Smart Metering Systems (SMS) is still in expansionary mode on the back of the UK government’s commitment to offer every household and small business a smart meter. Whitehall’s determination to drive energy efficiency has seen the group's network expand by more than a million units to 3.13m in 2018, and management expects installation rates to accelerate in the coming months. However, this investment came at a cost. Net debt almost quadrupled to £142m in the year, equivalent to 2.75 times adjusted cash profits, while statutory earnings were constricted by the depreciation charge, the largest non-cash cost item, which increased by 55 per cent to £21.8m.
Management said the government’s initial rollout target of the end of 2020 is “too ambitious” – adding that the end of 2022 is more realistic – but already eyes are turning to what comes next. Recurring revenues from installed meters has been ramping up, rising 32 per cent to £75.3m, and now the group is exploring new areas for expansion, including batteries and solar panels. But chief executive Alan Foy said the “immediate focus” once the rollout is complete will be its data analysis capabilities.
Analyst N+1 Singer is forecasting adjusted EPS of 22.4p in 2019, up from 18.5p last year.
SMART METERING SYSTEMS (SMS) | ||||
ORD PRICE: | 586p | MARKET VALUE: | £659m | |
TOUCH: | 585-589p | 12-MONTH HIGH: | 845p | LOW: 486p |
DIVIDEND YIELD: | 1% | PE RATIO: | 148 | |
NET ASSET VALUE: | 201p | NET DEBT: | 63% |
Year to 31 Dec | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
2014 | 42.4 | 11.0 | 10.5 | 2.82 |
2015 | 53.9 | 17.5 | 17.5 | 3.30 |
2016 | 67.2 | 18.2 | 17.3 | 4.10 |
2017 | 79.6 | 18.0 | 16.2 | 5.20 |
2018 | 98.5 | 5.4 | 3.97 | 5.98 |
% change | +24 | -70 | -75 | +15 |
Ex-div: | 25 Apr | |||
Payment: | tba* | |||
*To be paid "in early June", but SMS has yet to confirm a date |