TIDMSMS
RNS Number : 0839B
Smart Metering Systems PLC
18 September 2018
Smart Metering Systems plc
("SMS" or "the Company")
Interim Results for the six months ended 30 June 2018
Smart Metering Systems plc (AIM: SMS.L) is pleased to announce
its interim results, which show continued growth in the six months
to 30 June 2018.
Financial highlights
-- Revenue increased by 27% to GBP46.7m (H1 2017: GBP36.8m)
-- EBITDA increased by 29% to GBP23.4m (H1 2017: GBP18.1m)
-- PBT increased by 9% to GBP10.1m (H1 2017: GBP9.3m)
-- Total annualised recurring revenue(2) increased by 43% to GBP69.3m (H1 2017: GBP48.4m)
-- Pre-exceptional EBITDA(1,3) increased by 26% to GBP23.6m (restated H1 2017: GBP18.7m)
-- Pre-exceptional EBITDA(1,3) margin at 51% (restated H1 2017: 51%)
-- Underlying PBT(1,3,4) increased by 5% to GBP11.4m (restated H1 2017: GBP10.9m)
-- Underlying earnings per share(1,5) decreased by 15% to 8.40p (restated H1 2017: 9.92p)
-- Interim dividend of 2.00p per ordinary share, an increase of 15%
1 In 2017 the Board took the decision to change the presentation
of the underlying performance measures to include other operating
income. The Board believes this income is an integral feature of
the replacement of meters, particularly prevalent during the
current smart domestic rollout, and will occur with greater
regularity on an ongoing basis. All prior year underlying results
have been restated in accordance with this new approach.
2 Annualised recurring revenue refers to the revenue being
generated at a point in time. Revenue refers to revenue generated
by meter rental and data contracts.
3 Pre-exceptional EBITDA and underlying PBT figures are
presented under our revised approach to include other operating
income.
4 Underlying PBT is before exceptional items and intangible amortisation.
5 Underlying earnings per share is profit after taxation but
before exceptional items and intangible amortisation, divided by
the weighted average number of ordinary shares in issue.
Percentage
30 June 31 December 30 June increase
2018 2017 Percentage 2017 June
units units increase December 2017 units 2017
---------------------------------------------- --------- ----------- ----------------------- --------- ----------
Total gas and electricity metering and data
assets 2,523,000 2,031,000 24% 1,678,000 50%
Gas meter portfolio* 1,568,000 1,273,000 23% 1,064,000 47%
Gas data portfolio 129,000 126,000 2% 118,000 9%
Electricity meter portfolio 465,000 309,000 50% 166,000 180%
Electricity data portfolio 361,000 323,000 12% 330,000 9%
---------------------------------------------- --------- ----------- ----------------------- --------- ----------
* Includes assets under management for 3(rd) parties.
Alan Foy, Chief Executive Officer, commented:
"The first half of 2018 has seen us continue to grow the
business at record levels, in addition to which we are delighted to
have recently signed a significant smart meter contract on an
exclusive basis with a large independent energy supplier. At the
heart of this success is the strength and track record of our full
end to end capability to both install, and subsequently own and
maintain, our portfolio of assets in the domestic smart metering
and I&C markets.
I am delighted with the progress over the last 6 months and we
will continue to invest in our business to capitalise on the
domestic smart metering rollout programme."
For further information:
Smart Metering Systems plc 0141 249 3850
Alan Foy, Chief Executive Officer
David Thompson, Chief Financial Officer
Cenkos Securities 0131 220 6939 / 0207 397 8900
Neil McDonald
Beth McKiernan
Kreab 020 7074 1800
Matthew Jervois
Notes to editors
About Smart Metering Systems Plc
Established in 1995, Smart Metering Systems plc, headquartered
in Glasgow, installs, owns and operates gas and electricity meters
on behalf of major energy companies. The Company's full end to end
energy management services and consultancy business support large
blue-chip companies in the UK, through a network of offices in
Cardiff, Cambridge, Bolton, Doncaster, Rugby, and Newmarket.
The Company's services also include infrastructure design,
installation, consultancy and project management services for new
gas, electricity, water and telecoms connections for licenced
energy and telecoms suppliers, end consumers and the UK's licenced
electricity Distribution Network Owners (DNO's).
The Company was admitted to the AIM market in July 2011 and is
now part of the FTSE AIM 50 index. For more information on SMS
please visit the Company's website: www.sms-plc.com.
Chairman's statement
I am delighted to report another period of strong trading
activity, demonstrating our accelerated growth trajectory driven by
the UK domestic smart meter rollout.
Review of 2018 so far
The first half of this year has seen strong growth driven by the
successful and continued delivery of the foundation stage of the UK
domestic smart meter rollout. This is reflected in our growing
meter and data portfolio.
With now over 2.5 million metering and data assets under
management, our existing client base of energy suppliers continues
to provide customer portfolios to us as part of "business-as-usual"
activity, up 24% from 2 million at the end of 2017. This increase
includes an additional 267,000 smart domestic meters, taking our
overall smart meter portfolio to 690,000 domestic meters. This
justifies the strategic decisions the Company made in 2017
regarding the funding of this major undertaking and its previous
acquisitions. Indeed, we have clearly demonstrated that we have the
proven operational and financial capacity and platform to execute
and deliver this rollout.
Recent publicity surrounding the UK domestic smart meter rollout
has resulted in BEIS and OFGEM emphasising their commitment to the
2020 deadline after the likelihood of the programme completion
timescales was challenged. Our increasing portfolio reflects the
wider continued progress of the government-mandated programme,
which requires UK energy suppliers to fit c.53 million new smart
meters by the end of 2020.
Our proven capability, meanwhile, ensures we are well positioned
to support our customers with these obligations up to 2020 and
beyond, partnering with energy suppliers to deliver their
end-to-end requirements in a capacity-constrained market. This
model continues to demonstrate year-on-year growth, increasing
revenue by 27% and our annualised recurring and index-linked
revenue by 43%. This growth is being managed with an undiminished
attention to health and safety and customer service, which is
testament to our established and proven management team.
Going forward, our strategy is to carefully manage the
forthcoming transition to the SMETS2 rollout, in which meters will
directly and immediately connect to the Data Communications Company
(DCC), and to continue to increase our metering installation run
rates from the 2.5 million assets currently under management.
Our strategic priorities, in 2018, continue to be:
1. Install and own utility metering infrastructure and secure
rental and data revenues from our contracted energy suppliers in
the industrial and commercial (I&C) market.
2. Build on our strategic positioning and investment in capacity
to take advantage of the domestic smart market opportunity in the
UK, carefully managing the technology, logistics and engineering
challenges associated with the SMETS2 delivery. This is founded on
our proven end-to-end delivery capability, increasing capacity, and
track record of customer service and operational delivery.
3. Innovate our services to build big data, energy management,
financing and installation capabilities that enable our customers
to reduce their carbon emissions and facilitate our investment in
infrastructure asset classes which provide long-term recurring
revenue.
