Consolidated Annual Report & Accounts
Year ended 31 March 2024
GROUP PLC
Vianet Group plc
i
Section
Page
Company Information
1
Chairman’s Statement
5
Strategic Report
8
Report of the Directors
17
Corporate Governance Statement
24
Independent Auditor’s Report
31
Consolidated Statement of Comprehensive Income
38
Consolidated Balance Sheet
39
Consolidated Statement of Changes in Equity
40
Consolidated Cash flow Statement
41
Notes to the Consolidated Financial Statements
42-75
Company Balance Sheet
76
Company Statement of Changes in Equity
77
Notes to the Company Balance Sheet
78-85
CONTENTS
1
Vianet Group plc
COMPANY INFORMATION
Directors
J W Dickson (Chairman and Interim CEO)
M H Foster (Chief Financial Officer)
D C Coplin (Non-Executive Director)
S Panu (Non-Executive Director)
Secretary
M H Foster
Registered office
One Surtees Way
Surtees Business Park
Stockton on Tees
TS18 3HR
Registered number
05345684
Auditors
BDO LLP
Central Square
29 Wellington Street
Leeds
LS1 4DL
Bankers
HSBC UK Bank plc
3rd Floor
Central Square South
Orchard Street
Newcastle upon Tyne
NE1 3AZ
Nominated Adviser
Cavendish
One Bartholomew Close
London UK
EC1A 7BL
Stockbroker
Cavendish
One Bartholomew Close
London UK
EC1A 7BL
Solicitors
Gordons LLP
Riverside West
Whitehall Road
Leeds
LS1 4AW
Registrars
Link Group
Central Square
29 Wellington Street
Leeds
LS1 4DL
Vianet Group plc
2
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 350 customers and a combination of near
50,000 venues and unattended retail machines 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 hospitality venues, 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
data from which insight and analytics support
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;
•
Providing
seamless
touchless
payment
solutions, reducing customer dependency,
on ‘dirty’ cash, and providing the contactless
payment solutions that consumers increasingly
desire;
•
Improving
cash
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.
Whilst
our
technologies
were
developed
for
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.
WHO ARE WE
3
Vianet Group plc
FINANCIAL HIGHLIGHTS
2.72p
(2023: 0.56p)
BASIC EPS
0.75p
(2023: 0.5p)
9,160
(2023: 6,813)
DIVIDENDS
NEW CONNECTIONS
TURNOVER PERFORMANCE
RECURRING REVENUE
85%
(2023: 89%)
8,369
13,215
14,115
15,176
Mar-21
Mar-22
Mar-23
Mar-24
TURNOVER (£’000)
0
2000
4000
6000
8000
10000
12000
14000
16000
£3.47 MILLION ADJUSTED OPERATING PROFIT(a)
Mar-21
Mar-22
Mar-23
OPERATING PROFIT (£’000)
3,105
2,363
3,469
(687)
1000
-1000
2000
3000
4000
3500
2500
1500
500
-500
0
Mar-24
OPERATIONAL CASH GENERATION
PRE WORKING CAPITAL
EBITDA PRE EXCEPTIONAL ITEMS
AND SHARE BASED PAYMENTS
OPERATIONAL CASH GENERATION
POST WORKING CAPITAL
Mar-23
CASH GENERATION PRE WC (£’000)
Mar-24
(341)
3,929
4,448(c)
2,739
0
5000
4000
3000
2000
1000
-1000
Mar-22
Mar-21
Mar-23
EBITDA PRE EXCEPTIONAL ITEMS AND SHARE BASED PAYMENTS
(£’000)
Mar-24
(123)
4,012
3,624
2,693
0
4500
4000
3000
3500
2500
1500
500
-500
2000
1000
Mar-22
Mar-21
Mar-21
Mar-23
CASH GENERATION POST WC (£’000)
Mar-24
1,052
3,670
2,037
2,397
4000
3500
3000
2000
2500
1500
1000
Mar-22
NET DEBT OF £1.52 MILLION(b)
Mar-21
NET DEBT (£’000)
-3500
-3000
-2500
-2000
-1500
-1000
-500
0
(3,373)
(1,515)
(2,999)
(2,661)
Mar-24
Mar-22
Mar-23
Note:
(a) Adjusted operating profit is profit before exceptional costs, amortisation, interest and share-based payments
(b) Net debt includes a RCF
(c) Includes one off tax rebate accrued £0.92m, received May 23
Vianet Group plc
4
OPERATIONAL HIGHLIGHTS
Smart Machines unattended retail division
•
Adjusted operating profit increased 22.2% to
£2.46m (FY2023: £2.01m).
•
Added 8,900 new connected machines (FY2023:
6,554) despite sector distraction of planning
related to the UK-wide 3G switch-off.
•
Key long-term contract wins and renewals with
Baxter Storey, The Vending People, Compass,
and both Rontec and Wilcomatic in the fuel
forecourt market.
Smart Zones hospitality division
•
Acquisition of trade and assets of US-based
Beverage Metrics Inc (BMI)
•
Revenue increased 5.5% to £8.62m (FY2023:
£8.16m) with operating profit up 3.9% to £3.94m
(FY2023: £3.79m) despite absorbing c £0.5m of
post-acquisition cost associated with BMI.
•
Net installation base solid at c 9,640 (FY2023:
9,758) as ongoing investment and a pipeline
of new installations offset a slowing rate of
hospitality sector closures.
•
We had several contract extensions, including
Stonegate,
and
post-year-end
contract
renewals, including Heineken.
33,900
Mar-24
0
5,000
10,000 15,000 20,000 25,000 30,000 35,000 40,000 45,000 50,000
VENUES & MACHINES -TOTAL
Smart Zones
Smart Machines
9,758
36,093
9,638
Mar-23
5
Vianet Group plc
Introduction
I am delighted to report that the Group has continued
to build positive sales and commercial momentum in
FY2024. We are exceptionally well placed to capitalise
on the opportunities in the UK and USA hospitality
markets, unattended retail in the UK and Europe, and
the adjacent fuel forecourt market.
Sales grew c.8% to £15.2m (FY2023: £14.1m),
delivering an adjusted operating profit of £3.47m
(FY2023 £3.11m), representing c.12% year-on-year
growth. We have maintained a rigorous drive to grow
the top line and maximise the business’s profitability,
enabling progressive dividend payments. This is a
testament to the team’s hard work.
Progress from the unattended retail and hospitality
divisions has been particularly strong, marked by key
initiatives bringing in new customers, strengthening
existing relationships and expanding our service
offering. The initial delay in customers adapting to
the 3G network switch-off was more than offset as
demand rebounded in Q4. The sharp acceleration in
4G LTE systems upgrades, preventing connectivity
issues on payment devices, has resulted in numerous
new contracts, enhancing our installation pipeline
well into FY2025.
In addition, recent contract wins illustrate the
successful expansion of our business into new
industry verticals and our ability to react swiftly
to a changing dynamic. We are building on these
opportunities with key players in the manufacturing
and retail sectors of the forecourt industry.
Strategic Developments
Vianet has made significant strategic developments
in the past year. One of the key highlights is the
acquisition and subsequent integration of Beverage
Metrics Inc. in May 2023. This has allowed Vianet
to accelerate its product roadmap in the hospitality
sector by 18 months and expand its presence in the US
market. Through the integration of Beverage Metrics’
comprehensive inventory platform and Vianet’s
draught beer management solution, the Company
has created a compelling beverage management and
inventory offering. Together with the recent product
integration with Fintech we are providing customers
with a complete procure and pay solution.
Pilot testing of the integrated solution with leading
brands in the US has yielded encouraging results.
This success has reinforced the potential for Vianet
to increase its installation footprint in the US and UK
throughout FY2025 and beyond.
Our focus on customer engagement has received
positive feedback, demonstrating our commitment
to Vianet Americas. We have recently showcased the
solution, sharing a stand with Fintech at the National
Restaurant Association show in Chicago in May.
The integrated offering was well received, providing
valuable exposure and generating promising sales
leads. Vianet has also renewed and won several
contracts in the UK for the Beverage Metrics beer
module, establishing a solid foundation for revenue
growth in FY2025.
Furthermore, Vianet completed its refinancing and
transitioned to HSBC in August 2023. This has resulted
in lower finance costs, reflecting the strength of the
business and its ability to secure favourable financial
arrangements.
These strategic developments have positioned the
Company for continued growth and success in the
hospitality sector, both in the US and the UK.
Dividend
The high levels of customer engagement and
commercial momentum provide confidence that the
Group will benefit from solid revenue growth and high
levels of cash generation in FY2025.
Despite uncertainties over inflationary and interest
rate pressures, the new HSBC facility offers flexibility
to support ongoing investment in the business. The
Board recognises the significance of dividends for
CHAIRMAN’S STATEMENT
James Dickson
Chairman
Vianet Group plc
6
shareholders and supports a progressive dividend
policy, including the reinstatement of an interim
dividend at the earliest opportunity. For the full-year
dividend, the Board proposes 0.75p per share, payable
on 2 August 2024 to shareholders on the register on
21 June 2024.
Board and Staff
The Board has agreed that I shall remain as acting
CEO to build on the success of FY2024, maintain our
strong sales momentum, and develop our strategic
options. I am committed to realising significant
growth in shareholder value.
The Board regularly evaluates its composition and
effectiveness to ensure a balanced mix of experience
and independence, supporting our business and
growth ambitions. The operational structure of
the Group continues to evolve, and I am pleased to
report further development of the management team.
They are highly motivated and focused on delivery,
providing a strong succession pathway.
Our exceptional people consistently demonstrate
enthusiasm,
commitment,
and
openness,
underpinning the Group’s excellent reputation among
customers, suppliers, and stakeholders.
I take considerable pride and am incredibly grateful
for the unwavering commitment of our executive
team, employees, and Board members in continuing
to drive the Group’s success.
Conclusion and Outlook
FY2024 saw increased sales, profit, cash generation
& a reduction in net debt. However, what really
stands out is the excellent customer engagement and
momentum generated by our innovative solutions,
partnerships,
and
commercial
initiatives.
This
provides a platform for the Company’s future growth.
We empower customers to transform their business
performance, fostering deeper relationships and
creating substantial sales opportunities. We enable
customers to do more with less to unlock excellent
returns on their investment.
The Group is on track to deliver strong earnings growth
across both divisions and maximise the opportunities
in adjacent new verticals through FY2025 and beyond.
•
Smart Machines leads the industry with its
comprehensive product suite, strengthened
by new SmartVend releases. We have a
robust pipeline of opportunities for telemetry,
contactless sales and data management. This
is based on the strength of our commercial
proposition, footprint extension in existing long-
term contracts with blue-chip customers, and a
strong presence in UK and European markets,
where further contract wins reinforce our
progress.
•
The partnership with Suresite Group Ltd has
bolstered our position in the fast-growing
‘unattended’ contactless payments sector.
Combining our hardware and end-to-end
solution
with
Suresite’s
market-leading
acquiring services is unique. We can now
offer a competitive, user-friendly, and highly
secure payments solution that future-proofs
any unattended or automated retail business.
It caters to various applications, from charging
points and unmanned car washes to air and
vacuum stations.
•
Our proactive approach to the MNO 3G switch-
off and transition to 4G LTE will continue to pay
dividends. Customers are upgrading to new,
predominantly 5-year contracts to achieve
full estate connectivity with the resulting
productivity and sales gains.
•
The integration and successful launch of
Beverage Metrics has boosted our UK hospitality
growth and is a significant step forward in
developing a profitable footprint in the USA.
There is a growing pipeline of new installations
in the UK, and our US operations are on track to
deliver good sales traction as it moves towards
breakeven through FY2025.
•
Our investments in technology and commercial
activity have attracted strong interest from the
unattended retail and fuel forecourt sectors,
and further breakthroughs are expected in
FY2025. Investment in cloud infrastructure
and mobile technology will drive revenues in
both Smart Machines and Smart Zones. This
will enable scalability, flexibility, and speed,
which are crucial for supporting rapid growth in
existing and new verticals.
