GLASGOW-based Smart Metering Systems has said it is on course to achieve underlying profits in line with expectations and reiterated plans to increase dividend payouts amid challenging sector conditions.

The news from the company, which manages smart meters for energy firms, underlines the commercial appeal of the market it operates in.

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Smart Metering Systems temporarily stopped non-essential field work including installations from March 24, following the imposition of the Covid-19 coronavirus lockdown.

However, it told investors yesterday: “Despite the temporary cessation of meter installations … the Group currently expects underlying profitability for the year to 31 December 2020 to be in line with the Board’s earlier expectations.”

The company said the success reflected the resilience of its business model.

For example, it noted that capital expenditure on smart meters has been lower than expected following the drop in installations.

With around £350 million funding in place, SMS expects to be able to fulfil its two million meter installation order book while potentially taking on additional opportunities.

READ MORE: Smart Metering Systems in £291m deal with private equity investor

The company said it plans to implement the revised dividend policy it announced before the lockdown was imposed, noting that payouts are well covered by existing long-term and recurring cash flow generation.

It will pay dividends totalling 25p per share for the current financial year, up from 6.88p per share in 2019. Payments are expected to increase in line with retail price index inflation in the following four years.

The company announced the plan to increase dividends soon after it sold a portfolio of meters to the Equitix private equity house in a £291 million deal that reflected the scale of investor interest in the specialist sector SMS operates in.

The UK Government believes the use of smart meters can support the drive to reduce carbon emissions while helping users to cut their bills. However, its plans for them to be rolled out have sparked controversy.

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Energy firms were originally required to supply smart meters for all their domestic and small business customers by the end of 2020.

After the take up rate proved to be lower than expected, the deadline was extended to 2024.

Last week the Government extended the smart meter rollout deadline by a further six months taking into account delays resulting from Covid-19.