smart approach
smart systems
Smart Metering Systems plc
Annual report and accounts 2015
Smart Metering Systems plc Annual report and accounts 2015 Smart Metering Systems plc (SMS) 
connects, owns, operates and maintains 
metering systems and databases on 
behalf of energy companies.
STRATEGIC REPORT
FINANCIAL HIGHLIGHTS
 X Revenue increased by 27% to £53.9m (2014: £42.4m) 
 X Total annualised recurring income* increased by 33% 
to £34.7m (2014: £26.2m) 
 X Gas: meter recurring rent increased 27% to £27.8m 
(2014: £21.9m) and data recurring income more 
than doubled to £2.2m (2014: £1.0m)
 X Electricity: meter recurring rent doubled to £1.3m 
(2014: £0.6m) and data recurring income grew 28% 
to £3.5m (2014: £2.7m)
 X Gross profit increased by 32% to £36.5m (2014: £27.6m) 
 X Gross profit margin at 68% (2014: 65%) 
 X Underlying EBITDA** increased by 38% to £26.3m 
(2014: £19.1m)
 X Underlying PBT** increased by 38% to £17.4m 
(2014: £12.6m) 
 X EBITDA** margin at 49% (2014: 45%) 
 X Underlying earnings per share*** increased 67% to 17.5p 
(2014: 10.5p) 
 X 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 and EBITDA are 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
 X Total gas and electricity metering and data 
assets increased by 211,000 to just under 1 million 
under management at 31 December 2015 
(2014: 768,000)
 X Total gas meter portfolio increased by 19% to 
723,000 (2014: 607,000), with industrial and 
commercial (I&C) meters increasing by 75% 
to 114,000 (2014: 65,000). Gas data portfolio 
increased by 107% to 85,000 (2014: 41,000) 
 X Total electricity meter portfolio increased 
by 142% to 29,000 (2014: 12,000). Electricity 
data portfolio increased by 31% to 142,000 
(2014: 108,000) 
 X ADM™ installations up 80% to 74,000 units at 
31 December 2015 (2014: 41,000) with international 
trials continuing
 X Capital expenditure on meters increased by 15% to 
£41.2m, reaching a monthly run rate of approximately 
£3.5m in December 2015
 X 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
 X 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
 X Strong start to 2016 with new agreements 
and acquisitions: 
 X Opening the domestic smart meter market, SMS signed 
five framework agreements with independent energy 
suppliers: RHE, Green Energy, Flow Energy, Spark Energy 
and Our Power
 X Strategic acquisitions of meter installation suppliers, 
CH4 Gas Utility and Maintenance Services Limited 
and Trojan Utilities Limited, and IT specialists 
Qton Solutions Limited
A year of continued growth across all business areas: 
strong recurring meter rental year, strong performance in 
UK gas connections and strong electricity activity in meter 
rental connections with key strategic development of dual 
fuel smart domestic offering successfully introduced to UK market.
Our highlights Smart Metering Systems plc
Annual report and accounts 2015 01
STRATEGIC REPORT 1
CORPORATE GOVERNANCE
2
FINANCIAL STATEMENTS
3
STRATEGIC REPORT
IFC Our highlights 
02 At a glance 
03 Our business model 
04 Our strategy
05 Our markets 
06 Risk management and principal risks
08 Chairman’s statement 
10 Chief Executive Officer’s statement 
12 Financial review 
CORPORATE GOVERNANCE 
14 Board of Directors 
16 Corporate governance statement 
17 Directors’ remuneration report 
18 Directors’ remuneration policy (“the Policy”)
20 Directors’ report 
22 Directors’ responsibilities statement 
FINANCIAL STATEMENTS 
24 Independent auditor’s report 
25  C o n s o l i d at e d s t at e m e nt 
of comprehensive income 
26  C o n s o l i d at e d s t at e m e nt 
of financial position 
27  C o n s o l i d at e d s t at e m e nt 
of changes in equity 
28 Consolidated statement of cash flows 
29 Accounting policies 
35 Notes to the financial statements 
54 Parent company balance sheet 
54 Company statement of changes in equity
55  Notes to the parent company 
financial statements
MORE ONLINE
Read more about SMS online at our 
investor website sms-plc.com
MEASURE OUR PROGRESS
Our key performance indicators continually monitor 
our progress and enable us to maintain focus on delivery 
and stakeholder satisfaction. We monitor our performance 
by measuring and monitoring key performance indicators 
(KPIs) across the business that we believe are essential to 
our longer-term success. Long-term sustainable performance 
of these KPIs are linked to the remuneration arrangements 
of our management team.
Revenue (£m)
£53.9m
+27%
53.9
2013 2014 2015
27.9
42.4
Underlying earnings 
per share*** (p)
17.46p
+67%
17.46
2013 2014 2015
8.10
10.46
Underlying EBITDA** 
(£m)
£26.3m
+38%
26.3
2013 2014 2015
11.8
19.1
Gross profit (£m)
£36.5m
+32%
36.5
2013 2014 2015
17.8
27.6 STRATEGIC REPORT
Smart Metering Systems plc
Annual report and accounts 2015 02
At a glance
A history of innovation
We provide services across gas and electricity asset management and 
asset installation on behalf of energy companies and energy management 
services as part of an integrated service offering in the gas and electricity 
connections and metering services markets.
Smart Metering Systems plc (SMS) provides a completely 
integrated service from beginning to end, from project 
managing the installation of the gas and/or electricity 
supply and connection through to the procurement, 
installation and management of the meter asset, data 
collection and ongoing energy management services. 
WHAT SETS US APART
 X Completely integrated service from beginning to end
 X Our breadth of service makes us completely unique 
in the industry
 X There are no other organisations in a position to be 
able to offer all of our services simultaneously
 X Excellent customer experience; we build relationships 
that last
Our experience attests to our level of knowledge and 
expertise, but what really sets us apart is our ability to 
tailor customer contracts. This flexibility in the delivery 
of our services is key to our customer-service-centred 
approach. We listen to what our customers need and 
what they want to achieve and then use our collective 
experience to ensure these requirements are met.
