Profits for Vianet, the beer flow monitoring company, declined in the six months to 30 September as a “direct result” of factors including continuing pub disposals and fewer iDraught installations due to the “uncertainty” around Government intervention via the proposed Statutory Code.
The group’s profit before amortisation, share based payments and exceptional items was £1.3m (H1 2013: £1.87m). Profit before taxation was £0.57m (H1 2013: £1.26m). Its profits were also impacted by increased investment in the USA and the decline was partially offset by improved performance in its Vending and Fuel Solutions divisions.
Turnover was £9.01m (H1 2013: £11.19m) “impacted by the company’s exit from lower margin activity in the Fuel Solutions division, as well as slow iDraught sales and pub closures driven by the uncertainty in the pub sector resulting from the proposed Statutory Code”.
The company said the board is “hopeful of a positive final outcome from the consultation on a Statutory Code”, but in the short term, “remains cautious about the outlook for the group’s core Leisure Division until the new provisions of the Code are announced, particularly as the process has now extended into the Christmas trading period”.
“Against that background, the board feels it appropriate to exercise continued caution, and as outlined in the trading update on 9 October 2013, anticipates that pre-exceptional operating profits for the year ending 31 March 2014 will be in the region of £3m.”
Vianet fitted 150 new beer monitoring units in H1, of which 79 were higher value iDraught installations. This compares to 716 new installations in the corresponding period in 2013, including 669 for iDraught.
“Although the previous period had had the benefit of a major roll-out with Spirit Group, these numbers illustrate the significant impact of the statutory code inspired uncertainty on new investment in beer flow monitoring.
“Furthermore, this uncertainty has also accelerated the number of pub closures and disposals which has resulted in a net reduction of 650 sites to approximately 17,000 sites in the core Leisure installation base.”
However, Vianet said the underlying performance of its core beer monitoring business “remained robust over the period”.
“Several major customers, including Enterprise Inns, Heineken, Charles Wells and Daniel Thwaites, extended their contracts despite the ‘cloud’ of uncertainty around the potential Statutory Code.
“At a time when new capital investment in iDraught is being held back by this uncertainty, it continues to account for approximately 15% of the group’s beer monitoring base by number of installations.”
The company said it “remains confident about the future growth potential for iDraught in the UK and believes that, assuming a positive outcome from the Statutory Code, many of the sales that are currently on hold will in due course flow through once there is a satisfactory resolution”.
It also said it’s “encouraged” by the continued roll out of sites in the US, which reached over 100 at 30 September 2013.
As part of a proposed Statutory Code for pubcos, the Department for Business, Innovation and Skills plans to stop information obtained from flow monitoring equipment being used to determine if a tenant has bought outside the tie.
