SMS Management & Technology Limited (ASX: SMX) has seen its share price jump more than 14% to above $4.00, after posting a 48% increase in net profit for the six months to December.
An IT consulting, solutions and managed IT services company, SMS reported a net profit of $8.6 million for the half year, as revenues surged 15%. The company operates 2 main divisions, with SMS Consulting generating the lion's share of revenues, with M&T Resources around 24%.
Here's a summary of the results:-
- Revenues up 15% to $176.4 million
- Reported net profit up 48% to $8.6 million
- Earnings per share also up 48% to 12.3 cents
- Fully franked dividend of 7 cents per share, up from 5 cents last year
New contracts signed during the six month period to December 2014 totalled $212 million, up 21% and the company says consultant utilisation improved to 84%.
SMS Consulting saw $134.3 million in revenues and increased its earnings margin from 12.78% last financial year to 13.6% this year. The M&T Resources division generated $42.1 million in revenues for an earnings margin of 5.7%.
The company's Indicium acquisition in 2013 appears to be a good purchase, with new client wins and expected to outperform its earn-out target.
What is disappointing was SMS's Operating cash flow – which came in at a negative $0.3 million – the same as last year – although the company says $7 million of expected customer receipts were not collected until the week following cut-off.
SMS says it continues to focus on high demand areas such as mobile solutions and cloud services. That suggests the company is in for a good 2015 financial year. Trading on a P/E ratio of around 14.4 times earnings and paying an expected dividend yield of 3.4%, SMS looks to be around fair value.