OUR STORY
20th anniversary
 X Group established to provide 
services in gas market 
UK gas market evolved from British Gas 
monopoly to unbundled market 
1995
 X SMS started a UK-wide 
contracting business 
Establishment of a meter 
asset management service 
(Ofgem approved)
2004
 X Meter asset portfolio created 
Built with gas suppliers and then 
smart metering and data management 
offering for the I&C market
2009
 X Listed on AIM 
Now AIM top 50
 X Introduction of ADM
TM
 Solution 
SMS pioneered the design, 
development and implementation of 
a low-cost, simple-to-install gas data 
logger to the UK gas meter market
2011
 X Acquisition of UPL 
SMS now provides gas and electricity 
customers with a total end-to-end 
dual fuel gas and electricity service 
of connections, metering, asset 
installation, ownership and 
data management
2014
 X Current strategic opportunities 
Build out order book in I&C market 
Emphasis on recurring rental income 
Cross-selling model: gas and electricity
2015
OUR CLIENTS
Building relationships that last
We take the time to understand our clients’ businesses 
in order to deliver the right solution to match their 
requirements. Our client relationships last for many 
years, which is a testament to the time and commitment 
we invest in providing successful, innovative and 
forward-thinking solutions. Smart Metering Systems plc
Annual report and accounts 2015 03
STRATEGIC REPORT 1
CORPORATE GOVERNANCE
2
FINANCIAL STATEMENTS
3
Our business model
Meter asset manager: operations 
for UK gas and electricity suppliers
Gas and electricity suppliers are mandated 
to provide metering services
Our meter services are Ofgem approved. 
We own, operate and manage commercial and 
domestic gas and electricity meters on behalf 
of the UK’s leading gas and electricity suppliers 
and independent meter asset managers.
We are the largest independent provider 
of gas and electricity meter assets in the UK.
Infrastructure facilitator: management 
of connections and meter installations
Gas and electricity suppliers arrange 
connections for their clients
Our utility connection service is one of 
the UK’s largest independent operators. 
We work in partnership with many of the 
leading providers in the UK gas and electricity 
markets to deliver meter installations, removals 
and exchanges, new gas and electricity 
supplies and increases in capacity.
Helping customers manage energy 
cost and usage
Gas and electricity suppliers are mandated 
to support their customers in reducing 
their energy costs 
Our Energy Management services are 
delivered to organisations in the UK, Italy 
and the Caribbean. Further cost savings 
and reductions in energy consumption 
and carbon emissions can be achieved 
through our invoice management facility, 
automatic monitoring and targeting (aM&T) 
programme and environmental and energy 
management service.
UK GAS AND ELECTRICITY MARKETS AND 
THE SMS INTEGRATED SERVICE OFFERING
End consumers
UK licensed gas and electricity suppliers
SMS plc
ENERGY MANAGEMENT ASSET MANAGEMENT ASSET INSTALLATION
Managing assets and providing 
remote reading solutions
Providing innovative energy 
efficiency strategies
Delivering  
multi-utility connections 
Domestic
Gas I&C
Electricity I&C
Electricity data management
Gas and water data management
ADM™
Utility bureau
Bill validation
Recoveries
Energy and environmental
Gas connections
Electricity connections
Major projects
Estate and wayleaves
Design
Embedded generation STRATEGIC REPORT
Smart Metering Systems plc
Annual report and accounts 2015 04
Our strategy
Scope for continued expansion
Our strategy is to continue to be the market leader in the independent 
ownership of gas and electricity meters in the UK.
KEY STRATEGIC  
PRIORITIES
OUR PROGRESS  
IN 2015
OUR FOCUS  
FOR 2016
1
INCREASE GROWTH 
RATE OF METER 
ASSET PORTFOLIO IN 
I&C AND DOMESTIC 
METER MARKET
Grow our domestic meters 
business organically and 
through new contracts 
and portfolio acquisitions
Maintain SMS position as 
a leading provider of I&C 
smart metering services
 X Total gas and electricity meters 
portfolio increased to 751,897, 
from 619,000
 X Increase meter installations 
in domestic and I&C 
through servicing new 
and existing customers
 X Cross-sell multi-utility 
connections metering and 
data management services
3
TARGET THE 
DOMESTIC SMART 
METER MARKET 
OPPORTUNITY
Establish SMS as the leading 
independent provider of 
domestic smart metering 
assets and solutions to 
the UK market
 X Developed our dual fuel 
proposition resulting in contracts 
being signed with five energy 
suppliers: RHE, Green Energy, 
Flow Energy, Spark Energy 
and Our Power
 X Grow recurring revenue 
through deepening our 
relationships with existing 
energy suppliers and 
seeking new ones 
 X Establish an SMS dual 
fuel training academy
 X Establish dedicated in-house 
installation resources 
4
FOCUSING ON  
CROSS-SELLING
Develop and introduce 
cross-selling opportunities 
across the Group through 
the promotion of existing 
and new services to existing 
Group customers
 X Contracts secured with 
Total Gas & Power Ltd and 
DONG Energy (UK) Ltd
 X Energy Management services 
introduced to energy 
supplier market
 X Electricity site works model 
introduced to ongoing gas 
site works opportunities
 X Gas metering service 
introduced to existing 
major projects customers
 X Continue to promote and 
market Group services 
to existing customers
 X Expand electricity and 
gas I&C services to existing 
Group customers
 X Continue to build on the 
opportunities progressed in 2015
+86%
  Increased our I&C gas 
and electricity portfolio 
by 66,000 meters
2
DRIVE RECURRING 
RENTAL INCOME
Target growth in the 
I&C market
 X Annualised recurring revenues 
from gas and electricity increased 
by 33% to £34.7m
 X Increase recurring revenues 
+33% Smart Metering Systems plc
Annual report and accounts 2015 05
STRATEGIC REPORT 1
CORPORATE GOVERNANCE
2
FINANCIAL STATEMENTS
3
Our markets
Market size and outlook
The government’s smart metering initiative requires every 
home and business in the UK to have smart or advanced 
meter functionality by 2020. This mandate entails a significant 
investment replacing over 50 million electricity and gas meters.
The UK is a large market with few incumbent operators. 
We have traditionally focused on the I&C and traditional gas 
meter market. Following the introduction of our dual fuel 
proposition, we are now well positioned to operate in the 
UK domestic dual fuel smart meter market. The market size 
currently stands at circa 49 million domestic meters and 
3.7 million I&C meters. This breaks down as circa 27 million 
domestic electricity meters, 2.1 million I&C electricity meters, 
22 million domestic gas meters and 1.6 million I&C gas meters. 
Our current position
SMS continues to increase its market share in both the 
electricity and gas I&C markets through new and existing 
customers. The Group has, throughout the year, developed 
a compelling dual fuel domestic smart metering proposition. 
This has been well received by the market as evidenced by 
the recently secured dual fuel smart domestic contracts 
with Robin Hood Energy, Green Energy, Flow Energy, 
Spark Energy and Our Power which together provide 
services to over 386,000 homes in the UK.
Our current market share is 114,000 I&C gas meter assets 
(7.1% of the market) and 609,000 domestic gas meter assets 
(2.8% of the market). In electricity, our current market share 
is 28,557 I&C electricity meter assets (1.4% of the market) 
and, in addition, we are appointed as data agent to over 
140,000 I&C electricity meter points (6.8% of the market).
