Smart Metering Systems hikes dividend after strong 2021

Smart Metering Systems reported a “strong” 2021 result on Tuesday, with its index-linked annualised recurring revenue (ILARR) up 12% year-on-year as at 31 December, at £85.9m.

The AIM-traded company said its statutory group revenue for the year totalled £108.48m, up from £102.98m in 2020.

Pre-exceptional EBITDA rose 6% to £52.8m, with like-for-like growth coming in at 17%, while underlying profit before tax was “marginally ahead” of the firm’s upgraded expectations, rising 20% to £18.3m, or 58% on a like-for-like basis.

The board said the acquired industrial and commercial meter portfolio and data service contracts were adding an initial £3.1m to ILARR, as it also noted the completed £175m equity raise in October, and its refinanced and increased debt facility of £420m.

SMS said its net cash totalled £117.7m at year-end on 31 December, up from £40.2m at the close of 2020.

The company declared a dividend of 27.5p per share for the year, up 10% on 2020’s distribution, in line with its policy.

It said that was covered by its long-term index-linked cash flows from its existing metering and data asset base.

“Throughout 2021, SMS has demonstrated the strength of its business model, delivering profit ahead of upgraded expectations, growth in index-linked annualised recurring revenue and concluding the year with a strong cash position,” said chief executive officer Tim Mortlock.

“Given Covid-19 related operational challenges and recent turbulence in the UK energy market, these are impressive results.

“Our contracted smart meter order pipeline remains solid and now more favourably weighted to larger, well-financed independent energy suppliers, and supported by the extension to our exclusivity agreement with Shell Energy Retail.”

Mortlock said the company expected its installation rate to progressively increase throughout the coming year.

“We made excellent progress in the development of our grid-scale battery storage assets.

“The pipeline increased significantly to 620MW, and we finished the year with energising our first 50MW battery site at Burwell - ahead of programme and on budget.”

With construction of the firm’s wider secured pipeline progressing, and its second 40MW site expected to be operational by mid-2022, Tim Mortlock said SMS would soon be able to “demonstrate the attractiveness” of its underlying revenue streams, and their importance as critical energy infrastructure.

“Looking ahead, the year has started well, and we are confident with our previously guided expectations for 2022.

“Our strong balance sheet and a resilient, growing smart meter and grid-scale battery pipeline make SMS well-positioned for further growth.”

At 0936 GMT, shares in Smart Metering Systems were down 1.94% at 706p.