An 80 per cent rise in the number of installations of its patented ADM smart meter, together with a substantial hike in recurring revenues, underpinned an impressive set of full-year figures from Smart Metering Systems (SMS). With scale benefits increasingly kicking in, a 3 percentage point increase in the gross margin fed through into a one-third rise in gross profits to £36.5m.
The Glasgow-based group said annualised recurring revenues hit £34.7m, roughly two-thirds of the overall top line, as total gas and electricity metering and data assets increased by over a quarter to approximately 979,000 units under management.
Looking ahead, there is no shortage of potential customers on the back of a mandate from the Department of Energy and Climate Change. This governs the installation of smart meters in every home and small business across the UK by 2020. Management notes a "significant market opportunity", as an estimated 1.6m gas meters and 2.1m electricity meters in industrial and commercial sites are due to be exchanged by the target date. As if to bear this out, SMS revealed a framework agreement with Economy Energy to be its preferred smart meter service provider for 100,000 domestic smart meters, together with a separate deal with The Renewable Energy Company for the installation of around 50,000 dual fuel systems.
Prior to these figures, Panmure Gordon anticipated adjusted pre-tax profits of £17.6m in 2016, leading to EPS of 17.3p.
| SMART METERING SYSTEMS (SMS) | ||||
|---|---|---|---|---|
| ORD PRICE: | 390.5p | MARKET VALUE: | £336m | |
| TOUCH: | 390p-400p | 12-MONTH HIGH: | 435p | LOW: 305p |
| DIVIDEND YIELD: | 0.8% | PE RATIO: | 22 | |
| NET ASSET VALUE: | 55p* | NET DEBT: | 167% | |
| Year to 31 Dec | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2011 | 16.0 | 3.3 | 2.9 | nil |
| 2012 | 21.0 | 5.2 | 5.2 | 1.65 |
| 2013 | 27.9 | 7.4 | 7.9 | 2.31 |
| 2014 (restated) | 42.4 | 11.0 | 10.5 | 2.82 |
| 2015 | 53.9 | 17.5 | 17.5 | 3.30 |
| % change | +27 | +59 | +67 | +17 |
Ex-div: 28 Apr Payment: 2 Jun *Includes intangible assets of £10m, or 11.6p a share | ||||