Our potential
SMS remains confident with its existing contracted 
order book, noting that a further 700,000 meters within 
the I&C electricity and gas micro business market still 
require a smart or advanced meter to be fitted. The Group 
will continue to secure its share of this market and, as a 
result, increase its recurring revenue streams in the coming 
years. SMS has already won contracts for the provision of 
domestic smart meters with five energy suppliers and, with 
our proposition for the provision of turnkey end-to-end service, 
the Group aims to capture between 5 and 15% of the smart 
domestic market. 
We also see potential for our ADM™ device within the 
planned separation of retail in the water I&C market, with 
some 1.1 million water customers who will be able to procure 
their water supply competitively from April 2017. 
Growing market position
Our asset management business continues to present a large market 
opportunity for significant growth with a substantial proportion of an estimated 
2.7 million I&C gas and electricity meters in the UK due to be exchanged for 
a smart metering solution by 2020, with the added potential of a domestic 
market rollout of some 46 million domestic gas and electricity meters.
GAS METERS
723,000 +19.2%
Number of installed assets
 X I&C: 6.9% of the market
 X Domestic: 3.3% of the market
GAS DATA
85,000 +107%
Number of installed assets
ELECTRICITY METERS
29,000 +142.0%
Number of installed assets
 X I&C: 1.4% of the market
ELECTRICITY DATA
142,000 +31.5%
Number of data points STRATEGIC REPORT
Smart Metering Systems plc
Annual report and accounts 2015 06
Risk management and principal risks
Risk description Mitigation Change
BUSINESS CONTINUITY – FAILURE OR INTERRUPTION OF IT SYSTEMS
The Group has always understood the competitive 
advantage that it has derived from the significant 
investment made in its bespoke market-leading IT systems. 
Failure or interruption of these systems could result in 
reputational damage and loss of customer confidence.
The Company’s IT infrastructure is subject to failure 
from a variety of causes, including human error, power 
loss and physical or electronic security breaches. 
Other factors which are out of the Company’s control 
include sabotage, vandalism, network failures, natural 
disasters, fibre optic cable cuts, improper building 
maintenance by the landlords of the buildings in which 
the IT infrastructure is located, and terrorism.
 X The Group regularly reviews its IT security 
policies and has successfully undergone 
penetration testing of its IT systems.
 X Real-time offsite mirroring of its servers.
 X Failover facility available for immediate 
redeployment of staff, enabling key 
operations to be serviced. 
NO CHANGE
The Group 
continually reviews 
its strategy and 
implements changes 
to its IT infrastructure 
in line with 
known threats.
REVOLVING CREDIT FACILITY
A well capitalised credit facility is fundamental to 
our ability to provide continued growth. The Group 
is reliant on securing competitively priced funding to 
enable the continued investment in our growing asset 
portfolio. The ability to secure funding could be 
affected by prolonged periods of market volatility 
and political uncertainty.
 X The Group continually reviews its 
capital requirements and funding 
options with potential funders.
 X The Group has a long-term relationship 
and strong support from its existing 
banking club which continues to 
support the growth of the business.
 X The Group has recently agreed a £150m 
revolving credit facility with a club of 
banks which includes Barclays Bank PLC, 
Bank of Scotland and Santander UK PLC. 
This replaces the existing £105m facility.
NO CHANGE
The Group has 
secured sufficient 
capital to fulfil the 
next 15 months’ 
requirements.
DEPENDENT ON A LIMITED NUMBER OF GAS AND ELECTRICITY SUPPLIERS
The Group’s core customers for growth are the UK 
gas and electricity suppliers; these are limited in number. 
The Group has contracts in place with key customers, 
which make up a large part of our existing portfolio. 
These contracts provide for the provision of meter 
rental, and in the event that our relationship with these 
suppliers were to be adversely affected by performance 
or damage to our relationship then termination charges 
would apply. Damage to these relationships would 
have an adverse impact on the revenue generated 
by the Group.
 X Strong track record of maintaining these 
long-term partnering relationships over 
the last 20 years.
 X Key account managers ensure that 
we are listening to our customers’ 
requirements and translating these 
into business deliverables.
 X Customer service is at the heart of our 
business; it is what we have built our 
reputation on and it is what is driving 
our future growth.
 X Securing new contracts with new 
market entrants ensures that we are 
able to minimise the risk of loss of 
assets through change of supplier 
by end customers.
RISK DECREASED 
The securing of new 
contracts reduces 
SMS’ reliance on the 
big six suppliers.
Managing risks
The attention of investors is drawn to the fact that ownership of 
ordinary shares will involve a variety of risks which, if they occur, may 
have a material adverse effect on the Group’s business and financial 
condition and on the market price of the ordinary shares. Smart Metering Systems plc
Annual report and accounts 2015 07
STRATEGIC REPORT 1
CORPORATE GOVERNANCE
2
FINANCIAL STATEMENTS
3
Risk description Mitigation Change
THE GROUP MAY EXPERIENCE ACCELERATED DEMAND FOR ITS PRODUCTS AND SERVICES
The Group expects to be able to meet its current 
capital expenditure from its internal resources and its 
debt facility. However, with the rollout of Domestic 
Smart, the Group is tendering for opportunities that 
may require the Group to consider supporting the 
working capital requirements for orders by the 
issue of new equity and/or debt finance.
If the Company is unable to raise the necessary 
financing it could adversely affect the Group’s 
ability to expand.
 X The Group maintains close relationships 
with funding partners to give Directors 
confidence that future growth can 
be funded.
 X Opportunities are continually reviewed 
and assessed in line with our revolving 
credit facility.
RISK INCREASED
The value of 
opportunities has 
significantly 
increased.
CHANGES IN GOVERNMENT POLICY
Current government policy is the mandating for all 
meters to be smart by 2020; this requires capital 
investment in excess of £12bn. A large part of the 
Group’s growth strategy is geared around the exchange 
and delivery of these meter assets. Any changes in 
legislation may adversely affect the Group.
 X Actively involved with the Department 
of Energy & Climate Change (DECC) 
in shaping future policies.
 X Industry respected management team, 
playing a major role within important 
working groups.
 X Lobbying on market-specific consultation, 
ensuring we understand the impact of a 
change in policy whilst having an active 
voice in the shaping of future policies.
NO CHANGE
The foundation 
stage of Smart 
Domestic is being 
rolled out and 
adoption by new 
entrants is high.
RELIANCE ON PERFORMANCE OF SUBCONTRACTORS
The Group relies on a number of third-party partners 
to deliver its meter exchanges and maintenance activities. 
