Recurring revenues increased by 51 per cent during 2011 to £6.6m. The meter portfolio grew by 19 per cent to 254,000 by the year-end and has since grown to 265,000 by the end of the first quarter, which is equivalent to £8.1m of annualised recurring revenues. The company now supplies 80 per cent of the industrial and commercial gas supply market with metering services and has seen installations from its established customers increase significantly in the past three months. This business is fed initially by the new connections operation, which enjoyed a steady year in 2011. Fixed costs have risen post-float, but capacity is now in place for a much larger business.
Management sees a major opportunity with its ADM smart metering product, which is commercially ready after two years of trials. It can be retrofitted to existing meters and is cheaper and less technically complex than competing products, according to chief executive Alan Foy. It will deliver additional recurring revenues and could also be used in the water meter market and overseas.
|SMART METERING SYSTEMS (SMS)|
|ORD PRICE:||108.5p||MARKET VALUE:||£90.4m|
|TOUCH:||107-110p||12-MONTH HIGH:||120p||LOW: 63.5p|
|DIVIDEND YIELD:||nil||PE RATIO:||37|
|NET ASSET VALUE:||15p*||NET DEBT:||31%|
|Year to 31 Dec||Turnover (£m)||Pre-tax profit (£m)||Earnings per share (p)||Dividend per share (p)|
* includes intangible assets of £1.9m, or 2.3p a share
Smart Metering is a solid business backed up by growing recurring revenues and is likely to pay a dividend at its next interim results. But the shares have risen fast and are a little pricey at current levels. Hold.
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