Annual General Meeting Statement & Trading Update
Market Overview - Power to the People
Energy, or rather the consumption and control of it, is shifting. It is not simply about the proliferation of new energy suppliers and tariffs; it is about the way we use and generate energy in our own homes and businesses. This means that the energy market is changing. More suppliers and more choice, but with a fundamental shift at its core, decentralisation.
Decentralised energy flips the axis of power, as households and businesses begin to generate, store, manage and sell energy rather than simply consume it. People are increasingly energy aware. Solar panels are more affordable. SMART (Self-Monitoring Analysis and Reporting Technology) innovations are allowing homes and businesses to track and manage consumption. Newsworthy price hikes, and a proliferation of price comparison sites and switching services, mean more than ever they're paying more attention to their bills too. There is an environmental and ethical awakening happening across society, with greater awareness of personal and corporate environmental footprints.
A key driver of this change is rapidly advancing and accessible technology:
· Smartphones with on-tap data and increasingly sophisticated apps: 96% of future generations, 16‐24 year olds, in the
· SMART metering is allowing households and businesses to track and manage energy consumption. Moreover, the Government has called on all energy suppliers to install SMART meters in 53m British homes by 2020 (Source: Energy
· In our experience, domestic solar panels are becoming the norm on a significant number of new build housing projects and are increasingly easy to retrofit to older houses. Since 1990, the cost per watt of solar panels has dropped 90% (Source: Morgan Stanley, 2017); better technology, cheaper production and larger market all driving costs down.
· Battery performance, stability, efficiency, capacity and cost continues to improve at a rapid rate, giving households and businesses new storage and energy management potential. EV battery prices have fallen 79% since 2010 (Source: Bloomberg New Energy Finance, 2018).
The balance is shifting. Old world to new generation. And
We are growing through continued investment across multiple channels:
· Technology - Our SMART Programme will use the SMETS2 metering, the most advanced technologies being rolled out, with a setup that will give our home and business customers greater insight and control over their energy use;
· Strategic partnerships - we have developed a platform to accelerate innovation and bring new products and services to market faster for the benefit of our customers - through a range of partnerships in academia and business; and
· People - we have assembled a talented team to achieve these goals; our new Executive team, in‐house digital expertise, modernised customer care and marketing leadership will accelerate our ability to deliver on our growth plans.
Our established knowhow and integrity means our customers can be confident that their energy future is in good hands.
2017 was a transitional year as we began to reshape our business to capture this opportunity for the benefit of our people, customers and shareholders. We still delivered solid financial performance and saw a growth in revenue, customer numbers and gross profit in line with our expectations for the year.
Our business volumes increased by over 46%, as we continued to take market share, and invest in the teams and propositions to deliver in this sector.
We have remained a market frontrunner in decentralised clean energy for over 15 years and have increased our market share to 18% of the FiT market, through improved service and better partnerships, and expect to continue to grow in this sector.
We invested in a new customer billing engine to allow us to unlock the power of SMART metering, key to delivering in this new decentralised market. Its launch was not without glitches, but we learned valuable lessons and now have great confidence in its performance, and our investment for the future.
We continued to release value from the generation assets we developed, selling
This solid performance has set us up well for 2018.
2018 Trading Update
The impact of rising wholesale costs drove our decision to implement a price rise earlier than in prior years and in addition there was an increased benefit from the unseasonably cold winter.
Retail customer numbers have remained stable in the year to date, with churn trends as predicted following our annual price review. Our new billing infrastructure is working as planned, with 99% of customers now billed on time.
The sale of our large‐scale solar energy asset remains on track to complete later this year. There was strong uptake for the extension of our original Bond at a lower coupon rate of 4.25%.
Profit is expected to be weighted towards the first half of the year, particularly so following the unseasonably cold winter. We will be increasing investment in key growth areas of the business in the second half:
· Sales team - business sector focus, investing in increasing awareness of the brand in the business market and accelerating new customer acquisition
· Digital and developer capability - a new
· Retail customer relationship management - investing in modernising our customer experience across our customer base of consumers, prosumers and generators.
Overall we continue to expect 2018 to be a year of financial progress for the group.
Good Energy Strategy - 2018 and Beyond
The old energy model of production is evolving to a new generation of energy services, with customers and technology driving this change. We believe this is an opportunity to invest further in our proven capability and skill sets, to lead into this new energy world
Energy Awakening - An Evolving Good Energy Customer
Our target market is broadening, based on our market research. Caring about ethics and the environment is not just for "Eco Warriors".
A growing number of "Eco Worriers" want to be part of a movement to "do the right thing", but in a way that is straightforward and efficient; the customer experience is therefore crucial. A broader proposition using digital technology to deliver simple, straightforward service is the answer.
Beyond ethics and the environment, energy is becoming tangible in the home and in the boardroom too.
Costs are rising; there are myriad suppliers to choose from, and while it is easier than ever to switch, it's more confusing too.
Based on our research, households and businesses want guidance and clarity, as they seek to monitor and manage their energy consumption, and any energy they may have surplus.
With this attitude in mind and the opportunity that digital services and SMART technologies are creating,
We currently supply over 70,000 homes and less than 1% of the business market. We believe that the potential market is one in five, who may be interested in
Whilst SMART meters are the foundation of this new energy market, it is the data they produce, distilled at the right time, securely, with the required permissions, that provides real customer value.
Data will empower consumers of all types to understand the potential value of investment in new technologies like energy usage control, storage, electric vehicles and renewable energy.
Our clarity of purpose, and the trust customers already place in us to do the right thing mean
· Strategic partnerships - high‐profile strategic partnerships, with leading lights in industry, technology and research, to deliver new customer propositions. We are already collaborating with Honda, the
· Innovation and invention - in‐house intellectual property generation to create and build new systems and methodologies, which influences change whilst ensuring that our customers benefit from the derived value.
· New revenue models - evolving to a subscription service model as we facilitate the technology for our customers, shifting reliance away from energy margins in the longer term.
People are key to delivering this change for
David was Chief Information Officer at
Sarah brings her digital and customer expertise to support
The appointment of these three roles completes the senior leadership appointments and new strategic structure for the executive team at
The Board is also shifting, following the appointment of
As previously announced,
Following a solid 2017 performance and a strong start to 2018, we continue to reshape
In closing, I would like to thank all of our people, customers and shareholders for their continuing support of
Smithfield (Financial PR)
Notes to editors:
• Established to tackle climate change and help deliver energy security for the
• Founded in 1999 by Juliet Davenport OBE.
• A British company based in Chippenham,
• In 2017
• As at
This information is provided by RNS, the news service of the