Smart Metering Systems reports 'strong' first half

13th Sep 2022 11:26

(Sharecast News) - Smart Metering Systems reported a "strong" first half performance on Tuesday, with index-linked annualised recurring revenue rising 8% over the end of 2021 to £93.1m, which was also ahead 11% year-on-year.

The AIM-traded firm said revenue for the six months ended 30 June rose 21% year-on-year to £62.7m, while pre-exceptional EBITDA advanced 11% to £29.1m.

Its underlying profit before tax gained 7% to £10.3m.

Net cash at period end on 30 June totalled £38.6m, compared to £5.6m a year ago, while its debt facility of £420m was fully undrawn.

Looking ahead, the company's board said it expected 2022 pre-exceptional EBITDA and underlying profit before tax to be in line with the upgraded guidance it gave on 27 July.

It added that it was looking for 10% growth in the dividend to 30.25p per share for the full year, in line with its policy in place until 2024.

The board also said it was "confident" in the group's growth prospects for the 2023 financial year, as it expected the increase in smart meter installation run rates to continue, while its forward view on grid-scale battery returns had improved.

SMS said the "prevailing inflationary environment" was expected to have a net positive impact on its forecasts due to our index-linked contracts, and as a result, it expected that pre-exceptional EBITDA for 2023 would be "marginally ahead" of its previous expectations and, despite the impact of higher interest rates, underlying profit before tax would be in line with its previous expectations.

"The strong half-year results again demonstrate the resilience of our business model, which is underpinned by our index-linked recurring cash flows from meter and data assets, and reflect the strong performance of our first grid-scale battery storage project," said chief executive officer Tim Mortlock.

"We have made significant progress in executing the strategy set out last autumn.

"We are pleased to see continued acceleration in our meter installation run rates, an increase in our smart meter portfolio and a new contract which adds to our smart meter order pipeline."

Mortlock said that, leveraging on its end-to-end platform, the firm had successfully built and started to deliver a "strong pipeline" of grid-scale battery storage projects within a short period of time, with "significant" additional opportunities from the "substantial and growing" market.

"Our two recent strategic investments in electric vehicle charging infrastructure and energy data are complementary to our existing end-to-end business model and enhance our ability to accelerate other carbon reduction products and services, providing opportunities for further growth over the long-term.

"The global energy market is in a period of extreme turbulence and there is a fundamental need for the carbon reduction assets we originate and own.

"These assets enable the transition to a low carbon, flexible, secure and, of particular importance at this time to all businesses and consumers, low-cost energy system."

At 1110 BST, shares in Smart Metering Systems were up 0.11% at 902p.

Reporting by Josh White at Sharecast.com.