet as a right-of-use asset and a lease liability. The Group classifies its right-of-use assets in a
consistent manner to its property, plant and equipment (see Note 12).
Leases of vehicles are generally limited to a lease term of 3 to 4 years.
Lease payments are fixed over the term of the lease.
Each lease generally imposes a restriction that the right-of-use asset can only be used by the Group. Leases are
either non-cancellable or may only be cancelled by incurring a substantive termination fee.
Some leases contain an option to purchase the underlying leased asset outright at the end of the lease, or to extend
the lease for a further term. The Group is prohibited from selling or pledging the underlying leased assets as
security. For leases over vehicles, the Group must keep those vehicles legally maintained and roadworthy and must
return in a good condition at the end of the lease.
17. Borrowings
Current
Bank overdraft
Bank loans
Non-current
Bank loans
2023
£000
1,168
757
1,925
2023
£000
1,517
1,517
2022
£000
1,317
993
2,310
2022
£000
2,273
2,273
Bank loans are denominated in £ sterling and bear interest based on Bank of Scotland Base Rate plus a rate of
between 1% and 4%. The bank loans are secured by a fixed charge over the land and buildings of the Group.
The availability of the bank overdraft is £1.5m, which has been renewed through to 30 September 2023 and potentially
beyond if needed. On 23 June 2023, the Group signed new banking facilities with a new bank which will take place as
of 1 August 2023 with a mix of mortgage, term loan and 3 year committed RCF, with interest rates varying between
2.42% and 2.62% above base rate.
The effective interest rates on the Group’s borrowings were as follows above base rate:
Bank overdrafts
Bank borrowings - CBIL loan
Bank borrowings – Acquisition loan
Bank borrowings – commercial mortgage
2023
%
3.25
3.65
3.10
1.00
2022
%
2.50
3.65
3.10
1.00
67
Vianet Group plc
17. Borrowings (continued)
The maturity profile of the Group’s non-current bank loans was as follows:
Between one and two years
Between two and five years
2023
£000
756
761
1,517
2022
£000
756
1,517
2,273
The Group’s bank borrowings bear interest at floating rates, which represent prevailing market rates.
None of the above cash flows have been discounted.
18. 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.
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.
Denominated in US Dollars
Financial assets
Financial liabilities
Exposure
Denominated in Euros
Financial assets
Financial liabilities
Exposure
2023
$000
36
-
36
2023
€000
14
-
14
2022
$000
43
-
43
2022
€000
329
-
329
The Group has no long term foreign exchange exposure.
At the beginning, during 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
Contract Assets
Vianet Group plc
2023
£000
69
3,091
363
3,523
2022
£000
1,583
2,176
149
3,908
68
Notes to the Financial Statements for the year
ended 31 March 2023 (continued)
18. Financial Instruments (continued)
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.
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, therefore
no significant mitigating actions are required in respect of credit risk.
The Group uses an expected credit loss model for impairment that represents its estimate of incurred losses in
respect of the Trade Receivables as appropriate.
The Group applies the IFRS 9 simplified approach to measure expected credit losses using a lifetime expected credit
loss provision for trade receivables and contract assets. The expected loss rates are based on the Group’s historical
credit losses experienced over the two year period prior to the period end.
The historical loss rates are then adjusted for current and forward-looking information on macroeconomic factors
affecting the Group’s customer. Under the expected credit loss model impairment allowance wasn’t material
resulting in no provision being made.
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. The Group’s policy is to ensure that it will always have sufficient cash to allow it to meet its liabilities when
they become due. Budgets and forecasts are agreed and set by the Board in advance to ensure the Group’s cash
requirement to be anticipated.
This has all been formally considered in the going concern review of the business and the facilities we have access
to.
