TIDMSMS
RNS Number : 6724S
Smart Metering Systems PLC
21 March 2016
21 March 2016
Smart Metering Systems plc
("SMS" or "the Company" or "the Group")
Final results for the year ended 31 December 2015
Smart Metering Systems plc (AIM: SMS.L) is pleased to announce
its final results for the 12 months to 31 December 2015, which show
continued growth across all business areas.
Financial Highlights
-- Revenue increased by 27% to GBP53.9m (2014: GBP42.4m)
-- Total annualised recurring income* increased by 33% to GBP34.73m (2014: GBP26.2m)
o Gas: meter recurring rent increased 27% to GBP27.8m (2014:
GBP21.9m) and data recurring income more than doubled to GBP2.2m
(2014: GBP1.0m)
o Electricity: meter recurring rent doubled to GBP1.25m (2014:
GBP0.6m) and data recurring income grew 28% to GBP3.45m (2014:
GBP2.7m)
-- Gross profit increased by 32% to GBP36.5m (2014: GBP27.6m)
-- Gross profit margin at 68% (2014: 65%)
-- Underlying EBITDA** increased by 38% to GBP26.3 (2014: GBP19.1m)
-- Underlying PBT** increased by 38% to GBP17.4m (2014: GBP12.6m)
-- EBITDA** margin at 49% (2014: 45%)
-- Underlying earnings per share*** increased 67% to 17.46p (2014: 10.46p)
-- Final dividend of 2.2p per ordinary share making 3.3p for the
full year (2014: 2.82p), an increase of 17%
* Recurring revenue refers to revenue generated by meter rental
and data contracts. Annualised recurring income refers to the
revenue being generated at a point in time.
** Underlying PBT & EBITDA is before deduction of
exceptional items, other operating income and intangible
amortisation.
*** Underlying earnings per share is profit after taxation but
before exceptional items, other operating income and intangible
amortisation, divided by the weighted average number of ordinary
shares in issue.
Operational Highlights
-- Total Gas and Electricity metering and data assets increased
by 211,000 to just under 1 million under management at 31 December
2015 (December 2014: 768,000)
o Total gas meter portfolio increased by 19% to 723,000
(December 2014: 607,000), with industrial and commercial
("I&C") meters increasing by 75% to 114,000 (December 2014:
65,000). Gas data portfolio increased by 107% to 85,000 (December
2014: 41,000)
o Total electricity meter portfolio increased by 142% to 29,000
(December 2014: 12,000). Electricity data portfolio increased by
31% to 142,000 (December 2014: 108,000)
-- ADM(TM) installations up 80% to 74,000 units at 31st December
2015 (December 2014: 41,000) with international trials
continuing
-- Capital expenditure on meters increased by 15% to GBP41.2m,
reaching a monthly run rate of approximately GBP3.5m in December
2015
-- Celebrated 20 years in operation in June 2015 and first
anniversary of the integration of the electricity business, having
acquired UPL in April 2014, now SMS ES
-- Completed rebranding of the business in June 2015, bringing
all group subsidiaries under the single SMS brand, setting out a
simplified integrated gas, electricity and dual fuel offering to
clients
-- Strong start to 2016 with new agreements and acquisitions:
o With the opening of the domestic smart meter market, SMS
signed five framework agreements with independent energy suppliers
including RHE, Green Energy, Flow Energy, Spark Energy and Our
Power
o Strategic acquisitions of meter installation suppliers, CH4
Gas Utility and Maintenance Services Limited and Trojan Utilities
Limited, and IT specialists, Qton Solutions Limited
Alan Foy, Chief Executive Officer, commented:
"2015 has been another successful year with substantial progress
across all segments of the business. As we celebrate 20 years in
operation, SMS has again recorded double-digit growth. During the
year we completed the rebranding of the business, bringing all
group subsidiaries under the single SMS brand, setting out a
simplified integrated gas and electricity offering to clients with
the integration of UPL now complete.
We remain focused on the continued expansion of our core
business while also pursuing the significant opportunities
available to SMS in the domestic smart meter market. 2016 has
started well with the signing of five new domestic smart meter
agreements along with three important strategic acquisitions to
control our installation capacity in our markets. We remain
confident in our outlook for the business and market development in
2016."
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(TM)
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.
Chairman's statement
Review of the year
2015 has been a year of continued progress in our business,
notably with the acquisition last year of UPL (now SMS ES), and
continued growth and expansion during our 20(th) anniversary year.
We also completed the rebranding of the SMS business, bringing all
group subsidiaries under the single SMS brand and setting out a
simplified integrated gas and electricity offering to clients.
Following the rebrand, we now operate three divisions under the
single SMS Plc brand: Connections Management, Metering and Data and
Energy Management, with gas and electricity service offerings
across all three divisions.
In the first half of the year, the Metering and Data division
signed an agreement for the provision and ownership of electricity
meters and data management services for an initial order of 5,000
meters with Total Gas & Power Limited, an existing customer of
SMS's Gas business. This contract win followed a strong end to 2014
where we won contracts with BES Utilities, British Gas Business,
DONG Energy Services Limited, and Opus Energy, all of which now
benefit from our integrated offering across both gas and
electricity.
Our Business
SMS has delivered double-digit growth during the year across all
segments of the business with strong recurring income in our gas
and electricity business and a substantial increase in our gas
meter portfolio.
We have a strong order book to install and own gas and
electricity meters in the I&C and domestic market and we will
continue to fill that order book over the next few years. This will
continue to generate an asset-backed, high-quality annuity stream
that will provide high visibility of revenues.
We continue to develop a strong market position in the UK smart
metering market with a focus on the cross-selling of services
between gas and electricity customers by providing an integrated
suite of services across all three divisions.
SMS also has significant additional growth opportunities arising
from the UK government initiative mandating the installation of a
smart meter in every home and small business across the UK by 2020.
This presents a significant market opportunity with a substantial
proportion of an estimated 1.6 million gas meters and 2.1 million
electricity meters in the UK I&C market to be exchanged for a
smart metering solution by the target date of 2020. There is added
potential of a rollout of some 22 million gas meters and 27 million
electricity meters in the UK domestic market within that
period.
Strategy
Our medium term strategy is to increase the run rate with our
customers, and continue to grow the meter asset portfolio alongside
targeting of the new I&C and domestic smart meter market.
Our priority in 2016 and beyond is to focus on four key
strategic areas, reflecting the opportunity of the growing domestic
smart meter market is to:
-- Continue to install and own gas meters and data contracts and
maximise the contracted order book in the I&C and domestic
meter market organically with existing customers and through new
contracts
-- Drive recurring rental income from the I&C market
-- Target the significant domestic smart meter market
opportunity in the UK based on our proven business model and
established market position
-- Increase levels of business with, and services provided to
key gas and electricity suppliers, with a focus on cross-selling
between Gas and Electricity across our suite of services
People and Systems
Our people have been instrumental in driving the business
forward and in the successful integration of UPL and also the
rebranding of the expanded business.
Equally important in terms of operational performance is our IT
systems and compliance management work with our customers, the gas
and electricity suppliers. These are integral to the way in which
we deliver our dual fuel metering service and achieve customer
satisfaction and build relationships of trust.
We are excited to be driving forward our strategic vision,
values and culture through our enlarged team and strengthened
senior management.
Dividend
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We announced a progressive dividend policy in our interim
results and increased our interim dividend by 17% to 1.1p. SMS is
delighted to announce a proposed final cash dividend of 2.2p for
the year ended 31 December 2015. In addition to the interim
dividend of 1.1p, this will make a total dividend of 3.3p. The
final dividend will be paid on 2 June 2016 to those shareholders on
the register (record date) on 29 April 2016 with an ex-dividend
date of 28 April 2016.
Outlook
The team, under Alan Foy's leadership, has continued to deliver
on SMS's strategy and operational plans and SMS is ideally
positioned to maintain our competitive advantage and continue to
make progress on its strategy. We have seen a strong start to 2016
with five framework agreements with independent energy suppliers in
the domestic smart meter market. We have also made important
strategic acquisitions to control our installation capacity for the
delivery of our customer contracts in all our markets. We remain
confident on the outlook for 2016, and view the future of the
business and market development as highly promising.
Chief Executive Officer's statement
I am very pleased to report on the continued strong performance
of the business for the year ended 31 December 2015.
Recurring income now represents 57% of our total revenue
compared with 53% of total revenue in 2014, as we see the continued
benefits of building up recurring income streams from our long-term
contracts from a diversified blue chip customer base.
Operational Review
During 2015 our gas and electricity meter portfolios increased
by 19% and 142% respectively. The gas meter portfolio increased
from 607,000 to 723,000 at the year end. The number of electricity
meters rose from 12,000 to 29,000 at year end. Our Gas and
Electricity metering and data assets rose by over 20% in 2015.
Our two key financial metrics both demonstrated substantial
growth in the year. Our revenue increased by 27%, and our long-term
recurring revenue for gas meter recurring rent by 27%. The
electricity meter recurring rent doubled from GBP0.6m to GBP1.25m.
Gas data recurring income also doubled, while electricity data grew
by just over 28%.
These metrics are core to our long-term annuity financial model
and the recurring rental revenue is based on the ownership and
future purchase of meter assets. Once installed, these meters will
be on SMS's long-term index linked contracts and provide recurring
revenue for the lifetime of the assets, expected to be 25
years.
Industrial and Commercial Meters
2015 has been another successful year and we were delighted to
announce a number of new contracts and contract extensions with
major customers during the year.
