Vianet : Interim Results for September 2022

INTERIM RESULTS

FOR THE SIX MONTHS ENDED 30 SEPTEMBER 2022

GROUP PLC

Vianet Group plc

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

Interim Results

Momentum building and on track to deliver sustained growth

Vianet Group plc (AIM: VNET), an international cloud base provider of business intelligence to the hospitality, unattended retail vending and remote asset management sectors, is pleased to announce its unaudited results for the six months ended 30 September 2022.

The Company supplies hardware and connectivity to capture operational and sales data for customers on typically 3 to 5-year agreements. The operational alerts, performance dashboards and insights enable our customers to transform their business. Our solutions, which have been used by our customers for many years are critical in normal times and become vital during times of economic downturn and uncertainty.

The Group saw strong recovery in Smart Zones, which benefitted from the re-opening of the hospitality sector, at the same time Smart Machines has experienced solid YOY growth in both new business and unit sales. This resulted in a good H1 2023 performance and strengthened our high-quality recurring revenue base.

Fast-growing Smart Machines division provides a comprehensive end-to-end vending management system through our SmartVend platform, contactless payment solutions and business intelligence for unattended vending machines and remote assets to maximise operational efficiency, stock control and cash flow whilst reducing our customers' carbon footprint.

Smart Zones division provides SmartDraught a market leading beverage and bar management system which enables the drinks retailing industry to reduce waste and POS shrinkage, whilst driving quality, consumer experience and sales.

H1 2023 has contributed solid momentum into the second half and whilst we continue to see impacts from global semiconductor chip shortages and the economic backdrop, the management is pleased to report that trading is on track to meet full-year market expectations.

Financial highlights

• Revenue of £7.18 million (H1 2022: £6.34 million)
• Recurring revenues of £6.18 million at 86% of turnover (H1 2022: 83%)
• Adjusted operating profit(a) of £1.21 million (H1 2022: £0.82 million) - a 48% increase
• EBITDA(b) £1.37 million (H1 2021: £0.99 million) - a 38% increase
• Operational cash generation pre working capital was £1.43 million (H1 2022: £1.09 million) with strong cash conversion at 104% of EBITDA.
• Basic loss per share at 0.27p (H1 2022: basic loss per share at 1.15p)

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Divisional highlights

• Smart Machines new unit sales at 6,306 (H1 2022: 5,990 units) - estate increasing c. 24% YOY to c. 52,490 units
• New contactless payment device sales at 5,092 units (H1 2022: 5,410 units)
• Smart Machines adjusted operating profit(a) at £0.81 million (H1 2021: £0.71 million)
• Investment in the Smart Machines sales and commercial team driving increased customer engagement with 44 new contracts signed on 3-5-year terms, supporting recurring revenue increase
• Smart Zones adjusted operating profit(a) at £1.81 million (H1 2022: £1.31 million) benefitting from a return to full billing
• Smart Zones won four new long-term contracts and three renewed contracts, the majority on 3-year terms

1. Adjusted operating profit is profit before exceptional costs, amortisation, interest and share-based payments
2. EBIDTA is earnings before interest, tax, depreciation, and amortisation

Operational highlights

• Our ongoing investment in data insight and relationship with Oxford Partnership allows the Group to develop new incremental revenue streams, and this will gather further momentum through FY2024.
• Recent re-engineering of hardware to reduce costs and improve functionality will underpin the H2 2023 launch of SmartDraught, which, coupled with a new bar inventory partnership, is expected to provide new growth in the managed and independent sectors.
• In addition to helping customers reduce their carbon footprint, we continue to press forward with our ESG agenda. Recently installed solar panel system in our HQ building will save in the region of c15 tonnes of carbon consumption per annum. By 2025 our annual energy consumption in our HQ building will have reduced by over two-thirds as we seek to ensure we play our part in reducing greenhouse emissions.

