A Scottish company that installs smart meters for energy firms has hailed “the resilient nature” of its business model.
Glasgow-based Smart Metering Smart Metering Systems, the integrated energy infrastructure company owning and managing meters, energy data, grid-scale batteries and other carbon reduction (CaRe) assets, pointed to its model being underpinned by its index-linked recurring revenues as it provided a trading update for the six months to June 30.
It said its Index-linked Annualised Recurring Revenue (ILARR) grew 13.3% to £110 million, set against £97.1m at December 31, 2022.
READ MORE: Smart meter firm flags hike in profits
Its smart meter portfolio increased to around 2.3 million, compared to 2.1 million in December, while its contracted smart meter order pipeline of about 1.95 million was down from 2.17 million at the end of 2022.
In its grid-scale battery storage assets, the total portfolio increased to 860 megawatts (MW), against 760MW in December, with 140MW operational and performing within the board's expected range, 470MW fully secured, with 150MW expected to be operational in this year and 250MW under exclusivity.
READ MORE: Glasgow smart meter firm sees profits rise 92 per cent
The company said it continues to “build delivery capability, commercial models and pipelines in developing CaRe assets”.
SMS also reported net debt of £96.3m at June 30, and that current pipelines can be fully funded from internal cash generation and debt facilities.
It may also consider selective asset recycling to “maintain a prudent level of gearing and to support future growth”, with the full year’s results expected to be in line with the board’s expectations.
READ MORE: Glasgow company to raise £175m of equity
It also said index-linked revenues provide a hedge against short-term interest rates while “significantly benefiting long-term cash flows” and the expected full year 2023 dividend of 33.275 pence per share, is up 10% year on year.
Tim Mortlock, chief executive of SMS said: “We have delivered another strong operational and financial performance during first half 2023, a testament to the resilient nature of our business model which is underpinned by our index-linked recurring revenues.
“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 full year 2022, with significant additional growth opportunities in existing and developing CaRe assets."
Shares in SMS rose 7p, or 1.01%, at 699p.
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