Failure of one of these partners to deliver to the high 
expectation demanded by ourselves and our customers 
could result in loss of customer confidence or loss of 
accreditation. The Group has taken a strategic decision 
to safeguard its service standards through the 
acquisition of two of its third-party contractors.
 X The acquisitions of CH4 and Trojan 
significantly reduce the Group’s reliance 
on third-party providers and enable the 
Group to train and retain new dual fuel 
engineers to meet the demands of the 
domestic smart metering rollout.
 X The Group monitors and independently 
audits third-party partners accreditations, 
working practices and employee 
competencies.
RISK INCREASED
Resource availability 
will become 
increasingly tight 
with the anticipated 
increase in demand.
UNFORESEEN DELAYS AND COST OVERRUNS WHEN ROLLING OUT NEW, AND UPGRADING EXISTING, PRODUCTS
The Group may experience unforeseen delays and 
expenses in connection with a particular project or 
initiative. Although the Group has budgeted for 
expected costings, additional expenses may well be 
incurred. With the rollout of domestic smart resource 
retention, training and systems will be key. Inability 
to address these could negatively affect the Group.
 X The Group has considerable experience 
in forecasting and managing project 
implementation timetables.
 X The Group has taken steps, through its 
recent acquisitions, to ensure that it is 
able to mitigate future resource constraints 
that would otherwise have significantly 
hindered its ability to mitigate the 
above challenges. 
RISK INCREASED
Complexity and 
challenges of such 
a large rollout within 
truncated timelines, 
i.e. 50 million meter 
exchanges by 2020.
LOSS OF REQUIRED ACCREDITATIONS
The installation and maintenance of electricity and 
gas meters within the UK is a regulated activity and, 
as such, the organisations need to maintain the required 
industry accreditations, which are reviewed on an 
annual basis. Loss of these accreditations would mean 
that the Group would no longer be able to operate.
 X The Group has a dedicated compliance 
team which is responsible for ensuring 
that all members of staff are aware of our 
obligations. Routine audits are carried out 
and reported to the senior management 
team to ensure that compliance is 
maintained to the highest standard.
NO CHANGE
Robust audit 
processes ensure 
full compliance. STRATEGIC REPORT
Smart Metering Systems plc
Annual report and accounts 2015 08
Chairman’s statement
Celebrating 20 years in operation
2015 is a special year for SMS as we celebrate 20 years in operation and a 
rebranding of the business, bringing all of our Group subsidiaries under the single 
SMS brand. We are delighted to be reporting another strong set of results in our 
20th year in business.
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 20th 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: Asset Installation, Asset 
Management and Energy Management, with gas and 
electricity service offerings across all three divisions. 
In the first half of the year, the Asset Management 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 Asset Installation business. 
This contract win followed a strong end to 2014 where we 
won contracts with BES Utilities, British Gas Business, 
DONG Energy (UK) 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. 
HIGHLIGHTS
 X Celebrated 20 years in operation
 X Rebranded under single SMS brand 
 X Completion of strategic acquisitions Smart Metering Systems plc
Annual report and accounts 2015 09
STRATEGIC REPORT 1
CORPORATE GOVERNANCE
2
FINANCIAL STATEMENTS
3
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:
 X 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; 
 X drive recurring rental income from the I&C market; 
 X target the significant domestic smart meter market 
opportunity in the UK based on our proven business 
model and established market position; and
 X 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
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. 
Paul Dollman
Non-executive Chairman STRATEGIC REPORT
Smart Metering Systems plc
Annual report and accounts 2015 10
Chief Executive Officer’s statement
Simplifying our offer for greater results
Our rebrand reflects the additional future opportunities for SMS’s business, 
as the Company positions itself for the upcoming UK domestic smart meter 
exchange programme with its combined gas and electricity metering offering.
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 56% 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 
£0.6m to £1.25m. 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.
HIGHLIGHTS
 X Increase in recurring revenues by 33%
 X Increase in meter and data assets to just 
under 1 million
 X Domestic smart metering – signed five new 
framework agreements
 X Contracts in place with companies 
representing over 80% of the total 
I&C market and over 40% of the 
Domestic market 
 X Underlying earnings per share* 
increased by 67%
 X Final dividend of 2.20p per ordinary share
*  Underlying earnings per share is profit after taxation 
but before exceptional items and intangible amortisation, 
divided by the weighted average number of ordinary 
shares in issue. Smart Metering Systems plc
Annual report and accounts 2015 11
STRATEGIC REPORT 1
CORPORATE GOVERNANCE
2
FINANCIAL STATEMENTS
3
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 £6.5bn 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 rollout 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 £150m 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 
rollout 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 end of the year. 
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 rollout programme in the UK.
ADM™
The ADM™ 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™ devices in the UK. 
In 2015 the number of ADM™ installations increased to 
74,000, up from 41,000 in 2014, and we remain confident that 
our ADM™ 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. 
Alan Foy
Chief Executive Officer STRATEGIC REPORT
Smart Metering Systems plc
Annual report and accounts 2015 12
Financial review
Another year of strong results for SMS
2015 has been another year of strong growth with robust financial performance 
across all business areas with continued growth in both UK I&C and domestic 
meter markets.
Results for the year
During 2015, SMS increased revenue by 27% to £53.9m. 
Recurring revenue, in line with the Company’s strategy, 
increased to 56% of total revenue in 2015, compared 
to 53% in the same period in 2014. 
Gross profit increased by 32% from £27.6m to £36.5m, 
of which the new electricity offerings contributed £6.0m. 
Underlying EBITDA grew 38% from £19.1m to £26.3m, 
with the electricity offerings contributing £2.75m.
Recurring revenue is a key part of our business model which 
consists of meter rental and data provision revenue from both 
gas and electricity as disclosed in our Asset Management 
segment. We refer to this in two ways:
 X recurring revenue – the revenue included within 
the reporting period; and
 X annualised recurring revenue – the annual revenue from 
our meter and data income streams at a point in time.
Our meter asset management contracts entitle the company 
to termination fees should we be de-appointed from a meter. 
During the year termination fees of £1.55m were included 
in other operating income.
During the year end process two prior year adjustments 
were identified. These are detailed in note 1.
Cash and borrowings
SMS was delighted to announce in March 2016 a new £150m 
revolving credit facility with a club of banks: Barclays Bank PLC 
(lead bank), Bank of Scotland plc and Santander UK plc. 
This facility will fund the purchase of meter assets as part of 
a phased installation programme in line with recent substantial 
contract wins and under this facility we can fund 100% of 
the value of meter assets purchased.
As at 31 December 2015, the Company had net debt of £79m 
compared to £57.3m in 2014, cash resources including unused 
facilities of £26.0m compared to £47.5m in 2014 and gearing 
of 166% (2014: 166% – restated). 