7
Vianet Group plc
The Company maintains a strong contracted recurring
revenue, which is higher quality subscription rather
than transaction-based and expects to generate solid
operating cash flow. The Board remains confident
in the Group’s long-term growth strategy to achieve
earnings growth and expand future strategic options.
While cash management is a priority, the Board’s
primary focus is on driving sales growth and seizing
exciting growth opportunities.
James Dickson
Chairman
20 June 2024
Chairman’s Statement (continued)
Vianet Group plc
8
James Dickson
Chairman and Chief Executive
The year to March 2024 was building on the growth
momentum from the previous year and solidifying
our position in the market. We have successfully
navigated both the global semiconductor chip supply
problems and 3G switch-off distractions to make
sound progress in a high-inflation economy. We are
pleased to have exceeded the market expectations as
at the time of our H1 2024 results in key measures
such as revenue, EBITA and EBITDA, cash generation
and net debt.
Our core operations provide connectivity to assets,
enabling the collection of operational data and the
production of actionable analytics and insights to help
customers transform their business performance.
In a world increasingly reliant on the Internet of
Things and AI (Artificial Intelligence), we are at
the forefront of our industry, not only in providing
solutions for today but developing tools for the future.
Vianet’s leading-edge contactless payment capability
supports customer sales growth from unattended
retail machines and the business is well placed to
strengthen its position in this rapidly developing area.
There are further contactless and data opportunities
on assets in marketplaces such as fuel forecourts,
where we saw a breakthrough with two announced
orders totalling c1,800 units.
Our
well-invested
cloud-based
platform
now
supports much greater flexibility of data point
connection and data connectivity to the extent that
it is possible to connect a range of business-critical
third-party devices, enabling entry to new vertical
markets beyond those we currently supply. Through
collaboration with customers and partners, such
as Suresite and Vendekin, in unattended retail, we
can identify compelling end-to-end solutions to
address business opportunities. This combination of
capabilities will enable us to drive sustained business
growth over the coming years.
Whilst FY2024 has had its global challenges, the
Group has made excellent progress executing key
elements of our growth plan, including securing new
and renewed customer contracts over several years,
successfully launching SmartVend and our new
market data insights, and establishing ‘strategic go-
to-market’ partnerships. Our contactless payment
and telemetry solutions have strengthened customer
relationships and helped secure new business in
existing new verticals, such as retail & fuel forecourts.
The acquisition of the trade and assets of BMI in May
2023, combined with our draught beer monitoring
solution, established a comprehensive beverage
management platform that is unrivalled in our view.
The combined US operations will require initial
investment during FY2025, but the acquisition has
accelerated our hospitality-related development
roadmap, enabling profitable expansion of our
footprint in the USA and UK beyond our legacy leased
and tenanted customers.
As outlined in our September interim results, our H1
financial position was strengthened by a £927,774 tax
refund and a new refinancing agreement with HSBC,
enhancing our liquidity and supporting our growth
ambitions.
OPERATING REVIEW
Smart Machines – Unattended Retail Division
Investment in sales and marketing, including a
new CRM system, resulted in solid business gains,
including 73 new customer contract wins, providing a
healthy pipeline to underpin our growth plans.
Turnover was up 10.3% at £6.56m (FY2023: £5.95m),
with operating profit up 22.4% at £2.46m (FY2023:
£2.01m).
The
number
of
connected
unattended
retail
machines was 8,900 (FY2023: 6,554). Post machine
rationalisation, the total machines grew 6.5% to
36,093 at the year-end (FY2023: 33,900).
The division made good progress despite the
challenges of the MNO 3G switch-off, being a short-
term distraction to vending operators developing
plans to upgrade machines from 3G to 4G LTE.
Whilst this dampened short-term demand, Vianet
proactively supported our customers, and we saw a
Q4 FY2024 acceleration of demand and associated
new long-term contracts.
The division’s recurring revenues grew 2% YOY
by £0.09m and now represent c 74% of turnover
(FY2023: 80%). As we have reported previously, this
measure will flex dependant on the number of new
capex hardware sales compared to rental-based
sales. Regardless, this is a healthy level of recurring
revenue that has grown incrementally year-on-year
and will continue to do so.
As has been widely reported in the press, the
trend toward non-cash transactions is growing
significantly, with contactless payments giving a fast,
STRATEGIC REPORT
9
Vianet Group plc
easy, and secure transaction in a world where fewer
people carry cash. Contactless payment solutions
drive increased machine utilisation and sales for our
customers, who benefit from the reduced cost of cash
handling, improved cash flow and assured payment.
We believe that there is a continued significant
opportunity to drive growth in the unattended retail
market by delivering market-leading analytics and
insight into premium coffee and unattended retail
snack & can channels from new device connections
and the rollout of contactless payment capability, as
well as other market verticals such as fuel forecourts
where we have seen a breakthrough during the year.
The market opportunity for the Group is significant,
even when limited to the immediately addressable
market of over 300,000 vending machines in the UK
alone. It is estimated that the wider addressable
market in mainland Europe is nearer 3 million
devices, and there are 15 million machines worldwide,
of which only c.30% have any form of connectivity.
Vianet’s contactless payment solution is supported
by leading industry partners Elavon, Worldpay and
NMI and is enhanced by establishing our PCI Master
Merchant service. This allows us to speed up the
onboarding of customers for payment capability
and provide a more cost-effective reconciliation and
payment service.
Contactless payment remains a compelling solution in
a market where traditional cash-only payments have
long inhibited vending-related usage, consumption,
and customer experience. The evolution and growth
of contactless payment solutions, QR code technology
and the insight from our telemetry firmware will
materially change this dynamic and attract more
consumers to the vending vertical.
In summary, the growth prospects for the Smart
Machines business are positive, and there is a clear
line of sight toward significant growth in this sector
over the coming 2-3 years.
Smart Zones - Hospitality Division
The Hospitality division’s recovery continued strongly.
Revenues rose by 5.5% at £8.62m (FY2023: £8.16m),
with profit being up 4.0% at £3.94m (FY2023: £3.79m).
Sales held strong with 260 (FY2023: 259) new site
installations, 3 new contract wins, and 8 contract
renewals as customers’ needs and demand for data
and insights grew.
Our UK estate had 454 (FY2023: 603) pub closures
and 260 new installations (FY2023: 259), resulting in
a net 194 site reduction (FY2023: 344), representing
43% less than last year, taking our installed base
to c 9,640. Whilst it is difficult to predict the pace of
closure rates and new openings, with our plans and
opportunities, this is now a sustainable leased and
tenanted level to deliver growth.
Mar-24
0
1,000
2,000
3,000
4,000
5,000
6,000
7,000
8,000
9,000
10,000
HOSPITALITY VENUES -SMART ZONES
Venues
9,758
9,638
Mar-23
The trade and asset acquisition from BMI will
accelerate our penetration of the UK hospitality sector
beyond our current leased and tenanted footprint
and, more importantly, help unlock the significant
marketplace that exists in hospitality venues in the
USA and support commercial traction during FY2025
and beyond.
We see an increased appetite for market data insights
building on the customer engagement of the last two
years with the launch of BMI and the Smart Insights
portal. This is particularly relevant for the provision of
retail data for brewers. Through our relationship with
the Oxford Partnership, we deliver ground-breaking
insights that support consumer-level decision-
making for beer brands. We expect to show further
growth in this exciting area in FY2025.
Adding our compliance service and data insight
analytics to the BMI assets is resulting in a
heightened emphasis on improving operational and
retail performance. This strategic approach drives
value from pubs, especially those under private equity
ownership, by maximising their return potential.
Vianet Americas Inc (“VAI”)
VAI
reported
losses
at
pre-amortisation
and
exceptional items of £387k (FY2023: £150k loss),
impacted by the acquisition costs and integration of
BMI principally due to staff and licence costs.
The acquisition included customers, an established
inventory operating platform, software IP, patents for
barcode 3D scanning and advanced technology for
point-of-sale data integration.
Strategic Report (continued)
Vianet Group plc
10
The combination of Vianet’s SmartDraught draught
beer management solution with BMI’s inventory
platform provides a comprehensive one-stop drinks
management solution which enables operators to
reduce costs, improve productivity and maximise
sales, driving improved profitability across the entire
drinks category. SmartDraught integration with
the inventory platform will allow Vianet to provide
brewers with a more cost-effective and competitive
brand monitoring and market insight solution.
Alongside recent investment in our draught beverage
monitoring solution, this acquisition positions Vianet’s
hospitality operations firmly on the path to growth in
the UK and to establishing a profitable footprint in
the USA, where we benefit from direct access to a
considerable number of national retail chains.
The opportunity for the Company in the US, the
world’s largest single-operator market, remains
significant,
with
several
conversations
and
commercial opportunities at advanced stages. While
the combined US operations will require investment
and are expected to be loss-making during FY2025,
we anticipate monthly losses to have narrowed
significantly by year-end and remain committed to
establishing a significant US profit centre.
Overall, the Board remains confident that the Smart
Zones division will see growth and deliver enhanced
turnover, profit, and cash conversion to the Group.
R&D Investment
R&D investment is vital to maintaining the Group’s
market position, and thus, we have continued to invest
in delivering our product roadmap and operational
capabilities.
•
SmartVend vending management software
service module was released in Q3 FY2023,
and following the finance module in FY2024,
customer migrations should be completed
during FY2025.
•
SmartDraught
hardware
and
software
development, including BMI, has resulted in
enhanced features and reduced the cost of both
hardware and support.
•
SmartInsight market insight portal developed
and launched.
•
Speed and latency of our solutions have improved
with incremental hardware development to
adapt existing technology for new verticals.
Further product enhancements, migration of all
customers to SmartVend, leverage of BMI products
and services, and securing new market verticals for
telemetry and contactless payments on a cloud-based
platform will further boost our services to customers
in existing and new verticals.
The Board believes the investment in data capture
technology, our core data management capability,
and management software platforms will continue to
deliver growth and enhance the quality and visibility of
our recurring revenue streams.
LOOKING FORWARD
Vianet has an exciting outlook with excellent
momentum to take advantage of opportunities in
remote asset management, contactless payment
and market data insights both in our core and new
markets, and the end-to-end product suite with BMI
is enabling growth in our hospitality operations.
•
The launch of the SmartVend management
platform in H2 2023 has been well received and
will generate further operational efficiencies
for our customers, with complex migrations
expected to be completed in FY2025. This
will further cement Smart Machines as the
marketplace’s leading end-to-end solution. The
highly motivated sales and commercial team in
Smart Machines are continuing to accelerate
the conversion from the significant pipeline of
opportunities from existing and new customers
in the c 3 million machine UK and Europe
vending machine market. New business gains
resulted in 73 customers being onboarded,
helping us deliver significant new machine
sales.
•
Smart Zones has a healthy sales pipeline in
its core UK leased and tenanted sector driven
primarily by our data capabilities. We expect
new system sales in FY2025 to more than
offset further pub closures. The combination of
BMI’s inventory platform and Vianet’s draught
beer monitoring creates a comprehensive and
affordable beverage management solution
which will also unlock opportunities for stock
management, enhanced analytics, and insight.
This will result in growth across all UK pub
sectors, and we are already seeing enthusiastic
engagement in the USA. Continued Private
Equity pub company ownership is expected
to drive greater focus on operating and retail
performance, where we are well placed to
deliver value for customers.
11
Vianet Group plc
•
Growing demand for connectivity solutions,
data capture, insights, and payment systems
are driving new sales in our core hospitality
and unattended retail sectors. The recent
announcement of our partnership with Suresite,
a leading forecourt retail specialist with two
core contract wins, and Vendekin QR payment
specialists demonstrates our progress toward
leveraging our existing technology to extend our
growth in sectors such as catering and forecourt
solutions where we anticipate good growth.
Whilst we are not immune from the global supply chain
challenges or the inflationary economic backdrop,
increasing demand for our highly relevant products
will continue to drive growth, high-quality recurring
revenue at 85%, cash generation and reducing net
debt. Ongoing investment in product development
and people is creating real momentum. The Group
is confident that the team, products, and financial
capabilities we have will continue delivering growth
for the business.
The Board remains confident that momentum and
sales will continue to build as we execute our long-
term strategy and deliver sustainable earnings growth
and profitability.
