Vianet, the beer flow monitoring company, has predicted that trading for the six months to 31 March will be below expectations due a combination of “pressure in the leisure sector”, delays to new contracts and increased investment in the US.
The firm said this morning it believes operating profit before exceptional items and amortisation for the full year will be not less than £3.2m, against £3.9m in 2012. “Cash generation remains strong and the board expects to maintain the final dividend at 4p, which would give a total dividend for the year of 5.7p.”
Vianet said its core beer monitoring business traded “less strongly” in H2 due to “delays to several anticipated iDraught installation programmes” and “reduced contribution from traditional beer monitoring solutions as a result of bottom end pub disposals and the uncertainty that accompanies the disposal process”.
“In addition, there have been less favourable rates at contract renewal as a result of customers transferring some non-core support services back in-house. Whilst there has been increased iDraught penetration and good progress in gaining new contracts to monitor gaming machines in the pub sector, this has not been enough to offset these issues.”
The company added: “The board remains confident that the outlook for further growth in the higher value iDraught product and service, now accounting for almost 15% of the total installation base, remains very promising with many pub retailers conducting extensive evaluations. The board does not expect significant further erosion in the number of the group’s installations, currently at approximately 18,000 sites.”
James Dickson, chief executive, said: “It is obviously disappointing to be downgrading expectations. We have made good progress in a number of areas but have not been able to offset the effect of contract delays.
“The investment made in the US and recent contract wins in the UK means that the outlook for 2014 remains promising. The actions taken to reduce costs, particularly in the Fuel Solutions business, are also now coming through and further cost reduction initiatives are being implemented across the group. It is against this backdrop and the continued strong cash generation that the Board expects to maintain the dividend.”