The maturity profile of the Group’s financial liabilities at the reporting dates, based on contractual undiscounted
payments including lease payments, are summarised below:
At 31 March 2023
Up to 3 months
£000
Between 3 and
Between 1
12 months £000 and 5 years £000
Over 5 years
£000
Trade payables and other payables
Loans and borrowings
Lease liabilities
Total
At 31 March 2022
Trade payables and other payables
Loans and borrowings
Lease liabilities
Total
69
1,426
1,357
18
2,801
922
568
52
1,542
-
1,517
122
1,639
-
-
-
-
Up to 3 months
£000
Between 3 and
Between 1
12 months £000 and 5 years £000
Over 5 years
£000
1,687
1,659
25
3,371
1,296
651
-
1,947
-
2,273
-
2,273
-
-
-
-
Vianet Group plc
18. Financial Instruments (continued)
Categories of financial assets and financial liabilities
Accounting policy 1.15 provides a description of each category of financial assets and liabilities and the related
accounting policies. The carrying amounts of financial assets and financial liabilities in each category are as follows:
31 March 2023
Financial assets
Cash and cash equivalents
Trade and other receivables
Total assets
31 March 2023
Financial liabilities
Non-current borrowings
Current borrowings
Trade payables
Contingent consideration
Total financial liabilities
31 March 2022
Financial assets
Cash and cash equivalents
Trade and other receivables
Total assets
31 March 2022
Financial liabilities
Non-current borrowings
Current borrowings
Trade payables
Contingent consideration
Total financial liabilities
Amortised
cost
£000
69
3,091
3,160
Amortised
cost
£000
1,517
1,925
929
-
4,371
cost
£000
1,583
2,176
3,759
Amortised
cost
£000
2,273
2,310
1,194
-
5,777
FVTPL
£000
-
-
-
FVTPL
£000
-
-
-
-
-
FVTPL
£000
-
-
-
FVTPL
£000
-
-
-
18
18
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.
No supplier financing arrangements or credit insurance is in place.
The Group’s dividend policy is to monitor reserves available for distribution to shareholders.
Vianet Group plc
70
Notes to the Financial Statements for the year
ended 31 March 2023 (continued)
18. Financial Instruments (continued)
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
2023
£000
25,967
(69)
25,898
2022
£000
25,735
(1,583)
24,152
The Group is not subject to external imposed capital requirements and any bank covenants have been complied with
during the year, other than the minimum capital requirements and duties regarding reduction of capital as imposed
by the Companies Act 2006 for all public limited companies.
Fair value measurements
Financial assets and financial liabilities measured at fair value in the statement of financial position are grouped into
three levels of a fair value hierarchy. The three levels are defined based on the observability of significant inputs to
the measurement, as follows:
•
•
•
Level 1: quoted prices (unadjusted) in active markets for identical assets or liabilities
Level 2: inputs other than quoted prices included within Level 1 that are observable for the asset or liability,
either directly or indirectly
Level 3: unobservable inputs for the asset or liability.
The following table shows the levels within the hierarchy of financial assets and liabilities measured at fair value on
a recurring basis:
31 March 2023
Financial assets
Debenture
Total financial assets
31 March 2022
Financial assets
Debenture
Total financial assets
31 March 2023
Financial liabilities
Contingent consideration
Total financial liabilities
31 March 2022
Financial liabilities
Contingent consideration
Total financial liabilities
71
Level 1
£000
Level 2
£000
Level 3
£000
Total
£000
-
-
-
-
-
-
Level 1
£000
Level 2
£000
Level 3
£000
Total
£000
-
-
-
-
-
-
Level 1
£000
Level 2
£000
Level 3
£000
Total
£000
-
-
-
-
-
-
Level 1
£000
Level 2
£000
Level 3
£000
Total
£000
-
-
-
-
-
-
Vianet Group plc
18. Financial Instruments (continued)
The following valuation techniques are used for instruments categorised as level 3:
Debenture
The fair value of this balance is based on the expected future cash flows to be received from the entity, taking into
consideration a risk premium.
19. Deferred tax
Deferred tax is calculated in full on temporary differences under the liability method using a tax rate of 25% (2022:
19%).
The movement on the deferred tax account is as shown below:
Deferred tax asset
At 1 April
Surrendered
Profit and loss credit in respect of losses realised
At 31 March
Deferred tax liability
At 1 April
Profit and loss (debit)/credit in respect of timing differences
At 31 March
2023
£000
1,607
(1,276)
380
711
2023
£000
(1,221)
(317)
(1,538)
2022
£000
1,269
-
338
1,607
2022
£000
(1,243)
23
(1,221)
Net position per the Balance sheet at 31 March
(827)
386
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 £711k (2022: £1,607k) are amounts of £711k relating to tax losses (2022: £1,607k).
20.
