31st Jul 2019 12:39
(Alliance News) - Smart Metering Systems PLC said on Wednesday that its recurring revenue, a key performance indicator, was ahead of its expectations in the first half of 2019.
Its overall revenue for the first half of the year was in line with board forecasts, the installer and operator of smart meters said. In 2018, Smart Metering generated a total revenue of GBP98.5 million.
As at June 30, annualised recurring revenue - which refers to the annualised value of revenue generated from meter rental and data contracts and is one of the company's preferred performance measures - was GBP85.9 million.
This would represent a 14% increase from the annualised value of GBP75.3 million on December 31 and a 24% year-on-year rise from GBP69.3 million on the same basis on June 30, 2018.
The company said GBP19.6 million of the annualised recurring revenue is generated by domestic traditional meters, which will soon be exchanged for smart meters.
Compared with the end of 2018, annualised recurring revenue rose in the industrial and commercial meters sector by 11% to GBP21.0 million from GBP19.0 million and in domestic smart meters by 20% to GBP32.4 million from GBP27.1 million.
In the data assets division, annualised recurring revenue increased by 5.7% to GBP12.9 million from GBP12.2 million.
Smart Metering Systems' total number of metering and data assets under management increased by 11% in the six month period to 3.5 million from 3.1 million, helped by the installation of 156,000 domestic smart meters so far in 2019.
Looking ahead, the company expects further growth in annualised recurring revenue, driven by an increase in its domestic smart meter installation run-rate.
Government policy to ensure that all UK homes and small businesses to be offered smart meters by 2020 will also help the company, it said.
The firm said the transition from the SMETS 1 to SMETS 2 meters was slower than anticipated during the period but expects installation rates to rise in the second half after "technical issues" in some geographical areas were addressed. The SMETS 2 smart meter allows users to switch energy suppliers but keep the same meter.
Chief Executive Alan Foy said: "We have now installed over one million smart meters. Although installation rates in H1 have been impacted by the transition to SMETS 2 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 the first half, 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 the second half and beyond. We are well prepared to increase significantly our installation run-rate in the second half compared to the first half, as industry-wide activity picks up."
Shares in Smart Metering Systems were down 2.0% at 507.00 pence each in London on Wednesday morning.
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