Finally, our high-calibre, energised team, robust
strategy, and strong earnings visibility provide a
natural platform for growth as we expand our IoT
capability and deliver data and insight applications
that help our customers make better decisions about
their assets to transform business performance.
Strategic Report (continued)
Vianet Group plc
12
FINANCIAL PERFORMANCE
Group
operating
profit,
pre-exceptional
costs,
amortisation and share-based payments was £3.47m
(FY2023: £3.11m), c12% year-on-year growth. It is
important to recognise these results are net of post-
acquisition BMI people and licence costs of nearly
£0.5m.
Mar-21
Mar-22
Mar-23
OPERATING PROFIT (£’000)
3,105
2,363
3,469
(687)
1000
-1000
2000
3000
4000
3500
2500
1500
500
-500
0
Mar-24
Mar-23
EBITDA PRE EXCEPTIONAL ITEMS AND SHARE BASED PAYMENTS
(£’000)
Mar-24
(123)
4,012
3,624
2,693
0
4500
4000
3000
3500
2500
1500
500
-500
2000
1000
Mar-22
Mar-21
Proactive management delivered robust gross
margins at c69% (FY2023: 66%), reflecting the strength
of
the
margin-enhancing
growing
incremental
recurring revenue footprint.
TURNOVER
Turnover improved by 7.6%, £1.08m, to £15.18m
(FY2023: £14.12m), with Smart Machines continuing
its growth curve and best result to date, in addition to
Smart Zones growing revenue and profit.
RECURRING REVENUE
Group contracted recurring revenue base remains
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.
8,369
13,215
14,115
15,176
Mar-21
Mar-22
Mar-23
Mar-24
TURNOVER (£’000)
0
2000
4000
6000
8000
10000
12000
14000
16000
Consolidated recurring revenue across the two
divisions remained robust at 85% (FY2023: 89%)
despite recent sales being more capex based,
demonstrating the strength of a growing incremental
recurring revenue footprint. Overall actual recurring
revenue grew 3.3%, £0.42m year on year, and it is set
to continue.
15%
85%
TURNOVER - MAR 24
Hardware
Recurring
The absolute recurring revenue increased year
on year, with the average recurring revenue per
connected device remaining flat at £284.02 (FY2023:
£286.72), impacted only by the revenue mix.
FINANCIAL REVIEW
Mark Foster
Chief Financial Officer
13
Vianet Group plc
286.72
284.02
Mar-23
Mar-24
0
50.00
100.00
150.00
200.00
250.00
350.00
300.00
AVERAGE RECURRING REVENUE PER VENUE & MACHINE (£)
This KPI is measured by taking full year recurring
revenue and dividing it by the total number of
connected venues and machines at the year end.
PERFORMANCE SUMMARY
Profit before tax was £0.78m (FY2023: £0.45m), a
material improvement from the low of the FY2021
pandemic year. For FY2023, we took the opportunity to
seek a tax refund, which was received during FY2024,
for historic accrued R&D losses. FY2024 shows a
tax credit of £17k after all tax movements. The table
below shows the performance of the Group.
FY2024
FY2023
Change
Revenue
£15.18m
£14.12m
7.6%
Operating profit (a)
£3.47m
£3.11m
11.6%
Profit before tax
£0.78m
£0.45m
73.3%
EBITDA (b)
£4.01m
£3.62m
10.8%
Basic EPS
2.72p
0.56p
385.7%
Dividend per share
0.75p
0.5p
50.0%
Net debt (c)
£1.52m
£3.37m
54.9%
a) Pre-exceptional items, share-based payments and amortisation
b) Pre-exceptional items and share-based payments
c) Refer to note 24
EXCEPTIONALS
FY2024
FY2023
‘£000
‘£000
People and office rationalisation
65
17
3G Network obsolescence costs
25
-
Corporate Activity and BMI
acquisition costs
346
66
Recovered corporate costs
(350)
-
Bank Refinance costs
59
37
Other items
-
2
Total
145
122
Corporate activity and acquisition costs relate to fees
paid to corporate advisors with respect to prospective
acquisitions and corporate evaluations. During the
year, the Company recovered costs associated with
a previous historic matter that is the subject of a
Confidentiality Agreement
DIVIDEND
As noted in the Chairman’s statement, the Board has
proposed a final dividend payment of 0.75p per share
(FY2023: 0.50p).
CASH
Mar-23
CASH GENERATION PRE WC (£’000)
Mar-24
(341)
3,929
4,448(c)
2,739
0
5000
4000
3000
2000
1000
-1000
Mar-22
Mar-21
Mar-21
Mar-23
CASH GENERATION POST WC (£’000)
Mar-24
1,052
3,670
2,037
2,397
4000
3500
3000
2000
2500
1500
1000
Mar-22
Mar-21
NET DEBT (£’000)
-3500
-3000
-2500
-2000
-1500
-1000
-500
0
(3,373)
(1,515)
(2,999)
(2,661)
Mar-24
Mar-22
Mar-23
Net cash generation pre-working capital movements
was an inflow of £3.93m (2023: £4.45m, which includes
an accrued tax rebate of c£0.92m. Normalised cash
generation was £3.53m), 113.6% of pre-exceptional
EBITA, and 104.2% of net EBITDA (97.9% of pre-
exceptional EBITDA) – very healthy levels of profit to
cash conversion.
Financial Review (continued)
Vianet Group plc
14
Working capital was proactively managed, with a more
normalised draw of £0.26m in the year as expected,
which delivered a post-working capital generation
inflow of £3.67m (2023: £2.04m).
We received a c.£922k tax rebate in the year, which
meant cash generated overall post working capital
was £4.59m.
The cash generated was principally used to invest in
R&D technology spend (as noted in the Chairman’s
and Strategic review), new recurring revenue rental
assets, new leased engineer vehicles alongside
the impact of the bank facility refinance and move
to HSBC. This resulted in an overall cash inflow of
£2.92m (2023: £1.37m cash outflow) – a strong cash
rebound generated from cash generative results, tax
rebate and bank refinance to more flexible facilities.
At the year-end, the Group had gross cash of £1.82m
(2023: £0.07m) and net debt of £1.52m (2023: £3.37m)
– a significant step forward in the cash strength of the
business.
The strong results and cash base of the business,
together with the expected business progress outlined
in the Chair and CEO report, serve to underline our
belief in our business strategy and allow for our
growth plans.
DIVISIONAL PERFORMANCE
SMART MACHINES
The Smart Machines division consists of telemetry
insights and monitoring and contactless payment
predominantly in the unattended vending retail and
coffee sector, as well as ERP and mobile connectivity
services.
FY2024
FY2023
Turnover
£6.56m
£5.95m
Operating profit (a)
£2.46m
£2.01m
Profit before tax
£2.40m
£1.65m
New Telemetry machines
3,644
2,046
New Contactless machines
5,256
4,508
YE net machine estate
c36,083
c33,900
a) Pre-exceptional items, share-based payments and amortisation on a continuing basis
Turnover mix is shown in the chart below.
Recurring revenues were c 74% of turnover (2023:
80%), reflecting the mix of capex to recurring revenue,
but with an underlying increase in recurring revenue
growth of 2.2%.
Hardware 1,726,900
Recurring 4,834,499
SMART MACHINES TURNOVER (£) - MAR 24
Hardware
Recurring
Machine unit estate grew c6.4% year on year to an
estate size of 36,083, with unit sales growth of c35.8%
pre any customer estate refinement.
140.21
133.95
Mar-23
Mar-24
0
20.00
40.00
60.00
160.00
140.00
120.00
100.00
80.00
AVERAGE RECURRING REVENUE PER MACHINE (£)
Average recurring revenue per machine unit was
£133.95 (FY2023: £140.21), reflecting a growing
footprint in larger customers who attract keener
pricing, but absolute recurring revenue is increasing,
nevertheless. As stated previously, this is an evolving
growth story, with overall turnover and profit growth
trends being driven by increased penetration of our
contactless and telemetry solutions, and so these
measures will flex each year.
59.38
68.16
Mar-23
Mar-24
0
30.00
20.00
10.00
40.00
60.00
70.00
50.00
80.00
AVERAGE OPERATING PROFIT PER MACHINE (£)
15
Vianet Group plc
Profit per device increased 14.8% to £68.16 (FY2023:
£59.38), reflecting the footprint growth, associated
recurring revenue and cost base. As a result, profit
grew to £2.46m from £2.01m last year, representing
a growth of c22.4%
SMART ZONES
Currently, the Smart Zones division principally
consists of the core beer monitoring and insight
business services (including the US).
FY2024
FY2023
Turnover
£8.62m
£8.16m
Operating profit (a)
£3.94m
£3.79m
Profit before tax
£2.76m
£2.97m
New site installations
260
259
YE net premises (b)
c. 9,638
c. 9,758
a) Pre-exceptional items, share-based payments and amortisation.
b) UK, USA, and Europe.
Turnover mix is shown below, with recurring revenue
being 94% (2023: 95%).
Hardware
513,800
Recurring 8,100,972
SMART ZONES TURNOVER (£) - MAR 24
Hardware
Recurring
Recurring revenue per device has improved to £840.52
(2023: £795.70), an increase of 5.6%.
795.70
840.52
Mar-23
Mar-24
0
100.00 200.00 300.00 400.00 500.00 600.00 700.00 800.00 900.00
AVERAGE RECURRING REVENUE PER VENUE (£)
Average
operating
profitability
per
venue
is
measured by taking full-year operating profit before
amortisation, share-based payments and exceptional
items and dividing it by the total number of venues at
the year-end.
Average adjusted operating profit per venue in the
year grew to £408.28 (2023: £388.30), 5.1% year-on-
year growth.
388.30
408.28
Mar-23
Mar-24
0
50.00
100.00
200.00
150.00
300.00
250.00
350.00
450.00
400.00
AVERAGE OPERATING PROFIT PER VENUE (£)
The division performed well from robust recurring
revenue streams, new venue sales and a declining
rate of pub disposals, coupled with the addition of
the venues and their revenue streams from the USA
BMI acquisition, demonstrating both the customer
engagement for the services we provided and the
resilience of the revenue model. The net estate at the
year-end was circa 9,640 sites (UK, USA & Europe)
versus last year’s c.9,760.
Smart Zones operating profit of £3.94m (2023: £3.79m),
c4% growth despite the increased USA losses from
the post-acquisition costs of BMI.
Taxation
The Group has continued to utilise available tax
losses during the year resulting in no tax being paid
(FY2023: £nil). The Group will continue to utilise the
available tax losses carried forward into FY2025. The
impact of tax movements in the year, including the tax
rebate for prior year surrendered losses, contributed
to an overall tax credit of £0.02m (FY2023 tax charge
£0.29m), recognising the impact of the tax losses
available and being utilised.
Earnings per share
Basic EPS was 2.72p (2023: 0.56p). This reflects the
step forward in results.
Balance sheet and cash flow
The Group balance sheet remains strong, very capable
of supporting our growth position and is further
enhanced by the more flexible HSBC bank facility we
now have.
The Group generated operating cash flow pre-working
capital of £3.93m (2023: £3.53m) being 12.46% growth
year on year.
Post working capital draw of £0.26m but receipt of a
£0.922m tax rebate, there was a net inflow of £4.59m
(2023: £2.04m), working capital movement being more
normalised in the year.
Financial Review (continued)
Vianet Group plc
16
Key performance indicators
Actual
Actual
Target
2024
2023
Percentage of revenue from recurring income streams1
80%
85%
89%
Gross Margin2
70%
69%
66%
Employee Turnover3
2%
1.7%
3.8%
Notes to KPIs
1 Percentage of revenue from recurring income streams = recurring income streams as a percentage of all income streams. Group trading
companies aim to increase shareholder value through growth in revenue, linked to profitability (see Gross Margin below). Source data is taken from
management information. The recurring contractual nature of the Company’s income stream has led to continued improvement in performance
versus target. The achievement of this target depends on the mix of new hardware sales versus on going recurring revenue.
2 Gross Margin = Gross profit as a percentage of revenue. Group trading companies aim to generate sufficient profit for both distribution to
shareholders and re-investment in the Company, as measured by Gross Margin.
