Smart Metering Systems plc- Full-Year Results 2021

Smart Metering Systems plc

Full year results

Strong 2021 performance, well-positioned for growth

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 full year results for the year ended 31 December 2021.

2021 financial performance

^{1 2020 measures include the financial performance of the disposed I&C portfolio up to the date of sale on 22 April 2020.} 

^{2 ILARR is the revenue generated from meter rental and data contracts at a point in time. Includes revenue from third-party managed meters.}  

^{3 Pre-exceptional EBITDA is statutory EBITDA excluding exceptional items.}

^{4 Underlying profit before taxation is profit before taxation excluding exceptional items and amortisation of certain intangibles.}

^{5 Underlying basic EPS is underlying profit after taxation divided by the weighted average number of ordinary shares for the purpose of basic EPS.}

^{6 2020 measures for statutory EBITDA and statutory profit before taxation include a non-recurring gain of £194,713,000 on the I&C meter portfolio disposal.}

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

Highlights

Financial

• ILARR at 31 December2021 up 12% to £85.9m (2020: £77.0m)
• Pre-exceptional EBITDA up 6% to £52.8m (2020: £49.9m), up 17% like-for-like⁷
• Underlying profit before taxation marginally ahead of upgraded expectations, up 20% to £18.3m (2020: £15.2m), up 58% like-for-like⁷
• Acquired I&C meter portfolio and data service contracts initially adding c.£3.1m of ILARR
• Completed £175m equity raise in October and refinanced debt facility increased to £420m  
• Net cash at 31 December 2021 of £117.7m (2020: £40.2m)

Dividend

• +10% year-over-year, in line with policy until 2024; covered by long-term index-linked cash flows from existing metering and data asset base

Smart meters

• Smart meter installation run rate increased to over 30,000 per month in the second half of the year; currently installing 9.4%of a ll new smart meters in the UK; targeting progressive improvement in meter install run rate
• Exclusivity agreement with Shell Energy Retail Limited extended until December 2025
• Contract wins totalling 900,000 meters in 2021; net of installations, the contracted smart meter order pipeline improved to c.2.55m (31 December 2020: c.2.0m)
• Negligible impact on pipeline from the failure of some energy suppliers; customer base strengthened

Grid-scale batteries

• Grid-scale battery pipeline increased to 620MW (31 December 2020: 267MW⁸ ):

o  50MW site at Burwell now operational (January 2022)

o  270MW fully secured, including a 30MW site acquired in February 2022

o  300MW under exclusivity

• Second site of 40MW expected to be operational by mid-2022 and further 100MW during H1'23

Developing CaRe assets

• Installation of electric vehicle charge points commenced as part of Virgin Media Park and Charge project
• Behind-the-meter smart solar and battery solution launched with initial pilot projects
• Continued progress in the development of wider CaRe products and services

Environmental, Social and Governance (ESG)

• Strong progress towards 'net zero by 2030' target, led by energy upgrades to estate and fleet
• Highest scoring range achieved for 'Corporate Governance' by Morgan Stanley Capital International (MSCI)

^{7 Like-for-like adjusted for the I&C metering and data portfolio acquisition in 2021 and the prior year I&C meter portfolio disposal.}

^{8 267MW grid-scale battery pipeline was increased to 470MW in March 2021 and then to 620MW in November 2021.}

Tim Mortlock , Chief Executive Officer, commented:  

“Throughout 2021, SMS has demonstrated the strength of its business model, delivering profit ahead of upgraded expectations, growth in index-linked annualised recurring revenue and concluding the year with a strong cash position. Given COVID-19 related operational challenges and recent turbulence in the UK energy market, these are impressive results.

“Our contracted smart meter order pipeline remains solid and now more favourably weighted to larger, well-financed independent energy suppliers, and supported by the extension to our exclusivity agreement with Shell Energy Retail. We expect our installation rate to progressively increase throughout the coming year.

“We made excellent progress in the development of our grid-scale battery storage assets. The pipeline increased significantly to 620MW, and we finished the year with energising our first 50MW battery site at Burwell – ahead of programme and on budget. With construction of our wider secured pipeline progressing well, and our second 40MW site expected to be operational by mid-2022, we will soon be able to demonstrate the attractiveness of the underlying revenue streams and their importance as critical energy infrastructure.  

“Looking ahead, the year has started well, and we are confident with our previously guided expectations for 2022. Our strong balance sheet and a resilient, growing smart meter and grid-scale battery pipeline make SMS well-positioned for further growth.

“Lastly, after nearly two decades with the business, Alan Foy stepped down as CEO on 1 March 2022. I, along with the Board, wish to thank him for the tremendous work he has done to drive and deliver sustained growth and success to SMS. We all wish Alan the very best for the future.”

There will be an analyst webcast at 9.00am today – please contact sms@instinctif.com for details. The full year results presentation will be published on the Group's website shortly.