We nearly doubled our I&C gas metering portfolio to 114,000
from 65,000 meters in 2014 and grew our customer base during 2015
to a point where SMS contracts are in place with over 80% of the
total I&C meter market in the UK with national and
multinational clients.
The I&C electricity metering business has also witnessed
more than a doubling of its metering portfolio to 29,000 from
12,000 meters in 2014 following the introduction of new contracts
with BES, Total Gas & Power, Opus Energy and Dong Energy. The
electricity business has also been successful in delivering new
contracts with existing and new customers in order to satisfy
increasing market demand for half hourly metering services
following the introduction of new OFGEM regime which will see more
than 160,000 meters move to the half hourly market by April 2017.
These industry changes provide opportunities for increased meter
ownership and in particular for increased recurring data revenue
due to the increased demand for half hourly data.
UK Domestic Smart Market Opportunity
SMS will provide UK domestic smart meters as part of the
government's domestic smart meter programme overseen by the
Department of Energy and Climate Change. The programme requires
domestic energy supply companies to provide all of their customers
with a smart meter in homes and small businesses (larger businesses
are subject to separate regulations and are already using smart
meters) across the UK by 2020. In total, this represents 22 million
domestic gas and 27 million domestic electricity smart meters to be
installed, requiring an approximate GBP6.5 billion aggregate
capital investment.
This new market presents an important opportunity for SMS to
extend its current business model, based on owning and installing
assets in the I&C and domestic market, and to replicate this
with the installation of domestic smart meters in the roll-out out
between now and 2020.
Gas and electricity suppliers must appoint a Meter Asset Manager
(MAM) and SMS is one of only four companies in the Smart Domestic
market. We are very well positioned for this new market, given our
business model.
SMS has the ability to fund substantial growth of this new
market with, inter alia, a GBP150 million term facility from a club
of banks. We firmly believe that the nascent domestic smart meter
market will prove attractive to our funders.
While the new market presents a considerable opportunity, there
are also challenges. There will, in all likelihood, be new
entrants, and while the Government has committed to the roll-out
timetable, given its scale, it would not be surprising to see some
delay.
Domestic Meters
Over the period, we grew our domestic gas meter portfolio by 12%
from 542,000 to 609,000 by the year end 2015.
Our combined gas and electricity full service offering has both
strengthened our position and our opportunity in the domestic meter
market, ideally positioning the business for the domestic smart
meter roll out programme in the UK.
ADM(TM)
The ADM(TM) device is SMS's advanced metering solution which
allows for remote meter reading on a half-hourly basis and has been
designed to meet our customer requirements. SMS continues to deploy
the ADM(TM) devices in the UK.
In 2015 the number of ADM(TM) installations increased 74,000, up
from 41,000 in 2014, and we remain confident that our ADM(TM)
device technology has a broad range of potential applications in
gas, electricity, water and LPG markets.
Business Summary
2015 has been a successful year and our business is strong,
notably our I&C installation business and the recurring rental
income. SMS continues to deliver operational and financial growth
and along with the significant opportunities in the domestic smart
metering market we remain confident in the outlook for the business
and market development in 2016.
Consolidated statement of comprehensive income
For the year ended 31 December 2015
2015 2014 Restated
Notes GBP'000 GBP'000
----------------------------------------------------------------------------------- ------ --------- --------------
Revenue 2 53,945 42,386
Cost of sales 3 (17,427) (14,766)
----------------------------------------------------------------------------------- ------ --------- --------------
Gross profit 36,518 27,620
Administrative expenses 3 (18,484) (14,832)
Other operating income 3 1,546 215
----------------------------------------------------------------------------------- ------ --------- --------------
Profit from operations 3 19,580 13,003
----------------------------------------------------------------------------------- ------ --------- --------------
Attributable to:
Operating profit before exceptional items, Other operating income and amortisation
of intangibles 19,493 14,580
Amortisation of intangibles (1,459) (1,155)
Other operating income 1,546 215
Exceptional items and fair value adjustments 3 - (637)
----------------------------------------------------------------------------------- ------ --------- --------------
Finance costs 6 (2,118) (2015)
Finance income 6 3 30
----------------------------------------------------------------------------------- ------ --------- --------------
Profit before taxation 17,465 11,018
Taxation 7 (2,463) (2,143)
----------------------------------------------------------------------------------- ------ --------- --------------
Profit for the year attributable to equity holders 15,002 8,875
Other comprehensive income -
----------------------------------------------------------------------------------- ------ --------- --------------
Total comprehensive income 15,002 8,875
----------------------------------------------------------------------------------- ------ --------- --------------
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The profit from operations arises from the Group's continuing
operations.
Earnings per share attributable to owners of the parent during
the year:
Notes 2015 2014 Restated
------------------------------------ ------ ------ --------------
Basic earnings per share (pence) 8 17.46 10.46
Diluted earnings per share (pence) 8 16.78 10.06
------------------------------------ ------ ------ --------------
Consolidated statement of financial position
As at 31 December 2015
31 December 2014 1 January 2014
(restated) (restated)
31 December 2015
Notes GBP'000 GBP'000 GBP000
------------------------------------------------------ ------ ------------------ ----------------- ---------------
Assets
Non-current
Intangible assets 10 10,028 10,932 2,018
Property, plant and equipment 11 125,700 91,277 57,382
Investments 12 83 83 -
Trade and other receivables 15 901 1,172 -
------------------------------------------------------ ------ ------------------ ----------------- ---------------
136,712 103,464 59,400
------------------------------------------------------ ------ ------------------ ----------------- ---------------
Current assets
Inventories 14 1,099 1,211 2,504
Trade and other receivables 15 10,205 8,245 6,052
Income tax recoverable - 66 433
Cash and cash equivalents 16 5,711 4,285 2,073
Other current financial assets 20 - - 207
------------------------------------------------------ ------ ------------------ ----------------- ---------------
17,015 13,807 11,269
------------------------------------------------------ ------ ------------------ ----------------- ---------------
Total assets 153,727 117,271 70,669
------------------------------------------------------ ------ ------------------ ----------------- ---------------
Liabilities
Current liabilities
Trade and other payables 17 14,919 16,694 10,810
Income tax payable 445 - -
Bank loans and overdrafts 18 8,496 7,904 3,933
Commitments under hire purchase agreements 19 64 90 3
Other current financial liabilities 20 46 70 -
------------------------------------------------------ ------ ------------------ ----------------- ---------------
23,970 24,758 14,746
------------------------------------------------------ ------ ------------------ ----------------- ---------------
Non-current liabilities
Bank loans 18 76,219 53,645 31,475
Commitments under hire purchase agreements 19 14 64 6
Deferred tax liabilities 22 6,139 4,395 3,395
------------------------------------------------------ ------ ------------------ ----------------- ---------------
82,372 58,104 34,876
------------------------------------------------------ ------ ------------------ ----------------- ---------------
Total liabilities 106,342 82,862 49,622
------------------------------------------------------ ------ ------------------ ----------------- ---------------
Net assets 47,385 34,409 21,047
------------------------------------------------------ ------ ------------------ ----------------- ---------------
Equity
Share capital 23 861 856 838
Share premium 9,650 9,291 8,971
Other reserve 25 4,258 4,258 1
Treasury shares 24 (231) (92) -
Retained earnings 32,847 20,096 11,237
------------------------------------------------------ ------ ------------------ ----------------- ---------------
Total equity attributable to equity holders of the
parent company 47,385 34,409 21,047
------------------------------------------------------ ------ ------------------ ----------------- ---------------
Consolidated statement of changes in equity
For the year ended 31 December 2015
Share Share Other Treasury Retained
Attributable to the owners capital premium reserve shares Earnings Total
of the parent company: GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
------------------------------------------------------- -------- --------- -------- --------- --------- --------
As at 1 January 2014 838 8,971 1 - 12,782 22,592
Prior Year adjustment (Note 1) - - - - (1,545) (1,545)
------------------------------------------------------- -------- --------- -------- --------- --------- --------
As at 1 January 2014 (restated) 838 8,971 1 - 11,237 21,047
Total comprehensive income for the year (as restated) - - - - 8,875 8,875
Transactions with owners in their capacity as owners:
Dividends (note 9) - - - - (2,174) (2,174)
Shares issued 18 320 4,257 - - 4,595
Shares held by SIP - - - (92) - (92)
Share options - - - - 240 240
Income tax effect of share options - - - - 1,918 1,918
------------------------------------------------------- -------- --------- -------- --------- --------- --------
As at 31 December 2014 856 9,291 4,258 (92) 20,096 34,409
Total comprehensive income for the year - - - - 15,002 15,002
Transactions with owners in their capacity as owners:
Dividends (note 9) - - - - (2,564) (2,564)
Shares issued 5 359 - - - 364
Shares held by SIP - - - (139) - (139)
Share options - - - - 410 410
Income tax effect of share options - - - - (97) (97)
------------------------------------------------------- -------- --------- -------- --------- --------- --------
As at 31 December 2015 861 9,650 4,258 (231) 32,847 47,385
------------------------------------------------------- -------- --------- -------- --------- --------- --------
See notes 24 and 25 for details of the Treasury shares and Other
reserve.