Capital investment in meters and data assets in 2015 
was £41.1m compared to £35.7m in 2014. 
Treasury policies
The Company uses interest rate swaps, where appropriate, 
to manage interest rate movements on borrowings by 
paying a fixed interest rate rather than a variable rate. 
Interest rate swaps were for an amount of £26.4m as at 
31 December 2015 (2014: £30.0m). The interest rate swap 
gives a fixed interest rate of 2.81%. The maturity date for the 
interest rate swap is 15 September 2016.
Glen Murray
Finance Director
HIGHLIGHTS
 X Revenues increased by 27% 
 X Gross profit increased by 32% 
 X Underlying EBITDA* increased by 38% 
 X Capital investment in meters up by 15% 
 X New £150m club bank facility announced 
on 7 March 2016 
 X Available cash resources of £26m 
at year end
*  Excluding exceptional items, other operational income, 
and intangible amortisation. 13
Smart Metering Systems plc
Annual report and accounts 2015
STRATEGIC REPORT 1
CORPORATE GOVERNANCE
2
FINANCIAL STATEMENTS
3
Corporate
governance
14 Board of Directors
16 Corporate governance statement
17 Directors’ remuneration report
18 Directors’ remuneration policy (“the Policy”) 
20 Directors’ report
22 Directors’ responsibilities statement CORPORATE GOVERNANCE
Smart Metering Systems plc
Annual report and accounts 2015 14
Board of Directors
Paul is a Chartered Accountant 
and was Group Finance Director of 
John Menzies plc for over ten years 
until May 2013. John Menzies plc is 
an international support services 
business with two divisions and has 
revenues of around £2bn. Paul was 
particularly involved in the growth and 
development of the aviation division, 
which nearly trebled in size in ten 
years. Prior to that he was Group 
Finance Director of William Grant 
and Sons Ltd and previously held 
senior finance positions in Inveresk plc, 
Maddox Group plc and Clydesdale 
Retail Group. He is a Non-executive 
Director of Scottish Amicable Life 
Association Society and Wilmington plc 
and is a member of the Audit Committee 
of The National Library of Scotland. 
He graduated from the University 
of St Andrews in 1978 and qualified 
as a Chartered Accountant with 
Price Waterhouse in 1982.
Alan has been Chief Executive Officer 
of SMS plc since 2009. He led the 
flotation of the Company on the 
London Stock Exchange AIM market in 
July 2011. In the past four years, annual 
turnover and profits have risen 
significantly through a combination 
of strategic acquisition and organic 
growth. Prior to joining SMS in 2004, 
Alan worked for Scottish Power and, 
in 1997, gained approval to establish 
its regulated gas transportation and 
metering business, SP Gas Ltd, which 
under his management grew to become 
a major gas transporter in the UK. 
Alan was previously a Director of 
an international energy consultancy 
practice and has considerable experience 
in utility asset ownership, supply and 
shipping activities. A professionally 
qualified engineer, Alan places strong 
emphasis on team development, safety, 
operational performance and financial 
accountability within an ethos 
of customer satisfaction.
Glen joined SMS in 2009 as a business 
accountant prior to assuming his current 
role as Finance Director. A qualified 
accountant and experienced financier, 
he provides the business with the 
structure and controls to diligently 
manage and report on all business 
activities. Glen has key responsibility 
for financial reporting, business plan 
modelling, business performance 
monitoring and reporting against the 
plan. Glen qualified with French Duncan 
in 1995 and in 1997 joined Shin-Etsu 
Handotai Europe as an accountant, 
with responsibilities including treasury 
management, budgetary control, monthly 
branch accounts and management 
accounting. He later joined Gilchrist & 
Company (which merged with Baker 
Tilly in May 2009) as a senior manager 
responsible for a team of five delivering 
accountancy, audit, corporate finance 
and VAT services.
Paul Dollman
Non-executive Chairman 
Alan Foy
Chief Executive Officer 
Glen Murray
Finance Director 
Date of appointment 7 November 2013
Committees
Date of appointment 24 December 2007
Committees
Date of appointment 1 January 2011
Committees R A N R A N R A N 15
Smart Metering Systems plc
Annual report and accounts 2015
STRATEGIC REPORT 1
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2
FINANCIAL STATEMENTS
3
With qualifications as a barrister 
and in corporate finance, Miriam has 
spent more than 25 years working 
for a number of leading investment 
banks and other financial institutions. 
Miriam is a founding partner in SPARK 
Advisory Partners, a corporate advisory 
business, a Non-executive Director of 
Mithras Investment Trust plc and Eclipse 
Shipping and a trustee of Fiscal Affairs 
Scotland. She was, for nine years until 
2013, a Non-executive Director of the 
Gas and Electricity Markets Authority 
(Ofgem) for whom she is currently 
Chair of the Gas Network Innovation 
Expert Panel. A Deputy Lieutenant 
of the City of Edinburgh, Miriam was 
awarded an OBE for services to 
corporate finance in 2000. 
Miriam Greenwood
Independent Non-executive 
Director
Date of appointment 3 February 2014
Committees
Willie is a very experienced Non-executive 
and Executive Director having held 
a number of senior posts across 
various sectors.
He is currently Chairman of Fallago Rigg, 
a joint venture between Hermes Capital 
and EDF Renewables. He is also 
a Non-executive Director at Grove, 
the holding company for Barchester 
Healthcare, and Business Stream 
(Retail Water and Waste). Willie is the 
Chairman of the remuneration committee 
at Business Stream and most recently 
has been appointed as Chairman 
of Ogilvie Group, a Stirling-based 
conglomerate with interests spanning 
construction, fleet hire and IT.
In 2012 he acted as Non-executive/CEO 
of May Gurney PLC, which was AIM listed. 
Here he led a significant turnaround after 
a profits warning, which culminated in 
the sale of the business to Kier PLC. 
This turnaround received The Times 
Turnaround of the Year Award. 
From 2009 to 2012 Willie was the main 
Board Director of EAGA PLC, a FTSE 250 
energy services company, which after 
successfully entering the green energy 
sector was sold to Carillion PLC.
As a member of the Scottish Power 
Executive Team (Energy Retail Director) 
he successfully led Scottish Power through 
the deregulation of the UK energy market. 
He played a major role in the integration 
of Scottish Power and Iberdrola. Scottish 
Power’s successful metering business 
was part of his portfolio.
Willie had involvement at the highest 
level with the last two UK governments 
utilising experience and skills on a variety 
of working groups with strategic and 
operational dimensions reporting to the 
UK Energy Minister/Director Generals.
