Glasgow’s Smart Metering to raise £175m in placing

Smart Metering Systems chair Miriam Greenwood

Glasgow-based Smart Metering Systems plc (SMS) said on Monday it will seek to raise around £175 million by selling stock in a share placing and has refinanced its existing revolving credit facility to £420 million to help fund “significant growth opportunities.”

Smart Metering also published half year results for the six months ended June 30, 2021, showing revenue down 5% at £51.7 million and underlying profit before tax up 5% to £9.6 million.

SMS declared a dividend of 18.75p, up from 4.58p a year before.

SMS chair Miriam Greenwood said: “Our contracted smart meter order pipeline and pipeline of grid-scale battery projects represent significant growth opportunities for SMS, as the group continues to enable the UK’s transition to a low carbon energy economy.

“This next stage of SMS’ growth is expected to deliver attractive returns to our shareholders. 

“Our recently increased £420m debt facility demonstrates the significant support for our business model, and together with internally generated cash and this proposed fundraising, will enable SMS to invest in the substantial identified growth opportunities ahead and drive long term shareholder value.”

Smart Metering said that following recent wins, it now has a contracted smart meter order pipeline of 2.75 million meters and a pipeline of 470MW of grid-scale battery projects, with a combined £690 million capital expenditure requirement over the next five years.

The board proposes to fund this pipeline through a combination of the group’s internally generated cash, the recently increased £420m debt facility and the proposed fundraising, maintaining leverage at prudent levels and SMS’s financial strength to pursue further growth opportunities …

This capital expenditure is expected to add an estimated £75 million to the group’s annual EBITDA (year  ended 31 December 2020: £49.9 million) when fully operational …

“The board has identified further growth opportunities both within the group’s established CaRe products (smart meters, energy data and grid-scale batteries) and developing carbon reduction (CaRe) products (‘behind-the-meter’ solar and storage, ADM Australia, EV charging and Heat solutions), all of which are underpinned by SMS’ fully integrated and established METIS technology platform.”

On current trading and outlook, SMS said: “The monthly smart meter installation run rate has recovered since the beginning of 2021 and is currently operating at c.20% above the pre-COVID-19 run rate.

“We installed over 30,000 smart meters per month during the June to August period, whilst continuing to focus successfully on the safety and efficiency of our operational delivery.  

At the end of August 2021, the Group’s ILARR (index linked annualised recurring revenues) stood at £84.8m (30 June 2021: £84.2m) with 4.1 million meter and data assets under management (30 June 2021: 4.0 million).

The existing meter and grid-scale battery pipelines, once completed, are expected to add a combined c.£75m of EBITDA.

“The net proceeds of the proposed equity placing will be utilised alongside the extended £420m debt facility to give us the financial and operational flexibility to help fund these pipelines.

“As the company set out at its inaugural capital markets event in June, we remain well positioned in the UK’s energy market, with significant additional growth opportunities for our established and developing CaRe products and services.

In the light of recent trading and assuming no further pandemic-related restrictions, the board expects FY 2021 underlying PBT to be marginally ahead of its previous expectations.”

UPDATE: SMS confirmed on Tuesday the bookbuild was completed and the group, conditionally, raised gross proceeds of £175 million through the fundraising by way of an oversubscribed placing of, and subscription for, a total of 19,453,777 new ordinary shares at an issue price of £9 each.

The issue price represents a discount of 6.2 per cent. to the volume weighted average price of the group’s shares in the 20 trading days prior to 13 September 2021 (being the last business day prior to the announcement of the fundraising),” said SMS.

“The new ordinary shares will represent approximately 14.6 per cent of the group’s issued ordinary shares following admission.”

About the Author

Mark McSherry
Dalriada Media LLC sites are edited by veteran news journalist Mark McSherry, a former staff editor and reporter with Reuters, Bloomberg and major newspapers including the South China Morning Post, London's Sunday Times and The Scotsman. McSherry's journalism has also appeared in The Washington Post, The Guardian, The Independent, The New York Times, London's Evening Standard and Forbes. McSherry is also a professor of journalism and communication arts in universities and colleges in New York City. Scottish-born McSherry has an MBA from the University of Edinburgh and a Certificate in Global Affairs from New York University.