Consolidated statement of cash flows
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For the year ended 31 December 2015
2015 2014
GBP'000 GBP'000
---------------------------------------------------------------------- --------- ---------
Cash flow from operating activities
Profit before taxation 17,465 11,018
Finance costs 2,118 1,738
Finance income (3) (30)
Fair value movement on derivatives (24) 277
Depreciation 6,816 4,526
Amortisation 1,459 1,155
Share-based payment expense 271 148
Movement in inventories 112 1,636
Movement in trade and other receivables (1,689) 1,709
Movement in trade and other payables (1,776) 3,159
---------------------------------------------------------------------- --------- ---------
Cash generated from operations 24,749 25,336
Taxation (304) (220)
---------------------------------------------------------------------- --------- ---------
Net cash generated from operations 24,445 25,116
---------------------------------------------------------------------- --------- ---------
Investing activities
Payments to acquire property, plant and equipment (41,474) (35,779)
Disposal of property, plant and equipment 235 52
Payments to acquire intangible assets (555) (539)
Acquisition of subsidiary - (12,632)
Cash acquired with subsidiary - 3,420
Finance income 3 30
---------------------------------------------------------------------- --------- ---------
Net cash used in investing activities (41,791) (45,448)
---------------------------------------------------------------------- --------- ---------
Financing activities
New borrowings 33,059 33,003
Capital repaid (9,893) (6,862)
Hire purchase repayments (76) (10)
Finance costs (2,118) (1,738)
Net proceeds from share issue 364 325
Dividend paid (2,564) (2,174)
---------------------------------------------------------------------- --------- ---------
Net cash generated from financing activities 18,772 22,544
---------------------------------------------------------------------- --------- ---------
Net increase in cash and cash equivalents 1,426 2,212
Cash and cash equivalents at the beginning of the financial year 4,285 2,073
---------------------------------------------------------------------- --------- ---------
Cash and cash equivalents at the end of the financial year (note 16) 5,711 4,285
---------------------------------------------------------------------- --------- ---------
Accounting policies
The consolidated financial statements of the Group for the year
ended 31 December 2015 were approved and authorised for issue in
accordance with a resolution of the Directors on 21 March 2016.
Smart Metering Systems plc is a public limited company incorporated
in Scotland. The company's ordinary shares are traded on AIM.
The financial information set out in the audited results does
not constitute the Group's statutory financial statements for the
year ended 31 December 2015 within the meaning of section 434 of
the Companies Act 2006 and has been extracted from the full
financial statements for the year ended 31 December 2015.
Statutory financial statements for the year ended 31 December
2014 ("2014"), which received an unqualified audit report, have
been delivered to the Registrar of Companies. The reports of the
auditors on the financial statements for the year ended 31 December
2014 and for the year ended 31 December 2015 were unqualified and
did not contain a statement under either section 498(2) or section
498(3) of the Companies Act 2006. The financial statements for the
year ended 31 December 2015 will be delivered to the Registrar of
Companies and made available to all shareholders in due course.
Basis of preparation
The consolidated financial statements, which have been prepared
in accordance with EU Endorsed International Financial Reporting
Standards (IFRS), and IFRIC interpretations and the Companies Act
2006 applicable to companies reporting under IFRS. The consolidated
financial statements are presented in British pounds Sterling (GBP)
and all values are rounded to the nearest thousand (GBP'000) except
where otherwise indicated.
Going concern
Management prepares budgets and forecasts on a rolling 24 month
basis. These forecasts cover operational cash flows and investment
capital expenditure. The Group has committed bank facilities which
extend to March 2017 and available cash resources at 31 December
2015 of GBP26m.
Based on the current projections and facilities in place the
Directors consider it appropriate to continue to prepare the
financial statements on a going concern basis.
Basis of consolidation
The consolidated accounts of the Group include the assets,
liabilities and results of the Company and subsidiary undertakings
in which Smart Metering Systems plc has a controlling interest,
with the exception of UPL Italia SRL which is deemed immaterial to
the group as a whole, using accounts drawn up to 31 December.
Control is achieved when the Group is exposed, or has rights, to
variable returns from its involvement with the investee and has the
ability to affect those returns through its power over the
investee. Specifically, the Group controls an investee if, and only
if, the Group has all of the following: power over the investee
(i.e. existing rights that give it the current ability to direct
the relevant activities of the investee); exposure, or rights, to
variable returns from its involvement with the investee; and the
ability to use its power over the investee to affect its
returns.
When necessary, adjustments are made to the financial statements
of subsidiaries to bring their accounting policies into line with
the Group's accounting policies. All intragroup assets and
liabilities, equity, income, expenses and cash flows relating to
transactions between members of the Group are eliminated in full on
consolidation.
Use of estimates and judgements
The preparation of the financial statements requires the use of
estimates and assumptions. Although these estimates are based on
management's best knowledge, actual results ultimately may differ
from these estimates.
The key sources of estimation uncertainty that have a
significant risk of causing material adjustment to the carrying
amounts of assets and liabilities within the next financial year
are acquisitions and business combinations. When an acquisition
arises the group is required under IFRS 3 to calculate the Purchase
Price Allocation ("PPA"). The PPA requires companies to report the
fair value of assets and liabilities acquired and it establishes
useful lives for identified assets.
Subjectivity is involved in PPA with the estimation of the
future value of technology, customer relationships and
goodwill.
Revenue recognition
Revenue is recognised to the extent that it is probable that the
economic benefits will flow to the Group and the revenue can be
reliably measured. Revenue is measured at the fair value of the
consideration received or receivable, excluding discounts and
VAT.
Revenue is recognised when the significant rewards and risk of
ownership have been passed to the buyer. The risk and rewards of
ownership transfer when the Group fulfils its contractual
obligations to customers by supplying services.
Meter rental income
Rental income represents operating lease payments receivable
from gas and electricity suppliers. Revenue is recognised on a
straight-line basis over the lease term. Rental income is
calculated on a daily basis and invoiced monthly. Rental contracts
do not operate on a fixed-term basis and are cancellable at any
time by the lessee, in which case termination payments are levied
and recognised as other operating income in accordance with the
terms of the contract with immediate effect and do not transfer
risks and rewards of ownership of the underlying asset. They are
therefore considered as operating lease arrangements and accounted
for as such.
In line with the underlying contractual terms, termination fees
due are recognised at fair value upon notification of deappoinment
and are classified as other operating income.
Utility connection
Revenue from connection contracts is recognised upon delivery of
the related service.
Data management
Data income is recognised on a straight line basis over the
contract period. Amounts invoiced in advance are recorded as
deferred income.
Financial assets
Initial recognition and measurement
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Financial assets within the scope of IAS 39 are classified as
financial assets at fair value through profit or loss, loans and
receivables, held-to-maturity investments, available-for-sale
financial assets or as derivatives designated as hedging
instruments in an effective hedge, as appropriate. The Group
determines the classification of its financial assets at initial
recognition.
Purchases or sales of financial assets that require delivery of
assets within a time frame established by regulation or convention
in the marketplace (regular way trades) are recognised on the trade
date, i.e. the date that the Group commits to purchase or sell the
asset.
The Group's financial assets include cash and short-term
deposits, trade and other receivables, loans and other receivables,
quoted and unquoted financial instruments and derivative financial
instruments.
Financial liabilities
Initial recognition and measurement
Financial liabilities within the scope of IAS 39 are classified
as financial liabilities at fair value through profit or loss,
loans and borrowings or as derivatives designated as hedging
instruments in an effective hedge, as appropriate. The Group
determines the classification of its financial liabilities at
initial recognition. All financial liabilities are recognised
initially at fair value and, in the case of loans and borrowings,
net of directly attributable transaction costs.
The Group's financial liabilities include trade and other
payables, bank overdraft, loans and borrowings, financial guarantee
contracts and derivative financial instruments.
Derecognition
A financial liability is derecognised when the obligation under
the liability is discharged or cancelled or expires. When an
existing financial liability is replaced by another from the same
lender on substantially different terms, or the terms of an
existing liability are substantially modified, such an exchange or
modification is treated as a derecognition of the original
liability and the recognition of a new liability and the difference
in the respective carrying amounts is recognised in the
consolidated statement of comprehensive income.
Offsetting of financial instruments
Financial assets and financial liabilities are offset, and the
net amount reported in the consolidated statement of financial
position, if, and only if, there is a currently enforceable legal
right to offset the recognised amounts and there is an intention to
settle on a net basis, or to realise the assets and settle the
liabilities simultaneously.
Initial recognition and subsequent measurement
The Group uses derivative financial instruments such as interest
rate swaps to hedge its interest rate risk. Such derivative
financial instruments are initially recognised at fair value on the
date on which a derivative contract is entered into and are
subsequently remeasured at fair value. Derivatives are carried as
financial assets when the fair value is positive and as financial
liabilities when the fair value is negative. The Group has not
designated any derivatives for hedge accounting.
Current versus non-current classification
Derivative instruments that are not designated as effective
hedging instruments are classified as current or non-current or
separated into a current and non-current portion based on an
assessment of the facts and circumstances (i.e. the underlying
contracted cash flows).
Where the Group will hold a derivative as an economic hedge (and
does not apply hedge accounting) for a period beyond twelve months
after the reporting date, the derivative is classified as
non-current (or separated into current and non-current portions)
consistent with the classification of the underlying item.
Derivative instruments that are designated as, and are effective
hedging instruments, are classified consistent with the
classification of the underlying hedged item. The derivative
instrument is separated into a current portion and non-current
portion only if a reliable allocation can be made.
Exceptional items and separately disclosed items
The Group presents as exceptional items on the face of the
consolidated statement of comprehensive income those material items
of income and expense which, because of the nature or expected
infrequency of the events giving rise to them, merit separate
presentation to allow shareholders to understand better the
elements of financial performance in that year, so as to facilitate
comparison with prior periods and to assess better trends in
financial performance. Termination fee income is reported as a
separately disclosed given the materiality & nature.