Willie MacDiarmid
Independent Non-executive 
Director
Date of appointment 14 April 2014
Committees
Audit Committee
Remuneration Committee
Nomination Committee
Committee Chair
N
N
R
A
A N R R A CORPORATE GOVERNANCE
Smart Metering Systems plc
Annual report and accounts 2015 16
Corporate governance statement
As an AIM-listed company, the Company is not required 
to comply with any specific requirements for corporate 
governance procedures. Nevertheless, in considering its 
own arrangements for governance, the Company has regard, 
so far as is practicable and appropriate for a company of its size 
and nature, to the provisions of the UK Corporate Governance 
Code, and by the recommendations of the Quoted Companies 
Alliance (QCA). The key elements of the Company’s corporate 
governance arrangements are described below. 
Board structure
During the year the Company had two Independent 
Non-executive Directors on the Board to bring an independent 
view and to provide a balance to the Executive Directors. 
The Board is responsible for formulating, reviewing and 
approving the Group’s strategy, budgets and corporate 
actions. The Directors hold eight Board meetings per annum.
Board Committees 
The Board delegates certain matters to its three principal 
Committees, which deal with audit, remuneration 
and nomination.
Audit Committee
During the year the Audit Committee comprised Miriam 
Greenwood (Chair), Paul Dollman and Willie MacDiarmid. 
Meetings are also attended, by invitation, by the Group 
Finance Director. The Audit Committee is responsible for 
monitoring the quality of internal controls and ensuring that 
the financial performance of the Group is properly measured 
and reported on. It receives and reviews reports from the 
Group’s management and external auditor relating to the 
interim and annual accounts and the accounting and internal 
control systems in use throughout the Group. The Audit 
Committee meets at least twice in each financial year and 
has unrestricted access to the Group’s external auditor.
Remuneration Committee
During the year the Remuneration Committee comprised 
Willie MacDiarmid (Chair), Paul Dollman and Miriam Greenwood. 
The Remuneration Committee reviews the performance 
of the Executive Directors and makes recommendations 
to the Board on matters relating to their remuneration 
and terms of service. The Remuneration Committee also 
makes recommendations to the Board on proposals for 
the granting of share options and other equity incentives 
pursuant to any employee share option scheme or equity 
incentive plans in operation from time to time. The 
Remuneration Committee meets at least annually. In 
exercising this role, the Directors have regard to the 
recommendations put forward in the QCA Guidelines 
and, where appropriate, the UK Corporate Governance 
Code guidelines.
Nomination Committee
During the year the Nomination Committee was chaired 
by Paul Dollman and also comprised Miriam Greenwood, 
Willie MacDiarmid and Alan Foy. The Nomination Committee 
considers the selection and re-appointment of Directors. 
It identifies and nominates candidates to fill Board vacancies 
and regularly reviews the structure, size and composition 
(including the skills, knowledge and experience) of the 
Board and makes recommendations to the Board with 
regard to any changes.
Internal control
The Board has overall responsibility for the Group’s system 
of internal control and risk management and for reviewing 
the effectiveness of this system. Such a system can only be 
designed to manage, rather than eliminate, the risk of failure 
to achieve business objectives and can therefore only 
provide reasonable and not absolute assurance against 
material misstatement or loss.
The Board is of the view that, due to the current size and 
composition of the Group, it is not necessary to establish 
an internal audit function.
Relationship with shareholders
The Company values its dialogue with both institutional 
and private investors. Effective two-way communication 
with fund managers, institutional investors and analysts 
is actively pursued and this encompasses issues such 
as performance, policy and strategy.
Private investors are encouraged to participate in the 
Annual General Meeting at which the Chairman presents 
a review of the results and comments on current business 
activity. The Chairs of the Audit and Remuneration 
Committees will be available at the Annual General 
Meeting to answer any shareholder questions.
Notice of the Annual General Meeting is posted 
as an enclosure of the Annual Report.
Going concern 
The Directors confirm that, having given consideration 
to various alternative outcomes of future performance 
and forecast capital expenditure together with the available 
bank facilities, recently increased to £150m and giving 
available cash resources of over £50m, they are satisfied 
that the Company and the Group have adequate resources 
to continue in business for the foreseeable future. For this 
reason, they continue to adopt the going concern basis 
in preparing the financial statements.
On behalf of the Board
Glen Murray
Finance Director
21 March 2016
Paul Dollman 
Miriam 
Greenwood
Willie 
MacDiarmid 
(Chair)
Remuneration 
Committee
Paul Dollman  
 (Chair)
Alan Foy
Miriam 
Greenwood
Willie 
MacDiarmid
Nomination 
Committee
Miriam Greenwood 
(Chair)
Paul Dollman 
Willie 
MacDiarmid
The Board 
of Directors
Audit 
Committee
* Glen Murray attends Audit Committee meetings by invitation. 17
Smart Metering Systems plc
Annual report and accounts 2015
STRATEGIC REPORT 1
CORPORATE GOVERNANCE
2
FINANCIAL STATEMENTS
3
Directors’ remuneration report 
Dear shareholder 
As Chairman of the Remuneration Committee (“the Committee”), 
I am pleased to present the Directors’ Remuneration Report 
(“the Report”) for the financial year ended 31 December 2015. 
The Report has been prepared by the Committee and 
approved by the Board of Directors (“the Board”).
The Committee and the Board acknowledge that as an 
AIM-listed business we do not have to satisfy the remuneration 
reporting requirements set out under section 420(1) of the 
Companies Act 2006. However, we have chosen to adopt the 
general spirit of the reporting requirements in order to present 
the information required by the AIM Rules in a way that allows 
our stakeholders to better understand the Company’s policies 
for executive remuneration.
The Committee will continue to adopt this approach for future 
years, providing clear reporting on past remuneration and 
future policy.
The report has been arranged in the following three parts:
 X the Chairman’s Annual Statement, summarising and 
explaining the major decisions on, and any substantial 
changes to, Directors’ remuneration in the year;
 X the Directors’ Remuneration Policy, which sets out 
the Group’s forward looking policy for Executive and 
Non-executive Directors and the key factors which 
were taken into account in setting the Directors’ 
Remuneration Policy; and
 X the Annual Report on Remuneration, which sets 
out details of Directors’ remuneration for the financial 
year ended 31 December 2015. The Annual Report on 
Remuneration is subject to an advisory shareholder 
vote at the AGM on Thursday 26 May 2016.
Annual statement from the Chairman 
of the Remuneration Committee
Remuneration outcomes for the year to 31 December 2015
As outlined in the Annual Report, the Group’s performance 
for the financial year ended 31 December 2015 has been 
excellent. Both revenue and pre-tax profit increased 
substantially following the successful integration of the 
UPL business together with double-digit growth across 
all business segments.
