17th Sep 2019 08:58
(Alliance News) - Smart Metering Systems PLC said Tuesday it swung to a loss in the first half of 2019 on higher costs and depreciation, despite double-digit revenue growth.
The gas and electricity smart meter installer also said it has promoted Tim Mortlock, managing director of the group's Meters Assets & Energy Services division, to the newly created role of chief operating officer.
Mortlock has been in his current role at Smart Metering Systems for three years since 2016.
Shares in Smart Metering Systems were 10% lower at 389.76 pence on Tuesday.
For the six months to the end of June, Smart Metering Systems reported a pretax loss of GBP1.7 million, compared to a profit of GBP10.1 million the year before.
The swing to loss was due to an increased depreciation charge of GBP17.2 million, up from GBP10.0 million a year before, relating to meter assets within the traditional domestic meter portfolio.
There also was an exceptional cost of GBP5.2 million relating to losses on the removal of traditional meters and a proportion of first-generation smart meters, due to a "temporary industry transition period", the company said.
On an underlying basis, pretax loss still dropped by 60% to GBP4.6 million from GBP11.4 million.
More positively, revenue grew by 16% to GBP54.2 million for the period from GBP46.7 million the prior year.
Long term index-linked recurring revenue - the group's key financial metric - increased by 14% to GBP85.9 million as at the end of June, from GBP75.3 million as at December 31, buoyed by new contract wins,.
As at June 30, Smart Metering Systems' total number of metering and data assets under management increased by 11% to 3.5 million from 3.1 million at the end of December.
Smart Metering Systems declared an interim dividend of 2.30 pence per share, up 15% from 2.00p the year before.
Looking ahead, Smart Metering Systems has an order book of 2.0 million domestic smart meters, representing a GBP40 million lift in index-linked recurring revenue.
However, while the group expects revenue for 2019 to be ahead of market expectations, underlying earnings before interest, taxes, deprecation and amortisation is set to come below expectations, due to added engineering costs.
"We have continued to grow our annualised recurring revenue, our key financial metric, ahead of expectations and now have over 3.5 million metering and data assets under management of which over 1 million are smart," said Chief Executive Alan Foy.
"The widely reported industry-wide installation issues are now substantially addressed and the mass rollout of SMETS2 can now commence - this is expected to result in a pick up in the installation run-rate both in the latter part of 2019 and into 2020," Foy added.
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