Research and development
Expenditure on pure and applied research activities is
recognised in the consolidated statement of comprehensive income as
an expense as incurred.
Expenditure on product development activities is capitalised if
the product or process is technically and commercially feasible and
the Group intends and has the technical ability and sufficient
resources to complete development; if future economic benefits are
probable; and if the Group can measure reliably the expenditure
attributable to the intangible asset during its development. The
expenditure capitalised includes the cost of materials, direct
labour and an appropriate proportion of overheads.
Capitalised development expenditure is stated at cost less
accumulated amortisation and accumulated impairment losses.
Amortisation is calculated, when the product or system is
available for use, so as to write off the cost of an asset, less
its estimated residual value, over the useful economic life of that
asset as follows:
Amortisation 5% on cost straight line
Intangible assets
Intangible assets acquired separately from third parties are
recognised as assets and measured at cost.
Following initial recognition, intangible assets are measured at
cost at the date of acquisition less any amortisation and any
impairment losses. Amortisation costs are included within the net
administrative expenses disclosed in the consolidated statement of
comprehensive income.
Intangible assets acquired as part of a business combination are
recognised outside goodwill if the asset is separable or arises
from contractual or other legal rights and its fair value can be
measured reliably.
Intangible assets are amortised over their useful lives as
follows:
Software 12.5% and 20% straight line
Customer contracts 20%
Useful lives are examined on an annual basis and adjustments,
where applicable, are made on a prospective basis.
Goodwill
Goodwill arising on consolidation represents the excess of the
consideration transferred and the fair value of the identifiable
assets and liabilities of the acquiree at the date of acquisition.
Goodwill on acquisitions of subsidiaries is included in 'intangible
assets'. Goodwill is not amortised but is tested annually for
impairment and is carried at cost less accumulated impairment
losses. See note [13] for detailed assumptions and methodology.
Impairment losses are not subsequently reversed.
Goodwill is allocated to cash-generating units for the purpose
of impairment testing. The allocation is made to those
cash-generating units or groups of cash-generating units that are
expected to benefit from the business combination in which the
goodwill arose identified according to operating segment.
Provisional fair values are adjusted against goodwill if
additional information is obtained within one year of the
acquisition date, about facts or circumstances existing at the
acquisition date. Other changes in provisional fair values are
recognised through profit or loss.
Changes in contingent consideration arising from additional
information, obtained within one year of the acquisition date,
about facts or circumstances that existed at the acquisition date
are recognised as an adjustment to goodwill. Other changes in
contingent consideration are recognised through profit or loss,
unless the contingent consideration is classified as equity. In
such circumstances, changes are recognised within equity.
Impairment
At each reporting date, the Group reviews the carrying amounts
of its property, plant and equipment and intangibles to determine
whether there is any indication that those assets have suffered an
impairment loss. If any such indication exists, the recoverable
amount of the asset is estimated in order to determine the extent
of the impairment loss (if any). Where the asset does not generate
cash flows that are independent from other assets, the Group
estimates the recoverable amount of the cash-generating unit (CGU)
to which the asset belongs.
Recoverable amount is the higher of fair value less costs to
sell and value in use. In assessing value in use, the estimated
future cash flows are discounted to their present value using a
pre-tax discount rate that reflects current market assessments of
the time value of money and the risks specific to the asset for
which the estimates of future cash flows have been adjusted.
If the recoverable amount of an asset (or CGU) is estimated to
be less than its carrying amount, the carrying amount of the asset
(or CGU) is reduced to its recoverable amount. An impairment loss
is recognised as an expense immediately.
Where an impairment loss subsequently reverses, the carrying
amount of the asset (CGU) is increased to the revised estimate of
its recoverable amount, but so that the increased carrying amount
does not exceed the carrying amount that would have been determined
had no impairment loss been recognised for the asset (CGU) in prior
years. A reversal of an impairment loss is recognised as income
immediately.
Detailed assumptions with regard to discount, growth and
inflation rates are set out in note 13 to the accounts.
Property, plant and equipment
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Property, plant and equipment is stated at cost, net of
accumulated depreciation and/or accumulated impairment losses, if
any. Such cost includes the cost of replacing part of the plant and
equipment and borrowing costs for long-term construction projects
if the recognition criteria are met. When significant parts of
property, plant and equipment are required to be replaced in
intervals, the Group recognises such parts as individual assets
with specific useful lives and depreciation, respectively.
All other repair and maintenance costs are recognised in the
consolidated statement of comprehensive income as incurred.
Depreciation is calculated on a straight line basis over the
estimated useful life of the asset as follows:
Freehold property 2% on cost
Short leasehold Shorter of the lease term or 15%
property and 20% on cost
Plant and machinery 5% and 10% on cost
Fixtures, fittings 15% and 33% on cost
& equipment
Motor vehicles 25% on cost
Land is not
depreciated.
An item of property, plant and equipment and any significant
part initially recognised is derecognised upon disposal or when no
future economic benefits are expected from its use or disposal. Any
gain or loss arising on derecognition of the asset (calculated as
the difference between the net disposal proceeds and the carrying
amount of the asset) is included in the consolidated statement of
comprehensive income when the asset is derecognised. The asset's
residual values, useful lives and methods of depreciation are
reviewed at each financial year end and adjusted prospectively, if
appropriate.
Property, plant and equipment are initially recorded at
cost.
Inventories
Inventories are stated at the lower of cost and net realisable
value. Costs comprise direct materials. Net realisable value
represents the estimated selling price for inventories less all
estimated costs of completion and costs to be incurred in
marketing, selling and distribution.
Cash and cash equivalents
Cash and cash equivalents in the consolidated statement of
financial position comprises cash at bank and in hand and
short-term deposits with an original maturity of three months or
less. For the purpose of the consolidated statement of cash flows,
cash and cash equivalents consists of cash and short-term deposits
as defined above, net of outstanding bank overdrafts.
Hire purchase agreements
Assets held under hire purchase agreements are capitalised and
disclosed under property, plant and equipment at their fair value.
The capital element of the future payments is treated as a
liability and the notional interest is charged to the statement of
comprehensive income in proportion to the remaining balance
outstanding.
Leased assets and obligations as lessee
Leases are classified as finance leases whenever the terms of
the lease transfer substantially all the risks and rewards of
ownership to the lessee. All other leases are classified as
operating leases. Assets acquired under finance leases are
capitalised in the Balance Sheet at their fair value or, if lower,
at the present value of the minimum lease payments, each determined
at the inception of the lease. The corresponding liability to the
lessor is recorded in the Balance Sheet as a finance lease
obligation. The lease payments are apportioned between finance
charges to the Income Statement and a reduction of the lease
obligations.
Rental payments under operating leases are charged to the Income
Statement on a straight-line basis over the applicable lease
periods.
Group as lessor
Leases in which the Group does not transfer substantially all
the risks and rewards of ownership of assets are classified as
operating leases with meter income recognised in line with the
meter rental income policy.
Pension costs
The Group operates a defined contribution pension scheme for
employees. The assets of the scheme are held separately from those
of the Group. The annual contributions payable are charged to the
statement of comprehensive income.
Share-based payments
The costs of equity-settled share-based payments are charged to
the consolidated statement of comprehensive income over the vesting
period. The charge is based on the fair value of the equity
instrument granted and the number of equity instruments that are
expected to vest.
Taxation
Tax currently payable is based on the taxable profit for the
year. Taxable profit differs from accounting profit as reported in
the consolidated statement of comprehensive income because it
excludes items of income or expense that are taxable or deductible
in other years and it further excludes items that are never taxable
or deductible. The Group's liability for current tax is measured
using tax rates that have been enacted or substantively enacted by
the reporting date.
Deferred tax is the tax expected to be payable or recoverable on
differences between the carrying amount of assets and liabilities
in the financial statements and the corresponding tax bases used in
the computation of taxable profit and is accounted for using the
balance sheet liability method. Deferred tax liabilities are
recognised for all taxable temporary differences and deferred tax
assets are recognised to the extent that it is probable that
taxable profits will be available against which deductible
temporary differences can be utilised. The deferred tax balance is
calculated based on tax rates that have been enacted or
substantively enacted by the reporting date.
Deferred tax assets include temporary differences related to
employee benefits settled via the issue of share options.
Recognition of the deferred tax assets assumes share options will
have a positive value at the date of vesting, which is greater than
the exercise price.
Standards and interpretations
Several new standards and amendments are applicable for the
first time in 2015. However, they do not impact the annual
consolidated financial statements of the Group.
Standards and amendments to standards that have been issued but
are not effective for 2015 and have not been early adopted
Periods commencing
Standard or interpretation on or after
------------------------------------ ------------------------------------------------------------------------------
Amendments to IAS 1 Disclosure Initiative 1 January 2016
IFRS 9* Financial Instruments 1 January 2018
IFRS 15* Revenue from contracts with customers 1 January 2016
Annual Improvements to IFRSs 2012 to 2014 cycle 1 January 2016
Amendments to IFRS 10 and IAS 28* Sale or Contribution of Assets between an Investor and its 1 January 2016
Associate or Joint Venture
Amendments to IAS 16 and IAS 38 Clarification of Acceptable Methods of Depreciation and 1 January 2016
Amortisation
Amendments to IFRS 11 Accounting for Acquisition of Interests in Joint Operations 1 January 2016
IFRS 16* Leases 1 January 2019
Amendments to IAS 7* Disclosure Initiative 1 January 2017
Amendments to IAS 12* Recognition of Deferred Tax Assets for Unrealised Losses 1 January 2017
Note * - Not yet adopted for use in the European Union
The above standards and interpretations will be adopted in
accordance with their effective dates and have not been adopted in
these financial statements.