Health and safety
Health and safety is the Group's key priority; we are committed
to the wellbeing of every person involved with our business, with
zero harm realised across our organisation. We take seriously our
Board-level leadership responsibilities, striving for continuous
improvement and putting in place throughout the business a "no
blame" culture to ensure no incident goes unreported, thereby
ensuring we make available appropriate resourcing to monitor and
support the assurance function. We are, however, not complacent and
continue to invest and rigorously challenge, evaluate and assess
the risks within our business to ensure that we are doing
everything possible to ensure the health and safety of all our
stakeholders.
People
We have continued to grow the SMS family and we now employ over
940 staff across the UK. As we continue to grow we are working hard
to ensure that we foster a culture which enables all our staff to
uphold the highest levels of integrity and to maintain a positive
empowering environment in which we encourage all colleagues to look
forward, to take responsibility, and to make a difference to our
organisation and to our customers every day. We have continued to
invest in the business infrastructure to support this staff growth,
and we are building on the experienced and proven management team,
which, is now focused on successfully delivering the transition to
SMETS2, innovation in our future services and our growth plans.
During the six months to 30 June 2018, we have appointed Kelly
Olsen as a Non-executive Director, bringing a wealth of experience
to the Board as an information technology specialist. Kelly is
chairing a newly created Information and Technology Committee of
the Board, which is further improving the governance and strategic
guidance of the Company's technology programmes. Technology,
information security and IT systems are critical to the delivery of
the smart meter rollout, the transition to SMETS2, the delivery of
a first-class customer experience, and the development of our
services beyond smart meters to truly deliver the future of smart
energy and a low-carbon energy system. This importance of
technology is reflected in our appointment of Kelly and our
continued and substantial investment in this area to support our
existing and future service offering.
Dividend
SMS is pleased to announce a proposed interim cash dividend to
shareholders of 2.00p per ordinary share for the half year ended 30
June 2018, a 15% increase. The interim dividend will be paid on 23
November 2018 to those shareholders on the register (record date)
on 26 October 2018 with an ex-dividend date of 25 October 2018.
Outlook
The first half of 2018 has seen us accelerate our annualised
recurring revenues and our trading performance, and significantly
increase capital investment in metering assets accordingly. Whilst
we expect the transition to SMETS2 to bring some operational
challenges through the second half of 2018, we are confident in our
ability to manage this business change, and to maintain our growth
across the asset portfolio. As a result, we remain confident in our
ability to continue to grow the business for the remainder of 2018
and beyond.
Chief Executive Officer's statement
The first half of 2018 has been an outstanding one for SMS, a
period during which we have continued to establish our position at
the heart of the low-carbon smart energy revolution that is pivotal
to realising a greener, more sustainable world.
The rollout of smart meters has continued to build pace, with
SMS increasing its portfolio by over 267,000 smart meters in the
first six months of the year, resulting in the overall ownership of
more than 690,000 smart meters nationwide. To put this in
perspective, at the end of Q2 2018 there were around 12.5 million
smart domestic meters installed in the UK with SMS installing c.11%
of the current industry-wide run rate of c.1.25 million meters per
quarter.
Alongside the continued successful growth of our I&C and
data business, this means that SMS now manages a portfolio of over
2.5 million meter and data assets, generating annualised recurring
rentals of c.GBP69.3m to 30 June 2018. This represents an increase
of 43% (GBP20.9m) from the same period in 2017, and an increase of
22% (GBP12.4m) since the start of the year, with this recurring
revenue being based on long-term index-linked rental contracts.
This continued growth demonstrates the success of our strategy and
deployment of the financial capacity we put in place in November
2017 via a GBP150m equity placement. We also extended our GBP280m
revolving credit facility, giving us continued balance sheet
flexibility for the delivery of our smart asset base.
As we progress into the second half of 2018 and beyond we
continue in earnest our planning for and the transition to the
delivery of SMETS2 meters, which connect directly to the national
DCC network. This transition will bring short-term technology,
logistics and operational challenges and we are focused on managing
capacity, meter stock and installation run rates carefully in this
period. However, we have put in place the IT systems, capacity,
national engineering infrastructure and an experienced management
team which continues to successfully manage this industry-wide
challenge.
By the end of August 2018 our smart meter portfolio had grown
further to 748,000 smart meters, from a total increased portfolio
of 2.8 million meter and data assets, which provide annualised
recurring revenue of GBP71.4m by 31 August 2018.
Smart meter rollout
The benefits of smart metering remain clear. The introduction of
digital technologies, the need to decarbonise our energy usage, and
growing energy demand (particularly given the electrification of
transport and heat over coming years) have led to a fundamental
requirement to not only change how energy is supplied/generated,
but also how and when we demand and use it.
The smart meter is at the heart of this energy revolution, not
just by providing more accurate bills and enabling consumers to
monitor their energy usage, but for the first time enabling two-way
communication between consumers and the energy network. This
communication facilitates "real-time" automated responses to
changing demand, improved matching of energy supply to consumption,
and demand-side response schemes that allow consumers to control
when they use, store or export their energy. We are already seeing
energy suppliers introduce time-of-use tariffs which will be key to
enabling the full realisation of these benefits.
SMS is at the very centre of this fast-expanding landscape.
Indeed, with the energy system evolving to a more decentralised and
dynamic model, domestic smart metering is the clear and immediate
strategic focus for the business as we continue to build our order
book, put in place SMETS2 contracts, and manage the transition to
the mass SMETS2 rollout with the DCC.
In the short term, BEIS and OFGEM continue to reinforce the 2020
smart rollout deadline and the incentives on energy suppliers to
meet their mandated requirements. Recently we have seen OFGEM issue
fines to energy suppliers for failing to meet their smart meter
install targets. SMS has the capacity and infrastructure to support
suppliers in the delivery of these obligations up to and beyond
2020.
In the longer term, the delivery of this smart energy revolution
will require energy infrastructure and data driven services - using
technology, knowledge and engineering capacity - to provide control
over the generation, use and storage of energy. SMS is uniquely
positioned to help achieve this, with our customers seeing us as a
crucial component in delivering their needs and requirements.
Finally, SMS is not only leading the industry in the context of
delivering the smart meter rollout, as evidenced above, but also in
its efforts to communicate the benefits of smart metering and
related technologies. As we know, smart meters are pivotal in the
UK's decarbonisation and the realisation of a future smart energy
system that is estimated to save the country up to GBP40bn between
now and 2050. In face of the aforementioned criticism of the
rollout amongst the mass media, SMS has retained a consistent,
positive and strictly fact-based message concerning the benefits of
smart meters. This is a message regularly communicated to the
public through the Insights section of our website, as well as
through our various well-followed social media channels. Recent
examples of this include a response to the recent British
Infrastructure Group's (BIG) critical report on the rollout, as
well as a paper on the growing use of time-of-use tariffs by
consumers. Such clarity in our messaging has made us a leading
voice on smart energy issues, and we aim to consolidate this
position going forward.
