Smart Metering Systems plc – Half Year Results

Smart Metering Systems plc

Strong H1 performance, executing on our growth plans

Smart Metering Systems plc (AIM: SMS, “SMS”, “the Group”), which installs and manages smart meters, energy data, grid-scale battery storage and other carbon reduction (“CaRe”) assets, today publishes its half year results for the six months ended 30 June 2022.

H1 financial performance

^{1 ILARR is the revenue generated from meter rental and data contracts at a point in time. Includes revenue from third-party managed meters.}

^{2 Pre-exceptional EBITDA is statutory EBITDA excluding exceptional items.}

^{3 Underlying profit before taxation is profit before taxation excluding exceptional items and amortisation of certain intangibles.}

^{4 Underlying basic EPS is underlying profit after taxation divided by the weighted average number of ordinary shares for the purpose of basic EPS.}

^{A reconciliation between statutory and underlying performance is detailed in the Financial Review section.} 

Highlights

Financial

•    ILARR of £93.1m at 30 June 2022, up 8% on year-end (31 December 2021: £85.9m) and up 11% on the prior period (30 June 2021: £84.2m)
•    Revenue up 21% to £62.7m (H1 2021: £51.7m)
•    Pre-exceptional EBITDA up 11% to £29.1m (H1 2021: £26.1m)
•    Underlying profit before taxation up 7% to £10.3m (H1 2021: £9.6m)
•    Net cash at 30 June 2022 of £38.6m (30 June 2021: £5.6m)
•    Debt facility of £420m fully undrawn at 30 June 2022

Smart meters

•    Since the start of Q2 2022, the run rate for smart meter installations has increased to over 40,000 per month (FY 2021: c.30,000 meters average per month)
•    The total smart meter portfolio was c.1.9m at 30 June 2022 (FY 2021: c.1.7m), including 230,000 smart meter additions in H1 2022
•    Strong contracted smart meter order pipeline at 30 June 2022 of c.2.42m (31 December 2021: c.2.55m) reflecting a further contract win and net of installations

Grid-scale batteries

Grid-scale battery portfolio increased to 760MW (31 December 2021: 620MW) including:

•   50MW site at Burwell operational since end of January 2022 and performing ahead of previous expectations (equivalent to annualised c. £0.1m/MW EBITDA)

360MW fully secured, including 190MW in construction

350MW under exclusivity

• Second site of 40MW is now energised and is in the final stages of commissioning, and a further 100MW is expected to come online by the end of H1 2023

CaRe Products

•    Strategic investments in Clenergy EV and n3rgy Data accelerate the Group's capabilities in electric vehicle (EV) charging infrastructure and energy data management
•    Continued progress in other CaRe products and services including energy efficiency and Behind-the-Meter solar, storage and heat solutions
•    The Group considers these CaRe products to be closely aligned to our existing engineering and energy skills, and to our technology platforms. Management sees substantial further growth opportunity in what are large and growing markets

Outlook

The Board expects FY2022 pre-exceptional EBITDA and underlying PBT to be in line with the upgraded guidance given in our trading update announcement on 27 July 2022

10% growth in dividend to 30.25p per share intended for FY 2022 in line with policy until 2024

The Board is confident in the Group's growth prospects for FY2023

• we expect the increase in smart meter installation run rates to continue
• our forward view on grid-scale battery returns has improved
• the prevailing inflationary environment is expected to have a net positive impact on our forecasts due to our index-linked contracts
• as a result, the Board expects that pre-exceptional EBITDA for FY2023 will be marginally ahead of its previous expectations and, despite the impact of higher interest rates, underlying PBT will be in line with its previous expectations

Tim Mortlock , Chief Executive Officer, commented:

“The strong half year results again demonstrate the resilience of our business model, which is underpinned by our index-linked recurring cash flows from meter and data assets, and reflect the strong performance of our first grid-scale battery storage project.

“We have made significant progress in executing the strategy set out last Autumn. We are pleased to see continued acceleration in our meter installation run rates, an increase in our smart meter portfolio and a new contract which adds to our smart meter order pipeline. Leveraging on our end-to-end platform, we have successfully built and begun to deliver a strong pipeline of grid-scale battery storage projects within a short period of time, with significant additional opportunities from this substantial and growing market.

“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 carbon reduction (CaRe) products and services, providing opportunities for further growth over the long-term.

“The global energy market is in a period of extreme turbulence and there is a fundamental need for the CaRe assets we originate and own. These assets enable the transition to a low carbon, flexible, secure and, of particular importance at this time to all businesses and consumers, low-cost energy system. We remain confident about the future growth prospects for the business.”