21st Mar 2016 09:18
LONDON (Alliance News) - Smart Metering Systems PLC Monday said it has agreed to acquire three businesses to boost its growth ambitions after reporting a material rise in profit for 2015 that allowed the company to increase its dividend.
The integrated metering services company said its pretax profit in 2015 rose 59% to GBP17.5 million from GBP11.0 million in 2014 as revenue increased 27% to GBP53.9 million from GBP42.4 million a year earlier.
Building on the rise in revenue, the company said its gross margin in the year improved after rising to 68% from 65%, lifting its gross profit in the year by 38% to GBP36.5 million from GBP27.6 million.
Its earnings before interest, tax, depreciation and amortisation margin also increased in 2015 to 49% from 45%, boosting underlying Ebitda to GBP26.3 million from GBP19.1 million.
Smart Metering said it will pay a full year dividend of 3.3 pence, a 17% rise from the 2.82 pence paid last year.
"We remain focused on the continued expansion of our core business while also pursuing the significant opportunities available to SMS in the domestic smart meter market. 2016 has started well with the signing of five new domestic smart meter agreements along with three important strategic acquisitions to control our installation capacity in our markets. We remain confident in our outlook for the business and market development in 2016," said Chief Executive Alan Foy.
Smart Metering, in a separate statement, said it has acquired three companies for a total consideration of GBP6.9 million, which will be settled in shares.
The company has acquired CH4 Gas Utility & Maintenance Services Ltd, Trojan Utilities Ltd and Qton Solutions Ltd.
"The acquisitions are in line with SMS's strategy to grow its meter asset portfolio, particularly in the new domestic smart meter market, and alongside targeting the existing industrial and commercial market," the company said.
CH4 and Trojan will boost Smart Metering's capabilities to be a key participant in the substantial new smart domestic meter market for homes and small business in the UK, whilst IT systems specialist Qton Solutions will help to serve SMS's existing and future contractors, most of whom use its systems already.
CH4 will add approximately 100 engineers and 60 contractors to the company's books, of whom approximately 40 are domestic smart gas and electricity installation engineers. They will be joined by the 80 domestic smart gas and electricity installation engineers from Trojan Utilities.
Smart Metering will issue 510,497 shares at a price of 391.775 pence to acquire CH4 and could potentially issue shares in the future worth around GBP995,000 if the business meets certain milestones.
To acquire Trojan, the company will issue 127,625 shares at the same issue price and may issue shares in the future worth up to GBP500,000 if certain milestones are reached. The acquisition of Qton has resulted in Smart Metering issuing 740,230 shares at the same price.
Smart Metering shares were up 2.3% to 400.0 pence per share on Monday morning.
By Joshua Warner; [email protected]; @JoshAlliance
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