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Vianet lowers sights

By BFN News | 07:13 AM | Friday 22 February, 2013


Provider of real time monitoring systems Vianet Group said trading for the second half of the year to end-March will be below its expectations. Against that background, the Group believes that operating profit before exceptional items and amortisation for the full year will be not less than £3.2 million as compared to £3.9 million for 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. A combination of increased investment in the US, delays to new contracts and pressure in the leisure sector has impacted performance. James Dickson, CEO, commented: "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." Core Beer Monitoring Following a strong period of trading in H1 and contract renewals with several high profile customers, the Group's core beer monitoring business traded less strongly in H2 due to delays to several anticipated iDraughtTM 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 Board remains confident that the outlook for further growth in the higher value iDraughtTM product and service, now accounting for almost fifteen per cent 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. Vending The Vending Telemetry business is continuing to trade at breakeven in H2, although the expected benefits from a delayed significant order will not materialise until 2013/14 and commercial progress with Touch & PayTM cashless and contactless payment solutions, which were used successfully by Coca Cola and VISA at London 2012 Olympic Games, has been limited by delays in gaining extension approvals. Fuel Solutions The Group's Fuel Solutions Division continues to benefit from a reduced cost base and some new business gains. However, H2 is now expected to be loss-making having been held back by poor trading in December/January, and delays to two significant contracts which should now commence in March and April, respectively. Despite this slow start, the business is expected to trade at breakeven in Q4 and the Board does anticipate a strong start to 2013/14. iDraughtTM USA As announced in the Interim Results in December, the Group has an exciting opportunity to accelerate investment in the USA and extend the Vianet Americas Inc. footprint beyond the Colorado on-premise beer market. Vianet Americas' roll out delivery capability has advanced significantly having established a high calibre USA team and formed a strategic alliance with Micro Matic USA for nationwide iDraughtTM installation, service and sales support. Following several months of set-up activity, the full USA launch commenced in February with initial installations across ten states with several national USA retail chains, controlling over 2,000 bars. It is anticipated that a loss of £0.4 million will be recorded compared to the small profit originally expected with the Colorado-only business, reflecting the start-up costs of the enlarged opportunity. Whilst the overall economic environment remains difficult, the future growth prospects across the Group's Leisure, Vending and Fuel Solutions businesses are encouraging and the Board continues to have confidence in the longer term growth of the Group. Story provided by StockMarketWire.com

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