Network growth continues to be the name of the game for Smart Metering Systems (SMS). The group has positioned itself to benefit from the government-mandated move towards smart metering, through installing and managing these energy efficiency devices on behalf of clients in exchange for ongoing fees. The strategy is working so far, with annualised recurring revenue up 43 per cent to £69.3m for the first half of 2018.
The network has grown at record levels in the period, with total gas and electricity assets up 50 per cent compared with this time last year. However, growth comes with a cost, and increased capital expenditure has caused net debt to surge to £103m, from £36.5m at the end of 2017.
However, near-term growth rates are expected to temper. Smart Meter rollout has so far focused on the first generation meters, known as SMETS1, but soon the focus will shift to the newer generation of meters. The cut-off for installing SMETS1 meters is pencilled in for early December, subject to consultation, and meter installation is expected to tail off a little as companies make the transition to SMETS2.
Analysts at Peel Hunt are expecting a full-year pre-tax profit of £22.8m, giving EPS of 16.2p for 2018 (from £22.2m and 19.6p in 2017).
| SMART METERING SYSTEMS (SMS) | ||||
| ORD PRICE: | 610p | MARKET VALUE: | £686m | |
| TOUCH: | 609-613p | 12-MONTH HIGH: | 900p | LOW: 587p |
| DIVIDEND YIELD: | 0.9% | PE RATIO: | 41 | |
| NET ASSET VALUE: | 207p | NET DEBT: | 44% | |
| Half-year to 30 Jun | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
| 2017 | 36.8 | 9.3 | 8.59 | 1.74 |
| 2018 | 46.7 | 10.1 | 7.45 | 2.00 |
| % change | +27 | +9 | -13 | +15 |
| Ex-div: | 25 Oct | |||
| Payment: | 23 Nov | |||
