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Vianet shares slide despite expected profit boost from Smart Machines division

Published: 14:44 18 Apr 2018 BST

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Vianet added that it anticipated operating profit for its 2018 financial year to come in above last year’s figure

Vianet Group PLC (LON:VNET) saw its shares fall in late afternoon trading Wednesday after an expected profit boost from its Smart Machines division failed to prevent some profit taking.

The AIM-listed technology and data company said the division continued to deliver growth following the recent acquisition of Vendman Systems Ltd in October 2017 as well as a new contract with an undisclosed coffee firm announced in November 2017.

Short term Smart Machine revenue suppressed

However, the group also said that the divisions’ revenue stream transition from capital sales to recurring annuity was suppressing short term financial performance, although in the long run it would provide greater visibility of future earnings.

Vianet added that it anticipated operating profit for its 2018 financial year to come in above last year’s figure of £3.3mln, while maintaining its final dividend of 4p per share.

Meanwhile, the company’s Smart Zones division saw its contribution down slightly year-on-year due to challenges faced in its customers’ core market of UK pub retailing. In the prior year, the division generated revenues of £11.9mln.

However, Vianet said its investment in the Pubco data analytics capability and its increased automation of transactional processes would lead to more sustainable contributions for the division in the future.

Vianet chairman James Dickson said: "The group will again deliver good year-on-year profit growth. Importantly, this has been achieved whilst shifting the balance of Smart Machines sales from capital to recurring annuity based income.

He added: "The group's medium to long term prospects are exciting, particularly for telemetry and payment solutions for the coffee vending market, where momentum is being boosted by good progress integrating the Vendman acquisition, and better visibility on delivery of the material contract win with a global coffee company."

Vianet shares were down 7.2% at 128.5p.

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