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Chairman and Chief Executive Officer's Statement

The Group has delivered strong year-on-year growth in both our core trading divisions resulting in a c 48% increase in adjusted operating profit to £1.21 million. Despite a challenging economic backdrop and continued supply chain pressures, this positive momentum going into H2 2023 gives us confidence in meeting full year market expectations and that the Group will be back to pre-pandemic run rates in FY2023.

Performance

Group turnover was at £7.18 million (H1 2022: £6.34 million), being 85.4% of pre-pandemic performance levels. Our high-quality recurring revenue base, on contracts varying from 3 to 5 years, grew to £6.17 million being 86% of turnover during H1 2023 (H1 2022: £5.25 million)

The Group's adjusted operating profit was up c 48% at £1.21 million (H1 2022: £0.82 million).

Operating profit post exceptional items was £1.17 million (H1 2022: £0.78 million). The pre-tax

loss was £0.11 million (H1 2022: £0.36 million loss).

The Group's loss per share was 0.27 pence (H1 2022: loss 1.15 pence).

Smart Machines

New telemetry and contactless payment device sales enabled Smart Machines to increase adjusted operating profit by 14% to £0.81 million (H1 2022: £0.71 million), which is ahead of pre-pandemic performance. Our installation footprint increased c 24% YOY from c 42,000 connected units to over 52,000. The Smart Machines sales team delivered 44 new contracts, with further contract wins expected in H2 2023 following the recent launch of our award- winning SmartVend vending management software.

Smart Zones

Smart Zones adjusted operating profit recovered strongly to £1.81 million (H1 2022: £1.31 million), helped by a return to full billing of high-quality recurring income from our long-term contracts. Due to pub closures during the period, there was a net reduction of around 200 contracted sites from 10,100 to 9,900. However, we expect to reverse this trend with our new business pipeline and the imminent launch of SmartDraught.

Dividend

While the Group's recovery is on track, Vianet is not immune from macro-economic factors. We remain focused on managing our cash balances to fund working capital and invest in growth. Whilst our banking facilities provide flexibility the Board remains prudent and will refrain from re-introducing an interim dividend for H1 2023. However, subject to no further adverse factors beyond our control or a deterioration of semi-conductor supply, we expect that H2 cash generation will enable the Board to consider reintroducing a dividend in July for FY2023.

Outlook

The bounce-back recovery experienced in FY2022 and H1 2023 has continued to develop momentum into H2 2023, giving us confidence in meeting the market's expectations for the full year, and well-placed to achieve our pre-pandemic run rates.

The team work closely with our customers and suppliers on intelligent cash management solutions. We have excellent momentum to take advantage of opportunities in remote asset management, contactless payment, and market data insights in both our core and new markets.

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• The recent launch of the SmartVend management platform in H2 2023 is being well received and will generate further operational efficiencies for our customers. This will further cement Smart Machines as the marketplace's leading end-to-end solution. Our highly motivated sales and commercial team in Smart Machines are continuing to accelerate growth from the significant pipeline of opportunities from existing and new customers in the c 3 million machine UK and Europe vending machine market. In H1, new business gains resulted in 44 customers being onboarded, helping us deliver significant new device sales in H2.
• Despite the economic backdrop, 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 H2 2023 to offset further pub closures.
• Growing demand for connectivity solutions to capture data, insights, and payment systems is driving new sales in our core hospitality and unattended retail sectors. The recent announcement of our partnership with Suresite, a leading forecourt retail specialist, demonstrates our progress toward leveraging our existing technology to extend our growth in other sectors such as catering and forecourt solutions.

Whilst we are not immune from the global supply chain challenges or the economic backdrop, increasing demand for our highly relevant products will continue to drive growth, high- quality recurring income, and cash generation. Ongoing investment in product development and people is creating real momentum. The Group is confident with the team, products, and financial capabilities we have to continue delivering growth of 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.

James Dickson

Chairman & CEO

6 December 2022