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(Sharecast News) - Vianet Group delivered higher profits, improved margins and reduced debt in the first half of its financial year on Tuesday, despite subdued customer spending and disruption associated with the UK's telecoms network transition.
Revenue was broadly unchanged at £7.67m in the six months ended 30 September, but adjusted EBITDA increased 20.6% to £1.86m and adjusted operating profit rose 10.4% to £1.58m.
Pre-tax profit jumped to £392,000 from £18,000 a year earlier.
Recurring revenue remained high at 84% of turnover, underpinning what the company described as strong earnings visibility.
Gross margin improved to 68% from 67%, reflecting operational efficiencies, while net debt fell to £0.5m from £1.0m and cash balances increased to £2.60m.
The company refinanced its HSBC banking facilities to April 2028 and raised its interim dividend by 33% to 0.4p per share.
Chief executive James Dickson said the business had made "strong progress" despite a challenging macroeconomic backdrop and more cautious customer spending ahead of the Autumn Budget.
"Our growing pipeline, resilient recurring revenues and robust cash generation continue to demonstrate the effectiveness of our model," he said.
He added that strategic investments in AI, analytics, energy-efficiency solutions and US expansion were translating into "clear commercial momentum."
The Smart Machines division reported lower turnover of £2.97m, down £270,000 due to a deliberate exit from ERP services, though the installed device base grew to 36,957 units.
Cashless payment units now account for 71% of deployed devices, with the number of such units rising by 2,700 during the half.
The company said the shutdown of legacy mobile networks remained a short-term headwind but expected the phased retirement of 2G and 3G services to be a structural growth driver through 2027.
The Smart Zones hospitality division grew turnover 5.6% to £4.7m and increased installations by 58% year-on-year, supported by new platform deployments at pub groups including Marstons and Trust Inns.
The US operation reduced losses as the Beverage Metrics platform gained traction alongside a new partnership with Fintech.
CFO Sarah Bentham said improved margins and stronger cash generation reflected "the financial benefits of our business model and the operational efficiencies implemented over the past year."
She added that the early move away from 2G had created "some short-term operational friction," but had not changed the company's financial trajectory.
Vianet said it entered the second half with a strengthened balance sheet, healthy pipeline and confidence in further contract wins.
The board reaffirmed its expectation of year-on-year growth, citing telecom network upgrades, increasing demand in unattended retail and hospitality, and expanded opportunities in the US market.
At 1206 GMT, shares in Vianet Group were down 0.16% at 60.9p.
Reporting by Josh White for Sharecast.com.