Operational delivery
"Safety is the Priority" is our number-one core value. In
practice, this means we are committed to being a safe, secure and
reliable organisation and acting at all times to protect everyone
around us: colleagues, customers and the general public. Our
internal training centres are key to this, and we consider
ourselves an industry leader in ensuring that safe and quality
working practices are adopted by our entire engineering
workforce.
We avoid complacency at all costs and continue to drive the
highest standards in safety throughout the organisation even as we
continue to grow our engineering installation capacity. As we
transition to SMETS2, our internal training capability will be
particularly critical in the face of new challenges, meter variants
and technological requirements. Nevertheless, we have the proven
ability to upskill our engineering base accordingly.
We are also well advanced in the end-to-end testing and
development of our SMETS2 systems, working closely with our energy
supplier customers to lead the industry in full integration with
the DCC data network. We are also pleased to have been appointed
directly by the DCC to provide test laboratory facilities. Testing
at the lab is being conducted to ensure that all the original
SMETS1 smart meters installed to date will maintain full
functionality when adopted and enrolled into the DCC data network.
This will ensure that these first-generation meters remain "smart"
if a consumer decides to switch energy supplier in the future.
As manufacturing capacity for SMETS2 meters begins to come
online, we are closely managing this risk by working with multiple
partners to ensure we have appropriate diversity and resilience in
our supply chain. We continue, therefore, to focus on our proven
approach to capacity management, ensuring controlled growth in our
systems, financial, and engineering capacity. Our internal direct
control over training, compliance, engineering installation
services and the end-to-end IT infrastructure continues to prove
critical to our current success, our transition to SMETS2, and the
development of services beyond smart metering. We have the
demonstrable ability to increase our capacity to meet our clients'
needs, which will prove vital as we move towards the mass rollout
phase.
Consequently, we have proven ourselves to be one of the largest
independent domestic smart metering installation workforces in the
UK and positioned ourselves to be the partner of choice, offering
services to large and small energy suppliers alike as they move
into the mass rollout phase of their mandated smart meter rollout
programmes.
Energy Management services
Our Energy Management division continues to play a critical part
in the knowledge-based evolution of our services, and is essential
to delivering the data-driven, long-term smart energy revolution
enabled by smart meters. The division provides energy-cost,
energy-consumption and carbon reduction services primarily to
corporate I&C customers. We believe long-term domestic services
such as energy storage, energy efficiency investments, demand-side
management and electric vehicle (EV) charging point installations
will prove economic in the I&C sector first and we are
extending our service range accordingly.
We are pleased to have begun the active rollout and turnkey
delivery of such energy efficiency measures - including LED
retrofit projects - to large corporate energy users, with these
services underpinned by our industry-leading energy monitoring and
analytics software platform. This unique proposition and capability
provides ongoing market opportunities for growth and ancillary
benefits through provision of complementary metering and data
services which deliver recurring index-linked revenue.
Business summary
We continue to deliver on our growth plan predicated on the
financial, engineering and IT infrastructure platform strategically
put in place in recent years. Whilst we are carefully managing the
transition to the mass SMETS2 rollout, we remain confident in the
business outlook for the remainder of 2018 and the real
opportunities to drive growth which we are delivering from the
smart rollout through to 2020 and beyond.
Chief Financial Officer's review
Results for the period
The period ended 30 June 2018 saw our growth profile continue,
with revenue increasing by 27% to GBP46.7m (H1 2017: GBP36.8m), our
EBITDA on a statutory basis increasing by 29% to GBP23.4m (H1 2017:
GBP18.1m) and our profit before tax increasing by 9% to GBP10.1m
(H1 2017: GBP9.3m). As we build momentum in the domestic smart
meter rollout, we have continued to invest in our business with our
meter asset and data portfolio increasing to 2.5 million meters (H1
2017: 1.68 million). We implemented our medium-term financing
strategy in November 2017, raising GBP150m of equity and extending
our GBP280m revolving credit facility with our existing syndicate
of five banks to deliver the flexible capital necessary to fund the
growth in meter assets, and take full advantage of the current
smart meter rollout opportunity. The first six months of 2018 have
seen us deploy record levels of capital in our portfolio with a 60%
increase in investment in the period to GBP78.3m (H1 2017:
GBP48.9m), the vast majority of which is in assets which are
immediately revenue generating.
Annualised recurring revenue
Annualised recurring revenue as at 30 June 2018 grew by 43% to
GBP69.3m (H1 2017: GBP48.4m). Our gas meter recurring revenue
increased by 21% to GBP40.9m and gas data recurring revenue
increased by 10% to GBP3.1m, while, our electricity meter recurring
revenue increased by 182% to GBP17.2m and electricity data
recurring revenue increased by 41% to GBP8.1m. The significant rise
in percentage terms in electricity meter rental is predominantly
driven by the domestic smart meter rollout, demonstrating the
successful implementation of SMS's strategy of growing its asset
base and driving recurring revenue.
Financial performance
Asset Management revenue grew 43% to GBP31.6m (H1 2017:
GBP22.1m) largely due to the continued transition into the Domestic
Smart market with our portfolio increasing by 267,000 to a total of
690,000 domestic smart meters. Energy Management revenue has
increased by 84% to GBP3.0m (H1 2017: GBP1.6m) due primarily to
commencing a nationwide energy efficient lighting project. Asset
Installation revenue has decreased 7% to GBP12.1m (H1 2017:
GBP13.1m) due to legacy installation-only contract work from the
acquisition of Trojan Utilities Limited ending, and a decreasing
portfolio of domestic traditional meters requiring transactional
works. The continuation of legacy installation-only type works is
being phased out as part of a wider strategic decision to allocate
our internal engineering resource to fit our own portfolio of smart
meters.
Overall, Group profit margins have decreased by 3% to 48% (H1
2017: 51%), the underlying cash margin in the Asset Management
division, excluding depreciation, has increased from 87.5% to 89%.
Across the other two divisions, the Asset Installation division has
seen a margin reduction of 10% to 26%, largely driven by the
decline of more profitable domestic transactional work and one-off
productivity losses due to the extreme bad weather seen in March.
The margin reduction in Energy Management has arisen following the
successful tender and commencement of a large-scale energy
efficient lighting contract, which will span several reporting
periods. Whilst driving significant growth in overall revenue it
delivers a lower gross margin. The reduction in margin is expected
to carry through to the end of the year and beyond as this becomes
a greater proportion of the overall turnover of the division.
To support the ongoing significant growth of the business we
have continued to invest in our people across all areas from our
engineering workforce and the related operational support
infrastructure to our central functions. Our ability to deploy our
own engineering workforce in the installation of meters is unique
to SMS amongst our key meter asset provider competitors and is a
core competitive advantage in our strategy of growing our asset
base. Development of our people is critical to the growth of the
business and this investment in our employees and their skill sets
will continue.
