Vianet has transformed itself from a one product company to a three business company, but two of them were loss-making in 2012. Twenty-thirteen will be different, it says.

Highlights

• Adjusted operating profit up 2%
• Adjusted net profit of ''3m compared to net cash flow of ''1m (''0.5m after net capital expenditure)
• Net debt up 176% to ''3.5m, 27% of tangible assets

The Human Screen comments:

Vianet was Brulines, a company that supplied pubs with flow meters and software to track the volume of drinks sold,  wastage, pilfering, quality, and the profitability of brands. It’s entered markets by acquisition that collect and manage data from vending machines, gaming machines and most recently petrol pumps.

The Human Screen is suspicious of companies that grow by acquisition, and notes that in 2007 Brulines had ''9m of goodwill on its balance sheet, 50% of total assets, and by 2012 the newly renamed and diversified Vianet had ''18m of goodwill, 59% of total assets.

But profitability has declined and a modest cash reserve has turned into a modest debt burden as Vianet expanded from a one product company to a three business company. Both of the new businesses, vending and fuel, made a loss last year.

The good news is the transformation is complete, and having reduced costs at the acquired companies chief executive James Dickson expects the vending business to move strongly into profit in 2013 as new contracts pay off. He expects the fuel business to be profitable too, prompting a transformation in earnings.

The Human Screen does not make forecasts, but if the company’s exuberance is justified there may be an opportunity to profit. The shares cost ten times earnings.

^HS+ (The Human Screen considers May Gurney a candidate for the Thrifty 30 portfolio)