For standards with a future effective date, the Directors are in
the process of assessing the likely impact and look to finalisation
of the standards before formalising their view.
Notes to the financial statements
For the year ended 31 December 2015
1 Prior period restatement
Over a number of years, the revenue on gas connection services
has been incorrectly recognised upon advance payment by customers
rather than upon the delivery of the underlying service. The
related subcontractor cost was accrued at the point of revenue
recognition. This resulted in the accelerated recognition of both
revenue and cost of sales across a number of years. The scale of
the gas connections business has been consistent over a number of
years with the exception of 2013 when the revenue was higher due to
a number of significant contracts.
The financial statements have been restated to correct the
cumulative impact on the Consolidated statement of financial
position as at 1 January 2014. In addition, income tax receivable
and payable and long term trade & other receivables have been
reclassified to be shown on the face of the consolidated statement
of financial position. No adjustment has been made to the 2014
profit before tax as previously reported, as the impact on the year
after the consideration of the effect of the turnaround error from
pre 1 January 2014 is considered immaterial at both revenue and
profit level.
The impact is as follows:
31 December 1 January
2014 2014
GBP000 GBP000
Increase in Advance payments 3,448 3,448
Decrease to Accruals (1,517) (1,517)
Decrease to Income tax payable/increase
to Income tax repayble (386) (386)
Decrease in Equity (1,545) (1,545)
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In addition, in 2014, a credit of GBP1,918,000 was recognised
through the income statement in connection with the recognition of
deferred tax benefits arising on share based payments which should
have been recognised directly in equity. Accordingly, the
comparative financial statements have been restated to correct the
charge as follows:
31 December 2014
GBP000
Increase to taxation charge 1,918
Increase to amount recognised directly
in equity (1,918)
This adjustment has had the following impact on earnings per
share:
As restated As previously reported
Earnings per share:
- basic (pence) 10.46 12.71
- diluted (pence) 10.06 12.23
Adjusted earnings per share:
- basic (pence) 11.90 14.36
- diluted (pence) 11.45 13.81
------------------------------ ------------ -----------------------
2 Segmental reporting
For management purposes, the Group is organised into three core
divisions, Asset Management, Asset Installation and Energy
Management, which form the basis of the Group's reportable
operating segments and Operating segments within those divisions
are combined on the basis of their similar long-term economic
characteristics and similar nature of their products and services,
as follows:
Asset Management comprises regulated management of gas meters,
electric meters and ADM(TM) units within the UK.
Asset installation of meters comprises installation of domestic
and Industrial and Commercial gas meters and electricity meters
throughout the UK.
Energy Management comprises the provision of energy advice.
For greater clarity the trade in the Energy Management business
has been separated out from Asset Installation.
Comparatives have been altered accordingly.
Management monitors the operating results of its divisions
separately for the purpose of making decisions about resource
allocation and performance assessment. The operating segments
disclosed in the financial statements are the same as reported to
the Board. Segment performance is evaluated based on gross
profit.
At the most granular level of information presented to the CODM,
Asset Management aggregates four operating segments (Gas meter
rental, Electricity meter rental, Gas data and Electricity data)
principally on the basis that they derive from the same asset using
similar processes for consistent customers and are often provided
together. Asset Installation aggregates two operating segments (Gas
Transactional and Electricity Transactional) due to the consistent
nature of the service, customers and delivery processes.
The following segment information is presented in respect of The
Groups reportable segments together with additional balance sheet
information:
Asset Asset Energy Total
management installation Management Unallocated operations
31 December 2015 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
---------------------------------------------- ----------- ------------- ----------- ------------ -----------
Segment/Group revenue 30,233 19,535 4,177 - 53,945
Cost of sales (4,148) (10,891) (2,388) - (17,427)
---------------------------------------------- ----------- ------------- ----------- ------------ -----------
Segment profit - Group gross profit 26,085 8,644 1,789 - 36,518
Items not reported by segment:
Other operating costs/income - - - (8,663) (8,663)
Depreciation (5,846) - - (970) (6,816)
Amortisation (121) - - (1,338) (1,459)
Exceptional items and fair value adjustments - - - - -
---------------------------------------------- ----------- ------------- ----------- ------------ -----------
Profit from operations 20,118 8,644 1,789 (10,971) 19,580
Net finance costs (2,127) 0 4 8 (2,115)
---------------------------------------------- ----------- ------------- ----------- ------------ -----------
Profit before tax 17,991 8,644 1,793 (10,963) 17,465
Tax expense (2,463)
---------------------------------------------- ----------- ------------- ----------- ------------ -----------
Profit for year 15,002
---------------------------------------------- ----------- ------------- ----------- ------------ -----------
Restated
Asset Asset Energy Total
management installation Management Unallocated Operations
31 December 2014 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
---------------------------------------------- ----------- ------------- ------------ ------------ -----------
Segment/Group revenue 22,404 17,639 2,343 - 42,386
Cost of sales (3,712) (9,656) (1,398) - (14,766)
---------------------------------------------- ----------- ------------- ------------ ------------ -----------
Segment profit - Group gross profit 18,692 7,983 945 - 27,620
Items not reported by segment:
Other operating costs/income - - - (8,299) (8,299)
Depreciation (4,200) - - (326) (4,526)
Amortisation (746) - - (409) (1,155)
Exceptional items and fair value adjustments - - - (637) (637)
---------------------------------------------- ----------- ------------- ------------ ------------ -----------
Profit from operations 13,746 7,983 945 (9,671) 13,003
Net finance costs (1,985) - - - (1,985)
---------------------------------------------- ----------- ------------- ------------ ------------ -----------
Profit before tax 11,761 7,983 945 (9,671) 11,018
Tax expense (2,143)
---------------------------------------------- ----------- ------------- ------------ ------------ -----------
Profit for year 8,875
---------------------------------------------- ----------- ------------- ------------ ------------ -----------
All revenues and operations are based and generated in the
UK.
The Group has one major customer that generated turnover within
each segment as listed below:
2015 2014
GBP'000 GBP'000
--------------------------------- -------- --------
Customer 1 - Asset Management 11,865 9,847
Customer 1 - Asset Installation 4,704 5,089
--------------------------------- -------- --------
16,569 14,936
--------------------------------- -------- --------
Segment assets and liabilities
Asset Asset Energy Total
management installation Management Operations
31 December 2015 GBP'000 GBP'000 GBP'000 GBP'000
-------------------------------------------- ----------- ------------- ----------- -----------
Assets by segment
Intangible assets 10,028 - - 10,028
Plant, plant and equipment 119,435 - 6,265 125,700
Inventories 996 - 103 1,099
-------------------------------------------- ----------- ------------- ----------- -----------
130,459 - 6,368 136,827
Assets not by segment 16,900
-------------------------------------------- ----------- ------------- ----------- -----------
Total assets 153,727
-------------------------------------------- ----------- ------------- ----------- -----------
Liabilities by segment
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Bank loans 84,715 - - 84,715
Obligations under hire purchase agreements 63 - 15 78
-------------------------------------------- ----------- ------------- ----------- -----------
84,778 - 15 84,793
Liabilities not by segment 21,549
-------------------------------------------- ----------- ------------- ----------- -----------
Total liabilities 106,342
-------------------------------------------- ----------- ------------- ----------- -----------
Restated
Asset Asset Energy Total
management installation Management Operations
31 December 2014 GBP'000 GBP'000 GBP'000 GBP'000
-------------------------------------------- ----------- ------------- ----------- -----------
Assets by segment
Intangible assets 10,932 - - 10,932
Plant, plant and equipment 84,649 - 3,855 88,504
Inventories 1,091 - 120 1,211
-------------------------------------------- ----------- ------------- ----------- -----------
96,672 - 3,975 100,647
Assets not by segment 16,624
-------------------------------------------- ----------- ------------- ----------- -----------
Total assets 117,271
-------------------------------------------- ----------- ------------- ----------- -----------
Liabilities by segment
Bank loans 61,549 - - 61,549
Obligations under hire purchase agreements 84 - 70 154
-------------------------------------------- ----------- ------------- ----------- -----------
61,633 - 70 61,703
Liabilities not by segment 21,159
-------------------------------------------- ----------- ------------- ----------- -----------
Total liabilities 82,862
-------------------------------------------- ----------- ------------- ----------- -----------
3 Income statement by nature and items of expenditure included
in the consolidated statement of comprehensive income
2015 2014
GBP'000 GBP'000
---------------------------------------------- --------- --------
Revenue 53,945 42,386
Direct rental costs (4,148) (3,712)
Direct subcontractor costs (6,504) (6,125)
Other direct sales costs and systems rental (6,775)) (4,929)
Staff costs (7,166) (6,549)
Depreciation:
- owned assets (6,751) (4,447)
- leased assets (65) (79)
Amortisation (1,459) (1,155)
Other operating income 1,546 215
Auditor's remuneration:
- as auditor (80) (68)
- other services - (179)
Exceptional costs and fair value adjustments - (637)
Operating lease costs: -
- plant and equipment - (5)
Other operating charges (2,963) (1,713)
---------------------------------------------- --------- --------
Profit from operations 19,580 13,003
Finance costs (2,118) (2,015)
Finance income 3 30
---------------------------------------------- --------- --------
Profit before taxation 17,465 11,018
---------------------------------------------- --------- --------
Included in exceptional items and fair value adjustments
expenses are: GBPNil (2014: GBP479,691) acquisition costs and
GBPNil (2014: GBP157,500) redundancy costs. . Included within other
direct sales costs and systems rental are staff costs of
GBP2,924,000 (2014: GBP2,245,000).