As a result of our continued meter deployment, we have seen a
net increase of GBP0.4m in our borrowing costs in the period to
GBP2.2m as we further utilise our revolving credit facility to fund
this investment, albeit this is partially offset by deleveraging
the business utilising the equity placement proceeds.
Pre-exceptional EBITDA has increased by 26% to GBP23.6m
(restated H1 2017: GBP18.7m) and underlying profit before tax has
increased by 5% to GBP11.4m (restated H1 2017: GBP10.9m).
Exceptional costs have been incurred in both the current and prior
year. Exceptional costs predominantly relate to the costs
associated with reorganisation within the installation business as
we transferred the operational oversight and control of the
domestic smart function within our subsidiaries to deliver the cost
synergies within those businesses.
Our inventory has grown from our year-end position of GBP16.6m
to GBP18.9m at 30 June 2018 (H1 2017: GBP12.9m). This continued
level of investment in inventory is necessary to ensure we have a
sufficient holding in our supply chain for our installation
workforce and to manage an efficient meter rollout in delivering
our growth plan. We are carefully managing our inventory as the
market transitions to a mass SMETS2 rollout.
Financial resources
As at 30 June 2018, the Company had net debt of GBP103.3m (FY
2017: GBP36.5m; H1 2017: GBP122.0m) with a net debt to annualised
EBITDA ratio of 2.2 times. The Company's available cash and
unutilised debt facility stood at GBP176.6m at 30 June 2018. We
believe that our capital structure allows us the flexibility to
deliver on our strategy of increasing our asset portfolio through
investment and driving index-linked recurring revenue as a result.
We maintain the potential to increase our credit facilities to fund
up to 4.0m domestic smart meters.
Outlook
The results are pleasing for the half-year period, showing
record investment in revenue-generating assets, and an increased
profitability. Due to this increased investment in our meter
portfolio in H1 2018, we will see an increased depreciation charge
and interest cost in the full year to 31 December 2018.
The successful equity raise of GBP150m in November 2017 provided
immediate capacity to establish a smart meter portfolio of at least
2.5 million meters in the rollout period, in addition to the
existing metering and data assets which will drive an increase in
index-linked recurring revenue. The transition from the foundation
smart meter rollout phase to the mainstream rollout phase will now
commence in Q4 2018 and Q1 2019 as announced by the Department of
Business, Energy and Industrial Strategy (BEIS), and this will
potentially affect the timing of near-term deployment of meters. As
a business that always seeks to plan ahead and invest in growth, we
will continue our tactical investment in H2 2018 in operational
capacity to ensure we retain all momentum as a business during the
rollout and maximise the opportunity to obtain additional market
share of the meter portfolio in the UK.
Six months Six months
ended ended
30 June 30 June
2018 2017
Unaudited Unaudited Percentage
GBPm GBPm increase
---------------------------------- ---------- ---------- ----------
Revenue 46.7 36.8 27%
Annualised recurring revenue(1) 69.3 48.4 43%
Statutory profit from operations 12.3 11.1
Amortisation of intangibles 1.1 1.0
Depreciation 10.0 6.0
Statutory EBITDA 23.4 18.1 29%
Exceptional items 0.2 0.6
Pre-exceptional EBITDA 23.6 18.7 26%
Net interest (2.2) (1.8)
Depreciation (10.0) (6.0)
Underlying profit before taxation 11.4 10.9 5%
Exceptional items (0.2) (0.6)
Amortisation of intangibles (1.1) (1.0)
Statutory profit before taxation 10.1 9.3 9%
---------------------------------- ---------- ---------- ----------
1 Annualised recurring revenue refers to the revenue being
generated at a point in time. Revenue refers to revenue generated
by meter rental and data contracts.
Markets
We continue to roll out smart and advanced metering solutions to
I&C customers, with significant focus now also moving to the
"micro-business" segment. Such activity continues to provide
significant opportunity for recurring data and energy management
services. Indicative of this is the Company's recently launched
market forecast tool that demonstrates the projected increase in
energy costs for business users over the next ten years,
necessitating further focus on the visibility and reduction of
energy consumption that these particular services provide. The
extension of half-hourly settlement across the electricity
industry, starting with smaller I&C meter points, similarly
offers significant market opportunity for provision of our
accredited industry services, whilst also supporting energy
suppliers and customers in using the data enabled by such smart
solutions.
Domestic smart metering remains a clear focus for SMS. This
year, consumer interest in energy usage and costs has continued to
rise and this is particularly reflected in increases in the volume
of supplier switching across the market. In the six months to June
2018, 2.1 million retail gas consumers switched energy supplier
along with 2.6 million retail electricity consumers, with a
resultant net continuation in the trend for consumers moving to
small and medium energy suppliers. This is a trend that has indeed
accelerated in recent years as the competitive energy supply market
has developed. As a result, the Domestic market share is today
split at c.22% held by small and medium suppliers (an increase from
17% at the start of 2017) and c.78% by larger suppliers. We
continue to work with all suppliers as they target the government's
2020 completion date.
Whilst the market has seen a slight slowdown in the installation
of smart meters from the last quarter of 2017 (to 1.25 million in
Q2 2018), this is significantly attributable to the poor weather at
the start of the year as well as energy suppliers preparing for the
transition to SMETS2 meters. The end cut-off date for the
installation of foundation-stage SMETS1 has been delayed from 13
July 2018 to 5 December 2018 (subject to consultation), with
further transitions allowed for certain energy suppliers and market
segments (prepay). It is also important to note (as we highlighted
in responses to the BIG report) that, despite negative publicity
around SMETS1 meters' continued operation following supplier churn,
smart meters can in fact be shown to increase the customer
switching rate. According to OFGEM figures, 23% of customers with a
smart meter switched supplier in 2017 compared to 17% of those with
a traditional meter.
The government has also reaffirmed its commitment to SMETS1
meters being enrolled and adopted into the DCC to ensure full
interoperability and to remove the problems that some people with
first-generation smart meters have experienced when switching. This
is an area that SMS is currently directly involved in developing as
it continues to host a metering test lab for the DCC - the
organisation mandated to manage the UK's smart meter data and
communications system. Testing at the lab in Cardiff aims to ensure
that any original SMETS1 smart meters maintain full functionality
when adopted and enrolled into the new SMETS2 data network. It is
also important to note that any loss of functionality in the short
term can be addressed by the energy supplier, should they put in
place commercial arrangements to operate the meter in smart
mode.