3 Employee Turnover = Gross trading companies aim to be seen as a good, attractive employer with positive values and career prospects, measured
against internal People and Development reports. In addition to normal employee turnover, the figure also includes employees leaving as a result
of business rationalisation activity.
The cash generated was used to continue to invest
in the Group’s technology plans, service less onerous
borrowings, and acquire rental assets alongside
some vehicle fleet refreshment.
At the year-end, the Group had borrowings of £3.34m
(2023: £3.44m) across an RCF (Revolving Credit
Facility), term loan and mortgage, with net debt of
£1.52m (2023: £3.37m).
Our resilient balance sheet and capacity to generate
cash provides the Company with a solid base to build
on the results of FY2024 to pursue the significant
growth opportunities that have been identified.
Business risk
The Board and senior management review business
risk two to three times per year. The last year has seen
an increased inflationary environment. The Directors
had considered the areas of potential risk in assessing
the Group’s prospects. Based on their review and
having considered a range of factors such as market
conditions, stock supply and premium costs, inflation,
financial plans, and new bank facilities, they believe
that the business is of sound financial footing and has
a forward looking sustainable operating future. They
note that the business has achieved financial results
ahead of market expectation as at H1 2024 and prior
year, set against overall market confidence in liquidity
and credit.
The Directors consider that material business risks
are limited to:
•
Inflation remaining for a further period.
•
The potential for a cyber security breach
where data security is compromised resulting
in unauthorised access to information which
is sensitive and/or proprietary to Vianet or its
customers. This threat is in common with most
technology businesses, however both short
term and long-term mitigation plans continue
to be in place. Payment Card Industry Data
Security Standard (PCI DSS - Level 1) highest
level of compliance has already been achieved
to support the Group’s contactless payment
solutions and by May 2022 all on premise
servers are in the cloud.
Going Concern
•
As is required, the Board has considered “Going
Concern” and, coupled with a new more flexible
finance facility with HSBC, concluded we have
sufficient cash and reserves see us through
the 12 months post the signing date of the
statutory accounts, and beyond with associated
committed bank facilities. Going Concern
is covered in more detail in the Report of the
Directors.
17
Vianet Group plc
The Directors present their report and the audited financial statements for the year ended 31 March 2024.
Business Risk
Business risk is discussed in the Chief Executive’s report pages 5 to 16.
Going Concern
The Directors, after having made appropriate enquiries, including (but not limited to) a review of the Group’s budget
for 2024/2025, two year plan including the budget, cash generating capacity at least 12 months from the date of
signing (underpinned by long term contracts in place and historical results), cash funds in the balance sheet and new
bank facilities as follows:
1)
a £4m three year committed RCF from 1 August 2023
2)
£0.84m fifteen year mortgage and,
3)
£0.6m four year term loan
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 £3.47 million for the year to March 2024. The underlying group retains a
strong track record of earnings and cash growth. We have delivered a credible result to build from in what may
be considered more normalised trading.
•
The Group has bank facilities with HSBC which have been in place since 1 August 2023. This covers a £4m three
year committed RCF (of which £2m is drawn), £0.84m fifteen year mortgage and £0.6m four year term loan.
•
The Directors have prepared prudent forecasts through to March 2026, built from the detailed Board approved
FY25 budget and a further forecast year to March 2026. 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 to ensure the forecast period covers at least 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, 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.
REPORT OF THE DIRECTORS
Vianet Group plc
18
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
•
Bank facilities in place
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
We engage with stakeholders through regular meetings and dialogue with employees, customers, suppliers and
investors. We undertake customer satisfaction surveys, periodic employee Best Company engagement survey and
host regular live employee Q&A sessions. The Board have considered the impact of increased interest rates and
inflationary economics. The 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 previous facilities have. The economy is expecting
rates to reduce in the second calendar half of 2024.
While the company did face in FY23 increased cost of semi-conductor components, such high and extraordinary
increases have now receded 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 four 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.
19
Vianet Group plc
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 in 2021 which in summary confirmed we consumed in the region of 300,000 KWH
or energy a year, or c78 tonnes of carbon.
We committed to a range of actions in 2022 the major component of which was installing 288 solar panels on the roof
of our building.
Report of the Directors (continued)
Vianet Group plc
20
This, along with several other initiatives, has seen a significant reduction in carbon consumption to around 135,000
KWH, representing c35 tonnes of consumption, around a 55% reduction in the year.
The services we provide reduce the carbon footprint significantly for some of our customer base - 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.
This has been demonstrated in many ways, including improvements in employee engagement, 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 1.7% 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 £1,724,000
(2023: £1,699,000) but the like for like underlying rate was £1,424,000 pre the impact of the BMI acquisition, 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 2024 of 0.75p per share payable on
2 August 2024 to shareholders on the register on 21 June 2024. Total dividend payable 0.75p (2023: 0.50p).
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.
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.
21
Vianet Group plc
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:
Ordinary
Ordinary
shares of
shares of
10p each
10p each
2024
2023
J W Dickson
5,144,981
5,124,981
M H Foster
347,192
343,050
S Panu
310,000
75,000
D Coplin
7,500
7,500
Directors’ emoluments
Details of Directors’ emoluments for the year are as follows:
Salary
Salary
and
Other
Total
and
Other
Total
fees
emoluments
emoluments
fees
emoluments
emoluments
2024
2024
2024
2023
2023
2023
£’000
£’000
£’000
£’000
£’000
£’000
Executive
M H Foster
255
39
294
241
39
280
J W Dickson
224
27
251
247
-
247
Non-executive
C Williams
-
-
-
11
-
11
D Coplin
33
-
33
32
-
32
Stella Panu
37
-
37
20
-
20
Total
549
66
615
551
39
590
1. Executive remuneration is determined by the remuneration committee consisting of non-executive Directors
D Coplin, S Panu, and Chairman 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. S Panu fees for 2024 were paid to Heron Consulting Group Limited, a company of which she is a Director.
4. 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.
5. The company does not have a formal policy for directors notice periods, they are in line with best practice for an
AIM listed business.
6. M H Foster has 19 years’ service, J W Dickson 21 years’ service, D Coplin 7 years’ service, S Panu 2 year service.
Report of the Directors (continued)
Vianet Group plc
22
Directors’ share options
Details of the share options held by Directors are as follows:
At
At
1 April
31 March
Option
2023
2024
price
Date granted
M H Foster
135,000
135,000
85.0p
April 2014*
124,000
124,000
103.0p
December 2015
100,000
100,000
72.0p
February 2021
100,000
100,000
75.0p
February 2023*
James Dickson
250,000
250,000
75.0p
February 2023
Dave Coplin
50,000
50,000
75.0p
February 2023*
Stella Panu
50,000
50,000
75.0p
February 2023*
* Unapproved
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 111.5p and the range of market prices
during the year was between 118.5p and 63.5p.
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 70. 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 1 May 2024 the following shareholders (excluding Directors) held substantial
holdings of the issued ordinary shares of the company:
Holding of
Issued
Ordinary shares
Share capital
Number
%
Gresham House plc
5,087,286
17.29%
Liontrust Asset Management
2,520,942
8.57%
Interactive Investor Trading
1,583,064
5.38%
Hargreaves Lansdown plc
1,106,802
3.76%
Canaccord Genuity
1,072,300
3.65%
Teviot Partners LLP
988,610
3.36%
Annual General Meeting
The Annual General Meeting will be held on 18 July 2024 at 11.00pm, at the company’s offices One Surtees Way,
Surtees Business Park, Stockton on Tees, TS18 3HR.
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 safeguarding 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 20 June 2024 and signed on its behalf by:
Mark Foster
Director
Report of the Directors (continued)
Vianet Group plc
24
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/2024/05/2024.05.13-VNET-Corporate-Governance-Statement-May-24.docx
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/CEO)
D Coplin
S Panu
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 acting Chief Executive Officer, who, together with the other Executive Director, are responsible for running
the business.
CORPORATE GOVERNANCE STATEMENT
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.
Mark Foster, CFO, and David Coplin, Non Executive Director, retired by rotation this year and, being eligible for re-
election will be re-appointed to the Board at the AGM on 18 July 2024.
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.
Corporate Governance statement (continued)
Vianet Group plc
26
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, Chairman and current CEO - who
was CEO until 2013 and holds a shareholding of c17.49% 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 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
Corporate Governance statement (continued)
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 8 comprising:
-
Two two-day Board meetings incorporating Performance & Strategy reviews with senior management
attending
-
6 one day Board meetings. The All board meetings are face to face, however MS Teams can be utilised where
travel logistics are problematic.
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 2024, 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 4 June 2024 in
respect of the full year results to 31 March 2024 with BDO LLP. An Audit Committee was held on 5 December 2023
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 4 June 2024 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
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 Chief Executive attends only in relation to senior management matters on the agenda
however, and is not in attendance for matters relating to the Group Chairman and Chief Executive remuneration.
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 acting 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
•
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
29
Vianet Group plc
Corporate Governance statement (continued)
•
a framework for capital expenditure and controls including authorisation procedures and rules relating to
delegation of authority
•
risk management policies to manage issues relating to health and safety, environment, legal compliance,
insurance and security
•
day to day hands on involvement of the Executive Directors
As a result of the above systems and controls, and due to its current size, the Group does not operate an internal
audit function, but is keeping its position under review. 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
•
Close customer relationships and long term
contracts
Cyber Security
A cyber security breach where customer data security
is compromised resulting in unauthorised access to
sensitive/proprietary customer information.
•
Ongoing PCI-DSS compliance – Level 1
Environmental sustainability
The company is seeking to address a sustainability
agenda around health, safety and wellbeing, operating
efficiently giving due regard to environmental
responsibility.
•
See above section.
Price Risk
Price pressure from suppliers in the semi-conductor
commodity market (less of a risk today)
•
Agree forward buying of components and healthy
stock levels
Technological factors
Technological risk factors may cause technology in
use to become obsolete or too costly to maintain
•
Vianet has a full technology strategy both
commercially and infrastructure wise
•
Employ strategic planning to make timely
investments in existing and new equipment
Ukraine/Russia risk
While the impact currently is minimal, the Board will
monitor events and sanctions as they unfold and act
accordingly.
•
The
Company
has
implemented
all
recommended review actions and has support
contracts ready to implement if needed
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 Cavendish 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 a periodic 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
Whilst the challenges of the pandemic and the semi-conductor chip supply issues were addressed in FY21-FY23 it
did afford 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 prior year reports, however it is worthy
to note that employee engagement and welfare management has been exceptionally good, and we continue with
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 2024 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
Opinion on the financial statements
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 2024 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 UK adopted
international accounting standards and as applied in accordance with the provisions of the Companies Act
2006; 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 2024 which comprise the Consolidated Statement of Comprehensive Income,
Consolidated Balance Sheet, Consolidated Statement of Changes in Equity, Consolidated Statement of Cash
flow Statement and Notes to the Consolidated Financial Statements, the Company Balance Sheet, the Company
Statement of Changes in Equity and notes to the Company Balance Sheet, including a summary of significant
accounting policies. The financial reporting framework that has been applied in their preparation is applicable law
and UK adopted international accounting standards and, as regards the Parent Company financial statements, as
applied in accordance with the provisions of the Companies Act 2006.
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 Boards’ Going Concern paper alongside supporting forecasts for the period of at
least twelve months from when the financial statements are authorised for issue;
•
Challenging the Directors’ 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 Boards’ probable scenarios of sensitivities, to understand the robustness of the forecast
trading model and the headroom available to the Group and Parent Company;
•
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; and
•
Review of the disclosures made in the financial statements.
Vianet Group plc
32
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
95% of Group profit before tax
100% of Group revenue
95% of Group total assets
Key audit matters
2024
2023
Valuation of non-current assets
Materiality
Group financial statements as a whole
£228k (2023: £212k) based on 1.5% of revenue (2023: 1.5% 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), were subject to specified audit procedures and relevant
analytical procedures. The cost base included in these non-significant components was approximately £0.9m 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
How the scope of our audit addressed the key audit
matter
Valuation of non-
current assets
The Group’s accounting
policies on goodwill
and
intangibles
are
shown in notes 1.6 - 1.8
and 2.1 to the financial
statements
and
related disclosures are
included in notes 10
and 11.