Auditors' remuneration can be analysed as:
2015 2014
GBP'000 GBP'000
------------------------------------------------------------ -------- --------
Statutory group audit (Ernst & Young) 80 -
Statutory group audit (Baker Tilly UK Audit LLP) - 56
Statutory parent audit - 12
Taxation services (Baker Tilly Tax and Accounting Limited) - 13
Corporate finance (Baker Tilly Corporate Finance LLP) - 157
Non-statutory audit services (Baker Tilly UK Audit LLP) - 9
------------------------------------------------------------ -------- --------
80 247
------------------------------------------------------------ -------- --------
4 Particulars of employees
The average number of staff employed by the Group, including
Executive Directors, during the financial year was:
2015 2014
Number Number
-------------------------------- ------- -------
Number of administrative staff 17 20
Number of operational staff 276 208
Number of sales staff 3 5
Number of IT staff 12 12
Number of Directors 2 2
-------------------------------- ------- -------
310 247
-------------------------------- ------- -------
The aggregate payroll costs, including Executive Directors, of
the employees were:
2015 2014
GBP'000 GBP'000
------------------------ -------- --------
Wages and salaries 9,205 7,654
Social security costs 935 734
Staff pension costs 192 145
Share-based payment 410 240
Director pension costs 20 21
------------------------ -------- --------
10,762 8,794
------------------------ -------- --------
5 Directors' emoluments
The Directors' aggregate remuneration in respect of qualifying
services were:
2015 2014
GBP'000 GBP'000
---------------------------------------------------------------- -------- --------
Emoluments receivable 821 738
Value of Group pension contributions to money purchase schemes 5 5
Other pension 16 16
---------------------------------------------------------------- -------- --------
842 759
---------------------------------------------------------------- -------- --------
2015 2014
Emoluments of highest paid Director GBP'000 GBP'000
------------------------------------- -------- --------
Total emoluments 488 423
Pension contributions 16 16
------------------------------------- -------- --------
The number of Directors who accrued benefits under Company
pension schemes was as follows:
2015 2014
Number Number
------------------------ ------- -------
Money purchase schemes 2 1
------------------------ ------- -------
6 Finance costs and finance income
2015 2014
GBP'000 GBP'000
-------------------------------- -------- --------
Finance costs
Bank loans and overdrafts 2,134 1,731
Interest rate hedge fair value (24) 277
Hire purchase 8 7
-------------------------------- -------- --------
Total finance costs 2,118 2,015
-------------------------------- -------- --------
Finance income
Bank interest receivable 3 30
Interest rate hedge fair value - -
-------------------------------- -------- --------
Total finance income 3 30
-------------------------------- -------- --------
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7 Taxation
2015 2014 Restated
GBP'000 GBP'000
--------------------------------------------------- -------- --------------
Analysis of charge in the year
Current tax:
Current income tax expense 1,159 372
Over provision in prior year (163) -
--------------------------------------------------- -------- --------------
Total current income tax 996 372
Deferred tax:
Origination and reversal of temporary differences 1,467 1,771
--------------------------------------------------- -------- --------------
Tax on profit on ordinary activities 2,463 2,143
--------------------------------------------------- -------- --------------
The charge for the period can be reconciled to the profit per
the consolidated statement of comprehensive income as follows:
Profit before tax 17,465 11,018
----------------------------------------------------------------- ------- -------
Tax at the UK corporation tax rate of 20.25% (2014: 21.5%) 3,536 2,314
Expenses not deductible for tax purposes / (non taxable income) (62) 121
Adjustments to tax charge in respect of previous periods (107) 132
Change in tax rate (904) -
Changes in amounts recognised for deferred tax - (424)
----------------------------------------------------------------- ------- -------
Tax expense in the income statement 2,463 2,143
----------------------------------------------------------------- ------- -------
8 Earnings per share
The calculation of EPS is based on the following data and number
of shares:
2015 2014 restated
GBP'000 GBP000's
---------------------------------------------------------------------------- ----------- --------------
Profit for the year used for calculation of basic EPS 15,002 8,875
Amortisation of intangible assets 1,459 1,155
Other operating income (1,546) (215)
Exceptional costs - 637
Tax effect of adjustments 19 (347)
---------------------------------------------------------------------------- ----------- --------------
Earnings for the purpose of adjusted EPS 14,934 10,105
---------------------------------------------------------------------------- ----------- --------------
Number of shares 2015 2014
---------------------------------------------------------------------------- ----------- --------------
Weighted average number of ordinary shares for the purposes of basic EPS 85,928,114 84,887,262
Effect of potentially dilutive ordinary shares:
- share options 3,463,275 3,370,617
---------------------------------------------------------------------------- ----------- --------------
Weighted average number of ordinary shares for the purposes of diluted EPS 89,391,389 88,257,879
---------------------------------------------------------------------------- ----------- --------------
Earnings per share:
- basic (pence) 17.46 10.46
- diluted (pence) 16.78 10.06
Adjusted earnings per share:
- basic (pence) 17.38 11.90
- diluted (pence) 16.70 11.45
---------------------------------------------------------------------------- ----------- --------------
The Directors consider that the adjusted earnings per share
calculation gives a better understanding of the Group's earnings
per share.
9 Dividends
2015 2014
GBP'000 GBP'000
-------------------------------------------------- -------- --------
Equity dividends
Paid during the year:
Interim paid in respect of 2015, 1.1p per share 947
Final paid in respect of 2014, 1.88p per share 1,617
Interim paid in respect of 2014, 0.7p per share 1,370
Final paid in respect of 2013, 1.61p per share 804
Total dividends 2,564 2,174
-------------------------------------------------- -------- --------
10 Intangible assets
Customer
Goodwill contracts Development Software Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
-------------------------------------- --------- ---------- ------------ --------- --------
Cost
As at 1 January 2014 - - 1,192 1,810 3,002
Additions - - 356 183 539
Additions as part of UPL acquisition 4,112 2,160 - 3,258 9,530
-------------------------------------- --------- ---------- ------------ --------- --------
As at 31 December 2014 4,112 2,160 1,548 5,251 13,071
Additions - - 525 30 555
As at 31 December 2015 4,112 2,160 2,073 5,281 13,626
-------------------------------------- --------- ---------- ------------ --------- --------
Amortisation
As at 1 January 2014 - - 44 940 984
Charge for year - 332 77 746 1,155
-------------------------------------- --------- ---------- ------------ --------- --------
As at 31 December 2014 - 332 121 1,686 2,139
Charge for year - 666 121 672 1,459
-------------------------------------- --------- ---------- ------------ --------- --------
As at 31 December 2015 - 998 242 2,358 3,598
-------------------------------------- --------- ---------- ------------ --------- --------
Net book value
At 31 December 2015 4,112 1,162 1,831 2,923 10,028
-------------------------------------- --------- ---------- ------------ --------- --------
At 31 December 2014 4,112 1,828 1,427 3,565 10,932
-------------------------------------- --------- ---------- ------------ --------- --------
At 1 January 2014 - - 1,148 870 2,018
-------------------------------------- --------- ---------- ------------ --------- --------
11 Property, plant and equipment
Freehold/ Fixtures,
leasehold Plant and fittings and Motor
property machinery equipment vehicles Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
-------------------------------------- ---------- ---------- ------------- --------- --------
Cost
As at 1 January 2014 136 63,000 511 - 63,647
Additions 5 35,715 214 - 35,934
Additions as part of UPL acquisition 1,990 - 437 112 2,539
Disposals - (69) - - (69)
-------------------------------------- ---------- ---------- ------------- --------- --------
As at 31 December 2014 2,131 98,646 1,162 112 102,051
Additions 13 41,192 256 - 41,461
Disposals - (222) - (32) (254)
-------------------------------------- ---------- ---------- ------------- --------- --------
As at 31 December 2015 2,144 139,616 1,418 80 143,258
-------------------------------------- ---------- ---------- ------------- --------- --------
Depreciation
As at 1 January 2014 50 5,959 256 - 6,265
Charge for year 56 4,200 236 34 4,526
Disposals - (17) - - (17)
-------------------------------------- ---------- ---------- ------------- --------- --------
As at 31 December 2014 106 10,142 492 34 10,774
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Charge for year 64 6,378 340 34 6,816
Disposals - (21) - (11) (32)
-------------------------------------- ---------- ---------- ------------- --------- --------
As at 31 December 2015 170 16,499 832 57 17,558
-------------------------------------- ---------- ---------- ------------- --------- --------
Net book value
At 31 December 2015 1,974 123,117 586 23 125,700
-------------------------------------- ---------- ---------- ------------- --------- --------
At 31 December 2014 2,025 88,504 670 78 91,277
-------------------------------------- ---------- ---------- ------------- --------- --------
At 1 January 2014 86 57,041 92 163 57,382
-------------------------------------- ---------- ---------- ------------- --------- --------
Hire purchase agreements
Included within the net book value of GBP125,700,000 (2014:
GBP91,277,000; 2013: GBP57,382,000) is GBP73,258 (2014: GBP208,000;
2013: GBP84,000) relating to assets held under hire purchase
agreements. The depreciation charged to the consolidated financial
statements in the year in respect of such assets amounted to
GBP65,060 (2014: GBP79,000; 2013: GBP31,000).
The assets are secured by a bond and floating charge (note
[18]).