Issued share capital
Issued and fully paid
Ordinary shares of 10p each: 28,808,914 (2022: 28,808,914)
2023
£000
2022
£000
2,880
2,880
During the year, no shares were bought back and cancelled as part of an approved share buy back programme.
During the financial year, no shares were issued. Refer to Note 26 for Post Balance Sheet Event share issue.
Vianet Group plc
72
Notes to the Financial Statements for the year
ended 31 March 2023 (continued)
21. Employees and directors
Employee benefit expense during the period
Wages and salaries
Furlough receipts
Social security costs
Pension costs
Share based payments
2023
£000
5,282
-
492
211
71
6,056
2022
£000
5,633
(105)
505
214
83
6,330
Furlough receipts claimed during the year was nil (2022: £105k). Furlough receipts are presented net within
employee expenses.
Average monthly number of people (including directors) employed
2023
Number
2022
Number
Sales
Engineering
Volume Recovery
Management
Administration
Key management personnel - Directors
Group
Short term employment benefits
Pension contributions
Share based payments
10
20
9
4
98
141
2023
£000
556
27
71
654
During the year one (2022: one) director had benefits accruing under defined contribution pension schemes.
Highest paid director
Short term employment benefits
Pension contributions
2023
£000
253
27
280
14
21
9
4
95
143
2022
£000
510
27
83
620
2022
£000
221
39
260
73
Vianet Group plc
22. Share-based payments
There are four share option plans in place the EMI Plan, the Executive Plan, the Employee Plan, and a Long Term
Incentive 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 start of the financial year
Exercised
Granted
Forfeited
Lapsed
At end of financial year
Exercisable at end of financial year
2023
2022
Number of
share options
1,639,750
-
796,000
(129,000)
-
2,306,750
1,005,750
Weighted
average
exercise
price(p)
74.7
-
74.4
(78.0)
-
74.4
77.7
Number of
share options
1,731,750
(2,000)
80,000
(170,000)
-
1,639,750
614,750
Weighted
average
exercise
price(p)
76.9
(85.0)
72.0
(96.1)
-
74.7
89.0
The below share options are serving Directors only:
Name of director /
senior employee
Date of grant
Number of
options
Exercise
price
Exercise
date
M H Foster
M H Foster
M H Foster
M H Foster
J W Dickson
S Panu
D Coplin
09/04/14
21/12/15
24/02/21
17/02/23
17/02/23
17/02/23
17/02/23
135,000
124,000
100,000
100,000
250,000
50,000
50,000
85.0p
103.0p
72.0p
75.0p
75.0p
75.0p
75.0p
-
-
-
-
-
-
-
Weighted
average
share price
at date of
exercise
-
-
-
-
-
-
-
Gain on
exercise
Exercise
period
-
-
-
-
-
-
-
10/04/17 to 09/04/24
21/12/18 to 20/12/25
24/02/24 to 23/02/31
17/02/26 to 16/02/33
17/02/26 to 16/02/33
17/02/26 to 16/02/33
17/02/26 to 16/02/33
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 £71,000 (2022: £83,000) in relation to equity settled share-based payment
transactions in the year.
Vianet Group plc
74
Notes to the Financial Statements for the year
ended 31 March 2023 (continued)
22. Share-based payments (continued)
Long Term Incentive Plan
The Group adopted a new Long Term Incentive Plan (LTIP) on 17 December 2015 and on 21 December 2015, awards
were granted to two executive directors and three key management personnel under the scheme.
LTIP awards give a conditional right to a ‘cash payment’ at three separate points in time 30 June 2018, 30 June 2019
and 30 June 2020. The amount of the cash payment is determined by the participant’s percentage entitlement to the
award pool at each date, and the size of the award pool itself is based upon performance criteria relating to growth
in the parent company’s share price and dividends over the period to 30 June 2020. There is no clawback of earlier
awards if performance declines in later periods. The entitlement of Mark Foster in the overall award pool is 29%.
Any cash payment awarded under the LTIP will (after the deduction of income tax and employee national insurance)
be used to acquire a number of shares in the Company based upon the prevailing market value on behalf of the
participant. Accordingly, the LTIP is accounted as an equity settled share based payment with a net settlement
feature.
