GLASGOW-based Smart Metering Systems (SMS) has underlined how much money firms are making in the sector it operates in amid the energy crisis.

SMS said it expected to report profits materially ahead of expectations for 2022 after enjoying a surge in revenue during the year.

The news comes amid controversy over recent moves by National Grid to grant discounts to householders that have smart meters, if they cut their energy use at peak periods.

Consumers have been left facing huge increases in their annual energy bills following the spike in wholesale gas prices fuelled by Russia’s war on Ukraine.

The latest official figures show only around half of the meters in homes and small businesses are smart or advanced reflecting low take-up rates that have persisted for years.

The smart meter drive was launched by the Conservative Liberal Democrat coalition government, in the belief that it could play a big part in the drive to boost energy efficiency and to reduce emissions.

Energy firms rely on specialists such as SMS to supply and fit smart meters and the costs are added to their customers’ bills.

SMS has become a company with £1.1 billion stock market valuation after spotting the potential of the drive, under which around 30 million smart meters have been fitted in Great Britain so far.

In an update on trading issued yesterday, SMS said the number of smart meters in its portfolio increased by 400,000 last year, to 2,100,000.

The increase helped the company to grow recurring revenues by 13.1 per cent, to £97.1m, from £85.9m, and powered strong growth in profits.

The company said its expected to achieve underlying profits before tax materially ahead of its previous expectations.

The consensus of analysts’ forecasts is for SMS to report £24.5m underlying pre-tax profits for 2022. The company made £18.3m on that measure in the preceding year.

Chief executive Tim Mortlock said yesterday that SMS was well placed to maintain a strong growth rate as he underlined the appeal of a business that involves supplying meters on long-term contracts. The company also provides technology that can be used to analyse the data the meters collect.

Mr Mortlock said: “Our business can deliver significant value in the years ahead, with our inflation-linked recurring revenues from our existing meter and data assets providing considerable protection against macro-economic shocks.”

SMS had an order pipeline of 2.2m meters at the end of 2022.

Signalling confidence in its prospects, SMS said it expected to increase its full year dividend for 2022 by 10%, to 30.25p per share.

The smart meter sector has generated strong interest among investors. In 2020 SMS struck a £291m deal to sell 187,000 of its meters to funds ran by the Equitix private equity firm.

SMS has also diversified into markets such as the operation of large-scale batteries.

The group has around 1,400 employees, including 210 in Scotland.

Shares in SMS closed up six per cent, 48p, at 888p. Analyst Joe Brent at the Liberum brokerage kept a buy recommendation on SMS shares with a target price of 1185p.

Official statistics show 54% of meters in homes and small businesses were smart or advanced at September 30, Many of the meters concerned were operating in traditional mode.

In December the Government extended the powers enjoyed by ministers in respect of the smart meter programme by five years, to 2028.