With the UK government’s ongoing rollout of its smart meter programme – which will see around 53m installed across 30m premises by the end of 2020 – the challenge for Smart Metering Systems (SMS) is keeping up with the demand created. This is no mean feat, but the company is making progress, and by the end of June was managing 1.68m metering and data assets, up from 1.25m at the end of 2016.
This requires investment, though, with inventories more than doubling since the start of the calendar year, reaching £12.9m at the period-end. In addition, it has trained more than 100 engineers in the first half. Investment in future capacity and control systems have depressed the gross profit margin by six percentage points to 51 per cent, while the pre-tax profit margin has fallen three percentage points to 25 per cent.
Net debt increased sharply, climbing by just more than half to £122m, giving a toppy net debt to annualised underlying cash profit ratio of 3.8 times. But, for now at least, SMS has the support of lenders. In March, the company agreed a £280m revolving credit facility with a syndicate of banks and its unutilised debt facility sat at £158m at the period-end.
Analysts at Peel Hunt are forecasting adjusted pre tax profit of £23.4m, giving EPS of 20.8p for the year to December 2017 (from £19.6m and 18.9p in 2016).
| SMART METERING SYSTEMS (SMS) | ||||
| ORD PRICE: | 681p | MARKET VALUE: | £613m | |
| TOUCH: | 681-682.5p | 12-MONTH HIGH: | 724p | LOW: 456p |
| DIVIDEND YIELD: | 0.7% | PE RATIO: | 39 | |
| NET ASSET VALUE: | 82p* | NET DEBT: | 165% | |
| Half-year to 30 Jun | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
| 2016 | 32.3 | 9.1 | 8.45 | 1.37 |
| 2017 | 36.8 | 9.3 | 8.59 | 1.74 |
| % change | +14 | +2 | +2 | +27 |
| Ex-div: | 18 Oct | |||
| Payment: | 24 Nov | |||
| *Includes intangible assets of £14m, or 16p a share | ||||
