TIDMSMS
RNS Number : 6723S
Smart Metering Systems PLC
21 March 2016
21(st) March 2016
Smart Metering Systems plc
("SMS"or the "Company" the parent of the "Group")
Acquisition of two meter suppliers and IT specialist for up to
GBP6.895 million in shares
Smart Metering Systems plc (AIM: SMS.L), the integrated metering
services company that connects, owns, operates and maintains
current generation, advanced and smart metering assets and
databases, is pleased to announce the acquisition of the entire
issue share capital of three companies: CH4 Gas Utility and
Maintenance services Limited ("CH4"), Trojan Utilities Limited
("Trojan Utilities"), and Qton Solutions Limited ("Qton Solutions")
(together, the "Acquisitions") for a total consideration of up to
GBP6.895 million.
The Acquisitions are in line with SMS's strategy to grow its
meter asset portfolio, particularly in the new domestic smart meter
market, and alongside targeting the existing Industrial and
Commercial ("I&C") market.
CH4 and Trojan Utilities will enhance the SMS' capabilities to
be a key participant in the substantial new smart domestic meter
market for homes and small business in the UK. CH4 will add
approximately 100 engineers and 60 contractors, of whom
approximately 40 are domestic smart gas and electricity
installation engineers, alongside the approximately 80 domestic
smart gas and electricity installation engineers from Trojan
Utilities, which will significantly enhance SMS' capability. Out of
the approximately 1.6 million domestic smart meters installed so
far in the UK, they together represent approximately 23% (368,000)
of that figure, independent of SMS. Alongside these installation
businesses, IT systems specialist Qton Solutions will help to serve
SMS' existing and future contractors, most of whom use its systems
already. This will ensure full confidence to energy suppliers
throughout the domestic smart meter roll-out.
CH4 Gas Utility and Maintenance Services Limited
CH4 is a specialist in traditional and smart gas and electricity
metering installations to the domestic and I&C sectors. It
operates throughout the UK and is a current service provider to
SMS.
Since its establishment in 2011, CH4 has grown successfully and,
for the year ended 28 February 2015, reported turnover of GBP7.64
million with gross profit of GBP2.95 million and EBITDA (after
exceptional items) of GBP0.89 million.
The initial consideration for CH4 is up to GBP2 million and is
being satisfied through the issue of up to approximately 510,497
ordinary shares of 1p each in SMS ("Ordinary Shares") at a price of
391.775p per Ordinary Share (the final number of shares is subject
to a completion accounts adjustment). In addition, a further up to
GBP0.995 million may be payable through the issue of Ordinary
Shares pursuant to an earn out arrangement based on the CH4
business satisfying certain performance criteria over the three
years from the date of completion.
Trojan Utilities Limited
Trojan Utilities is a leading installation service provider to
energy suppliers in the UK and delivers domestic smart gas and
electricity trained and accredited installation services.
Established in 2011, Trojan Utilities has over 80 fully trained
engineers operates throughout the UK and has already installed over
270,000 gas and electric domestic smart meters, representing over
17% of the national smart metering installed to date. It is
currently installing over 3,000 domestic smart meters per week
outside of its SMS business.
Trojan Utilities has grown substantially since 2011 and, for the
year ended 31 October 2014, recorded turnover of GBP2.86 million
with gross profit of GBP1.26 million and EBITDA of GBP0.5m. Trojan
Utilities has seen additional growth in 2015 with estimated
turnover for year ended 31 October 2015 of GBP5.76 million, gross
profit of GBP2.13 million but with a reduced EBITDA of GBP0.067
million as a result of increased investment in operational capacity
and UK-wide infrastructure.
The initial consideration for Trojan Utilities is up to GBP0.5
million and is being satisfied through the issue of up to
approximately 127,625 Ordinary Shares at a price of 391.775p per
Ordinary Share (the final number of shares is subject to a
completion accounts adjustment). In addition, a further up to
GBP0.5 million may be payable through the issue of Ordinary Shares
pursuant to an earn out arrangement based on the Trojan Utilities
business satisfying certain performance criteria over the three
years from the date of completion.
Qton Solutions Limited
Established in Cambridge in 2009, Qton Solutions has a team of
17 IT professionals specialising in the provision of work and field
management IT systems applications for gas and electricity metering
installations for energy suppliers, installation contractors and
meter asset managers and owners in the UK with specific
applications tailored for domestic dual fuel smart
installations.
