Smart Metering Systems pays off debt with £291m offload of customer assets

● Glasgow firm enhances divi as it says full-year results will meet expectations

Glasgow-based Smart Metering Systems (SMS) has sold a stake in its customer assets portfolio for £291 million, allowing it to pay off debts and up its annual dividend.

The London-listed company has offloaded Crail Meters – a wholly owned subsidiary comprising around 187,000 meter assets – to funds managed by core infrastructure specialist Equitix Investment Management.

The deal, which will see SMS receive £282m, after expenses, will shore up the company’s balance sheet and enhance its “long-term, sustainable dividend payment policy”.

SMS will continue to manage the disposed portfolio, adding that it received an “attractive” valuation and that the transaction leaves the company in positive net cash position. It proposed a dividend of 25p per share for 2020, increasing “at least” in line with the retail price index year-on-year until 2024.

In a stock market update SMS also said that it expects full-year results, which are due to be announced next week, to be in line with expectations.

As of 31 December SMS had a portfolio of more than 1.2 million domestic smart meters, with an expected order book of an additional two million meters.

SMS also pointed to “additional opportunities beyond order book” with contracted and potential customers.

Chief executive Alan Foy said: “This transaction realises considerable cash returns and demonstrates the substantial value of our smart meter portfolio.

“It also will enable us to enhance greatly shareholder value with significant and sustainable increase in dividends – underpinned by our asset-backed, inflationlinked, recurring revenue stream.

“With a strengthened balance sheet, we will also be in a much stronger position to invest in the sizeable UK smart meter rollout programme, which is central to the establishment of a decentralised and decarbonised energy system.” Achal Bhuwania, deputy chief investment officer for Equitix, added: “We are very pleased to participate in the UK smart metering programme whilst creating a long-term partnership with SMS.

“This acquisition aligns with our business objectives of investing in the country’s sustainable energy transition initiatives, which we are excited to be part of.”

Established in 1995, SMS installs and operates gas and electricity meters on behalf of major energy companies. It employs 1,200 people.