Smart Metering Sys - Trading update and Outlook
25/07/2023 07:00
For best results when printing this announcement, please click on link below:
http://newsfile.refinitiv.com/getnewsfile/v1/story?guid=urn:newsml:reuters.com:20230725:nRSY0860Ha&default-theme=true
RNS Number : 0860H Smart Metering Systems PLC 25 July 2023
25 July 2023
Smart Metering Systems plc
Trading update and Outlook
Smart Metering Systems plc (AIM: "SMS", the "Group"), the integrated energy
infrastructure company owning and managing meters, energy data, grid-scale
batteries and other carbon reduction (CaRe) assets, provides a trading update
for the six months to 30 June 2023 ("H1 2023") and the Board's future
expectations.
Key Highlights
· Index-linked Annualised Recurring Revenue ("ILARR") grew 13.3% to
£110.0m (31 December 2022: £97.1m)
· Meter assets:
o smart meter portfolio increased to c.2.3m (31 December 2022: c.2.1m)
o contracted smart meter order pipeline of c.1.95m((1)) (31 December 2022:
c.2.17m)
· Grid-scale battery storage assets:
o total portfolio increased to 860MW (31 December 2022: 760MW)
§ 140MW operational; performed within the Board's expected range
§ 470MW fully secured with 150MW expected to be operational in H2 2023
§ 250MW under exclusivity
· Continue to build delivery capability, commercial models and
pipelines in developing CaRe assets
· Capital allocation:
o net debt as at 30 June 2023 was £96.3m
o current pipelines((2)) can be fully funded from internal cash generation
and debt facilities
o may consider selective asset recycling to maintain a prudent level of
gearing and to support future growth.
Outlook
· FY 2023 underlying EBITDA and PBT expected to be in line with the
Board's expectations; confident in FY 2024 and medium-term outlook
o index-linked revenues provide a hedge against short-term interest rates
whilst significantly benefiting long-term cash flows
· Expected FY 2023 dividend of 33.275 pence per share, +10% y-o-y
in line with stated policy
Tim Mortlock, CEO of SMS said:
"We have delivered another strong operational and financial performance during
H1 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 c.4 years compared to FY 2022, with
significant additional growth opportunities in existing and developing CaRe
assets((3))."
(1) Net of meters installed over the same period.
(2) Current pipelines includes the existing c.1.95m meter order pipeline
and 860MW 1 hour duration grid-scale battery portfolio.
(3) Includes 'Behind-The-Meter', such as solar and storage, domestic EV
chargers, air-sourced heat pumps and public EV charging infrastructure.
Index-linked annualised recurring revenue
ILARR grew to £110.0m as at 30 June 2023, which includes the annual RPI
adjustment. This represents a 13.3% increase since the year end (31 December
2022: £97.1m).
Category % change ILARR Portfolio
Smart meters + 16.9 % £71.5m 2.3 million
Data assets + 5.6 % £16.9m 0.4 million
Industrial & Commercial meters + 17.2 % £6.2m 0.1 million
Traditional domestic meters + 5.6 % £11.8m 0.2 million
Third party assets +3.9 % £3.6m 1.4 million
Total + 13.3% £110.0m 4.5 million
Smart meters
Smart meter ILARR grew in line with the Board's expectations with higher
rental per meter, driven by an increased focus on single fuel and Industrial
and Commercial ("I&C") smart meter installations.
SMS installed c.220,000 (H1 2022: c.230,000) smart meters during the first
half of 2023 and has maintained market share of c.14%, which is in line with
FY 2022.
In H1 2023, SMS's engineering capacity delivered higher volumes of activity,
largely driven by transactional callout services alongside a higher proportion
of single fuel installations. The Group has further increased its engineering
capacity to support higher transactional volumes and expects the meter
installation run-rate to accelerate during the second half of the year as a
result. This, coupled with SMS's strong supply chain and inventory levels,
provides the Board confidence in the Group's ability to successfully deliver
its contracted smart meter pipeline.