The fair value of the LTIP was calculated at the date of grant using the Monte Carlo Model and the following key
assumptions:
Expected volatility (%)
Risk free rate (%)
Expected dividend yield (%)
Share price on grant date (p)
Exercise price (p)
The fair values of each award pool are the following:
30 June 2018
30 June 2019
30 June 2020
21 December 2015
27.3
1.15
5.534
103.0
0
£000
305
143
108
23. 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. C Williams, a non-
executive director, invoiced Vianet Group plc for fees totalling £nil (2022: £nil). As at 31 March 2023, there was £nil
outstanding (2022: £nil). D Coplin, a non-executive director, invoiced Vianet Group plc for fees totalling £nil (2022:
£nil). As at 31 March 2023 there was £nil outstanding (2022: £nil). S Panu, a non-executive director, invoiced Vianet
Group plc for fees totalling £10,998 (2022: £nil). As at 31 March 2023 there was £1,833 outstanding (2022: £nil).
IAS 24:17 required disclosures are included in Note 22
75
Vianet Group plc
24. Notes supporting statement of cash flows
Net debt as at 1 April 2021
Cash flows
Non-cash flows
- Interest accruing in the period
Net debt as at 31 March 2022
Cash flows
Non-cash flows
- Interest accruing in the period
Net debt as at 31 March 2023
Borrowings
due within
one year
£000
(1,265)
134
138
(993)*
236
Borrowings
due after
one year
£000
(3,290)
1,017
-
(2,273)
756
Total
£000
(4,555)
1,151
138
(3,266)
992
-
-
-
(757)**
(1,517)
(2,274)
* The net debt as at 31 March 2022 for borrowing due within one year of £993k as stated here, does not agree to the
Balance Sheet amount of £2,310k, as this does not include the bank overdraft of £1,317k as at 31 March 2022.
** The net debt as at 31 March 2023 for borrowing due within one year of £757k as stated here, does not agree to
the Balance Sheet amount of £1,925k, as this does not include the bank overdraft of £1,168k as at 31 March 2023.
Cash and cash equivalents for the purpose of the statement of cash flows comprises:
Cash at bank available on demand
Cash on hand
Adjusted net cash generation
2023
£000
69
-
69
2022
£000
1,581
2
1,583
No significant non-cash transactions from investing activities are noted.
Non-cash transactions from financing activities are shown in the reconciliation of liabilities from financing
transactions in Note 24.
25. Alternative Performance Measures
In the reporting of financial information, the Directors have adopted the APMs “Adjusted operating (loss)/profit”,
“Adjusted operating cash generation”, and “Adjusted net cash generation”, (APMs were previously termed ‘Non-
GAAP measures’), which is not defined or specified under International Financial Reporting Standards (IFRS).
These measures are not defined by IFRS and therefore may not be directly comparable with other companies’ APMS,
including those in the Group’s industry. APMs should be considered in addition to, and are not intended to be a
substitute for, or superior to, IFRS measurements.
Purpose
The Directors believe that this APM assists in providing additional useful information on the underlying trends,
performance and position of the Group. This APM is also used to enhance the comparability of information between
reporting periods and business units, by adjusting for non-recurring or uncontrollable factors which affect IFRS
measures, to aid the user in understanding the Group’s performance.
Consequently, APMs are used by the Directors and management for performance analysis, planning, reporting and
incentive setting purposes and this remains consistent with the prior year. Adjusted APMs are used by the Group
in order to understand underlying performance and exclude items which distort compatibility, as well as being
consistent with public broker forecasts and measures.
Vianet Group plc
76
Notes to the Financial Statements for the year
ended 31 March 2023 (continued)
25. Alternative Performance Measures
Operating profit/(loss) (IFRS measure)
Add back:
Amortisation charge
Share based payments charge
Exceptional items charge
Adjusted operating profit
2023
£000
658
2,254
71
122
3,105
2022
£000
(36)
2,195
83
121
2,363
26. Post Balance Sheet Events
On 12th May 2023, the Company acquired the trade and assets of a US based business, BevMetrics Inc. (BMI).
BMI is based in Denver, being a USA based provider of inventory software solutions to the USA hospitality sector, and
wholly owned subsidiary of Identec AG.
The acquisition consisted of software IP and patents, an established operating platform, and minor customers.
