Securing long-term, sustainable value for all stakeholders
SMS is perfectly positioned to maximise the opportunities available from Carbon Reduction (CaRe) assets whilst enhancing shareholder value.
At the heart of the zero-carbon and smart energy revolution
In 2019, the UK became the first major economy to pass the net-zero emissions law. Our vision is to be at the heart of the smart energy, low-carbon revolution, and we have built our services around transforming and decarbonising the UK energy system. For over two decades, SMS has focused on providing CaRe solutions to the UK’s largest emissions sectors: power, transport, residential and business, which together emit more than all other sectors combined. We are also dedicated to reducing our own carbon footprint through effective management of our business estate and fleet. The next few years will see intense evolution across the energy production and consumption landscape and we are primed to lead the transformation to a more sustainable world.
Strong, sustainable dividends with further potential to enhance value
Our existing portfolio of mature assets underpins the Group dividend policy, with additional levers to rebase dividends in the future.
- Resilient balance sheet: The infrastructure nature of its underlying cash flows provides SMS with several options to fund its growth: i) residual long-term cash flows from its existing portfolio; (ii) a revolving credit facility; iii) further capital optimisation options; and iv) access to low-cost infrastructure funding. The Group intends to maintain future leverage at prudent levels.
- Attractive growth opportunities: SMS has significant growth opportunities to expand ILARR, with an existing order book of c.2 million meter points alone. SMS has also developed a pipeline of opportunities in CaRe assets, with recent independent funding support from an infrastructure fund.
- Potential to rebase: By the end of 2019 SMS had generated ILARR of £59.2m through its I&C and domestic smart meter portfolios. These highly sustainable, annuitystyle cash flows enable SMS to provide shareholders with long-term sustainable dividends, growing at least in line with RPI, with good cash cover and scrip alternatives. A combination of existing long-term cash flows and growth opportunities to generate additional long-term revenue streams, coupled with attractive funding options, provides several levers to rebase dividends in the future.
Robust, integrated delivery platform with well-established industrial partnerships
Since its inception, SMS has invested significant resources in creating an end-to-end integrated delivery platform, underpinned by extensive industrial expertise and: X Well-established infrastructure: SMS has a wellestablished utility infrastructure through its three core businesses of asset management, asset installation and energy management. Our internally trained engineer workforce provides the Group with significant competitive advantage, enabling the provision of a wide range of services and the development of our asset base.
- Robust technology platform: SMS’s delivery platform is supported by its own central, cloud-based IT and data platform, which is subject to ongoing development to meet the needs of our customers and the industry. Through the acquisition of Solo Energy, the Group now has access to a software platform, FlexiGrid, that will control and integrate the operation of renewable energy assets.
- Collaborative industrial partnerships: We are proud of the relationships we have formed with our partners over the past 20 years. This includes energy suppliers, I&C enterprises, local authorities, housing associations, Distribution Network Operators and industrial groups across a variety of sectors including telecoms, utilities, hotels, infrastructure, water metering and technology. These partnerships enable us to identify attractive opportunities well in advance. This places SMS at the forefront of energy efficiency and carbon reduction strategies and we are now well positioned to extend our offering to CaRe assets.
Highly experienced management team committed to deliver shareholder value
The SMS Board and Executive team have an optimal blend of experiences, including decades of association with the utilities and smart meter industries, experience in managing a nationwide engineering workforce and technological platform, and a solid background in infrastructure finance. This multitude of capabilities enables the Group to successfully navigate through the fast-changing energy landscape whilst continuing to deliver value for all stakeholders.