12 Financial asset investments
Shares in Group Unlisted
undertaking investments Total
GBP'000 GBP'000 GBP'000
------------------------ ---------------- ------------ --------
Cost
As at 1 January 2015 43 40 83
As at 31 December 2015 43 40 83
------------------------ ---------------- ------------ --------
Subsidiary undertakings
Country of Proportion of
incorporation Holding shares held Nature of business
---------------------------- -------------- ---------------- -------------- -------------------------------
All held by the Company:
SMS Connections Limited Scotland Ordinary shares 100% Gas utility management
SMS Meter Assets Limited Scotland Ordinary shares 100% Gas utility management
SMS Data Management Limited Scotland Ordinary shares 100% Data management
UKMA (AF) Limited* England Ordinary shares 100% Leasing
SMS Energy Services Limited Wales Ordinary shares 100% Electricity utility management
SMS Italia SRL* Italy Ordinary shares 100% Electricity utility management
---------------------------- -------------- ---------------- -------------- -------------------------------
[* The shareholding in this company is indirect via a subsidiary
company.]
13 Impairment of goodwill and intangibles with indefinite
lives
The goodwill acquired in business combinations is allocated, at
acquisition, to the cash-generating units (CGUs) that are expected
to benefit from that business combination. The goodwill is
allocated to the Asset Management segment which is the segment that
was expected to benefit from combining gas and electricity
offerings. The Group tests goodwill annually for impairment or more
frequently if there are indications that goodwill might be
impaired. The annual impairment test was performed and no evidence
of impairment was found as at the balance sheet date.
The recoverable amount calculated in the impairment review was
determined on a value-in-use basis. These calculations use pre-tax
cash flow projections based on financial budgets approved by
management and cover a 5-year period with a terminal value. Long
term growth is assumed at 0%. The estimated cash flows are derived
by discounting future cash flows that are based on conservative
growth and attrition rates and discounted at a post-tax rate of
8.2%. There is no reasonably possible change that would cause the
carrying values to exceed recoverable amounts.
14 Inventories
2015 2014
GBP'000 GBP'000
---------------- -------- --------
Finished goods 996 913
Consumables 103 298
---------------- -------- --------
1,099 1,211
---------------- -------- --------
15 Trade and other receivables
2015 2014
GBP'000 GBP'000
------------------- -------- --------
Trade receivables 4,815 3,588
Prepayments 221 542
Accrued income 5,145 3,644
Other receivables 24 70
VAT recoverable - 401
------------------- -------- --------
10,205 8,245
------------------- -------- --------
Amounts falling due after more than one year:
2015 2014
GBP'000 GBP'000
---------------- -------- --------
Accrued income 901 1,172
---------------- -------- --------
The Directors consider that the carrying amount of trade and
other receivables approximates to their fair value.
Trade receivables due from related parties at 31 December 2015
amounted to GBPNil (2014: GBPNil; 2013: GBPNil).
Receivables are all in Sterling denominations.
The Directors are of the opinion that GBP367,253 of the overdue
debts as at 31 December 2015 (2014: GBP33,000; 2013: GBPNil)
require impairment.
Accrued income is invoiced periodically and customers are the
same as those within trade receivables. Due to its nature there is
no accrued income past due.
16 Cash and cash equivalents
Cash and cash equivalents comprise cash held by the Group. The
carrying amount of the asset approximates the fair value. All
balances are held in Sterling.
During each period, there were no amounts of cash placed on
short-term deposit.
For the purposes of the cash flow statement, cash and cash
equivalents comprise:
2015 2014
GBP'000 GBP'000
------ -------- --------
Cash 5,711 4,285
------ -------- --------
5,711 4,285
------ -------- --------
17 Trade and other payables
2015 2014 Restated
GBP'000 GBP'000
------------------ -------- --------------
Current
Trade payables 5,324 7,767
Other payables 94 428
Advance payments 3,105 3,448
Other taxes 827 861
Deferred income 602 1,623
Accruals 4,967 2,567
------------------ -------- --------------
14,919 16,694
------------------ -------- --------------
The Directors consider that the carrying amount of trade and
other payables approximates to their fair value.
The maturity profile of trade payables is given below:
2015 2014
GBP'000 GBP'000
-------------- -------- --------
Current 3,703 5,326
31-60 days 825 1,099
60-90 days 284 539
Over 90 days 512 803
-------------- -------- --------
5,324 7,767
-------------- -------- --------
Trade payables are non interest-bearing and are normally settled
on 30-45 day terms.
All trade liabilities are Sterling denominated.
18 Bank loans and overdrafts
2015 2014
GBP'000 GBP'000
------------- -------- --------
Current
Bank loans 8,496 7,904
8,496 7,904
------------- -------- --------
Non-current
Bank loans 76,219 53,645
76,219 53,645
------------- -------- --------
Bank loans at 31 December 2015 relate to a term loan facility of
GBP105.0m that was finalised in March 2014.
The term loan is available for 24 months, is payable in equal
quarterly instalments based on a ten year repayment profile, with a
final repayment date of 14 March 2019. The term loan attracts
interest at a rate of 1.9% over the three month LIBOR. 0.76% is
paid on undrawn funds.
The banks have a bond and floating charge over current and
future property and assets.
The Group has fixed the bank interest payable through an
interest rate swap (see note 20).
19 Commitments under hire purchase agreements
Future minimal commitments under hire purchase agreements are as
follows:
2015 2014
GBP'000 GBP'000
------------------------------------------- -------- --------
Current
Amounts payable within one year 64 90
------------------------------------------- -------- --------
Non-current
Amounts payable between two to five years 14 64
14 64
------------------------------------------- -------- --------
The Group has hire purchase contracts for various items of
computer equipment. These leases have terms of renewal but no
purchase options and escalation clauses. Renewals are at the option
of the specific entity that holds the lease.
The Directors consider that the future minimum lease payments
under hire purchase contracts approximate to the present value of
the minimum payments. Obligations under hire purchase contracts are
secured on the underlying assets.
20 Other financial liabilities and assets
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The Group's treasury policy and management of financial
instruments, which form part of these financial statements, are set
out in the Financial Review.
2015 2014
GBP'000 GBP'000
----------------------------- -------- --------
Other financial assets - -
----------------------------- -------- --------
Current liabilities
Other financial liabilities 46 70
----------------------------- -------- --------
Other financial assets and liabilities relate to the fair value
adjustment on interest rate swaps.
The Group uses interest rate swaps to manage interest rate risk
on interest-bearing loans and borrowings which means that the Group
pays a fixed interest rate rather than being subject to
fluctuations in the variable rate. The Group has not designated
these derivatives as cash flow hedges. The interest rate swaps
cover an interest rate swap for an amount of GBP26,400,000 as at 31
December 2015 (2014: GBP30,000,000 2013: GBP28,200,000). The
interest rate swap results in a fixed interest rate of 2.83%. The
termination date for the derivatives is 15 September 2016.
The movement in the fair value is shown below:
2015 2014
GBP'000 GBP'000
-------------------------- -------- --------
Interest rate swap
Opening position (70) 207
Adjustment to fair value 24 (277)
-------------------------- -------- --------
Closing position (46) (70)
-------------------------- -------- --------
Fair values
The Directors do not consider there to be any material
differences between the fair values and carrying values of any
financial assets or liabilities recorded within these financial
statements at the balance sheet date other than as set out
below.
Fair value hierarchy
The Group uses the following hierarchy for determining and
disclosing the fair value of financial instruments by valuation
technique:
-- Level 1: quoted (unadjusted) prices in active markets for identical assets or liabilities;
-- Level 2: other techniques for which all inputs which have a
significant effect on the recorded fair value are observable,
either directly or indirectly; and
-- Level 3: techniques which use inputs which have a significant
effect on the recorded fair value that are not based on observable
market data.
At 31 December 2015, the Group held the following financial
instruments measured at fair value:
31 December
2015 Level Level Level
1 2 3
Liabilities measured GBP'000 GBP'000 GBP'000 GBP'000
at fair value
Financial liabilities
at fair value through
the statement of comprehensive
income:
Interest rate derivatives (46) - (46) -
Fair value has been assessed on a Mark to Market basis.
The above assets are shown on the statement of financial
position as other current financial assets and other current
financial liabilities.
During the reporting period ended 31 December 2015, there were
no transfers between Level 1 and Level 2 fair value measurements
and no transfers into and out of Level 3 fair value
measurements.
21 Financial risk management
The Board reviews and agrees policies for managing the risks
associated with interest rate, credit and liquidity risk. The Group
has in place a risk management policy that seeks to minimise any
adverse effect on the financial performance of the Group by
continually monitoring the following risks:
Interest rate risk
The Group's interest rate risk arises as a result of both its
long and short-term borrowing facilities.
The Group seeks to manage exposure to interest rate fluctuations
through the use of fixed interest rate swaps.
Interest rate sensitivity
The following table demonstrates the sensitivity to a change in
interest rates on loans and borrowings. The Group's profit before
tax is affected through the impact on floating rate borrowings as
follows:
Effect on profit
Increase/decrease before tax
Pound Sterling in basis points GBP'000
---------------- ---------------- -----------------
2015 1% 329
2014 1% 195
---------------- ---------------- -----------------
Interest rate risk profile of financial liabilities
The interest rate profile of the financial liabilities of the
Group (being bank loans and overdrafts, obligations under finance
leases and other financial liabilities) as at each period end is as
follows:
Fixed rate Variable rate
financial financial
liabilities liabilities Total
GBP'000 GBP'000 GBP'000
---------------- ------------ -------------- --------
2015 26,400 58,556 84,956
2014 30,153 31,550 61,703
1 January 2014 28,209 7,208 35,417
---------------- ------------ -------------- --------
The fixed rate financial liabilities relate to the portion of
the banking facility that is fixed through instruments.