BMI’s five employees will be incorporated into Vianet’s USA subsidiary Vianet Americas Inc. (“VAI”) which has worked
closely with BMI over the past couple of years.
The initial consideration payable to the BMI is £577,500 and will be satisfied in the form of the issue of 700,000
ordinary Vianet shares at a price of 82.5p each with contingent consideration payable dependent on performance
metrics. The contingent consideration, to be calculated as 7% of net revenue of VAI for the period 1 April 2024 through
31 December 2028, will be payable in cash annually and is capped at a maximum future contingent consideration of
£4 million. That will be evaluated for the year ended March 2024.
The fair values of assets and liabilities acquired is noted in the table below:
Asset/(Liability)
Furniture F&F NBV
Computer equipment NBV
Patent related legal costs NBV
Trade Debts
Trade Creditors
Software and IP Intangible asset value
$
£ at $1.20/£1
804.18
3,411.92
80,397.23
22,074.63
(3,445.80)
589,757.84
670.15
2,843.27
66,997.69
18,395.53
(2,871.50)
491,464.87
Price Paid Vianet Group plc shares at 82.5p
693,000.00
577,500.00
The trade and assets from the acquisition were transferred immediately on completion of the transaction to the
Company’s US subsidiary, Vianet Americas Inc. (VAI). VAI will continue to trade with the existing BMI customers as
plans to expand evolve in the coming year.
Financing
At the time of publication, the company has agreed on 23 June 2023 to move banks from Lloyds to HSBC. The date
of change is 1 August 2023.
27. Controlling party
The Directors consider there to be no ultimate controlling party of the Group.
77
Vianet Group plc
COMPANY BALANCE SHEET
at 31 March 2023
Fixed assets
Investments in subsidiaries
Other intangible assets
Tangible assets
Current assets
Debtors
Cash at bank
Creditors: amounts falling due within one year
Net current assets
Net assets
Capital and reserves
Ordinary share capital
Share premium
Share based payment reserve
Merger reserve
Capital redemption
Retained earnings
Total equity
Note
2
3
4
5
6
7
8
8
8
8
8
2023
£000
5,121
50
12
5,183
11,560
-
11,560
(273)
11,287
16,470
2,880
11,711
563
310
15
991
16,470
2022
£000
5,065
59
15
5,139
10,635
1,251
11,886
(429)
11,457
16,596
2,880
11,711
499
310
15
1,181
16,596
The company has taken the exemption under s408 of the Companies Act 2006 to not included the Company Statement
of Comprehensive Income
The company’s loss for the financial year was £197,000 (2022: loss £497,000).
The balance sheet was approved by the Board on 18 July 2023 and signed on its behalf by:
J Dickson
Director
Company number: 05345684
The accompanying accounting policies and notes form an integral part of the financial statements.
Vianet Group plc
78
COMPANY STATEMENT OF CHANGES IN EQUITY
for the year ended 31 March 2023
At 1 April 2021
Cancellation of shares
Share based payments
Share option forfeitures
Transactions with owners
Loss and total comprehensive
income for the year
Share
capital
£000
Share
premium
account
£000
2,895 11,709
-
-
-
(15)
-
-
(15)
-
2
-
At 31 March 2022
2,880 11,711
Share based payments
Share option forfeitures
Transactions with owners
Loss and total comprehensive
income for the year
-
-
-
-
-
-
-
-
At 31 March 2023
2,880 11,711
Share
based
payment
reserve
£000
Merger
reserve
£’000
Capital
Redemption
£000
Retained
Profit
£000
310
-
-
-
-
-
310
-
-
-
-
-
15
-
-
15
-
15
-
-
-
-
Total
£000
17,134
(126)
83
-
1,783
(126)
-
21
(105)
(41)
(497)
(497)
1,181
16,596
-
7
7
71
-
71
(197)
(197)
310
15
991
16,470
437
-
83
(21)
62
-
499
71
(7)
64
-
563
The accompanying accounting policies and notes form an integral part of the financial statements.
79
Vianet Group plc
NOTES TO THE COMPANY BALANCE SHEET
1. Principal accounting policies
1.1 Statement of compliance
Going concern has been considered as part of the Group position. See section 1.1 on page 44. The company has
ongoing current costs which are supported fully by the operating subsidiary Vianet Limited hence Going Concern is
referred as above.
