If only Adam had known about EDIS

Diary of a Private Investor - Terry Bond: An electronic business systems company has come up with a device that can remove us from temptation and protect us from ourselves
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The Independent Online

"Don't be a wimp, Adam. Just climb the stepladder, pick the apple, bite it, put the rest down the waste disposal and no-one will know."

"Don't be a wimp, Adam. Just climb the stepladder, pick the apple, bite it, put the rest down the waste disposal and no-one will know."

We're back on temptation again, because I want to tell you about a company I've come across this week that is planning to make big bucks from stopping weak-willed folk tread the path of naughtiness.

Pause and consider what would have happened if the Garden of Eden's apple tree had been electronically bugged. When Adam picked the apple, its absence would have been recorded at Head Office and alarm bells would have rung. Of course, if he had known that he was in danger of being caught, he would probably have turned down Eve's suggestion, they would have gone back to playing cards and we would not be living happily ever after.

The consequences of temptation for the manager and staff at your local pub are not quite so drastic, but they are undoubtedly a reality, based on "who would ever find out?" For the more unscrupulous licensee, the idea of sourcing the odd barrel of ale from another wholesaler, in contravention of the arrangement with the pub's owners, carries very minimal risk if the timing is right. And for barstaff, what's the harm in serving your friends with the odd pint and not ringing it up on the till?

It's wrong, it's naughty, but nevertheless it is tempting. At least, it was until Brulines intervened. Teeside-based Brulines produces a small, but highly effective pub security device which is fitted to the pipes leading from the beer barrels to the pumps. It measures the volumes of beer as they are dispensed into the glasses.

Each pint is logged and timed, comparisons with till rolls are easy, and at the end of the day if everything doesn't tally, the search for the serpent can begin. Nicknamed EDIS, for Electronic Draught Information System, the measuring unit comprises a flow sensor, which is inserted into the beer pipe and provides information to a central processing unit in the pub. This is connected to a telephone network and can be accessed remotely from head office. EDIS also works on any other dispenser of draught liquid such as lemonade, cola and so on.

Of course EDIS information ialso provides invaluable information on the pattern of beer consumption, which feeds through to improvements in marketing and sales.

No wonder then that Brulines, which is now wholly owned by an AIM quoted company called Comprehensive Business Systems, has built its customer base from eight to 32 in less than a year, and now supplies operators which include Whitbread, Enterprise Inns, Pubmaster and Punch Taverns.

EDIS costs £2,600 per installation. There are now 2,900 units around the country, only two per cent of the licensed trade, if you take into account pubs, hotels and clubs. So there's still a huge number of potential customers to aim for.

Comprehensive Business Systems have tight patents on EDIS and also plan to introduce their device in Europe, Australia and New Zealand.

In three years the company's turnover has increased from £700,000 to £3.3 million and profits have tripled to £1.18 million. During the three years the operating margin has been maintained at a whopping 35 per cent, and they don't get much better than that.

A strong plus point to my mind is that Brulines buys in all its EDIS components. This means a small workforce - a payroll of just 36 people - and they can concentrate on refining the existing EDIS system and developing new products. A Rolls Royce version, EDIS III, is off the drawing board and going through field trials.

It will automatically analyse and generate reports which will be accessed by pub owners and licensees via the internet. It is the ideal way to check on theeffectiveness of promotions or advertisements.

The City has begun to realise the potential of the holding company, Comprehensive Business Systems, and in a year the share price has moved from a low of 63p back to its near all-time high of 305p. Nevertheless I believe there is still a long way to go.

* An e-mail this week from Diary reader Peggy Hall who says: "You wrote recently about the investor maxim: 'Sell in May and go away.' That's all very fine, but when do we come back?"

Good question, Peggy, and thank you for setting me off on a search for the rest of the quotation that took the whole of Wednesday afternoon. As far as I can ascertain the saying was coined in Victorian times when farmers were buyers of shares. They sold their harvests in the autumn and had plenty of cash to invest on the stockmarket. But when Spring came they needed money to buy seeds and suchlike so they had to sell their holdings.

It sounds a bit unlikely to me, but anyway the complete quote is: "Sell in May and go away, buy again on St. Leger Day." Well, the St. Leger is being run at Doncaster Racecourse on Saturday, September 9. Please do not construe this as being investment advice, I offer it purely for information.

Under the heading of "Frequently Asked Questions" the most popular as far as my postbag is concerned is: "Which tipsheets do you recommend?" There are several good ones available, written by individuals whose investing abilities I respect, but it would be invidious for me to single any of them out. If you are considering a subscription to a tipsheet - they prefer to be called newsletters or magazines - you should first ask for a sample back issue and check to see how much research in depth has been done.

My golden rule is that the tipster should have visited the company , seen the product and talked to the management. Alternatively he or she should have a proven record in a field, say technology or chemistry.

I am not a fan of penny shares and do not place much credence on tipsheets that recommend them. If you think that I'm wrong, then please write to me explaining just why it is that the City, where there are so many wise professional investors and experienced analysts, continues to value a particular share in pennies rather than pounds.

terry.bond@hemscott.net

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