 X The Chief Executive Officer (CEO) earned a bonus 
equating to 41% of basic salary.
 X The Finance Director earned a bonus equating to 36% 
of basic salary.
 X In 2015 the Company made a 5% pension contribution 
to the scheme on behalf of both the CEO and the 
Finance Director. 
 X Share options were granted at the time of IPO under the 
IPO Award Plan, of which four tranches have vested in full. 
The final tranche was due in December 2015 and is subject 
to Board approval.
 X No LTIPs were issued in 2015; however, it is our intention 
to introduce these in 2016, which will be subject to 
Board approval.
Committee governance
During the financial year there was no change to the Board, 
the Non-executive Directors or the Committee; each is set 
out below: 
SMS plc Board of Directors
Paul Dollman  Non-executive Chairman 
Alan Foy  Chief Executive Officer 
Glen Murray  Finance Director 
Miriam Greenwood  Non-executive Director 
Willie MacDiarmid  Non-executive Director 
SMS plc Remuneration Committee
Willie MacDiarmid  Chairman 
Paul Dollman Member
Miriam Greenwood  Member
During the financial year the Committee met on 
three occasions, and Willie MacDiarmid, Chairman of 
the Committee, will be present at the AGM to be held 
on Thursday 26 May 2016.
External advice 
During the period, the Committee engaged Ernst & Young LLP, 
the Group’s current auditor, to assist them on various governance 
aspects relating to the Directors’ Remuneration Report. 
The Committee unanimously recommends that shareholders 
vote to accept the Annual Report on Remuneration. 
On behalf of the Board
Willie MacDiarmid
Chairman of the Remuneration Committee
21 March 2016 CORPORATE GOVERNANCE
Smart Metering Systems plc
Annual report and accounts 2015 18
Directors’ remuneration policy (“the Policy”) 
This section contains details of the Policy as prepared by 
the Committee; the Policy encompasses all remuneration 
in respect of Executive Directors, the Chairman and 
Non-executive Directors.
The Policy will be displayed on the Group’s website  
(www.sms-plc.com) within the Annual Report under the 
investor relations section immediately following the 2016 
AGM (to be held on Thursday 26 May 2016).
 X The objective of the Policy is to ensure that the overall 
remuneration of Executive Directors is aligned with the 
performance and objectives of the Group and preserves 
an appropriate balance of growth and shareholder value. 
 X In 2016 the Committee will introduce a number of new 
remuneration conditions (as outlined below) which will 
continue to be developed.
Non-executive Directors
The remuneration of the Non-executive Directors, including 
the Chairman, is determined by the Executive Directors. 
Non-executive Directors are not entitled to pensions, 
annual bonuses or employee benefits. 
Each of the Non-executive Directors has a letter of 
appointment stating their annual fee and that their 
appointment is initially for a term of three years. 
Their appointment may be terminated on three 
months’ written notice at any time.
Executive Directors’ remuneration
The remuneration arrangements for Executive Directors consist 
of basic salary and annual performance related bonuses and 
LTIPs where appropriate. In addition, they receive private health 
care, permanent health insurance and pension contributions.
It is our intention to seek Board approval for the following 
new conditions as part of the Directors’ remuneration 
in 2016:
 X a shareholding requirement of 100% of salary, 
to be achieved over a three to four year period; 
 X a clawback clause for Executive Director bonuses 
covering both short and long-term incentives. 
The percentage of clawback and the period for 
this will be agreed by the Board during 2016; and
 X the Board reserves the right to issue LTIPs as they 
reasonably deem appropriate, taking into account 
the objectives of the business and the policy.
Annual report on remuneration 
Directors’ emoluments for the financial year ended 31 December 2015
Fees/ Pension Benefits 2015 2014
basic salary Bonus contribution in kind Total Total
£ £ £ £ £ £
Executive
A H Foy 340,000 140,000 15,975 8,259 504,234 439,329
G Murray 110,000 40,000 5,500 2,184 157,684 159,849
Non-executive
P Dollman  90,000 — — — 90,000 75,000
N B Christie — — — — — 21,475
M Greenwood 45,000 — — — 45,000 33,333*
W MacDiarmid 45,000 — — — 45,000 30,000*
Total 630,000 180,000 21,475 10,443 841,918 758,986
* Partial year payment.
The pensions contributions for Directors in 2014 were £20,892. 19
Smart Metering Systems plc
Annual report and accounts 2015
STRATEGIC REPORT 1
CORPORATE GOVERNANCE
2
FINANCIAL STATEMENTS
3
Directors’ interests
The Directors who held office at 31 December 2015 had the following interests in the shares of the Company:
Ordinary shares
2015 2014
£0.01 each £0.01 each
Executive
A H Foy 7,780,608 8,889,958
G Murray — —
Non-executive
P Dollman 20,000 10,000
M Greenwood 10,000 10,000
W MacDiarmid — —
7,810,608 8,909,958
Directors’ share options
Aggregate emoluments disclosed above do not include any amounts for the value of options to acquire ordinary shares in 
the Company granted to or held by the Directors. Details of options for Directors who served during the year are as follows:
Number of
shares Earliest
under Exercise Date of date
Type option price grant exercisable
Executive
G Murray Approved 35,974 76p 15/07/11 15/07/14
Unapproved 666,667 60p 20/06/11 20/06/16
Unapproved 28,700 60p 20/06/13 20/06/13
The share price at 31 December 2015 was 330.0p. The range in the period 1 January to 31 December 2015 was 305.5p to 384.5p.
Details of share options granted by the Company at 31 December 2015 are given in note 25. CORPORATE GOVERNANCE
Smart Metering Systems plc
Annual report and accounts 2015 20
Directors’ report
Directors’ Report
The Directors submit their Annual Report on the affairs 
of the Group together with the financial statements and 
Auditor’s Report for the year ended 31 December 2015.
Outlook
An indication of the likely future developments in the 
business of the Company (and its subsidiaries) is included 
in the Strategic Report of this Annual Report and Accounts 
2015 (page 4) which is incorporated by reference into this 
Directors’ Report.
Directors
The Directors, who served throughout the year except as noted, were as follows:
Name of Director Board title Date of appointment
P Dollman Non-executive Chairman 7 November 2013
A H Foy Chief Executive 24 December 2009
M Greenwood Non-executive Director 3 February 2014
W MacDiarmid Non-executive Director 14 April 2014
G Murray Finance Director 1 January 2011
Political donations
No political donations were made during the year (2014: £Nil).