These financial statements have been prepared in accordance with applicable accounting standards and in
accordance with Financial Reporting Standard 101 - ‘The Reduced Disclosure Framework’ (FRS 101). The principle
accounting policies adopted in the preparation of these financial statements are set out below. These policies have
all been applied consistently throughout the year unless otherwise stated.
The financial statements have been prepared on a historical cost basis.
The financial statements are presented in Sterling (£).
1.2 Disclosure exemptions
In preparing these financial statements the Company has taken advantage of all disclosure exemptions conferred by
FRS 101. Therefore these financial statements do not include:
•
•
•
•
•
•
•
•
•
A statement of cash flows and related notes
The requirement to produce a balance sheet at the beginning of the earliest comparative period
The requirements of IAS 24 related party disclosures to disclose related party transactions entered in to
between two or more members of the group as they are wholly owned within the group
Capital management disclosures
Presentation of comparative reconciliation of the number of shares outstanding at the beginning and at the
end of the period
The effect of future accounting standards not adopted
Certain share based payments disclosures
Disclosures in relation to impairment of assets
Fair value measurement disclosures (other than disclosures required as a result of recording financial
instruments at fair value)
Vianet Group plc
80
Notes to the Company Balance Sheet (continued)
Income taxes
1. Principal accounting policies (continued)
1.3
Tax expense recognised in profit or loss comprises the sum of deferred tax and current tax not recognised in other
comprehensive income or directly in equity.
Calculation of current tax is based on tax rates and laws that have been enacted or substantively enacted by the end
of the reporting period. Deferred income taxes are calculated using the liability method.
Calculation of deferred tax is based on tax rates and laws that have been enacted or substantively enacted by the end
of the reporting period that are expected to apply when the asset is realised or the liability is settled.
The measurement of deferred tax reflects the tax consequences that would follow from the manner in which the
entity expects to recover the related asset or settle the related obligation.
Deferred tax assets are recognised to the extent that it is probable that the underlying tax loss or deductible temporary
difference will be utilised against future taxable income. This is assessed based on the Company’s forecast of future
operating results, adjusted for significant non-taxable income and expenses and specific limits on the use of any
unused tax loss or credit. Deferred tax assets are not discounted.
Deferred tax liabilities are generally recognised in full with the exception of the following: on the initial recognition
of goodwill on investments in subsidiaries and joint ventures where the Company is able to control the timing of the
reversal of the difference and it is probable that the difference will not reverse in the foreseeable future on the initial
recognition of a transaction that is not a business combination and at the time of the transaction affects neither
accounting or taxable profit.
Deferred tax liabilities are not discounted.
Investment in subsidiaries
1.4
Investments in subsidiary undertakings, associates and joint ventures are stated at cost less any applicable provision
for impairment.
1.5 Employee share option schemes
All share-based payment arrangements are recognised in the financial statements in accordance with IFRS 2.
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. Subsidiary costs are treated as a capital contribution and
added to the cost of investment.
Upon exercise of share options the proceeds received net of attributable transaction costs are credited to share
capital, and where appropriate share premium.
81
Vianet Group plc
1. Principal accounting policies (continued)
1.6 Tangible assets
Property plant and equipment (PPE) is initially recognised at acquisition cost or manufacturing cost, including any
costs directly attributable to bringing the assets to the location and condition necessary for them to be capable of
operating in the manner intended by the Company’s management.
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 Company.
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 Group
statement of comprehensive income.
1.7
Intangible assets
Software
Purchased software are stated at cost net of amortisation and any provision for impairment.
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:
Trademarks
Purchased software
expected length of trademark
5 years
Methods of amortisation, residual values and useful lives are reviewed, and if necessary adjusted, at each balance
sheet date.
Intercompany balances
1.8
The Company provides for impairment for amounts due from subsidiary undertakings based on forward looking
going concern assessments for the Group including its individual subsidiaries including and excluding Parent
Company guarantees.
The Company uses an expected credit loss model for impairment that represents its estimate of incurred losses in
respect of the Amounts due from subsidiaries as appropriate.
The Company applies the IFRS 9 simplified approach to measure expected credit losses using a lifetime expected
credit loss provision for amounts due from subsidiaries. The expected loss rates are based on the Company’s
historical credit losses experienced over the two year period prior to the period end.