We believe that smart meters provide consumers with the best
opportunity to reduce their energy consumption and save money as
they provide the ability to see energy usage and costs in real time
and enable two-way communication with the grid. As well as helping
consumers to make behavioural changes to reduce energy usage, this
also facilitates "real-time" automated responses to changing
demand, improved matching of energy supply to consumption, and
demand-side response schemes that allow consumers to control when
they use, store or export their energy. We are already seeing
energy suppliers introduce time-of-use tariffs which will be key to
enabling the full realisation of these benefits. Aimed at both
households and businesses, these smart meter-enabled tariffs look
to incentivise customers to use more energy during off-peak
periods, and less of it when supply is low or demand is high. They
do this by charging cheaper rates at certain times of night or day,
when demand is at its lowest, and higher rates at popular
times.
The benefits of this are twofold. Firstly, network operators can
better balance the grid by matching supply with demand, meaning
less power generation and network investment is required to support
the government's plans for the electrification of heat and
transport in the UK (potentially saving the country up to GBP40bn
by 2050), while additionally allowing for much better integration
of intermittent renewable sources. This ultimately leads to a
smarter, lower carbon and more efficient grid.
Secondly, customers are further empowered to lower their bills
through both behaviour change and automation of demand usage. This
helps consumers to further reduce energy usage, leading to a
decrease in peak consumption during the day.
SMS continues to lead the market and deliver the future of smart
energy. We do this by providing smart meter and grid infrastructure
programmes, as well as data-driven services which enable energy
suppliers and customers to obtain greater control over the
generation, use and storage of energy. We use finance, technology,
engineering skills and knowledge to provide these solutions for our
customers - delivering value to them, reducing carbon emissions and
generating long-term sustainable and recurring revenue streams.
Consolidated interim statement of comprehensive income
For the period ended 30 June 2018
Six months Six months Year
ended ended ended
30 June 30 June 31 December
2018 2017 2017
Unaudited Unaudited Audited
GBP'000 GBP'000 GBP'000
----------------------------------------------------------------------------- ---------- ---------- ------------
Revenue 46,741 36,842 79,593
Cost of sales (24,281) (17,869) (39,164)
----------------------------------------------------------------------------- ---------- ---------- ------------
Gross profit 22,460 18,973 40,429
Administrative expenses (11,274) (10,371) (21,270)
Other operating income 1,127 2,473 3,446
----------------------------------------------------------------------------- ---------- ---------- ------------
Profit from operations 12,313 11,075 22,605
----------------------------------------------------------------------------- ---------- ---------- ------------
Operating profit before exceptional items, other operating income and
amortisation of intangibles 12,500 10,206 22,825
Amortisation of intangibles (1,093) (1,048) (2,151)
Other operating income 1,127 2,473 3,446
Exceptional items (221) (556) (1,515)
----------------------------------------------------------------------------- ---------- ---------- ------------
Finance costs: exceptional - - (524)
Finance costs (2,332) (1,805) (4,137)
Finance income 143 - 21
----------------------------------------------------------------------------- ---------- ---------- ------------
Profit before taxation 10,124 9,270 17,965
Taxation (1,755) (1,603) (3,306)
----------------------------------------------------------------------------- ---------- ---------- ------------
Profit for the period attributable to equity holders 8,369 7,667 14,659
Other comprehensive income - - -
----------------------------------------------------------------------------- ---------- ---------- ------------
Total comprehensive income 8,369 7,667 14,659
----------------------------------------------------------------------------- ---------- ---------- ------------
The profit from operations arises from the Group's continuing
operations.
Earnings per share attributable to owners of the parent during
the period:
Six months Six months Year
ended ended ended
30 June 30 June 31 December
2018 2017 2017
Unaudited Unaudited Audited
----------------------------------- ---------- ---------- ------------
Basic earnings per share (pence) 7.45 8.59 16.17
Diluted earnings per share (pence) 7.37 8.45 15.98
----------------------------------- ---------- ---------- ------------
Consolidated interim statement of financial position
As at 30 June 2018
30 June 30 June 31 December
2018 2017 2017
Unaudited Unaudited Audited
GBP'000 GBP'000 GBP'000
------------------------------------------------------------------ ---------- ---------- -----------
Assets
Non-current assets
Intangible assets 15,094 13,999 13,870
Property, plant and equipment 335,297 199,808 265,346
Investments 74 118 118
Trade and other receivables 488 734 594
------------------------------------------------------------------ ---------- ---------- -----------
350,953 214,659 279,928
------------------------------------------------------------------ ---------- ---------- -----------
Current assets
Inventories 18,909 12,895 16,575
Trade and other receivables 27,073 20,451 25,282
Income tax recoverable 491 224 426
Cash and cash equivalents 46,844 7,816 150,600
------------------------------------------------------------------ ---------- ---------- -----------
93,317 41,386 192,883
------------------------------------------------------------------ ---------- ---------- -----------
Total assets 444,270 256,045 472,811
------------------------------------------------------------------ ---------- ---------- -----------
Liabilities
Current liabilities
Trade and other payables 49,881 42,656 48,182
Bank loans and overdrafts 16,987 17,012 23,197
Commitments under hire purchase agreements - 6 -
------------------------------------------------------------------ ---------- ---------- -----------
66,868 59,674 71,379
------------------------------------------------------------------ ---------- ---------- -----------
Non-current liabilities
Bank loans 133,196 112,807 163,887
Deferred tax liabilities 11,865 9,466 9,924
------------------------------------------------------------------ ---------- ---------- -----------
145,061 122,273 173,811
------------------------------------------------------------------ ---------- ---------- -----------
Total liabilities 211,929 181,947 245,190
------------------------------------------------------------------ ---------- ---------- -----------
Net assets 232,341 74,098 277,621
------------------------------------------------------------------ ---------- ---------- -----------
Equity
Share capital 1,125 900 1,124
Share premium 158,861 12,023 158,592
Other reserves 9,562 9,562 9,562
Treasury shares (761) (518) (697)
Retained earnings 63,554 52,131 59,040
------------------------------------------------------------------ ---------- ---------- -----------
Total equity attributable to equity holders of the parent company 232,341 74,098 227,621
------------------------------------------------------------------ ---------- ---------- -----------
Consolidated interim statement of changes in shareholders'
equity
For the period ended 30 June 2018
Share Share Other Treasury Retained
capital premium reserve shares earnings Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
----------------------------------------------------- -------- -------- -------- -------- --------- --------
As at 1 January 2017 892 10,861 8,447 (327) 46,543 66,416
Total comprehensive income for the period - - - - 7,667 7,667
Transactions with owners in their capacity as owners
Dividends (note 4) - - - - (2,452) (2,452)
Shares issued 8 1,162 1,115 - - 2,285
Shares held by Share Incentive Plan - - - (191) - (191)
Share options - - - - 352 352
Income tax effect of share options - - - - 21 21