Interest rate risk profile of financial assets
The Group's financial assets at 31 December 2015 comprise cash
and trade receivables. The cash balance of GBP5,711,000 (2014:
GBP4,285,000; 2013: GBP2,073,000) is a floating rate financial
asset.
Fair values of financial liabilities and financial assets
The fair values, based upon the market value or discounted cash
flows of financial liabilities and financial assets held in the
Group, were not materially different from their book values.
Foreign currency risk
The Group's exposure to the risk of changes in foreign exchange
rates is insignificant as primarily all of the Group's operating
activities are denominated in pound Sterling.
Liquidity risk
The Group manages its cash in a manner designed to ensure
maximum benefit is gained whilst ensuring security of investment
sources. The Group's policy on investment of surplus funds is to
place deposits at institutions with strong credit ratings.
The ageing and maturity profile of the Group's material
liabilities are covered within the relevant liability note or
below.
2015 2014
GBP'000 GBP'000
-------------------- -------- --------
Fixed rate
Less than one year 3,392 3,090
Two to five years 12,497 12,063
Over five years 14,119 15,000
-------------------- -------- --------
30,008 30,153
-------------------- -------- --------
Variable rate
Less than one year 6,728 4,603
Two to five years 25,597 19,618
Over five years 35,096 7,329
-------------------- -------- --------
67,421 31,550
-------------------- -------- --------
Credit risk
Credit risk with respect to trade receivables and accrued income
is due to the Group trading with a limited number of companies who
are generally large utility companies or financial institutions.
Therefore, the Group does not expect, in the normal course of
events, that these debts are at significant risk. The Group's
maximum exposure to credit risk equates to the carrying value of
cash held on deposit and trade, other receivables and accrued
income.
The Group's maximum exposure to credit risk from its customers
is GBP9,960,000 (2014: GBP8,278,000; 2013: GBP5,211,000) as
disclosed in note 15 - trade and other receivables, and accrued
income.
The Group regularly monitors and updates its cash flow forecasts
to ensure it has sufficient and appropriate funds to meet its
ongoing operational requirements whilst maintaining adequate
headroom on its facilities to ensure no breach in its banking
covenants.
Capital management
Capital is the equity attributable to the equity holders of the
parent. The primary objective of the Group's capital management is
to ensure that it maintains a strong credit rating and healthy
capital ratios in order to support its business and maximise
shareholder value. The Group manages its capital structure, and
makes adjustments to it, in light of changes in economic
conditions. To maintain or adjust the capital structure, the Group
may adjust the dividend payment to shareholders, sell assets,
return capital to shareholders or issue new shares.
The Group monitors capital on the basis of a leverage ratio.
This ratio is calculated as net debt divided by EBITDA. Net debt is
calculated as total borrowings less cash. EBITDA is calculated as
operating profit before any significant non-recurring items,
interest, tax, depreciation and amortisation.
22 Deferred taxation
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The movement in the deferred taxation liability during the
period was:
2015 2014 Restated
GBP'000 GBP'000
------------------------------------------------------------------------------ -------- --------------
Opening deferred tax liability 4,395 3,395
Increase in provision through consolidated statement of comprehensive income 1,467 1,771
Increase in provision through equity 277 (1,918)
Deferred tax on intangibles acquired as part of UPL - 1,137
Other - 10
------------------------------------------------------------------------------ -------- --------------
Closing deferred tax liability 6,139 4,395
------------------------------------------------------------------------------ -------- --------------
All movements identified have gone through the statement of
comprehensive income.
The Group's provision for deferred taxation consists of the tax
effect of temporary differences in respect of:
2015 2014 Restated
GBP'000 GBP'000
---------------------------------------------------------------------------------- -------- --------------
Excess of taxation allowances over depreciation on property, plant and equipment 7,029 5,330
Tax losses available - (37)
Deferred tax asset on share options (1,708) (2,021)
Deferred tax on intangible acquired as part of UPL 828 1,137
Fair value of interest rate swaps (net) (10) (14)
---------------------------------------------------------------------------------- -------- --------------
6,139 4,395
---------------------------------------------------------------------------------- -------- --------------
The deferred tax included in the consolidated statement of
comprehensive income is as follows:
2015 2014
Restated
GBP'000 GBP'000
----------------------------------------------- -------- ----------
Accelerated capital allowances 1,736 1,945
Tax losses - 1
Deferred tax asset on share options 36 (120)
Movement in fair value of intangibles (309)
Movement in fair value of interest rate swaps 4 (55)
----------------------------------------------- -------- ----------
1,467 1,771
----------------------------------------------- -------- ----------
Finance Act (No. 2) 2015, which was substantively enacted on 26
October 2015, includes legislation reducing the main rate of UK
corporation tax from 20% to 18%.This decrease is to be phased in
with a reduction to 19%, effective from 1 April 2017, and a
reduction to 18%, effective from 1 April 2020. Consequently
deferred tax has been provided at the tax rates at which temporary
differences are expected to reverse.
23 Share capital
2015 2014
GBP'000 GBP'000
----------------------------------------------------------------------------------------------- -------- --------
Allotted and called up:
86,112,912 ordinary shares of GBP0.01 each (2014: 85,575,452 ordinary shares of GBP0.01 each) 861 856
----------------------------------------------------------------------------------------------- -------- --------
On 18 March 2015 100,000 ordinary share options were exercised
and subsequently sold by staff.
On 25 March 2015 100,000 ordinary share options were exercised
and subsequently sold by staff.
On 10 April 2015 216,667 ordinary share options were exercised
and subsequently sold by staff.
On 5 May 2015 45,205 ordinary share options were exercised,
23,211 retained and 21,944 subsequently sold by staff.
On 26 May 2015 4,100 ordinary share options were exercised and
subsequently sold by staff
On 10 June 2015 27,088 ordinary share options were exercised and
subsequently sold by staff
On 25 September 2015 10,000 ordinary share options were
exercised and subsequently sold by staff
On 4 November 2015 28,700 ordinary share options were exercised
and subsequently sold by staff
On 27 November 2015 1,500 ordinary share options were exercised,
758 retained and 742 subsequently sold by staff.
On 14 December 2015 4,200 ordinary share options were exercised
and subsequently sold by staff
24 Share-based payments
On 20 June 2011 the Company adopted both an Approved Company
Share Option Plan (the CSOP) and an Unapproved Company Share Option
Plan (the "Unapproved Plan").
CSOP
The CSOP is open to any employee of any member of the Group up
to a maximum value of GBP30,000 per employee. No option can be
exercised within three years of its date of grant. The performance
conditions for awards are based on market capitalisation and
individual performance targets.
Unapproved plan
The Unapproved Plan is open to any employee, Executive Director
or Non-executive Director of the Company or any other Group company
who is required to devote substantially the whole of his time to
his duties under his contract of employment. Except in certain
specified circumstances no option will be exercisable within five
years of its grant. The performance conditions for awards are based
on market capitalisation and individual performance targets.
At At Exercise
1 January 31 December price Date Expiry
Plan 2015 Granted Exercised Lapsed 2015 (pence) exercisable Date
------------ ---------- -------- ----------- --------- ------------ --------- ------------ ---------
CSOP 229,291 - (49,330) - 179,961 76.0 15/7/14 15/7/21
CSOP 39,088 - (35,588) - 3,500 153.5 28/5/15 28/5/22
Unapproved 2,979,060 - (416,667)* - 2,562,393 60.0 20/6/16 20/6/21
Unapproved 1,162,629 - - (11,892) 1,150,737 153.5 28/5/17 28/5/22
Unapproved 64,575 - (35,875) - 28,700 60.0 28/6/13 28/6/23
Unapproved 1,430,965 - - (95,410) 1,335,555 350.0 12/11/14 12/11/24
------------ ---------- -------- ----------- --------- ------------ --------- ------------ ---------
* Early exercise due to retirement approved by board.
The average weighted average share price at the date of exercise
was GBP3.41.
Valuation
The fair value at grant of the share options has been estimated
using appropriate optionpricing models, taking into account the
terms upon which the options were granted, including the
market-based performance conditions. The fair value per share of
the outstanding optionswere estimated as follows.
Grant date Plan Fair value
(pence)
------------- ------------ -----------
15 July
2011 CSOP 17.1
------------- ------------ -----------
28 May 2012 CSOP 31.5
------------- ------------ -----------
20 June
2011 Unapproved 17.4
------------- ------------ -----------
20 June
2011 Unapproved 13.0
------------- ------------ -----------
28 May 2012 Unapproved 40.0
------------- ------------ -----------
28 June
2013 Unapproved 244.0
------------- ------------ -----------
12 Nov 2014 Unapproved 84.8
------------- ------------ -----------
The total fair value of these options is recognised over the
period from their grant date until they become exercisable.
Share Incentive Plan (SIP)
The Company introduced the Smart Metering Systems Share
Incentive Plan ("the SIP") in October 2014. All employees of the
Group (including executive directors) are eligible to participate
in the SIP. Participant may each acquire "Partnership Shares" worth
up to GBP1,800 per year from their pre-tax earnings at market
value. The Company awards participants one Matching Share for each
Partnership Share which they acquire. Dividends received on shares
held in the SIP are reinvested to acquire Dividend Shares at market
value. (Matching Shares may be forfeited if the participants
disposes of the corresponding Partnership Shares or leaves the
employment of the Group within three years of the award date.)
SIP awards
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