In line with the requirements of
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
to
changes
in
the
assumptions
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 .
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
assumptions
underpinning
management’s
impairment
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;
• Challenging
the
growth
assumptions
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; and
• 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.
Independent auditor’s report (continued)
Vianet Group plc
34
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:
Group financial statements
Parent company financial
statements
2024
£k
2023
£k
2024
£k
2023
£k
Materiality
228
212
115
115
Basis for determining
materiality
1.5% of
revenue
1.5% of
revenue
51% of group
materiality
54% of group
materiality
Rationale for the benchmark
applied
We considered
revenue
to
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 profit
before tax.
We considered
revenue
to
be the most
a p p r o p r i a t e
measure
of
performance
for
users
of
the
financial
statements,
given
the
volatility
in
profit
before
tax.
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.
Performance materiality
171
159
86
86
Basis for determining
performance materiality
75% (2023: 75%) 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.
Component materiality
For the purposes of our Group audit opinion, we set materiality for each significant component of the Group, apart
from the Parent Company whose materiality is set out above, based on a percentage of 95% (2023: 95%) of Group
materiality dependent on the size and our assessment of the risk of material misstatement of that component. In
the audit of each component, we further applied performance materiality levels of 75% (2023: 75%) 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 £6.5k
(2023: £6.3k). We also agreed to report differences below this threshold that, in our view, warranted reporting on
qualitative grounds.
35
Vianet Group plc
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
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.
Matters on which
we are required
to report by
exception
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.
Responsibilities of Directors
As explained more fully in the Directors’ responsibilities statement , 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.
Independent auditor’s report (continued)
Vianet Group plc
36
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:
•
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;and
•
Review of legal expenditure accounts to understand the nature of expenditure incurred.
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
Detecting and responding to the risks of fraud; and
o
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;
37
Vianet Group plc
•
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.
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
20 June 2024
BDO LLP is a limited liability partnership registered in England and Wales (with registered number OC305127).
Independent auditor’s report (continued)
Vianet Group plc
38
Before
Before
Exceptional
Exceptional
Total
Exceptional
Exceptional
Total
2024
2024
2024
2023
2023
2023
Note
£000
£000
£000
£000
£000
£000
Revenue
3
15,176
-
15,176
14,115
-
14,115
Cost of sales
(4,745)
-
(4,745)
(4,737)
-
(4,737)
Gross profit
10,431
-
10,431
9,378
-
9,378
Administration and other
operating expenses
(6,962)
(145)
(7,107)
(6,273)
(122)
(6,395)
Operating profit pre amortisation
and share based payments
3,469
(145)
3,324
3,105
(122)
2,983
Intangible asset amortisation
(2,164)
-
(2,164)
(2,254)
-
(2,254)
Share based payments
(100)
-
(100)
(71)
-
(71)
Total administrative expenses
(9,226)
(145)
(9,371)
(8,598)
(122)
(8,720)
Operating profit
1,205
(145)
1,060
780
(122)
658
Finance costs
6
(276)
-
(276)
(206)
-
(206)
Profit before tax
5
929
(145)
784
574
(122)
452
Income tax credit/(charge)
7
17
-
17
(291)
-
(291)
Profit and other comprehensive
income for the year
946
(145)
801
283
(122)
161
Earnings per share
Total
- Basic
8
2.72p
0.56p
- Diluted
8
2.69p
0.56p
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.
CONSOLIDATED STATEMENT OF
COMPREHENSIVE INCOME
for the year ended 31 March 2024
39
Vianet Group plc
2024
2023
Note
£000
£000
Assets
Non-current assets
Goodwill
10
17,856
17,856
Other intangible assets
11
5,884
5,425
Property, plant and equipment
12
3,327
3,370
Total non-current assets
27,067
26,651
Current assets
Inventories
13
2,185
2,275
Trade and other receivables
14
3,873
3,781
Cash and cash equivalents
24
1,822
69
7,880
6,125
Total assets
34,947
32,776
Equity and liabilities
Liabilities
Current liabilities
Trade and other payables
15
3,061
2,348
Leases
16
123
70
Borrowings
17
177
1,925
3,361
4,343
Non-current liabilities
Leases
16
157
122
Borrowings
17
3,159
1,517
Deferred tax liability
19
810
827
Contingent consideration
15
268
-
4,394
2,466
Equity attributable to owners of the parent
Share capital
20
2,940
2,880
Share premium account
11,748
11,711
Capital redemption
1.18
32
15
Share based payment reserve
583
563
Merger reserve
1.18
818
310
Retained profit
11,071
10,488
Total equity
27,192
25,967
Total equity and liabilities
34,947
32,776
The Group financial statements were approved by the Board of Directors on 20 June 2024 and were signed on its
behalf by:
J Dickson
Director
The accompanying accounting policies and notes form an integral part of these financial statements.
CONSOLIDATED BALANCE SHEET
at 31 March 2024
Vianet Group plc
40
Share
Share
based
Share
premium
Own
payment
Merger
Capital
Retained
capital
account
shares
reserve
reserve
Redemption
Profit
Total
£000
£000
£000
£000
£’000
£000
£000
£000
At 1 April 2022
2,880
11,711
-
499
310
15
10,320
25,735
Share based payments
-
-
-
71
-
-
-
71
Share option forfeitures
-
-
-
(7)
-
-
7
-
Transactions with owners
-
-
-
64
-
-
7
71
Profit and total comprehensive
income for the year
-
-
-
-
-
-
161
161
Total comprehensive income
less owners’ transactions
-
-
-
64
-
-
168
232
At 31 March 2023
2,880
11,711
-
563
310
15
10,488
25,967
At 1 April 2023
2,880
11,711
-
563
310
15
10,488
25,967
Dividends
-
-
-
-
-
-
(148)
(148)
Share based payments
-
-
-
100
-
-
-
100
Share option forfeitures
-
-
-
(80)
-
-
80
-
Share Capital Issued
77
37
-
-
508
-
-
622
Shares Cancelled
(17)
-
-
-
-
17
(150)
(150)
Transactions with owners
60
37
-
20
508
17
(218)
424
Profit and total comprehensive
income for the year
-
-
-
-
-
-
801
801
Total comprehensive income
less owners’ transactions
60
37
-
20
508
17
583
1,225
At 31 March 2024
2,940
11,748
-
583
818
32
11,071
27,192
CONSOLIDATED STATEMENT OF
CHANGES IN EQUITY
for the year ended 31 March 2024
41
Vianet Group plc
2024
2023
Note
£000
£000
Cash flows from operating activities
Profit for the year
801
161
Adjustments for
Interest payable
6
324
236
Interest receivable
(48)
(30)
Income tax (credit)/charge
(17)
1,213
Amortisation of intangible assets
11
2,164
2,254
Depreciation
12
544
519
Disposal of property, plant and equipment
5
61
24
Share based payments
100
71
Operating cash flows before changes in working capital and provisions
3,929
4,448
Change in inventories
91
(702)
Change in receivables
(996)
(1,091)
Change in payables
646
(618)
Operating cash flows post changes in working capital and provisions
(259)
(2,411)
Cash generated from operations
3,670
2,037
Income taxes refunded
922
Net cash generated from operating activities
4,592
2,037
Cash flows from investing activities
Purchases of property, plant and equipment
12
(577)
(651)
Capitalisation of development costs
11
(1,724)
(1,699)
Purchases of other intangible assets
11
(8)
(4)
Net cash used in investing activities
(2,309)
(2,354)
Cash flows from financing activities
Net interest payable
(324)
(236)
Net interest receivable
48
30
Repayment of leases
(84)
(65)
Repayments of borrowings
(2,378)
(992)
New loans
3,440
-
Payment of contingent consideration
-
(16)
New leases
190
231
Dividends paid
(148)
-
Shares repurchased and cancelled
(150)
-
Issue of share capital
44
-
Net cash used in financing activities
638
(1,048)
Net increase in cash and cash equivalents
2,921
(1,365)
Cash and cash equivalents at beginning of period
(1,099)
266
Cash and cash equivalents at end of period
1,822
(1,099)
Reconciliation to the cash balance in the Consolidated Balance Sheet
Cash balance as per consolidated balance sheet
1,822
69
Bank overdrafts (see note 18)
-
(1,168)
Balance per statement of cash flows
1,822
(1,099)
CONSOLIDATED CASH FLOW STATEMENT
for the year ended 31 March 2024
Vianet Group plc
42
1.
Significant accounting policies
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 2 years, increasing contracted revenue streams, and new bank facilities from 1 August 2023 as follows:
1)
a £4m three year committed RCF (of which £2m is drawn)
2)
£0.84m fifteen year mortgage and,
3)
£0.6m four year term loan
As a result of the above actions and bank facilities, the Directors have produced revised forecasts and also considered
possible downside impacts alongside having made appropriate enquiries, including (but not limited to) a review
of the Group’s budget for 2024/2025, 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 includes
economic inflationary back drop 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 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 2024.
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
•
the ability to use its power over the entity to affect the amount of the Groups returns
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 31 March 2024
43
Vianet Group plc
1.
Significant accounting policies (continued)
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.
Identifying the contract with a customer
2.
Identifying the performance obligations
3.
Determining the transaction price
4.
Allocating the transaction price to the performance obligations
5.
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.
Notes to the Financial Statements for the year
ended 31 March 2024 (continued)
Vianet Group plc
44
1.
Significant accounting policies (continued)
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.
45
Vianet Group plc
1.
Significant accounting policies (continued)
1.7 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
2 to 5 years
Software
5 years
Trademarks
10 years
Order book
2 to 5 years
Methods of amortisation, residual values and useful lives are reviewed, and if necessary adjusted, at each balance
sheet date.
1.8 Intangible assets: Research and development
Expenditure on research (or the research phase of an internal project) is recognised as an expense in the period in
which it is incurred.
Development costs incurred on specific projects are capitalised when all the following conditions are satisfied:
•
completion of the intangible asset is technically feasible so that it will be available for use or sale
•
the Group intends to complete the intangible asset and use or sell it
•
the Group has the ability to use or sell the intangible asset
•
the intangible asset will generate probable future economic benefits. Among other things, this requires that
there is a market for the output from the intangible asset or for the intangible asset itself, or, if it is to be used
internally, the asset will be used in generating such benefits
•
there are adequate technical, financial and other resources to complete the development and to use or sell the
intangible asset, and
•
the expenditure attributable to the intangible asset during its development can be measured reliably.
Development costs not meeting the criteria for capitalisation are expensed as incurred.
The cost of an internally generated intangible asset comprises all directly attributable costs necessary to create,
produce and prepare the asset to be capable of operating in the manner intended by management.
Directly attributable costs include employee (other than directors) costs incurred on development and directly
attributable overheads. The costs of internally generated software developments are recognised as intangible assets.
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.
Notes to the Financial Statements for the year
ended 31 March 2024 (continued)
Vianet Group plc
46
1.
Significant accounting policies (continued)
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
10 - 50 years
Freehold Land
Nil
Plant, vehicles and equipment
3 - 5 years
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 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.
47
Vianet Group plc
1.
Significant accounting policies (continued)
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 and
•
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.
Notes to the Financial Statements for the year
ended 31 March 2024 (continued)
Vianet Group plc
48
1.
Significant accounting policies (continued)
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.
49
Vianet Group plc
1.
Significant accounting policies (continued)
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, 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.
Notes to the Financial Statements for the year
ended 31 March 2024 (continued)
Vianet Group plc
50
1.
Significant accounting policies (continued)
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 2024. 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.
51
Vianet Group plc
1.
