Smart Metering Systems plc (AIM: SMS, "SMS", "the Group"), the UK's largest integrated installer and manager of smart meters, provides a half year trading update for the six months to 30 June 2019 ("H1 2019" or "the period") and the current view of the outlook for the year to 31 December 2019 ("FY 2019").


  • H1 2019 revenues in line with the Board's expectations

  • Annualised recurring revenue ("ARR") continued to grow strongly and increased by 14.1% during the period to £85.9m at 30 June 2019, ahead of expectations

  • 156,000 domestic smart meters installed in H1 2019 taking the Group's domestic smart portfolio alone through the 1 million meter milestone

  • The Group is well-positioned for an increase in installation run-rate in H2 2019 and beyond

  • The Board expects a material H2 weighting to the year's trading performance as increases in industry-wide smart meter installation rates will provide greater utilisation of the Group's engineering workforce

  • Currently exploring options to monetise the value of a minority of the Group's meter assets

  • The Group has significant liquid resources: c.£50 million cash in hand, undrawn banking facilities of £183 million and future internal cash generation.

"We have now installed over 1 million smart meters.  Although installation rates in H1 have been impacted by the transition to SMETS2 meters, we have continued to build our recurring revenue base, ahead of our expectations. 

"Momentum in the installation rate is now building across the industry. Throughout H1, and in line with our longer term strategy, we are retaining the financial, technical and people resources necessary to support a substantial increase in activity in H2 and beyond.  We are well prepared to increase significantly our installation run-rate in H2 compared to H1, as industry-wide activity picks up. 

"We also continue to experience strong demand as societal, regulatory and environmental factors drive the requirement for smart energy management. 

"The Group has a strong portfolio of meter and data assets which generates index-linked, long-term recurring revenues. We are looking at options to monetise the value of a minority of our meter asset portfolio to support our future growth."

Alan Foy Chief Executive Officer

Current trading 

H1 2019 revenues are in line with the Board's expectations.  ARR from the Group's portfolio of meter and data assets, its primary financial KPI, continued to grow strongly and increased by c.14.1% to £85.9 million at 30 June 2019 (31 December 2018: £75.3 million), of which £19.6 million was domestic traditional which the Group expects to be materially exchanged with smart meters. Of the remainder, the industrial and commercial ("I&C") meters ARR grew c.10.6% to £21.0 million, domestic smart meters ARR grew 19.6% to £32.4 million and data assets ARR grew 5.7% to £12.9 million. 

The Group continued to invest in its high-quality asset base, installing c.156,000 domestic smart meters and taking the total number of domestic smart meter installations to over one million during June 2019. 

The Group's total number of metering and data assets now under management increased by c.10.5% to 3.46 million (31 December 2018: 3.13 million) with its domestic smart meter portfolio increasing by c.18.4% to 1,002,000 (31 December 2018: 846,000). 

FY2019 outlook 

The Group expects ARR to grow further, primarily driven by an increase in the domestic smart meter installation run-rate. This is underpinned by SMS's strong order book and the UK Government's commitment to the smart meter programme which requires all UK households and small businesses to be offered a smart meter by 2020. 

As SMS has stated, the overall installation profile of domestic smart meters has been impacted by industry-wide issues associated with the slower-than-anticipated transition from SMETS 1 and the roll out of the new SMETS 2 meters. However, the Board expects that, with technical issues experienced by the whole industry in certain geographical areas and energy supplier readiness for SMETS 2 now being addressed, industry-wide installations rates should now build. 

In particular, the Board expects to see a marked pick-up in installation activity from September 2019 onwards and believes that SMS is well-positioned and has capacity to increase significantly installation run-rates through the remainder of FY2019. 

In the event that installation run-rates do not increase as anticipated, the Group's strategy is to continue to maintain the investment in its engineering capacity in order to maximise strategically the overall installed portfolio of smart meters in the longer term, even at the expense of short-term profitability. The Board will continue to review the position and any impact on the full year outlook for FY 2019 and will update the market when the Group announces its interim results for H1 2019 on 17 September 2019. 

Position and opportunities 

The Group has a market leading position in terms of meter asset installation, asset management and energy management, but its comprehensive service offering developed over the last 24 years makes it unique in its industry. The Group currently have contracts with 12 independent energy suppliers underpinning a strong order book with an additional c.4 million opportunity with these contracted suppliers. SMS also continue to engage with all other energy suppliers in the market. Recently the Group secured a framework agreement with both British Gas and Opus Energy to install smart meters across their I&C customer base. 

Beyond the UK domestic smart market opportunity, SMS intends to ensure it has the capabilities to deliver integrated energy solutions to its customers, with data at the centre of everything it does.  SMS will continue to develop its capabilities to deliver innovative and integrated energy solutions to its customers, leveraging the foundations established in smart meters to grow its service proposition, and establish a business at the centre of the energy system as the economy transitions to a more sustainable and low-carbon future.

For further Information:

Smart Metering Systems plc
0141 249 3850
Willie MacDiarmid, Chairman
Craig McGinn, Company Secretary

Cenkos Securities plc
0131 220 6939 / 0207 397 8900
Neil McDonald
Beth McKiernan

020 7457 2077
Adrian Duffield/ Kay Larsen

Investec Bank plc (Joint Broker)
020 7597 5970
Christopher Baird / Henry Reast