Smart Metering Systems plc
Trading update
Smart Metering Systems plc (AIM: “SMS”, the “Group”), which installs and manages smart meters, energy data, grid-scale battery storage and other carbon reduction (“CaRe”) assets, provides a trading update announcement.
Key points
· ILARR(1) grew 8% to £93.1m at 30 June 2022 (31 December 2021: £85.9m)
· Meter and data assets
· smart meter portfolio increased to 1.9m at 30 June 2022 (31 December 2021: 1.7m)
· secured a new smart meter contract win adding c.0.1m meters to the pipeline
· smart meter order pipeline of c.2.42m(2) at 30 June 2022 (31 December 2021: c.2.55m)
· continued growth in smart meter installation rates; no impact on meter supply
· Grid-scale battery pipeline
· first 50MW performing well ahead of management expectations
· total pipeline increased to 760MW(3) at 30 June 2022 (31 December 2021: 620MW)
· Continued progress in other CaRe products and services including recent strategic investments in EV charging infrastructure and energy data management
· Net cash position at 30 June 2022 was £38.6m
· FY 2022 underlying EBITDA and PBT expected to be marginally ahead of previous expectations; confident in medium term outlook
· Expected FY 2022 dividend of 30.25 pence per share, +10% year-over-year in line with stated policy
Tim Mortlock, CEO of SMS said:
“The global energy market has changed rapidly over the last few months. The requirement for a low carbon, flexible and secure energy system has never been greater or more acute.
Our purpose is to facilitate a lower cost, lower carbon energy future. Our carbon reduction (CaRe) assets, managed by our in-house technology platform METIS, have helped consumers manage their energy bills throughout this difficult period.
Our two recent strategic investments in EV charging infrastructure and energy data are complementary to our existing end-to-end business model and enhance our ability to accelerate other CaRe products and services.
The defensive nature of smart meters, combined with our long-term index-linked cash flows has seen SMS demonstrate strong financial and operational resilience throughout the pandemic, energy market volatility and recent geopolitical upheaval. Our existing pipeline of meter assets and grid-scale battery storage assets alone is well on track to hit our medium-term growth expectations, with significant additional opportunities for growth in our established CaRe asset classes and in developing CaRe products and services.”
(1) Index-linked annualised recurring revenue
(2) c.0.1m contract win offset by meter installs in H1 2022
(3) 760MW pipeline includes the 50MW operational Burwell site
Index-linked annualised recurring revenue
Total meter and data asset ILARR was £93.1m at 30 June 2022, representing growth of 8%, which includes the annual RPI adjustment (+4.3% applied on 1 April 2022) (31 December 2021: £85.9m).
|
Category |
% change |
ILARR |
Details |
|
Domestic smart meters |
+ 15% |
£57.4m |
1.9 million smart meters |
|
Data assets |
+ 13% |
£15.7m |
0.5 million data assets |
|
I&C meters |
+ 10% |
£5.1m |
0.1 million I&C meters |
|
Traditional domestic meters |
– 1% |
£11.6m |
Traditional meters to be exchanged for smart over the UK smart meter rollout programme |
|
Third party assets |
– 39% |
£3.3m |
Industry appointment to third party owned meters (traditional). Now excludes £2.2m of pass-through third-party rental |
Meters
The meter installation run-rate continued to strengthen, in line with the Group's expectations. 230,000 smart meters were installed during H1 2022, with Q2 2022 average monthly run-rate at more than 40,000 meters (FY 2021: c.30,000 meters average per month). Our total smart meter portfolio increased to 1.9m as a result. We have a resilient diverse supply chain in place and the meter stock within our UK warehouses to support this continued run-rate. We expect to install at least 450,000 smart meters during FY 2022.
The smart meter order pipeline was c.2.42m at 30 June 2022 (31 December 2021: c.2.55m), net of smart meter installations during H1 2022 and including a new smart meter contract win of c.0.1m.
Grid-scale batteries
The Group's first site (Burwell, 50MW) commenced trading at the end January 2022 and accessed all revenue streams from 1 March 2022. Thus far, the majority of the revenues have been generated from the provision of frequency services, such as Dynamic Containment. The site's current performance is well ahead of the Board's expectations, equivalent to an annualised EBITDA contribution of £0.1m/MW.
SMS also has 330MW of fully secured grid-scale battery projects, of which 190MW is currently in construction including 40MW now energised and entered commissioning. A further 380MW is under exclusivity, giving a total pipeline of 760MW at 30 June 2022.
FY 2022 outlook
The FY 2022 underlying profitability is expected to be marginally ahead of the Board's previous expectations, and we are confident in the medium term outlook.
SMS expects to publish its first half results on 13 September 2022.