Significant accounting policies (continued)
Issued date
IASB mandatory
effective date
(UK/EU
mandatory
effective date)
UK Adoption
status (EU
pre-31
December
2020)
EU
Endorsement
Status
New Standards
1
IFRS 17 Insurance contracts
including Amendments to IFRS 17
(issued on 25 June 2020)
18-May-2017
and
25-June-2020
01-Jan-23
Adopted by
UKEB
Endorsed
2
IFRS S1 General Requirements for
Disclosure of Sustainability-related
Financial Information
26 June 2023
01-Jan-24
TBC
TBC
3
IFRS S2 Climate-related Disclosures
26 June 2023
01-Jan-24
TBC
TBC
4
IFRS 18 Presentation and Disclosure
in Financial Statements
9 April 2024
01-Jan-27
TBC
TBC
5
IFRS 19 Subsidiaries without Public
Accountability: Disclosures
9 May 2024
01-Jan-27
TBC
TBC
Amendments to Existing Standards
6
Amendments to IAS 1: Classification
of Liabilities as Current or Non-
current
23-Jan-20
31-Oct-22
(Final
amendments)
01-Jan-24
Adopted by
UKEB
Endorsed
7
Amendments to IAS 8 - Definition of
Accounting Estimates
12-Feb-21
01-Jan-23
Adopted by
UKEB
Endorsed
8
Amendments to IAS 1 and IFRS
Practice Statement 2 - Disclosure of
Accounting policies
12-Feb-21
01-Jan-23
Adopted by
UKEB
Endorsed
9
Amendments to IAS 12 - Deferred
Tax related to Assets and Liabilities
arising from a Single Transaction
07-Feb-21
01-Jan-23
Adopted by
UKEB
Endorsed
10
Amendment to IFRS 17 - Initial
Application of IFRS 17 and IFRS 9 -
Comparative Information
09-Dec-21
01-Jan-23
Adopted by
UKEB
Endorsed
11
Amendments to IFRS 16 Leases:
Lease Liability in a Sale and
Leaseback
22-Sep-22
01-Jan-24
Adopted by
UKEB
Endorsed
12
Amendments to IAS 7 and IFRS 7 -
Supplier Finance Arrangements
25-May-23
01-Jan-24
Adopted by
UKEB
TBC
13
Amendments to IAS 12 - International
Tax Reform – Pillar Two Model Rules
23-May-23
01-Jan-23
Adopted by
UKEB
Endorsed
14
Amendments to IAS 21 – Lack of
Exchangeability
15-Aug-2023
01-Jan-25
TBC
TBC
7
Amendments to IAS 12 - Deferred
Tax related to Assets and Liabilities
arising from a Single Transaction
07-Feb-21
01-Jan-23
TBC
Endorsed
8
Amendment to IFRS 17 - Initial
Application of IFRS 17 and IFRS 9 -
Comparative Information
09-Dec-21
01-Jan-23
Adopted by
UKEB
TBC
9
Amendments to IFRS 16 Leases:
Lease Liability in a Sale and
Leaseback
22-Sep-22
01-Jan-24
TBC
TBC
Notes to the Financial Statements for the year
ended 31 March 2024 (continued)
Vianet Group plc
52
1.
Significant accounting policies (continued)
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)
the entity will comply with the conditions attaching to them; and
(b)
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 prior 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.
Asset Acquisition
Following the purchase of BMI assets (as described in Note 27), the ‘concentration test’ provisions of IFRS 3 in
determining the fair value of the assets have been applied. As substantially all of the fair value of the assets acquired
was considered to be the software IP intangible, this transaction was treated as an asset acquisition in the financial
statements, rather than a business combination.
53
Vianet Group plc
2.
Critical accounting judgements and key sources of estimation uncertainty (continued)
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.
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 hospitality
sector, including US (particularly in pubs)) and Smart Machines (mainly adopted in the vending sector (particularly
in unattended retail vending machines)) supported by Corporate/Technology & stores costs.
The products/services offered by each operating segment are:
Smart Zones: Data insight & actionable data services, design, product development, sale and rental of fluid
monitoring equipment.
Smart Machines: Data insight & actionable data services, design product development, sale and rental of machine
monitoring and contactless payment equipment.
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.
Notes to the Financial Statements for the year
ended 31 March 2024 (continued)
Vianet Group plc
54
3.
Segment reporting (continued)
2024
Smart
Smart
Corporate/
Continuing Operations
Zones
Machines
Technology
Total
(post exceptional items)
£000
£000
£000
£000
Total revenue
8,615
6,561
-
15,176
Of which is recurring
8,101
4,834
-
12,935
Pre-exceptional segment result
3,214
2,070
(4,079)
1,205
Exceptional costs
(181)
325
(289)
(145)
Post exceptional segment result
3,033
2,395
(4,368)
1,060
Finance costs
(276)
-
-
(276)
Profit before taxation
2,757
2,395
(4,368)
784
Taxation
17
Profit for the year from continuing operations
801
Other information
Additions to property, plant
equipment and intangible assets
541
800
704
2,045
Depreciation and amortisation
885
699
1,124
2,708
Recurring revenue is contracted revenue payable monthly over the length of the customer contract
Smart
Smart
Corporate/
Zones
Machines
Technology
Total
£000
£000
£000
£000
Segment assets
30,730
4,083
134
34,947
Unallocated assets
-
-
-
-
Total assets
30,730
4,083
134
34,947
Segment liabilities
6,619
-
335
6,954
Unallocated liabilities
-
-
801
801
Total liabilities
6,619
-
1,136
7,755
55
Vianet Group plc
3.
Segment reporting (continued)
2023
Smart
Smart
Corporate/
Continuing Operations
Zones
Machines
Technology
Total
(post exceptional items)
£000
£000
£000
£000
Total revenue
8,163
5,952
-
14,115
Of which is recurring
7,746
4,753
-
12,499
Pre-exceptional segment result
3,174
1,667
(4,061)
780
Exceptional costs
-
(19)
(103)
(122)
Post exceptional segment result
3,174
1,648
(4,164)
658
Finance costs
(206)
-
-
(206)
Profit before taxation
2,968
1,648
(4,164)
452
Taxation
(291)
Profit for the year from continuing operations
161
Other information
Additions to property, plant
equipment and intangible assets
762
687
905
2,354
Depreciation and amortisation
728
664
1,381
2,773
Recurring revenue is contracted revenue payable monthly over the length of the customer contract
Smart
Smart
Corporate/
Zones
Machines
Technology
Total
£000
£000
£000
£000
Segment assets
28,593
4,083
100
32,776
Unallocated assets
-
-
-
-
Total assets
28,593
4,083
100
32,776
Segment liabilities
5,743
-
239
5,982
Unallocated liabilities
-
-
827
827
Total liabilities
5,743
-
1,066
6,809
Analysis of revenue by category
2024
2023
£000
£000
Continuing operations
Sale of goods
- Smart Zones and Smart Machines
2,241
1,597
Rendering of services
- Smart Zones and Smart Machines
12,935
12,518
15,176
14,115
Included in rendering of services is £1,917,000 (2023: £2,375,000) of income related to lessor income
Geographical analysis
- United Kingdom
13,834
12,700
- Rest of Europe
1,215
1,396
- United States/Canada
127
19
15,176
14,115
99% (2023: 99%) of the Rest of Europe revenue is derived from the Netherlands
Notes to the Financial Statements for the year
ended 31 March 2024 (continued)
Vianet Group plc
56
3.
Segment reporting (continued)
Major Clients
In 2024 there were two major customers that individually accounted for at least 10% each of total revenues (2023:
two customers). The revenues relating to these customers in 2024 was £3.9m (2023: £3.7m)
Both customers are in the Smart Zones segment (2023: Smart Zone Segment)
4.
Exceptional items
2024
2023
£000
£000
Corporate activity and BMI Acquisition costs
346
66
Recovered corporate costs
(350)
-
Staff transitional costs
65
17
3G Project (4G swap)
25
-
Bank refinance costs
59
37
Other
-
2
145
122
Corporate activity and acquisition costs relate to fees paid to corporate advisors in respect of prospective acquisitions
and corporate evaluations. During the year the company recovered costs associated with a previous historic matter
that is the subject of a Confidentiality Agreement.
Staff transitional costs relate to the transition of people and management to ensure we have to succession and
calibre of people on board to deliver the strategic aims and aspirations of the Group.
5.
Profit for the year
The following items have been included in arriving at profit/(loss) for the year:
2024
2023
£000
£000
Employee benefits expense (note 21)
6,570
6,056
Depreciation of property, plant and equipment (note 12)
444
477
Depreciation of property, plant and equipment – right of use assets (note 12)
100
42
Amortisation of intangible assets (note 11)
2,164
2,254
Loss on disposal of property, plant and equipment
61
24
Auditor’s remuneration
2024
2023
Services to the company and its subsidiaries
£000
£000
Fees payable to the company’s auditor for the audit of the annual financial statements
30
30
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
70
68
Other services relating to tax – taxation compliance services
14
13
Other services relating to tax – taxation advisory services
25
74
Other services – corporate activity
44
-
Other services – interim review
3
3
186
188
57
Vianet Group plc
6.
Net finance costs
2024
2023
£000
£000
Interest payable on bank borrowings
304
210
Interest payable on leasing arrangements
20
26
324
236
2024
2023
£000
£000
Interest receivable on bank deposits
-
-
Interest receivable on other loans
48
30
48
30
Net Interest Payable
276
206
Screenreach was a company which the Group historically provided a loan to. Interest receivable on this loan valued
at £75,000 (2023 - £30,000) is due from Screenreach Interactive Limited
7.
Taxation
Analysis of (credit)/ charge in period:
2024
2023
£000
£000
Current tax expense
- Amounts in respect of the current year
-
-
- Amounts in respect of prior periods
-
(922)
-
(922)
Deferred tax (credit)/ charge
- Amounts in respect of the current year
(82)
1,213
- Amounts in respect of prior periods
65
-
Income tax (credit)/charge
(17)
291
Notes to the Financial Statements for the year
ended 31 March 2024 (continued)
Vianet Group plc
58
7.
Taxation (continued)
Reconciliation of effective tax rate
The tax for the 2024 period is lower (2023 was higher) than the standard rate of corporation tax in the UK 25% (2023:
19%). The differences are explained below:
2024
2023
£000
£000
Profit before taxation
- Continuing operations
784
452
Profit before taxation multiplied by rate of corporation tax in the UK of 25% (2023: 19%)
196
86
Effects of:
Other expenses not deductible for tax purposes
26
(17)
Non-taxable income
(377)
(44)
Gains/(losses) not provided for
380
(355)
Adjustments for prior years
65
922
Amortisation of intangible assets
512
427
Research and development
(819)
(728)
Total tax (credit)/charge
(17)
291
Unutilised Trading Losses
The Group continues to carry forward unutilised trading losses of £2,260k (2023: £2,844k). A Deferred Tax Asset of
£565k (2023: £711k) has been recognised as at 31 March 2024 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.
Carried forward, unutilised losses which originated in Vianet Group plc and Vianet Americas Inc have not been
recognised due to non-trading status and overseas tax regulation requirements respectively.
Deferred Tax Assets of £565k is recognised in respect of unutilised trading losses and short-term timing differences.
Deferred Tax Liabilities of £1,375k 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% (2023: 25%)
8.
Earnings per share
Earnings per share for the year ended 31 March 2024 was 2.72p (2023: earnings per share 0.56p)
Basic earnings per share are calculated by dividing the earnings attributable to ordinary shareholders being a profit
of £801k (2023: Profit £161k) 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.
59
Vianet Group plc
8.
Earnings per share (continued)
2024
2023
Basic
Diluted
Basic
Diluted
Profit
earnings
earnings
Profit
earnings
earnings
£000
per share
per share
£000
per share
per share
Post-tax profit attributable to equity shareholders
801
2.72p
2.69p
161
0.56p
0.56p
2024
2023
Number
Number
Weighted average number of ordinary shares
29,493,637
28,808,914
Dilutive effect of share options
250,533
66,673
Diluted weighted average number of ordinary shares
29,744,170
28,875,587
9.
Ordinary dividends
2024
2023
£000
£000
Final dividend for the year ended 31 March 2023 (year ended 31 March 2022: nil)
148
-
Interim dividend paid in respect of the year of nil (2023: nil)
-
-
Amounts recognised as distributions to equity holders
148
-
In addition, the directors are proposing a final dividend in respect of the year ended 31 March 2024 of 0.75p per share
payable on 2 August 2024 to shareholders on the register on 21 June 2024. Total dividend payable 0.75p (2023: 0.5p).