----------------------------------------------------- -------- -------- -------- -------- --------- --------
As at 30 June 2017 900 12,023 9,562 (518) 52,131 74,098
Total comprehensive income for the period - - - - 6,992 6,992
Transactions with owners in their capacity as owners
Dividends (note 4) - - - - (1,576) (1,576)
Shares issued 224 146,569 - - - 146,793
Shares held by Share Incentive Plan - - - (179) 70 (109)
Share options - - - - 94 94
Income tax effect of share options - - - - 1,329 1,329
----------------------------------------------------- -------- -------- -------- -------- --------- --------
As at 31 December 2017 1,124 158,592 9,562 (697) 59,040 227,621
Adjustment on initial application of IFRS 9 - - - - (49) (49)
----------------------------------------------------- -------- -------- -------- -------- --------- --------
Restated retained earnings as at 1 January 2018 1,124 158,592 9,562 (697) 58,991 227,572
----------------------------------------------------- -------- -------- -------- -------- --------- --------
Total comprehensive income for the period - - - - 8,369 8,369
Transactions with owners in their capacity as owners
Dividends (note 4) - - - - (3,892) (3,892)
Shares issued 1 269 - - - 270
Shares held by Share Incentive Plan - - - (64) - (64)
Share options - - - - 271 271
Income tax effect of share options - - - - (185) (185)
----------------------------------------------------- -------- -------- -------- -------- --------- --------
As at 30 June 2018 1,125 158,861 9,562 (761) 63,554 232,341
----------------------------------------------------- -------- -------- -------- -------- --------- --------
Consolidated interim statement of cash flows
For the period ended 30 June 2018
Six months Six months Year
ended ended ended
30 June 30 June 31 December
2018 2017 2017
Unaudited Unaudited Audited
GBP'000 GBP'000 GBP'000
--------------------------------------------------------- ---------- ---------- ------------
Operating activities
Profit before taxation 10,124 9,270 17,965
Finance costs 2,332 1,805 4,661
Finance income (143) - (21)
Depreciation 9,999 6,015 14,061
Amortisation 1,093 1,048 2,151
Share-based payment expense 271 352 446
Impairment of investment 44 - -
Loss on disposal of property, plant and equipment 177 - -
Movement in inventories (2,334) (6,774) (10,454)
Movement in trade and other receivables (1,616) (4,659) (9,300)
Movement in trade and other payables 1,717 16,154 22,031
--------------------------------------------------------- ---------- ---------- ------------
Cash generated from operations 21,664 23,211 41,540
Taxation (64) (891) (1,008)
--------------------------------------------------------- ---------- ---------- ------------
Net cash generated from operations 21,600 22,320 40,532
--------------------------------------------------------- ---------- ---------- ------------
Investing activities
Payments to acquire property, plant and equipment (80,849) (48,968) (123,864)
Disposal of property, plant and equipment 722 1,700 3,335
Payment to acquire intangible assets (2,317) - (1,416)
Finance income 143 - 21
--------------------------------------------------------- ---------- ---------- ------------
Net cash used in investing activities (82,301) (47,268) (121,924)
--------------------------------------------------------- ---------- ---------- ------------
Financing activities
New borrowings 70,440 36,111 104,075
Borrowings repaid (107,458) (8,127) (19,167)
Hire purchase repayments - (22) (29)
Finance costs (2,351) (1,724) (4,521)
Net proceeds from share issue 270 1,170 147,963
Movement in Treasury shares (64) (191) (300)
Dividends paid (3,892) (2,452) (4,028)
--------------------------------------------------------- ---------- ---------- ------------
Net cash generated from financing activities (43,055) 24,765 223,993
--------------------------------------------------------- ---------- ---------- ------------
Net (decrease)/increase in cash and cash equivalents (103,756) (183) 142,601
Cash and cash equivalents at the beginning of the period 150,600 7,999 7,999
--------------------------------------------------------- ---------- ---------- ------------
Cash and cash equivalents at the end of the period 46,844 7,816 150,600
--------------------------------------------------------- ---------- ---------- ------------
Reconciliation of net cash flow to movement in net debt
For the period ended 30 June 2018
Six months Six months Year
ended ended ended
30 June 30 June 31 December
2018 2017 2017
Unaudited Unaudited Audited
GBP'000 GBP'000 GBP'000
------------------------------------------------------------ ---------- ---------- ------------
Net (decrease)/increase in cash and cash equivalents (103,756) (183) 142,601
Decrease/(increase) in net debt arising from cash movements 37,018 (27,482) (84,697)
Increase in net debt arising from non-cash movements (118) (162) (211)
------------------------------------------------------------ ---------- ---------- ------------
(Increase)/decrease in net debt in period (66,856) (27,827) 57,693
Net debt at beginning of period (36,483) (94,176) (94,176)
------------------------------------------------------------ ---------- ---------- ------------
Net debt at end of period (103,339) (122,003) (36,483)
------------------------------------------------------------ ---------- ---------- ------------
Notes to the interim report
For the period ended 30 June 2018
1 Basis of preparation and accounting policies
The Group's half-yearly financial report consolidates the
results of the Company and its subsidiary undertakings made up to
30 June 2018. The Company is a limited liability company
incorporated and domiciled in Scotland whose shares are quoted on
AIM, a market operated by the London Stock Exchange.
The financial information contained in this half-yearly
financial report does not constitute statutory accounts as defined
in section 434 of the Companies Act 2006. It does not therefore
include all the information and disclosures required in the annual
financial statements and should be read in conjunction with the
Group's annual financial statements for the year ended 31 December
2017.
The financial information for the six months ended 30 June 2018
is also unaudited.
The comparative information for the year ended 31 December 2017
has been extracted from the Group's published financial statements
for that year, which were prepared in accordance with International
Financial Reporting Standards (IFRSs) as endorsed by the European
Union and have been delivered to the Registrar of Companies. The
report of the auditor on these accounts was unqualified and did not
contain a statement under section 498(2) or (3) of the Companies
Act 2006.
The financial statements have been prepared on a going concern
basis, which the Directors believe is appropriate for the following
reason:
The Directors have prepared cash flow forecasts which show the
Group expects to meet its liabilities as they fall due for a period
in excess of twelve months from the date of approval of these
financial statements. Our forecasts show continued capital
investment which is funded from retained profits and external
finance, with strong support from our banking group, together with
the ability to raise additional capital from the equity market. At
30 June 2018, the Group had cash of GBP46.8m and available
facilities of GBP129.8m and continued to be cash generative through
trading operations.
Significant accounting policies
As required in AIM Rule 18, the interim financial information
for the six months ended 30 June 2018 is presented and prepared in
a form consistent with that which will be adopted in the annual
statutory financial statements for the year ended 31 December 2018
and having regard to the IFRS applicable to such annual
accounts.
New standards, interpretations and amendments adopted by the
Group
From 1 January 2018, the following standards and amendments are
effective in the Group's consolidated financial statements:
-- IFRS 9 Financial Instruments
-- IFRS 15 Revenue from Contracts with Customers
The impact of adoption of these standards and the key changes to
the accounting policies are disclosed below. The full revised
accounting policies applicable from 1 January 2018 will be provided
in the Group's consolidated financial statements for the year
ending 31 December 2018.
