28 January 2022
Smart Metering Systems plc
Trading update
Smart Metering Systems plc (AIM: "SMS", the "Group"), a fully integrated energy infrastructure company owning and managing meter assets, energy data, grid-scale battery storage and other carbon reduction ("CaRe") assets is pleased to provide a trading update for the year ended 31 December 2021 ("FY 2021").
The Group will announce its audited results for FY 2021 on 15 March 2022.
Highlights
· Index-linked annual recurring revenue ("ILARR") grew 11.6% to £85.9m (31 December 2020: £77.0m)
· Total meter and data assets increased to 4.2m (31 December 2020: 3.8m)
o Domestic smart meter portfolio increased to 1.7m (31 December 2020: 1.3m)
o Smart meter order pipeline increased to c.2.55m(1) (31 December 2020: c.2.0m), net of smart meter installations in 2021
· Grid-scale battery pipeline increased to 620MW (31 December 2020: 267MW(2))
o Fully secured pipeline of 290MW (31 December 2020: 117MW)
o First 50MW site is now operational
· FY 2021 underlying PBT is expected to be marginally ahead of consensus, after being upgraded in September 2021
· Strong net cash position of £118m as at 31 December 2021 reflects internal cash generation and the net proceeds of the Group's £175m equity placing to finance future growth
· Board remains confident of the consensus expectations for the current financial year ("FY 2022")
· Expected FY 2022 dividend of 30.25 pence per share, +10% y-o-y and in line with stated policy
Index-linked annual recurring revenue
Total meter and data asset ILARR growth of 11.6% to £85.9m driven by:
| Category | % change | ILARR | Details |
| Domestic smart meters | +17.6% | £50.1m | 1.7 million smart meters |
| Data assets | +18.8% | £13.9m | Includes £2.0m data service contracts acquired as part of I&C Half Hourly (HH) meter portfolio acquisition |
| I&C meters | +53.3% | £4.6m | Includes £1.1m from I&C HH meter portfolio acquisition |
| Traditional domestic meters | -11.3% | £11.8m | Traditional meters to be exchanged for smart over the UK smart meter rollout programme |
| Third party assets | -14.1% | £5.5m | Industry appointment to third party owned meters |
Smart meter pipeline and installation run rate
With energy prices at record highs, the UK energy market has been experiencing considerable turbulence since the final quarter of 2021. This has resulted in the failure of a number of energy suppliers and the implementation of both the UK's Supplier of Last Resort ("SoLR") mechanism and Special Administration regime.
While the failure of some energy suppliers has resulted in movement in our customers' metering portfolios the net impact on the Group's pipeline has been negligible. We have also benefitted from a strengthening in our customer base as some portfolios have consolidated into larger SMS customers through the SoLR process. The Board remains comfortable with the level of previously guided contracted smart meter order pipeline, which as at 31 December 2021 stood at c.2.55m(1) (31 December 2020: c.2.0m).
In December 2021 the Group also announced a four-year extension to its exclusivity agreement and partnership with Shell Energy Retail Limited for the installation and funding of smart meters. The extended agreement runs until December 2025 and covers the UK's mandated smart meter rollout period.
The Group's installation run rate has averaged c.30,000 meters per month since June 2021; a strong recovery following the disruption caused by COVID-19. The Group expects continued progressive improvement in this run rate in FY 2022 and thereafter.
Strong progress in establishing grid-scale battery storage pipeline
During 2021, SMS made considerable progress in further developing its pipeline of grid-scale battery storage assets. The total pipeline increased to 620MW as at 31 December 2021 compared to 267MW(2) at 31 December 2020. Of the total 620MW pipeline, 290MW has been fully secured with the remaining 330MW under exclusivity.
The Group is also pleased to report that the first 50MW battery site is now operational. Of the remaining 240MW secured pipeline, 140MW is currently under construction.
FY 2021 underlying PBT marginally ahead of consensus expectations
FY 2021 underlying PBT is expected to be marginally ahead of consensus, after being upgraded in September 2021. The Group's year-end cash position of £118m reflects internal cash generation and the net proceeds of the £175m equity placing to finance future growth.
Alan Foy, CEO, SMS commented:
"2021 was a year of substantial progress for SMS and we ended the year strongly, despite the broader turbulence in the UK energy market.
We delivered profit marginally ahead of upgraded expectations, saw good growth in our index-linked annualised recurring revenue and ended the year with a strong cash position.
Our contracted smart meter order pipeline has proved resilient despite the market turbulence in the final quarter of the year, and we remain comfortable with the level of previously guided contracted order pipeline. We were also pleased to extend our exclusivity agreement with Shell Energy Retail.
We have continued to make encouraging progress in the development of our grid-scale battery storage assets and pipeline, with our first 50MW battery site now operational.
On the ESG front we are pleased with the progress made towards our 2030 net-zero carbon roadmap, our committee engagement and employee wellbeing programmes and have retained our strong focus on ensuring solid corporate governance.
As we look at 2022, we remain confident with previously guided expectations for the year. We have a strong balance sheet thanks to our recent equity raise and organically-generated cash, and a growing smart meter and grid-scale battery pipeline."
(1) 0.9m increase offset by installations in 2021
(2) 267MW battery pipeline was increased to 470MW in March 2021 and then to 620MW in November 2021
For further information:
| Smart Metering Systems plc | 0141 249 3850 |
| Alan Foy, Chief Executive Officer |
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| Dilip Kejriwal, Investor Relations |
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| Cenkos Securities plc (Joint Broker and Nomad) | 0131 220 6939 / 020 7397 8900 |
| Neil McDonald / Pete Lynch
Investec Bank plc (Joint Broker) Christopher Baird / Henry Reast
RBC Capital Markets (Joint Broker) Matthew Coakes / Evgeni Jordanov / Jack Wood
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020 7597 5970
020 7653 4000 |
| Instinctif Partners | |
| Tim Linacre / Guy Scarborough / Sarah Hourahane | 07917 178 920 |
Notes to Editors
Smart Metering Systems plc (www.sms-plc.com) is the fully integrated energy infrastructure company owning and managing meter assets, energy data, grid-scale batteries and other carbon reduction (CaRe) assets. The Group manages and optimises these assets through its in-house technology and data analytical platform "METIS".
Established in 1995, SMS provides a full end-to-end service, from funding and installation to management and maintenance, with a highly skilled workforce, deep engineering expertise and well-established industrial partnerships.
SMS is leading the low carbon, smart energy revolution in the UK and is committed to reducing its own carbon emissions to net zero by 2030. SMS has been recognised with the London Stock Exchange's Green Economy Mark every year since it was introduced in 2019.
SMS plc is headquartered in Glasgow with a national presence across twelve UK locations.
SMS's shares are listed on AIM.
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