The historical loss rates are then adjusted for current and forward-looking information on macroeconomic factors
affecting the Company’s subsidiaries. Under the expected credit loss model impairment allowance was considered
relevant in respect of amounts due from Vianet Americas Inc, with 100% provision being made at 31 March 2022.
Vianet Group plc
82
Notes to the Company Balance Sheet (continued)
2.
Investments in subsidiaries
Company
Cost and net book amount:
Shares in subsidiaries
At 1 April
Additions
At 31 March
2023
£000
2022
£000
5,065
56
5,121
4,990
75
5,065
Additions relate to the subsidiary costs of the employee share option scheme.
The company owns the whole of the issued ordinary share capital of the following subsidiaries:
Subsidiary
Shareholding
Brulines Group Limited
Vianet Americas Inc
Vianet Limited
100%
100%
100%
Country of
incorporation
and registration
UK
USA
UK
Principal activity
Dormant
Leisure Solutions
Leisure Solutions
Brulines Limited and Vendman Systems Limited, are indirect investments via Vianet Limited in Leisure.
The registered address of the above subsidiaries is:-
Brulines Group Limited – One Surtees Way, Surtees Business Park, Stockton On Tees, TS18 3HR
Vianet Americas Inc - 251 Little Falls Drive, Wilmington, New Castle, DE, 19808
Vianet Limited - 4th Floor 115 George Street, Edinburgh, EH2 4JN
3. Other intangible assets
Patents
£000
Software
£000
Total
£000
Cost
At 31 March 2021
Additions
At 31 March 2022
Additions
At 31 March 2023
Amortisation
At 31 March 2021
Charge for the year
At 31 March 2022
Charge for the year
At 31 March 2023
Net book amount
At 31 March 2023
At 31 March 2022
83
116
11
127
4
131
56
12
68
13
81
50
59
165
-
165
-
165
165
-
165
-
165
-
-
281
11
292
4
296
221
12
233
13
246
50
59
Vianet Group plc
4.
Tangible Assets
Cost
At 31 March 2021
Additions
At 31 March 2022
Additions
At 31 March 2023
Accumulated depreciation
At 31 March 2021
Charge for the year
Disposals
At 31 March 2022
Charge for the year
At 31 March 2023
Net book amount
At 31 March 2023
At 31 March 2022
5. Debtors
Amounts due more than 1 year
Amounts due from subsidiaries
Amounts due within 1 year
Other debtors
Other taxation
Fixtures
and fittings
£000
30
17
47
3
50
27
5
-
32
6
38
12
15
2023
£000
2022
£000
11,488
10,565
38
34
45
25
11,560
10,635
All intercompany debt is repayable on demand. Interest is charged at base rate plus 2.5%.
The amounts due from subsidiaries have been reviewed for expected credit losses, and no further credit losses are
expected.
A provision against an amount due from a subsidiary totalling £1,696k has been made (2022: £1,613k). The subsidiary
received funding of £83k during 2023 which was provided against.
Vianet Group plc
84
Notes to the Company Balance Sheet (continued)
6. Creditors: amounts falling due within one year
Other payables
Accruals
7.
Issued share capital
2023
£000
140
133
273
2023
£000
2022
£000
152
277
429
2022
£000
Issued and fully paid
Ordinary shares of 10p each: 28,808,914 (2022: 28,808,914)
2,880
2,880
During the year, the company bought back and cancelled down nil shares as part of an approved share buy back
programme.
During the year, the company issued no shares from an employee share option exercise.
Allotments during the year
Since the end of the financial year no shares have been issued under the share option scheme.
Please refer to note 15 post balance sheet event.
Share capital and reserves
8.
Called-up share capital - represents the nominal value of shares that have been issued.
Share premium account - includes any premiums received on issue of share capital. Any transaction costs associated
with the issuing of shares are deducted from share premium.
Capital redemption - represents the nominal value of shares repurchased and cancelled.
Share based payment reserve - represents the fair value of all share options issued by the Company which have yet
to be exercised.
Merger reserve - excess of fair value of shares issued over nominal value when shares are issued in exchange for
obtaining at least a 90% interest in the equity share capital of another entity.
Profit and loss account - includes all current and prior period retained profits and losses.
