Shares of Glasgow-based Smart Metering Systems (SMS) rose about 2% on Tuesday after it published “resilient” 2020 results that included an “attractive dividend policy.”
SMS is proposing a 2020 full-year 25p per share dividend, up from 6.88p in 2019.
“As announced at the half-year results on 15 September 2020, the board intends to grow this dividend annually, with a 10% annual increase planned for each of the financial years FY 2021, FY 2022, FY 2023 and FY 2024,” said Smart Metering.
“SMS thus intends to pay a 27.5p per share dividend in respect of FY 2021 …
“The group will maintain prudent leverage and has announced an enhanced and sustainable dividend, which it aims to increase by 10% each year through to 2024.”
Smart Metering said its favored measure of index-linked annualised recurring revenue (ILARR) for 2020 rose 6% to £77 million and underlying profit before taxation slipped 2% year-on-year to £15.2 million.
“The group has delivered a strong, resilient financial performance in the year, repaid £270m of debt, strengthened its balance sheet to a cash-positive position, and established an attractive dividend policy underpinned by the existing asset base,” added the company.
SMS shares have risen more than 30% over the past 12 months to give it a current stock market value of around £850 million.
Smart Metering Systems CEO Alan Foy said: “2020 has been a transformational year for SMS, from which we have emerged a stronger, leaner organisation with a reinforced commitment to our customers, the environment and our people.
“We have delivered financial results ahead of market expectations in an unprecedented year, demonstrating the strength of our business model.
“Since the end of the year we have won new meter contracts, secured rights to an additional 100MW of grid-scale battery storage projects and purchased an I&C portfolio that will benefit from our end-to-end industry systems.
“These achievements are testament to SMS’s ability to leverage its well-established platform and infrastructure, and to support continuing growth, with significant additional opportunities in CaRe assets.
“The COVID-19 pandemic has accelerated the urgency to decarbonise, decentralise and digitalise the UK’s energy systems.
“For over 25 years SMS has played a pivotal role in UK energy and is now well positioned to transform the economy towards net zero.
“SMS itself has committed to achieving ‘net-zero’ carbon emissions by 2030, two decades ahead of the UK’s own ‘net-zero’ target.”