In the period, SMS won a pilot project with Alternative Home Area Network
Company aimed at removing the technical barriers for smart meters in 'hard to
reach' residential properties, which accounts for c.4% of UK households. This
technical solution, alongside the Group's end-to-end integrated platform,
provides additional growth opportunities in the smart metering space.
Grid-scale battery storage
The Group's operational grid-scale battery portfolio has performed within the
Board's expected range, generating an annualised EBITDA of c.£57,000/MW. The
Group generated the majority of its revenues from Balancing Services, compared
to last year when the majority of revenues were generated from Frequency
Services.
We continue to expect a long-term annualised EBITDA contribution of
£57,000-£65,000/MW, with the majority of revenues continuing to be generated
from Balancing Services.
Of the total 860MW portfolio, the Group has secured the option to increase the
duration of at least 290MW 1 MW/hour sites to 2 MW/hour sites. This would
enable the Group to access further revenue opportunities from delivery of
Balancing Services.
Developing CaRe assets
The Group has continued to build its delivery capability, commercial models
and pipelines for the provision of other developing CaRe assets and data
services:
§ The Clenergy EV platform is used in c.3,500 public chargers across the UK
with significant additional future pipeline.
§ SMS's data services platform 'METIS' will participate this Autumn as an
early adopter in system testing for the implementation of market-wide half
hourly settlement, which, once implemented by 2026, will enable a more
flexible energy system.
§ In Behind-the-Meter assets, SMS has partnered with Samsung to deliver a UK
Government funded heat pump trial in Oxford, comprising 150 heat pumps. This
initial project is part of a wider requirement for 30,000 air source heat
pumps across the council by 2040 and could be further upscaled nationwide.
Capital allocation
The Group's current pipeline of smart meters and grid-scale batteries can be
fully funded from asset-backed internally-generated cash flows and debt
facilities.
Notwithstanding this strong position, the Group may consider selective asset
recycling to maintain a prudent level of gearing in the medium term and to
support future growth.
Outlook
FY 2023 pre-exceptional EBITDA and underlying PBT are expected to be in line
with the Board's expectations. The Group remains confident in FY 2024 and its
medium-term outlook.
SMS expects to publish its H1 2023 results on 12 September 2023.
For further information:
Smart Metering Systems plc 0141 249 3850
Tim Mortlock, Chief Executive Officer
Gail Blain, Chief Financial Officer
Dilip Kejriwal, Head of Investor Relations
Cenkos Securities plc (Joint Broker and Nomad) 0131 220 6939 / 020 7397 8900
Neil McDonald / Pete Lynch
Investec Bank plc (Joint Broker) 020 7597 5970
Christopher Baird / Henry Reast
RBC Capital Markets (Joint Broker) 020 7653 4000
Matthew Coakes / Evgeni Jordanov / Jack Wood
Instinctif Partners sms@instinctif.com (mailto:sms@instinctif.com)
Tim Linacre / Guy Scarborough / Vivian Lai
Notes to Editors
Smart Metering Systems plc (www.sms-plc.com) installs and manages smart
meters, energy data, grid scale batteries and other carbon reduction assets
("CaRe") to facilitate effective energy management. The Group manages and
optimises these assets through its in-house technology and data analytical
platform.
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.
This information is provided by RNS, the news service of the London Stock Exchange. RNS is approved by the Financial Conduct Authority to act as a Primary Information Provider in the United Kingdom. Terms and conditions relating to the use and distribution of this information may apply. For further information, please contact
rns@lseg.com (mailto:rns@lseg.com)
or visit
www.rns.com (http://www.rns.com/)
.
RNS may use your IP address to confirm compliance with the terms and conditions, to analyse how you engage with the information contained in this communication, and to share such analysis on an anonymised basis with others as part of our commercial services. For further information about how RNS and the London Stock Exchange use the personal data you provide us, please see our
Privacy Policy (https://www.lseg.com/privacy-and-cookie-policy)
. END TSTFIFEEDFIEFIV