SMS recurring revenue jumped 20%, Board confirmed 8 new supplier agreements
Companies: Smart Metering Systems PLC
Smart Metering Systems Plc has released a post-close trading update for the year ending 31 December, reporting 20% growth in recurring revenue, a 28% increase in assets under management (to 1.25m), and confirming contracts with 8 UK energy suppliers for 2.5m customers.
Total annualised recurring revenue jumped 20% to £41.3m, with the Gas division's meter recurring rent increasing 13% to £31.48m, and the Electricity division's meter rent doubling to c.£3m.
The integrated metering services company, which is listed on the FTSE AIM market, said continued investment in its electricity and gas portfolio boosted the total number of assets under management:
"This figure includes 51,000 gas and electricity domestic smart meters installed towards the end of 2016, in the new domestic smart meter market."
During the year, SMS agreed contracts with 8 energy suppliers, who supply an estimated 2.5m customers, for the installation and ownership of domestic smart meters.
Broker Panmure Gordon said the firm had made significant progress with smart dom suppliers and kept its 650p valuation in place until March:
"SMS has signed eight suppliers with 2.5m customer for smart dom (over 10% of the market on our estimates, which is above our 7% assumption that drives a 650p target price). Illustratively, a 10% mkt share would make the target price 680p (20% upside)...
We keep our 650p target price unchanged until March FY, when we will rerun our model. The shares have risen by 42% over the past 12 months, but a higher valuation is easily achievable as recurring revenues from smart dom start to appear. "
CEO Alan Foy said 2016 had been a "transformational year" for SMS with the evolution of its business into a fully integrated service provider. According to Mr Foy, the domestic smart meter market continues to "move apace", with SMS set to benefit after signing contracts with some of the fastest growing energy suppliers in the UK.
SMS shares opened down 3% as the market opened on Friday before rebounding shortly after.
