Smart Metering Systems on track after first half

Smart Metering Systems said in a trading update on Wednesday that revenue and underlying profit in its first half was in line with its expectations.

The AIM-traded firm said index-linked annual recurring revenue (ILARR) grew 9.3% to £84.2m in the six months ended 30 June, while total meter and data assets increased to four million at period end, from 3.8 million at the end of December.

Its domestic smart meter portfolio increased by 146,000 to 1.5 million, and its contracted smart meter pipeline saw a net increase to 2.35 million, from two million as at the end of 2020.

Smart Metering reported a “strong recovery” in smart meter installation rates, with more than 30,000 meters installed in June, making for a 20% increase on its pre-Covid-19 run rate.

Its grid-scale battery pipeline stood at 470MW, after the company acquired an additional 100MW taking the total to 190MW, of which 90MW was under construction and 100MW would begin construction by the fourth quarter of 2021.

The remaining 280MW was under exclusivity, the board said.

Looking at the rest of the year, Smart Metering said its underlying profitability for 2021 remained in line with the board's expectations.

It said its smart meter installation run rates were expected to continue to strengthen, with the board saying it was expecting a full-year dividend of 27.5p per share, up 10% over the prior year and in line with its stated policy.

Smart Metering said it would continue to make progress in expanding the contracted smart meter order pipeline, grid-scale battery pipeline and development of wider CaRe products and services.

It added that grid-scale battery projects would continue to be built in line with its cost and construction programme expectations.

“The group's performance remains strong, further demonstrating the resilience of our business, the defensive nature of the metering infrastructure asset class and the index linked sustainable cash flows it generates,” said chief executive officer Alan Foy.

“Our fully integrated and scalable technology platform ‘METIS’ is at the heart of digitally enabling and integrating our CaRe assets and energy data solutions and provides us with a great platform for growth.

“Once installed, we estimate our existing meter and battery pipelines will add a combined £70m to the group's £50m of EBITDA in 2020.”

Foy said its metering, data and battery CaRe products allowed the company to access an addressable market opportunity of £1.2bn EBITDA, alongside the “significant additional potential” provided by its developing CaRe products.

“We remain committed to our people, customers and the communities we serve and are proud of the role SMS plays in helping to deliver a net zero economy.”

Smart Metering Systems said it would publish its first half results on 14 September.

At 1109 BST, shares in Smart Metering Systems were up 2.07% at 908.43p.