Other amendments to IFRSs that became effective for the period
beginning on 1 January 2018 did not have any impact on the Group's
accounting policies.
The accounting policies adopted in the preparation of the
interim condensed consolidated financial statements are consistent
with those followed in the preparation of the Group's annual
consolidated financial statements for the year ended 31 December
2017, except for the adoption of new standards effective as of 1
January 2018. The Group has not early adopted any other standard,
interpretation or amendment that has been issued but is not yet
effective.
Impact of adoption of IFRS 15 Revenue from Contracts with
Customers
The Group has adopted IFRS 15 Revenue from Contracts with
Customers from 1 January 2018. As disclosed in the financial
statements to 31 December 2017 a review was carried out in the year
to 31 December 2017 to assess the impact on transitioning to IFRS
15. IFRS 15 has had no impact on results previously reported and
accordingly there has been no restatement of the previously
reported results for the periods to 30 June 2017 and 31 December
2017 nor use of the modified retrospective method to adjust the
opening balance sheet at 1 January 2018.
Impact on IFRS 9 Financial Instruments
IFRS 9 replaces the provisions of IAS 39 Financial Instruments:
Recognition and Measurement that relate to the recognition,
classification and measurement of financial assets and financial
liabilities, derecognition of financial instruments, impairment of
financial assets and hedge accounting.
The adoption of IFRS 9 Financial Instruments from 1 January 2018
resulted in changes in accounting policies and adjustments to the
amounts recognised in the financial statements. The new accounting
policies are set out below.
IFRS 9 has been adopted without restating comparative
information.
The reclassifications and the adjustments arising from the new
impairment rules are recognised in the opening consolidated
statement of financial position on 1 January 2018.
Classification and measurement
On application of IFRS 9 on 1 January 2018 the Group has
assessed which business models apply to the financial assets held
by the Group and has classified its financial instruments into the
appropriate IFRS 9 categories.
Impairment of financial assets
The Group has three types of financial assets that are subject
to IFRS 9's new expected credit loss model:
-- trade receivables; and
-- debt investments carried at Fair Value through Other Comprehensive Income (FVOCI).
From 1 January 2018, the Group assesses on a forward-looking
basis the expected credit loss associated with its debt instruments
carried at amortised cost and FVOCI. The impairment methodology
applied depends on whether there has been a significant increase in
credit risk. For trade receivables, the Group applies the
simplified approach permitted by IFRS 9, which requires expected
lifetime losses to be recognised from initial recognition of the
receivables.
2 Segmental reporting
For management purposes, the Group is organised into three core
divisions, Asset Management, Asset Installation and Energy
Management, which form the basis of the Group's reportable
operating segments, and operating segments within those divisions
are combined on the basis of their similar long-term economic
characteristics and the similar nature of their products and
services, as follows:
Asset Management comprises management of gas and electricity
meters and ADM(TM) units within the UK.
Asset Installation comprises the installation of domestic and
I&C gas and electricity meters and infrastructure connections
throughout the UK, with internally generated installation costs
capitalised.
Energy Management comprises the provision of advice on energy
costs, consumption and control.
Management monitors the operating results of its divisions
separately for the purpose of making decisions about resource
allocation and performance assessment. The operating segments
disclosed in the financial statements are the same as those
reported to the Board. Segment performance is evaluated based on
revenue generation and gross profit.
At the most granular level of information presented to the Chief
Operating Decision Maker, Asset Management aggregates four
operating segments (gas meter rental, electricity meter rental, gas
data and electricity data) principally on the basis that they
derive from the same asset using similar processes for consistent
customers and are often provided together. Asset Installation
aggregates two operating segments (gas transactional and
electricity transactional) due to the consistent nature of the
services, customers and delivery processes.
The following segment information is presented in respect of the
Group's reportable segments together with additional balance sheet
information.
Asset Asset Energy Total
Management Installation Management Unallocated operations
30 June 2018 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
------------------------------------ ----------- ------------- ----------- ----------- -----------
Segment/Group revenue 31,642 12,107 2,992 - 46,741
Cost of sales (13,013) (8,924) (2,344) - (24,281)
------------------------------------ ----------- ------------- ----------- ----------- -----------
Segment profit - Group gross profit 18,629 3,183 648 - 22,460
Other operating costs - - - (8,370) (8,370)
Depreciation - (48) - (415) (463)
Amortisation (1,093) - - - (1,093)
Exceptional items - - - (221) (221)
------------------------------------ ----------- ------------- ----------- ----------- -----------
Profit from operations 17,536 3,135 648 (9,006) 12,313
Net finance costs (2,189) - - - (2,189)
------------------------------------ ----------- ------------- ----------- ----------- -----------
Profit before tax 15,347 3,135 648 (9,006) 10,124
Tax expense (1,755)
------------------------------------ ----------- ------------- ----------- ----------- -----------
Profit for the period 8,369
------------------------------------ ----------- ------------- ----------- ----------- -----------
Asset Asset Energy Total
Management Installation Management Unallocated operations
30 June 2017 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
------------------------------------ ----------- ------------- ----------- ----------- -----------
Segment/Group revenue 22,132 13,083 1,627 - 36,842
Cost of sales (8,442) (8,431) (996) - (17,869)
------------------------------------ ----------- ------------- ----------- ----------- -----------
Segment profit - Group gross profit 13,690 4,652 631 - 18,973
Other operating costs - - - (5,962) (5,962)
Depreciation - - - (332) (332)
Amortisation (1,048) - - - (1,048)
Exceptional items - - - (556) (556)
------------------------------------ ----------- ------------- ----------- ----------- -----------
Profit from operations 12,642 4,652 631 (6,850) 11,075
Net finance costs (1,805) - - - (1,805)
------------------------------------ ----------- ------------- ----------- ----------- -----------
Profit before tax 10,837 4,652 631 (6,850) 9,270
Tax expense (1,603)
------------------------------------ ----------- ------------- ----------- ----------- -----------
Profit for the period 7,667
------------------------------------ ----------- ------------- ----------- ----------- -----------
Asset Asset Energy Total
Management Installation Management Unallocated operations
31 December 2017 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
------------------------------------ ----------- ------------- ----------- ----------- -----------
Segment/Group revenue 48,655 27,517 3,421 - 79,593
Cost of sales (18,958) (17,970) (2,236) - (39,164)
------------------------------------ ----------- ------------- ----------- ----------- -----------
Segment profit - Group gross profit 29,697 9,547 1,185 - 40,429
Items not reported by segment
Other operating costs - - - (13,465) (13,465)
Depreciation - (24) - (669) (693)
Amortisation (2,151) - - - (2,151)
Exceptional items - - - (1,515) (1,515)
------------------------------------ ----------- ------------- ----------- ----------- -----------
Profit from operations 27,546 9,523 1,185 (15,649) 22,605
Net finance costs: exceptional - - - (524) (524)
Net finance costs: other (4,116) - - - (4,116)
------------------------------------ ----------- ------------- ----------- ----------- -----------
Profit before tax 23,430 9,523 1,185 (16,173) 17,965
Tax expense (3,306)
------------------------------------ ----------- ------------- ----------- ----------- -----------
Profit for the year 14,659
------------------------------------ ----------- ------------- ----------- ----------- -----------
All revenues and operations are based and generated in the UK.
