Smart Metering Systems reports strong growth in key areas

25th Jul 2023 10:46

(Sharecast News) - Energy infrastructure company Smart Metering Systems reported strong growth in key areas in a first-half trading update on Tuesday.

The AIM-traded firm reported a significant increase in index-linked annualised recurring revenue (ILARR), growth in its smart meter portfolio, and notable progress in grid-scale battery storage assets.

It said ILARR reached £110m in the first half - up 13.3% year-on-year - while its smart meter portfolio expanded to about 2.3 million, rising from 2.1 million meters at the close of 2022.

Additionally, the company said it had contracted smart meter order pipeline of approximately 1.95 million orders.

In terms of grid-scale battery storage assets, Smart Metering Systems reported considerable progress, with its total portfolio of grid-scale battery storage assets growing to 860MW by the end of the first half, up from 760MW at the end of 2022.

Among the current portfolio, 140MW was operational, performing within the board's expected range.

Additionally, the group said it had fully secured 470MW of grid-scale battery storage assets, with an additional 150MW expected to become operational in the second half of this year.

A further 250MW was currently under exclusivity, indicating potential future growth in the area.

Smart Metering Systems said it also remained committed to building delivery capability, enhancing commercial models, and expanding pipelines for developing CaRe assets.

The group said its capital allocation strategy was showing promising results, reporting that as of 30 June, net debt stood at £96.3m.

It said its current pipelines could be fully funded from internal cash generation and debt facilities, providing it with a solid financial position to support future endeavours.

The board also described a promising outlook, anticipating underlying EBITDA and profit before tax for the full year to align with expectations.

Smart Metering said it was aiming to offer an expected dividend of 33.275p per share for the full year, representing a 10% year-on-year increase in line with the stated policy.

"We have delivered another strong operational and financial performance during the first half of 2023, a testament to the resilient nature of our business model which is underpinned by our index-linked recurring revenues," said chief executive officer Tim Mortlock.

"Our existing pipeline of meter and grid-scale battery assets is expected to more than double the group's EBITDA in four years compared to 2022, with significant additional growth opportunities in existing and developing CaRe assets."

At 1022 BST, shares in Smart Metering Systems were down 0.13% at 691.1p.

Reporting by Josh White for Sharecast.com.