It was another stonking year for Glasgow-based gas meter installation and asset management firm, Smart Metering Systems. Headline revenues for the year to 31st Dec. 2012 rose by 32% to £21.0m (all organic), operating margins expanded by nearly 5 points to 28.2%, pre-tax profits increased 58% to £5.2m, and EPS rose by 72% to 5.0p. And there’s another 1.15p div, bring the full year total to 1.65p a share.
Just over half the company’s business (56%) comes from gas meter installation, but for us the interesting bit is the asset management division, which offers SMS’ ADM smart metering device and associated monitoring solution. With its web interface, ADM plays very much into the ‘internet of things’ theme (as does ‘Little British Battler’ Concirrus), the jazzy rebadging of telematics and machine-to-machine communication using internet technologies.
Investors have had much to be happy about. SMS’ shares are trading at almost quadruple their value since listing on AIM back in July 2011 at 60p (see Smart Meter smartness?), capitalising the company at nearly £200m, i.e. nearly 10x historic revenues and 34x EBIT. You may wish to take a view on this valuation – I couldn’t possibly comment. But unlike some highly valued, loss-making stocks in the SaaS space, at least SMS appears to be able to turn revenues into real profit and real profit into cash (see Great Companies vs Great Stocks).