These systems have become industry leading since 2011, and have
already been responsible for the completion of over 1 million meter
installations and are widely used by a number of domestic smart
meter installers, energy suppliers, and meter asset owners and
managers including SMS.
Qton Solutions has grown very successfully since its
establishment and, for the year ended 31 March 2015, reported
turnover of GBP0.99 million with gross profit of GBP0.34 million
and EBITDA (after exceptional items) of GBP0.23 million, backed
with annually recurring licence fee income on it software products
of over GBP0.8 million.
The consideration for Qton Solutions is up to GBP2.9 million and
is being satisfied through the issue of approximately 740,230
Ordinary Shares at a price of 391.775p per Ordinary Share (the
final number of shares is subject to a completion accounts
adjustment).
Commenting on the acquisitions, Alan Foy, Chief Executive
Officer, said:
"The acquisitions of CH4 and Trojan Utilities are part of the
Company's strategy to gain direct control of a large proportion of
our installation capacity for ongoing delivery of our customer
contracts in the I&C and domestic meter markets. This will
provide confidence to customers in our delivery model for the new
domestic smart metering market. In addition, the acquisition of
Qton Solutions allows us to gain direct control and ownership of
all software applications used by SMS.
We are delighted to welcome the employees of the three
businesses and look forward to working with them."
The initial consideration shares to be issued in connection with
the Acquisitions require to be issued by Friday 25 March 2016 and
the exact number of these shares will be announced on their
issue.
Smart Metering Systems
plc 0141 249 3850
Alan Foy, Chief Executive
Officer
Glen Murray, Finance Director
0131 220 6939 / 0207 397
Cenkos Securities plc 8900
Neil McDonald
Nick Tulloch
Kreab 020 7074 1800
Matthew Jervois
Natalie Biasin
Daniel Holgersson
Notes to Editors
About Smart Metering Systems
Established in 1995, Smart Metering Systems plc, based in
Glasgow, connects, owns, operates and maintains metering systems
and databases on behalf of major energy companies. The Company
provides a fully integrated service from beginning to end to cover
the installation of a gas/electricity supply/connection to the
procurement, installation and management of a gas or electricity
meter asset to the collection and management of customer data and
ongoing energy management services.
The Company has further applications for gas with its ADM device
which allows "smart" functions such as remote reading and
half-hourly consumption data to be offered to customers in addition
to the normal metering services. The Company was admitted to the
AIM market in July 2011 and is now part of the FTSE AIM 50 index.
For more information on SMS please visit the Company's website:
www.sms-plc.com.
CH4 Gas Utility and Maintenance services Limited
CH4 currently has capacity to install over 160,000 new domestic
smart metering installations annually once the current workforce
are through full training, indeed over 40 of these engineers are
already accredited and have installed over 100,000 gas and electric
domestic smart meters for energy suppliers independently of SMS
thus far. Overall, CH4 adds 100 engineers and 60 contractors, of
which 40 are dual fuel engineers.
In addition CH4 own a domestic smart dual fuel (gas and
electricity meters) accredited training academy which will assist
in providing additional fully trained installation capacity in
support of SMS.
Trojan Utilities Limited
Trojan Utilities currently has capacity to install over 160,000
new domestic smart gas and electricity metering installations
annually from an already fully trained and accredited workforce and
have developed a high-quality reputation for delivery with its
energy supplier customers backed with a strong ethos in health and
safety and customer satisfaction.
In addition Trojan Utilities own 35% of the share capital of
Utilities Academy, the leading domestic smart metering training and
accreditation academy which can assist in providing additional
fully trained installation capacity in support of SMS.
Qton Solutions Limited
Qton Solutions have a fully tried, tested and implemented
solution for all filed management activities involved in domestic
smart installations from shared appointment booking with installers
and energy suppliers to stock, resource scheduling, installations
management, asset registration and more; all key components for
successful delivery of customer contracts and providing confidence
for new customers to contract for their new domestic gas and
electricity smart metering requirements.
About UK Domestic Smart Meter Market
The domestic smart meters project is overseen by the Department
of Energy and Climate Change ("DECC") and aims to install smart
meters in homes and small businesses across the UK by 2020.
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