10. Goodwill
2024
2023
Group
£000
£000
Cost
At 1 April and 31 March
17,856
17,856
Accumulated impairment losses
At 1 April and 31 March
-
-
Net book amount
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:
2024
2023
£000
£000
Smart Zones
15,384
15,384
Smart Machines
2,472
2,472
Carrying amount 31 March
17,856
17,856
Notes to the Financial Statements for the year
ended 31 March 2024 (continued)
Vianet Group plc
60
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.
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 15.05% 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, 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 headroom improved
materially over the year and is justified as follows:
1)
Smart Zones division regularly throws off profit and cash in broadly equal measure
2)
Has a robust c9,640 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)
The managed market place represents a c12,000 pub opportunity in the UK
5)
There is a freehold market representing c4,000 to 5,000
6)
We have acquired BMI in May 2023 that significantly broadens the end to end service capability of this division
both in the UK and the significant USA market
7)
Ongoing performance is in line with expectations which delivers profit and cash generation.
61
Vianet Group plc
11. Other intangible assets
Capitalised
Order
Customer
development
book
Software
contracts
Patents
Total
Group
£000
£000
£000
£000
£000
£000
At 31 March 2022
13,991
281
451
3,229
155
18,107
Internally generated development costs
1,699
-
-
-
-
1,699
Additions
-
-
-
-
4
4
At 31 March 2023
15,690
281
451
3,229
159
19,810
Internally generated development costs
1,724
-
-
-
-
1,724
Additions
-
-
-
-
8
8
Acquisition of BMI assets
-
-
827
-
64
891
At 31 March 2024
17,414
281
1,278
3,229
231
22,433
Amortisation
At 31 March 2022
8,285
281
413
3,047
105
12,131
Charge for the year
2,048
-
20
182
4
2,254
At 31 March 2023
10,333
281
433
3,229
109
14,385
Charge for the year
2,043
-
106
-
15
2,164
At 31 March 2024
12,376
281
539
3,229
124
16,549
Net book amount
At 31 March 2024
5,038
-
739
-
107
5,884
At 31 March 2023
5,357
-
18
-
50
5,425
The £1,724,000 (2023: £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
Notes to the Financial Statements for the year
ended 31 March 2024 (continued)
Vianet Group plc
62
12. Property, plant and equipment
Freehold
Plant,
Land and
vehicles and
Fixtures and
buildings
equipment
fittings
Total
Group
£000
£000
£000
£000
Cost
At 31 March 2022
3,187
2,486
2,254
7,927
Additions
139
459
53
651
Disposals
-
(60)
(1)
(61)
At 31 March 2023
3,326
2,885
2,306
8,517
Additions
8
533
36
577
Acquisition of BMI assets
-
-
3
3
Disposals
-
(544)
-
(544)
At 31 March 2024
3,334
2,874
2,345
8,553
Accumulated depreciation
At 31 March 2022
949
1,576
2,140
4,665
Charge for the year
65
394
60
519
Disposals
-
(37)
-
(37)
At 31 March 2023
1,014
1,933
2,200
5,147
Charge for the year
72
421
51
544
Disposals
-
(465)
-
(465)
At 31 March 2024
1,086
1,889
2,251
5,226
Net book amount
At 31 March 2024
2,248
985
94
3,327
At 31 March 2023
2,312
952
106
3,370
Included in the net carrying amount of property, plant and equipment as at 31 March 2024, are right-of-use assets
as follows:
Carrying
Depreciation
amount
expense
Impairment
£’000
£’000
£’000
Motor vehicles
313
100
-
313
100
-
As at 31 March 2023, right-of-use assets were as follows:
Carrying
Depreciation
amount
expense
Impairment
£’000
£’000
£’000
Motor vehicles
213
42
-
213
42
-
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.
63
Vianet Group plc
13. Inventories
2024
2023
£000
£000
Finished goods
2,311
2,353
Provision on finished goods
(126)
(78)
2,185
2,275
No reversal of previous write-downs was recognised as a reduction of expense in 2024 or 2023. In 2024 £2,671,000
(2023: £2,546,000) 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
2024
2023
£000
£000
Trade receivables
3,257
2,165
Other receivables
15
4
Corporation Tax receivable
-
922
Prepayments
437
327
Contract Assets
164
363
3,873
3,781
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 £46,000 (2023: £89,000). 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:
£000
Loss allowance as at 1 April 2023 calculated under IFRS9
89
Loss allowance unused and reversed during the year
(89)
Loss allowance provided
46
Loss allowance as at 31 March 2024
46
The expected credit loss for trade receivables as at 31 March 2024 was determined as follows:
Current
Less than 3
Less than 6
More than 6
months
months
months
Total
Expected credit loss rate
0%
0%
0%
32%
-
Gross carrying amount
1,891
1,147
121
144
3,303
Lifetime expected credit loss
-
-
-
46
46
Notes to the Financial Statements for the year
ended 31 March 2024 (continued)
Vianet Group plc
64
14. Trade and other receivables (continued)
The expected credit loss for trade receivables as at 31 March 2023 was determined as follows:
Current
Less than 3
Less than 6
More than 6
months
months
months
Total
Expected credit loss rate
0%
0%
3%
100%
-
Gross carrying amount
977
1,040
153
84
2,254
Lifetime expected credit loss
-
-
5
84
89
15. Trade and other payables
2024
2023
£000
£000
Trade payables
1,265
929
Other taxation and social security
690
497
Accruals
879
661
Contract Liabilities
163
261
Contingent consideration
64
-
3,061
2,348
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 £261k (2023: £222k). 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 BMI assets from Identec Solutions in
May 2023. Total amount recognised is £332k, of which £64k has been realised under one year. £268k is due after
one year.
The contingent consideration period for BMI is 4.75 years to December 2028. The expected cash outflows in respect
of the BMI contingent consideration have been discounted at 15.05%.
16. Leases
2024
2023
Current
£000
£000
Lease liability
123
70
123
70
2024
2023
Non-current
£000
£000
Lease liability
157
122
157
122
65
Vianet Group plc
16. Leases (continued)
During the year, the group capitalised £190k (2023: £231k) 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
2024
2023
Current
£000
£000
Bank overdraft
-
1,168
Bank loans
177
757
177
1,925
2024
2023
Non-current
£000
£000
Bank loans
3,159
1,517
3,159
1,517
Bank loans are denominated in £ sterling and bear interest based on Bank of England Base Rate plus a rate of
between 2.42% and 2.62%. The bank loans are secured by a fixed charge over the land and buildings of the Group.
The Group has new bank facilities from 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:
2024
2023
%
%
Bank overdrafts
N/A
3.25
Bank borrowings – mortgage
2.62
N/A
Bank borrowings – term loan
2.62
N/A
Bank borrowings – RCF
2.42
N/A
Bank borrowings - CBIL loan
N/A
3.65
Bank borrowings – Acquisition loan
N/A
3.10
Bank borrowings – commercial mortgage
N/A
1.00
Notes to the Financial Statements for the year
ended 31 March 2024 (continued)
Vianet Group plc
66
17. Borrowings (continued)
The maturity profile of the Group’s non-current bank loans was as follows:
2024
2023
£000
£000
Between one and two years
177
756
Between two and five years
2,362
761
Between five and ten years
620
-
3,159
1,517
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.
2024
2023
Denominated in US Dollars
$000
$000
Financial assets
31
36
Financial liabilities
-
-
Exposure
31
36
2024
2023
Denominated in Euros
€000
€000
Financial assets
1
14
Financial liabilities
-
-
Exposure
1
14
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.
2024
2023
£000
£000
Cash and cash equivalents
1,822
69
Trade and receivables
3,272
3,091
Contract Assets
164
363
5,258
3,523
67
Vianet Group plc
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 2024
Up to 3 months
Between 3 and
Between 1
Over 5 years
£000
12 months £000
and 5 years £000
£000
Trade payables and other payables
1,955
1,042
332
-
Loans and borrowings
44
133
2,539
620
Lease liabilities
31
92
157
-
Total
2,030
1,267
3,028
620
At 31 March 2023
Up to 3 months
Between 3 and
Between 1
Over 5 years
£000
12 months £000
and 5 years £000
£000
Trade payables and other payables
1,426
922
-
-
Loans and borrowings
1,357
568
1,517
-
Lease liabilities
18
52
122
-
Total
2,801
1,542
1,639
-
Notes to the Financial Statements for the year
ended 31 March 2024 (continued)
Vianet Group plc
68
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:
Amortised
31 March 2024
cost
FVTPL
Financial assets
£000
£000
Cash and cash equivalents
1,822
-
Trade and other receivables
3,272
-
Total assets
5,094
-
Amortised
31 March 2024
cost
FVTPL
Financial liabilities
£000
£000
Non-current borrowings
3,159
-
Current borrowings
177
-
Trade payables
1,265
-
Contingent consideration
332
-
Total financial liabilities
4,933
-
31 March 2023
cost
FVTPL
Financial assets
£000
£000
Cash and cash equivalents
69
-
Trade and other receivables
3,091
-
Total assets
3,160
-
Amortised
31 March 2023
cost
FVTPL
Financial liabilities
£000
£000
Non-current borrowings
1,517
-
Current borrowings
1,925
-
Trade payables
929
-
Contingent consideration
-
-
Total financial liabilities
4,371
-
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.
69
Vianet Group plc
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.
2024
2023
£000
£000
Total equity
27,192
25,967
Less cash equivalents
(1,822)
(69)
25,370
25,898
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:
Level 1
Level 2
Level 3
Total
31 March 2024
£000
£000
£000
£000
Financial assets
Debenture
-
-
-
-
Total financial assets
-
-
Level 1
Level 2
Level 3
Total
31 March 2023
£000
£000
£000
£000
Financial assets
Debenture
-
-
-
-
Total financial assets
-
-
Level 1
Level 2
Level 3
Total
31 March 2024
£000
£000
£000
£000
Financial liabilities
Contingent consideration
-
-
-
-
Total financial liabilities
-
-
Level 1
Level 2
Level 3
Total
31 March 2023
£000
£000
£000
£000
Financial liabilities
Contingent consideration
-
-
-
-
Total financial liabilities
-
-
Notes to the Financial Statements for the year
ended 31 March 2024 (continued)
Vianet Group plc
70
19. Deferred tax
Deferred tax is calculated in full on temporary differences under the liability method using a tax rate of 25% (2023:
19%).
The movement on the deferred tax account is as shown below:
Deferred tax asset
2024
2023
£000
£000
At 1 April
711
1,607
Surrendered
-
(1,276)
Adjustments in respect of prior periods
(92)
-
Profit and loss (debit)/credit in respect of losses realised
(54)
380
At 31 March
565
711
Deferred tax liability
2024
2023
£000
£000
At 1 April
(1,538)
(1,221)
Adjustments in respect of prior periods
27
-
Profit and loss credit/(debit) in respect of timing differences
136
(317)
At 31 March
(1,375)
(1,538)
Net position per the Balance sheet at 31 March
(810)
(827)
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 £565k (2023: £711k) are amounts of £565k relating to tax losses (2023: £711k). Carried forward, unutilised
losses which originated in Vianet Group plc and Vianet Americas Inc have not been recognised due to non-trading
status and overseas tax regulation requirements respectively
20. Issued share capital
2024
2023
£000
£000
Issued and fully paid
Ordinary shares of 10p each: 29,403,414 (2023: 28,808,914)
2,940
2,880
During the year, 175,500 shares were bought back and cancelled as part of an approved share buy back programme.
During the financial year, shares were issued as part of employee share option exercises.
71
Vianet Group plc
21. Employees and directors
Employee benefit expense during the period
2024
2023
£000
£000
Wages and salaries
5,749
5,282
Social security costs
493
492
Pension costs
228
211
Share based payments
100
71
6,570
6,056
Average monthly number of people (including directors) employed
2024
2023
Number
Number
Sales
8
10
Engineering
18
20
Volume Recovery
9
9
Management
4
4
Administration
90
98
129
141
Key management personnel - Directors
2024
2023
Group
£000
£000
Short term employment benefits
539
556
Pension contributions
52
27
Share based payments
100
71
691
654
During the year one (2023: one) director had benefits accruing under defined contribution pension schemes.
