Vianet confident despite potential impact of pub companies code

Beer flow monitoring specialists Vianet said recent developments in the statutory code for pub companies presented only short-term worry

James Dickson, chairman of Vianet

Developments in the government’s proposed statutory code for pub companies continues to cast uncertainty over the future of part of Vianet’s business, the specialists in beer flow monitoring systems.

Anticipated cooling of capital investment in pubs could provide short-term challenges to the Stockton-based firm, as MPs voted last month to include a market rent only (MRO) option for tied pub tenants.

The move would give tenants of pub companies with more than 500 venues an option to ditch subsidised rent in return for freedom to buy beer from the whole market.

Speaking to The Journal as Vianet reported a rise in pre-tax profits from £0.57m to £0.77m in H1 2014, chairman James Dickson said he thought it unlikely the MRO would result in substantial take-up from pub tenants given the uncertainties market-rate rents would pose to landlords.

He said: “We believe the take-up could be limited. The code itself could pass into law by 2015 at the earliest, and then it could take another two years for an adjudicator to be set up. MRO would only arise on rent reviews, which are typically on a rolling five year basis - therefore it would be some time before this took effect.

“As far as we can see there is little incentive for landlords to go for the option, given the pressures on cashflow it would create, and the withdrawl of support from the pub companies - who would become a mere property business with little interest in the success of the pub as a business.”

Vianet’s beer flow monitoring systems have been sold to pub companies who want to track beer volumes sold by their tenants to strengthen their position in rent negotiations.

Against a backdrop of ongoing pub industry upheaval, including closures, operating profit in Vianet’s Leisure division fell 2% year-on-year.

Mr Dickson said the business, which also includes vending machine telemetry technology and forecourt petrol monitoring services, was well placed to overcome the longterm uncertainties created by the statutory code developments - as growth opportunities exist in these areas.

Within the group’s Vending Solutions business, profits before exceptional items increased to £0.28m, from £0.06m the year before.

Vianet’s chief executive officer, Stuart Darling said appetite for quality coffee vending, driven by the popularity of high street coffee retailers, presented the firm with a good opportunity.

He explained: “The popularity of brands like Starbucks and Costa on the high street has created a demand for better quality coffee from vending machines, which has traditionally been very poor.

“It’s a great market opportunity, and to execute it properly brands need the telemetry technology in vending machines to be able to gauge customers’ behaviour.”

Mr Darling added: “Vending has traditionally been a 100% cash market, but the development of contactless payments presents a whole new customer base. Sales are now growing on the back of our innovation here.”

Vianet confirmed it had grown staff numbers at its Stockton-based helpdesk to support the growth in its vending telemetry business.

Elsewhere, the firm’s fuel solutions business, acquired as a loss making business, was said to present an opportunity as it reported a small profit of £4,000 in the six month period.

James Dickson added: “The major supermarkets have shown interest in real time monitoring, for the purpose of margin management and informing ordering.

“We’ve got game changing technology here and it takes a while to introduce that, but we expect this part of the business to continue its growth.”

Revenues at Vianet increased by a marginal 1.44% to £9.14m in the six month period to the end of September, supported largely by sales of its iDraught system and vending solutions.

The firm also confirmed it had narrowed operating losses in its American business from £0.23m to £0.17m.

The majority of Vianet’s 210 strong workforce is employed at the firm’s Stockton headquarters, in addition to other sites across the UK.

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