Member Article

Stockton’s Vianet Group announce £200k pretax profit increase ahead of future uncertainty

Stockton-based Vianet Group plc, provider of real time monitoring systems and data management services for the leisure, vending and forecourt services sectors, has announced a £200k rise in pre-tax profits from £0.57 million to £0.77 million.

The modest growth in turnover for the period to £9.14 million (H1 2014: £9.01 million) was reportedly due to increased iDraughtTM and Vending sales which more than offset the impact of pub closures, whilst Fuel Solutions division turnover was flat.

Group gross margin increased from 57.5% in H1 2014 to 59.5% this year due to improved sales volume and on-going cost management.

The Group’s profit before amortisation, share based payments and exceptional items amounted to £1.52 million (H1 2014: £1.30 million).

The improvement is reportedly due to improved sales of iDraught™ and vending telemetry, reduced losses in USA and Fuel Solutions entering in to a small profit from a loss making position - this last factor involving a swing of £0.14 million year on year.

Group EPS before exceptional costs and a deferred tax adjustment amounted to 4.01 pence (H1 2014: 3.37 pence), with a deferred tax adjustment of £0.28 million reducing EPS before exceptional costs and post deferred tax adjustment to 2.97 pence (H1 2014: 3.37 pence).

Vianet’s growth and profitability is strongly influenced by factors affecting the UK pub sector. Given the Government’s announcement on the Statutory Code in early June 2014, industry uncertainty has been diminishing resulting in a modest increase in the pace of new iDraughtTM sales as pub operators evaluated their investment plans in the new environment.

However, further uncertainty has now been introduced with the House of Commons’ recent narrow vote in favour of a Bill to introduce a market rent only option to the Statutory Code.

Whilst there are several hurdles facing the Bill, including potential legal challenges as it progresses through the parliamentary process, regardless of the outcome any change may be some way off.

Though this development should have limited impact on the long term success of Vianet, the short term uncertainty is unwelcome as it may lead to some pub company investment temporarily being held back at a time when the Group was starting to witness a pickup in trading.

Chairman of Vianet Group plc, James Dickson, said: “The Board is pleased that the Group’s focus on growth areas has resulted in increased profits for the period.

“The Group’s robust operational cash flow is underpinned by the resilience of Vianet’s recurring revenue streams, particularly within the Leisure division, which has been augmented by improved iDraughtTM and vending telemetry sales whilst the Fuel Solutions division has moved into a small profit.

“Whilst aspects of the yet to be finalised Statutory Code for pub companies remain a distraction for a number of the Group’s customers, the Board is encouraged by several recent iDraughtTMorders and the pipeline of potential opportunities.

“The Board remains confident that Vianet’s long term strategy is appropriate and that the Group is capable of delivering consistent and sustained growth, within the parameters of its influence and control.”

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