Highest paid director
2024
2023
£000
£000
Short term employment benefits
267
253
Pension contributions
27
27
294
280
Notes to the Financial Statements for the year
ended 31 March 2024 (continued)
Vianet Group plc
72
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:
2024
2023
Weighted
Weighted
average
average
Number of
exercise
Number of
exercise
share options
price(p)
share options
price(p)
At start of the financial year
2,306,750
74.4
1,639,750
74.7
Granted
70,000
83.4
796,000
74.4
Exercised
(70,000)
(63.5)
-
-
Forfeited
(455,000)
(78.5)
(129,000)
(78.0)
Lapsed
-
-
-
-
At end of financial year
1,851,750
74.2
2,306,750
74.4
Exercisable at end of financial year
1,035,750
73.2
1,005,750
77.7
The below share options are serving Directors only:
Weighted
average
share price
Name of director /
Number of
Exercise
Exercise
at date of
Gain on
Exercise
senior employee
Date of grant
options
price
date
exercise
exercise
period
M H Foster
09/04/14
135,000
85.0p
-
-
-
10/04/17 to 09/04/24
M H Foster
21/12/15
124,000
103.0p
-
-
-
21/12/18 to 20/12/25
M H Foster
24/02/21
100,000
72.0p
-
-
-
24/02/24 to 23/02/31
M H Foster
17/02/23
100,000
75.0p
-
-
-
17/02/26 to 16/02/33
J W Dickson
17/02/23
250,000
75.0p
-
-
-
17/02/26 to 16/02/33
S Panu
17/02/23
50,000
75.0p
-
-
-
17/02/26 to 16/02/33
D Coplin
17/02/23
50,000
75.0p
-
-
-
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 £100,000 (2023: £71,000) in relation to equity settled share-based payment
transactions in the year.
73
Vianet Group plc
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:
21 December 2015
Expected volatility (%)
27.3
Risk free rate (%)
1.15
Expected dividend yield (%)
5.534
Share price on grant date (p)
103.0
Exercise price (p)
0
The fair values of each award pool are the following:
£000
30 June 2018
305
30 June 2019
143
30 June 2020
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. D Coplin, a non-
executive director, invoiced Vianet Group plc for fees totalling £nil (2023: £nil). As at 31 March 2024 there was £nil
outstanding (2023: £nil). S Panu, a non-executive director, invoiced Vianet Group plc for fees totalling £23,499 (2023:
£10,998). As at 31 March 2024 there was £2,000 outstanding (2023: £1,833).
IAS 24:17 required disclosures are included in Note 22
Notes to the Financial Statements for the year
ended 31 March 2024 (continued)
Vianet Group plc
74
24. Notes supporting statement of cash flows
Borrowings
Borrowings
due within
due after
one year
one year
Total
£000
£000
£000
Net debt as at 1 April 2022
(993)*
(2,273)
(3,266)
Cash flows
236
756
992
Non-cash flows
- Interest accruing in the period
-
-
-
Net debt as at 31 March 2023
(757)*
(1,517)
(2,274)
Cash flows
580
(1,642)
(1,062)
Non-cash flows
- Interest accruing in the period
-
-
-
Net debt as at 31 March 2024
(177)
(3,159)
(3,336)
* The net debt as at 31 March 2023 for borrowing due within one year of £757k as stated here, does not agree to the
Balance Sheet amount of £1,925k, as this does not include the bank overdraft of £1,168k as at 31 March 2023.
Cash and cash equivalents for the purpose of the statement of cash flows comprises:
2024
2023
£000
£000
Cash at bank available on demand
1,822
69
Cash on hand
-
-
Adjusted net cash generation
1,822
69
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.
75
Vianet Group plc
25. Alternative Performance Measures (continued)
2024
2023
£000
£000
Operating profit (IFRS measure)
1,060
658
Add back:
Amortisation charge
2,164
2,254
Share based payments charge
100
71
Exceptional items charge
145
122
Adjusted operating profit
3,469
3,105
26. Controlling party
The Directors consider there to be no ultimate controlling party of the Group.
27. Asset Acquisition
On 12 May 2023, the Group acquired the trade and assets of Beverage Metrics Inc (BMI) from Identec Inc, a company
based in the USA through Vianet Americas. The purchase price was settled for £577,500 in shares and £332,221 in
contingent consideration.
Details of the acquisition are set out below:
IFRS 3
Carrying values
Concentration
pre acquisition
Test Adjustment
Fair value
£000
£000
£000
Intangible assets
- Software
-
891
891
Property, plant and equipment
3
-
3
Trade and other receivables
18
-
18
Trade and other payables
(3)
-
(3)
Taxation
- Current
-
-
-
- Deferred
-
-
-
Cash and cash equivalents
-
-
-
Net assets acquired
18
891
909
Goodwill
-
Consideration
909
Consideration satisfied by:
Shares
577
Contingent consideration
332
909
All intangible assets were recognised at their respective fair values.
No deferred tax balances have been recognised in respect of this, given it has been accounted for under the IFRS 3
Concentration Test provisions as an asset acquisition.
Notes to the Financial Statements for the year
ended 31 March 2024 (continued)
Vianet Group plc
76
2024
2023
Note
£000
£000
Fixed assets
Investments in subsidiaries
2
5,170
5,121
Other intangible assets
3
48
50
Tangible assets
4
10
12
5,228
5,183
Current assets
Debtors
5
13,194
11,560
Cash at bank
2
-
13,196
11,560
Creditors: amounts falling due within one year
6
(357)
(273)
Net current assets
12,839
11,287
Net assets
18,067
16,470
Capital and reserves
Ordinary share capital
7
2,940
2,880
Share premium
8
11,748
11,711
Share based payment reserve
8
583
563
Merger reserve
8
818
310
Capital redemption
8
32
15
Retained earnings
8
1,946
991
Total equity
18,067
16,470
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 £827,000 (2023: loss £197,000).
The balance sheet was approved by the Board on 20 June 2024 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.
COMPANY BALANCE SHEET
at 31 March 2024
77
Vianet Group plc
Share
Share
based
Share
premium
payment
Merger
Capital
Retained
capital
account
reserve
reserve
Redemption
Profit
Total
£000
£000
£000
£’000
£000
£000
£000
At 1 April 2022
2,880
11,711
499
310
15
1,181
16,596
Share based payments
-
-
71
-
-
-
71
Share option forfeitures
-
-
(7)
-
-
7
-
Transactions with owners
-
-
64
-
-
7
71
Loss and total comprehensive
income for the year
-
-
-
-
-
(197)
(197)
At 31 March 2023
2,880
11,711
563
310
15
991
16,470
Share based payments
-
-
100
-
-
-
100
Share option forfeitures
-
-
(80)
-
-
80
-
Dividends paid
-
-
-
-
-
(148)
(148)
Shares repurchased and cancelled
(17)
-
-
-
17
(150)
(150)
Share capital issued
77
37
-
508
-
-
622
Transactions with owners
60
37
20
508
17
(218)
424
Loss and total comprehensive
income for the year
-
-
-
-
-
(827)
(827)
Dividends received
-
-
-
-
-
2,000
2,000
At 31 March 2024
2,940
11,748
583
818
32
1,946
18,067
The accompanying accounting policies and notes form an integral part of the financial statements.
COMPANY STATEMENT OF CHANGES IN EQUITY
for the year ended 31 March 2024
Vianet Group plc
78
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 42. 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)
NOTES TO THE COMPANY BALANCE SHEET
79
Vianet Group plc
1.
Principal accounting policies (continued)
1.3 Income taxes
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.
1.4 Investment in subsidiaries
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.
Notes to the Company Balance Sheet (continued)
Vianet Group plc
80
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
expected length of trademark
Purchased software
5 years
Methods of amortisation, residual values and useful lives are reviewed, and if necessary adjusted, at each balance
sheet date.
1.8 Intercompany balances
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 2024.
81
Vianet Group plc
2.
Investments in subsidiaries
2024
2023
Company
£000
£000
Cost and net book amount:
Shares in subsidiaries
At 1 April
5,121
5,065
Additions
49
56
At 31 March
5,170
5,121
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:
Country of
incorporation
Subsidiary
Shareholding
and registration
Principal activity
Brulines Group Limited
100%
UK
Dormant
Vianet Americas Inc
100%
USA
Leisure Solutions
Vianet Limited
100%
UK
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
Software
Total
£000
£000
£000
Cost
At 31 March 2022
127
165
292
Additions
4
-
4
At 31 March 2023
131
165
296
Additions
8
-
8
At 31 March 2024
139
165
304
Amortisation
At 31 March 2022
68
165
233
Charge for the year
13
-
13
At 31 March 2023
81
165
246
Charge for the year
10
-
10
At 31 March 2024
91
165
256
Net book amount
At 31 March 2024
48
-
48
At 31 March 2023
50
-
50
Notes to the Company Balance Sheet (continued)
Vianet Group plc
82
4.
Tangible Assets
Fixtures
and fittings
£000
Cost
At 31 March 2022
47
Additions
3
At 31 March 2023
50
Additions
3
At 31 March 2024
53
Accumulated depreciation
At 31 March 2022
32
Charge for the year
6
Disposals
-
At 31 March 2023
38
Charge for the year
5
At 31 March 2024
43
Net book amount
At 31 March 2024
10
At 31 March 2023
12
5.
Debtors
2024
2023
£000
£000
Amounts due more than 1 year
Amounts due from subsidiaries
13,097
11,488
Amounts due within 1 year
Other debtors
74
38
Other taxation
23
34
13,194
11,560
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 £691k has been made (2023: £1,696k). The subsidiary
received funding of £691k during 2024 which was provided against.
83
Vianet Group plc
6.
Creditors: amounts falling due within one year
2024
2023
£000
£000
Other payables
106
140
Accruals
251
133
357
273
7.
Issued share capital
2024
2023
£000
£000
Issued and fully paid
Ordinary shares of 10p each: 29,403,414 (2023: 28,808,914)
2,940
2,880
During the year, the company bought back and cancelled down 175,500 shares as part of an approved share buy
back programme.
During the financial year, shares were issued as part of employee share option exercises.
8.
Share capital and reserves
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
2024
2023
£000
£000
Final dividend for the year ended 31 March 2023 of nil (year ended 31 March 2022: nil)
148
-
Interim dividend paid in respect of the year of nil (2023: nil)
-
-
Amounts recognised as distributions to equity holders
148
-
In addition, the directors are proposing a final dividend in respect of the year ended 31 March 2024 of 0.75p per share
payable on 2 August 2024 to shareholders on the register on 21 June 2024. Total dividend payable 0.75p (2022: 0.50p).
Notes to the Company Balance Sheet (continued)
Vianet Group plc
84
10. Employees and directors
Employee benefit expense during the period
2024
2023
£000
£000
Wages and salaries
539
556
Social security costs
72
74
Pension costs
52
27
Share based payments
100
71
763
728
Average monthly number of people (including directors) employed
2024
2023
Number
Number
Management
4
4
4
4
11. Directors
2024
2023
£000
£000
Directors’ emoluments
539
556
Pension contribution
52
27
591
583
The amounts in respect of the highest paid director are as follows:
2024
2023
£000
£000
Directors’ emoluments
267
253
Pension contribution
27
27
294
280
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 profit for the financial year was £827,000
(2023: loss £197,000).
85
Vianet Group plc
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. D Coplin, a non-
executive director, invoiced Vianet Group plc for fees totalling £nil (2023: £nil). As at 31 March 2024 there was £nil
outstanding (2023: £nil). S Panu, a non-executive director, invoiced Vianet Group plc for fees totalling £23,499 (2023:
£10,998). As at 31 March 2024 there was £2,000 outstanding (2023: £1,833).
See Group accounts, Report of the Directors for details of non-executive directors’ emoluments.
Notes to the Company Balance Sheet (continued)
Vianet Group plc
86
NP0624.4031
DELIVERING REAL CHANGE THROUGH UNPARALLELED INSIGHT
One Surtees Way, Surtees Business Park, Stockton on Tees, TS18 3HR
www.vianetplc.com