Vianet, the beer flow monitoring and data management company, says it would challenge proposals for a statutory pubco code “as forcibly as necessary” and warned of the “detrimental” effect of the plan on its business.

It came as the group reported a 7% fall in revenue in its leisure arm in the year to 31 March, largely due to “exiting lower margin compliance cellar inspection activity” in the period.

Overall pre-tax profits fell from £2.3m to £1.8m on revenue down from £23m to £21.1m. Recurring revenues remained steady at 71% (2012: 70%) and gross margin was stable at 51% (2012: 53%).

In its core beer monitoring division, following a strong period of trading in H1 when it secured contract renewals with several high profile customers, Vianet’s core beer monitoring business traded “less strongly” in H2.

“This was due to delays to several anticipated iDraught installation programmes and a 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 the point of contract renewals as a result of customers transferring some non-core, lower margin 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.

“Nevertheless, overall installation progress was encouraging despite some initial delays to programmes. In total there were 864 new beer monitoring installations, of which 828 were higher value iDraught. iDraught is gaining penetration across the on-premise draught beer market and now accounts for almost 15%t of Leisure Solutions’ beer monitoring installation base.”

The company said it had several major contract extensions in the year, including the introduction of iDraught with customers including Enterprise Inns, Punch Taverns, and Marston’s.

Meanwhile, its Nucleus Smart Tills have gained “good sales traction” with almost 500 installations.

Vianet said: “The board remains confident that the outlook for further growth in the higher value iDraught product and service remains promising with many pub retailers conducting extensive evaluations. Overall, the board does not expect significant further erosion in the number of the Group’s installations, currently at approximately 17,500 sites.”

Vianet warned that uncertainty around the proposed statutory code for pub companies may lead to delays in orders for its products; the consultation includes provisions for controlling the application of beer flow monitoring for managing compliance with the beer tie.

Vianet said: “The group believes these proposals are unjust and that they are not based upon fact or any substantiated evidence. As such the board intends to formally respond to the Secretary of State [Vince Cable] to reject the proposals regarding beer flow monitoring and to support the continued legal use of beer monitoring products and services.”

The group said its service has been “subject to legal scrutiny by the court of law on many occasions and has never been shown to be unfit for purpose”. “Accordingly as a board, we are extremely disappointed and frustrated by the proposals contained within the consultation document.”

The firm said implementation of the code would “likely have a detrimental effect on the company’s business” and therefore the board is prepared to challenge these proposals “as forcibly as necessary to prevent them being enacted into legislation”.

“It is somewhat ironic that the measures proposed by the government will reduce transparency in the landlord - lessee relationship, increase the risk to HMRC tax revenues, and undermine beer quality for drinkers. The board looks forward to the Government exercising proper due diligence and reviewing the facts and evidence in this consultation and anticipates that if it does so, the proposals will be amended satisfactorily.”

Vianet said initial results of its move to launch iDraught into the US have been “encouraging”. “The first phase of a full USA launch commenced in February with initial installations on both full commercial and pilot contracts across ten states with several national USA retail chains, who between them control over 2,000 bars. Elsewhere, Vianet Fuel Solutions reduced losses by £0.6m.

James Dickson, executive chairman of Vianet Group, said: “We announced on 22 February 2013 that our results for the year would not match original market expectations due to a combination of contract delays, further pressure in the Leisure sector and the impact of increased investment in the US beer monitoring operation. The operating profit achieved has in fact slightly exceeded the revised forecasts and we remain pleased with much of our underlying performance and the impact of cost reduction programmes. We believe that we should make good progress in 2013/14 and, as a reflection of that and the continued strong cash generation of the group, we have maintained our progressive dividend policy.”