Following its very positive full year update in February (see here) Smart Metering Systems (SMS), the gas meter asset management player, has hit the numbers with 16% yoy revenue growth to £16m, and operating profit more than trebling to £3.8m. This pushed the operating margin up to 24% vs. 9% last year.
This is SMS’ first year as a publicly traded company, having launched on AIM last July (see Smart Meter smartness?) and it has clearly been a great start for the company. At this point SMS’ shares are almost double their list price of 60 pence at c112 pence, making SMS one of the top performers in, or on the periphery of, our SITS space (see Industry Views Quoted Sector Review – Q1 2012).
SMS’ business model is based around installing and registering new ‘smart’ meters, with recurring revenues coming from the rental of the meter ‘asset’ to gas suppliers. In 2011, the total number of SMS meters went up 19% to 254,000. And at 31 March 2012 this stood at 265,000. As such recurring revenue is on the rise, up 29% to £7.6m.
The next stage in SMS’ growth plans is to expand into the advanced metering space with its patented and IT-enabled device 'ADM'. This can be used with existing pulse meters, to offer functionality such as remote reading and half hourly consumption data. ADM is now in trial phase with three major UK energy suppliers, and SMS claims it has an addressable market of c378k units. The company is also considering new domestic and international markets for its products and services in 2012.
Anthony Miller has written a series on his misgivings about the Government’s plans to replace all 50-odd million UK gas and electricity meters with ‘smart’ devices (see Smart Meter Madness (6)). Nevertheless, that momentum puts SMS in a smart place right now.