Those assets and liabilities that are managed and reported on a
segmental basis are detailed below.
Asset Asset Energy Total
Management Installation Management Unallocated operations
30 June 2018 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
------------------------------ ----------- ------------- ----------- ----------- -----------
Assets by segment
Intangible assets 11,597 3,497 - - 15,094
Property, plant and equipment 329,838 309 - 5,150 335,297
Inventories 18,417 492 - - 18,909
------------------------------ ----------- ------------- ----------- ----------- -----------
359,852 4,298 - 5,150 369,300
Assets not by segment 74,970
------------------------------ ----------- ------------- ----------- ----------- -----------
Total assets 444,270
------------------------------ ----------- ------------- ----------- ----------- -----------
Liabilities by segment
Bank loans 150,183 - - - 150,183
------------------------------ ----------- ------------- ----------- ----------- -----------
Liabilities not by segment 61,746
------------------------------ ----------- ------------- ----------- ----------- -----------
Total liabilities 211,929
------------------------------ ----------- ------------- ----------- ----------- -----------
Asset Asset Energy Total
Management Installation Management Unallocated operations
30 June 2017 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
------------------------------------------- ----------- ------------- ----------- ----------- -----------
Assets by segment
Intangible assets 10,502 3,497 - - 13,999
Property, plant and equipment 196,879 115 - 2,914 199,908
Inventories 12,399 376 120 - 12,895
------------------------------------------- ----------- ------------- ----------- ----------- -----------
219,780 3,988 120 2,914 226,802
Assets not by segment 29,243
------------------------------------------- ----------- ------------- ----------- ----------- -----------
Total assets 256,045
------------------------------------------- ----------- ------------- ----------- ----------- -----------
Liabilities by segment
Bank loans 129,819 - - - 129,819
Commitments under hire purchase agreements - 6 - - 6
------------------------------------------- ----------- ------------- ----------- ----------- -----------
129,819 6 - - 129,825
Liabilities not by segment 52,122
------------------------------------------- ----------- ------------- ----------- ----------- -----------
Total liabilities 181,947
------------------------------------------- ----------- ------------- ----------- ----------- -----------
Asset Asset Energy Total
Management Installation Management Unallocated operations
31 December 2017 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
------------------------------ ----------- ------------- ----------- ----------- -----------
Assets reported by segment
Intangible assets 10,373 3,497 - - 13,870
Property, plant and equipment 261,992 251 - 3,103 265,346
Inventories 16,056 410 109 - 16,575
------------------------------ ----------- ------------- ----------- ----------- -----------
288,421 4,158 109 3,103 295,791
Assets not by segment 177,020
------------------------------ ----------- ------------- ----------- ----------- -----------
Total assets 472,811
------------------------------ ----------- ------------- ----------- ----------- -----------
Liabilities by segment
Bank loans 187,084 - - - 187,084
------------------------------ ----------- ------------- ----------- ----------- -----------
Liabilities not by segment 58,106
------------------------------ ----------- ------------- ----------- ----------- -----------
Total liabilities 245,190
------------------------------ ----------- ------------- ----------- ----------- -----------
3 Earnings per share (EPS)
The calculation of EPS is based on the following data and number
of shares:
Six months Six months Year
ended ended ended
30 June 30 June 31 December
2018 2017 2017
Unaudited Unaudited Audited
GBP'000 GBP'000 GBP'000
--------------------------------------------------------------------------- ----------- ---------- ------------
Profit for the period used for calculation of basic EPS 8,369 7,667 14,659
Amortisation of intangible assets 1,093 1,048 2,151
Exceptional costs 221 556 2,039
Tax effect of adjustments (242) (425) (780)
--------------------------------------------------------------------------- ----------- ---------- ------------
Earnings for the purpose of adjusted EPS 9,441 8,846 18,069
--------------------------------------------------------------------------- ----------- ---------- ------------
Number of shares
Weighted average number of shares for the purpose of calculating basic EPS 112,353,015 89,209,169 90,655,868
Effect of potentially dilutive ordinary shares (restated)
Share options 1,191,376 1,505,450 1,127,750
--------------------------------------------------------------------------- ----------- ---------- ------------
Weighted average number of ordinary shares for the purpose of diluted EPS 113,544,391 90,714,619 91,783,618
--------------------------------------------------------------------------- ----------- ---------- ------------
EPS
Basic (pence) 7.45 8.59 16.17
Diluted (pence) 7.37 8.45 15.97
Adjusted EPS
Basic (pence) 8.40 9.92 19.93
Diluted (pence) 8.32 9.75 19.69
--------------------------------------------------------------------------- ----------- ---------- ------------
The Directors consider that the adjusted EPS calculation gives a
better understanding of the Group's EPS as the adjusted earnings
basis better reflects the Group's underlying sustainable business
performance.
The June 2017 EPS figures have been restated to reflect the
Board's decision to change the presentation of the underlying
performance measures to include other operating income.
4 Dividend
Six months Six months Six months Six months Year Year
ended ended ended ended ended ended
30 June 30 June 30 June 30 June 31 December 31 December
2018 2018 2017 2017 2017 2017
Unaudited Per share Unaudited Per share Audited Per share
GBP'000 (pence) GBP'000 (pence) GBP'000 (pence)
---------------------- ---------- ---------- ---------- ---------- ------------ ------------
Paid final dividend 3,892 3.46 2,452 2.73 2,452 2.73
Paid interim dividend - - - - 1,576 1.74
---------------------- ---------- ---------- ---------- ---------- ------------ ------------
Total dividends 3,892 3.46 2,452 2.73 4,028 4.47
---------------------- ---------- ---------- ---------- ---------- ------------ ------------
After 30 June the Directors have approved an interim dividend of
2.00p per share for 2018, which has not been accrued as a liability
as at 30 June 2018 in accordance with IAS 8. The dividend will be
paid on 23 November 2018 with an ex-dividend date of 25 October
2018 and a record date of 26 October 2018.
5 The half-yearly financial report was approved by the Board of Directors on 11 September 2018.
6 A copy of this half-yearly financial report is available from
the Company's registered office or by visiting our website at
www.sms-plc.com.
This information is provided by RNS, the news service of the
London Stock Exchange. RNS is approved by the Financial Conduct
Authority to act as a Primary Information Provider in the United
Kingdom. Terms and conditions relating to the use and distribution
of this information may apply. For further information, please
contact rns@lseg.com or visit www.rns.com.
END
IR DMGMLKRKGRZG
(END) Dow Jones Newswires
September 18, 2018 02:01 ET (06:01 GMT)
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