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LONDON (Alliance News) - Vianet Group PLC Thursday expressed confidence in its long-term strategy, although it cautioned that trading in the UK pub sector will likely remain challenging, as revenue growth and cost-cutting measures helped it to post a small rise in pretax profit for its recently-ended financial year.
Vianet provides monitoring systems and data management services for the leisure, vending and forecourt sectors.
In the year to end-March, the company posted a pretax profit of GBP1.7 million, up from GBP1.6 million a year before, as a rise in revenue to GBP18.6 million from GBP18.3 million and lower administrative costs helped offset exceptional costs of GBP600,000 related to restructuring and cost cutting measures.
The company highlighted uncertainty in the pub industry during 2014 as a result of the UK government introducing a new statutory code for pub companies, which has hit sales of its iDraught product. Vianet said it regarded the proposed statutory code was a "fair outcome" and greeted it with cautious optimism. Although there might be a limited long-term hit, Vianet said, this uncertainty held back further investment and led to increased pub disposals and closures.
It did not lose any contracts, but estimated it lost around 1,400 beer monitoring installations over the financial year as a result of pub closures.
Vianet expects trading in the pub sector to remain challenging, and cautioned that its growth and profitability remains strongly influenced by external factors such as legislative, socio-economic or corporate activities in the UK pub sector.
In terms of how Vianet can counter these external factors, Chief Executive Stewart Darling told Alliance News that "very simply, we've got wait for customers to nail down their strategy, in relation to this brave new world they all find themselves in".
In the pub sector, the company is shifting focus away from compliance towards improving customer experiences, and developing 'big data' applications to tie in with its monitoring systems, which would have potential for cross selling across Vianet's businesses.
"It's about developing a capability. If you look at what we do - we've been incredibly successful building two vertical markets. When we started to segregate those two markets - what is the real value driver there? It's the data. It's that strategic insight and actionable data that improves business performance, and helps businesses make better decisions, " Darling said.
The company also continued to make progress in the US. It strengthened its commercial team in the region, and whilst this initially slowed sales traction, the company said the team's approach was starting to deliver necessary sales growth. Increased focus on national chains led to the number of sites using Vianet's products in the US rising to 143, compared with 121 sites a year before, although this was partly offset by withdrawals from some smaller outlets.
Whilst the US pub market is very different to the UK, Darling said that for Vianet the strategy is very similar. "Fundamentally for us, if you look at what we're trying to do from a retail perspective in the UK, the dynamics in the UK are practically the same as the US," Darling said.
Vianet said it had continued to make good progress in its other markets. It saw good progress in its Vending Solutions business as it continued to roll out a contract with a coffee company throughout the year. It has appointed Matt Lane as managing director for the business. Lane previously worked as head of beverage products and head of vending at Nestle Professional UK.
Revenue was broadly flat in the Vianet Fuel Solutions business, as growth was held back by projects being delayed into 2016.
"The board remains confident that Vianet's long-term strategy is appropriate, that the group is well positioned, within the parameters of its influence, to deliver sustained earnings growth, which in doing so should also expand the future strategic options for Vianet," said Chairman James Dickson in a statement.
The company proposed a final dividend of 4.00 pence, taking its total dividend for the year to 5.70 pence, unchanged from the previous year.
Shares in Vianet are trading up 0.9% at 102.90 pence Thursday afternoon.
By Hana Stewart-Smith; hanassmith@alliancenews.com; @HanaSSAllNews
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