9. Dividends
Final dividend for the year ended 31 March 2022 of nil (year ended 31 March 2021: nil)
Interim dividend paid in respect of the year of nil (2022: nil)
Amounts recognised as distributions to equity holders
2023
£000
-
-
-
2022
£000
-
-
-
In addition, the directors are proposing a final dividend in respect of the year ended 31 March 2023 of 0.5p per share
payable on 27 October 2023 to shareholders on the register on 14 September 2023. Total dividend payable 0.5p (2022:
nil).
85
Vianet Group plc
10. 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
11. Directors
Directors’ emoluments
Pension contribution
The amounts in respect of the highest paid director are as follows:
Directors’ emoluments
Pension contribution
2023
£000
556
74
27
71
728
2022
£000
510
65
27
83
685
2023
Number
2022
Number
4
4
2023
£000
556
27
583
2023
£000
253
27
280
4
4
2022
£000
510
27
537
2022
£000
221
39
260
For other Directors’ emoluments see page 21 in the Report of the Directors.
12. Share-based payments
The company disclosures required under FRS 101 are identical to those required under IFRS. See Group accounts,
note 22, for details.
13. 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 £197,000
(2022: loss £497,000).
Vianet Group plc
86
Notes to the Company Balance Sheet (continued)
14. Related Party Transactions
As permitted by FRS 101 related party transactions with wholly owned members of Vianet Group plc have not been
disclosed.
Non-executive director payments were incurred in the company during this year.
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. C Williams, a non-
executive director, invoiced Vianet Group plc for fees totalling £nil (2022: £nil). As at 31 March 2023, there was £nil
outstanding (2022: £nil). D Coplin, a non-executive director, invoiced Vianet Group plc for fees totalling £nil (2022:
£nil). As at 31 March 2023 there was £nil outstanding (2022: £nil). S Panu, a non-executive director, invoiced Vianet
Group plc for fees totalling £10,998 (2022: £nil). As at 31 March 2023 there was £1,833 outstanding (2022: £nil).
See Group accounts, Report of the Directors for details of non-executive directors’ emoluments.
15. Post Balance Sheet Events
On 12th May 2023, the Company acquired the trade and assets of a US based business, BevMetrics Inc. (BMI).
BMI is based in Denver, being a USA based provider of inventory software solutions to the USA hospitality sector, and
wholly owned subsidiary of Identec AG.
The acquisition consisted of software IP and patents, an established operating platform, and minor customers.
BMI’s five employees will be incorporated into Vianet’s USA subsidiary Vianet Americas Inc. (“VAI”) which has worked
closely with BMI over the past couple of years.
The initial consideration payable to the BMI is £577,500 and will be satisfied in the form of the issue of 700,000
ordinary Vianet shares at a price of 82.5p each with contingent consideration payable dependent on performance
metrics. The contingent consideration, to be calculated as 7% of net revenue of VAI for the period 1 April 2024 through
31 December 2028, will be payable in cash annually and is capped at a maximum future contingent consideration of
£4 million. That will be evaluated for the year ended March 2024.
The fair values of assets and liabilities acquired is noted in the table below:
Asset/(Liability)
Furniture F&F NBV
Computer equipment NBV
Patent related legal costs NBV
Trade Debts
Trade Creditors
Software and IP Intangible asset value
$
£ at $1.20/£1
804.18
3,411.92
80,397.23
22,074.63
(3,445.80)
589,757.84
670.15
2,843.27
66,997.69
18,395.53
(2,871.50)
491,464.87
Price Paid Vianet Group plc shares at 82.5p
693,000.00
577,500.00
The trade and assets from the acquisition were transferred immediately on completion of the transaction to the
Company’s US subsidiary, Vianet Americas Inc. (VAI). VAI will continue to trade with the existing BMI customers as
plans to expand evolve in the coming year.
Financing
At the time of publication, the company has agreed on 23 June 2023 to move banks from Lloyds to HSBC. The date
of change is 1 August 2023.
87
Vianet Group plc
Vianet Group plc
88
NP0523.3806
DELIVERING REAL CHANGE THROUGH UNPARALLELED INSIGHT
One Surtees Way, Surtees Business Park, Stockton on Tees, TS18 3HR
www.vianetplc.com