Substantial shareholdings
On 1 February 2016, the Company had been notified, in accordance with sections 791 to 828 of the Companies Act, 
of the following interests in the ordinary share capital of the Company:
Name of holder Number % held
Mr Steve P Timoney 15,144,344 17.59
Liontrust Asset Management 10,033,284 11.65
Mr Alan Foy 7,780,608 9.03
Old Mutual Asset Manager (UK) 7,382,163 8.57
Schroders Investment Management 6,213,350 7.21
River & Mercantile Asset Management 5,260,000 6.11
Legal & General Investment Management 4,999,963 5.81
Standard Life Investments 4,551,963 5.29
Abdiel Capital Management LLC 3,958,866 4.60
Dividends
The Directors recommend the payment of a final dividend 
of 2.20p per ordinary share (2014: 1.88p), payable on 
2 June 2016 to shareholders on the Company’s Register 
of Members as at the close of business on 29 April 2016. 
The shares will be quoted as ex-dividend on 28 April 2016. 
This final dividend, together with the interim dividend of 
1.1p per ordinary share (2014: 0.7p) paid on 20 November 2015, 
makes a total dividend of 3.3p per ordinary share for the 
2015 financial year (2014: 2.82p).
Financial instruments
Details of the use of financial instruments and financial 
risk management are included in note 21 of the notes to the 
accounts contained in this Annual Report and Accounts 2015, 
which is incorporated by reference into this Directors’ Report. 21
Smart Metering Systems plc
Annual report and accounts 2015
STRATEGIC REPORT 1
CORPORATE GOVERNANCE
2
FINANCIAL STATEMENTS
3
Employees
The Group’s policy of operating through autonomous 
subsidiaries has ensured close consultation with employees 
on matters likely to affect their interests. The Group is firmly 
committed to the continuation and strengthening of 
communication lines with all its employees. 
SMS plc operates an equal opportunities policy which is 
documented in the employee handbook. This is reviewed 
periodically and is now an equality and diversity policy with 
the aim of ensuring that all employees, potential employees 
and other individuals receive equal treatment (including 
access to employment, training and the opportunity for 
promotion) regardless of their age, disability, gender 
reassignment, marriage and civil partnership, pregnancy 
and maternity, race, religion or belief (including lack of belief), 
sex and sexual orientation. It is the policy of the Group to 
support the employment of people with disabilities wherever 
practicable and to ensure, as far as possible, that training, 
career development and promotion opportunities are 
available to all employees. This policy includes employees 
who become disabled whilst employed by the Group. 
All disclosures concerning diversity of the Group’s Directors, 
senior management and employees (as required under 
the Companies Act 2006 (Strategic Report and Directors’ 
Report) Regulations 2013) are contained within the 
Strategic Report.
Research and development
The main research and development activities relate to IT 
systems development to facilitate the dual fuel business.
Director qualifying indemnity provisions
As permitted by the Companies Act 2006, the Company 
purchases and maintains directors’ and officers’ insurance 
cover against certain legal liabilities and costs incurred by 
the Directors and Officers of the Group companies in the 
performance of their duties. The Company has also granted 
an indemnity to each of its Directors in relation to the Directors’ 
exercise of their powers, duties and responsibilities as Directors 
of the Company, the terms of which are in accordance with the 
Companies Act 2006.
Auditor
Each of the Directors at the date of approval of this 
Annual Report confirms that:
 X so far as the Director is aware, there is no relevant 
audit information of which the Company’s auditor 
is unaware; and
 X the Director has taken all the steps that he/she ought to 
have taken as a Director in order to make himself/herself 
aware of any relevant audit information and to establish 
that the Company’s auditor is aware of that information.
This confirmation is given and should be interpreted in 
accordance with the provisions of section 418 of the 
Companies Act 2006.
Ernst and Young LLP was appointed 8 July 2015 and has 
expressed its willingness to continue in office as auditor 
and a resolution to re-appoint Ernst and Young LLP will 
be proposed at the forthcoming AGM.
Approved by the Board of Directors and signed on behalf 
of the Board. 
Glen Murray
Finance Director
21 March 2016 CORPORATE GOVERNANCE
Smart Metering Systems plc
Annual report and accounts 2015 22
The Directors are responsible for preparing the Directors’ Report, 
the Strategic Report, the Directors’ Remuneration Report, the 
separate Corporate Governance Statement and the financial 
statements in accordance with applicable law and regulations.
Company law requires the Directors to prepare Group 
and Company financial statements for each financial year. 
The Directors are required by the AIM Rules of the London 
Stock Exchange to prepare Group financial statements in 
accordance with International Financial Reporting Standards 
(IFRSs) as adopted by the European Union (EU) and have 
elected under company law to prepare the Company financial 
statements in accordance with United Kingdom Generally 
Accepted Accounting Practice (United Kingdom Accounting 
Standards and applicable law), including FRS 102 Limited.
The Group financial statements are required by law and 
IFRSs adopted by the EU to present fairly the financial 
position and performance of the Group; the Companies 
Act 2006 provides in relation to such financial statements 
that references in the relevant part of that Act to financial 
statements giving a true and fair view are references 
to their achieving a fair presentation.
Under company law the Directors must not approve the 
financial statements unless they are satisfied that they give 
a true and fair view of the state of affairs of the Group and the 
Company and of the profit or loss of the Group for that period. 
In preparing each of the Group and Company financial 
statements, the Directors are required to:
 X select suitable accounting policies and then apply 
them consistently;
 X make judgements and accounting estimates that 
are reasonable;
 X for the Group financial statements, state whether 
they have been prepared in accordance with IFRSs 
as adopted by the EU and, for the Company financial 
statements, state whether applicable UK accounting 
standards have been followed, subject to any material 
departures disclosed and explained in the Company 
financial statements; and
 X prepare the financial statements on the going concern 
basis unless it is inappropriate to presume that the 
Group and the Company will continue in business.
The Directors are responsible for keeping adequate 
accounting records that are sufficient to show and explain 
the Group’s and the Company’s transactions and disclose 
with reasonable accuracy at any time the financial position 
of the Group and the Company and enable them to ensure 
that the financial statements and the Directors’ Remuneration 
Report comply with the Companies Act 2006. They are also 
responsible for safeguarding the assets of the Group and 
the Company and hence for taking reasonable steps for the 
prevention and detection of fraud and other irregularities.
The Directors are responsible for the maintenance and 
integrity of the corporate and financial information included 
on the Smart Metering Systems plc website.
Legislation in the UK governing the preparation and 
dissemination of financial statements may differ from 
legislation in other jurisdictions.
Directors’ responsibilities statement
In the preparation of financial statements 23
CORPORATE GOVERNANCE
2
FINANCIAL STATEMENTS
3
STRATEGIC REPORT 1
Smart Metering Systems plc
Annual report and accounts 2015
Financial 
statements
24 Independent auditor’s report 
25  C o n s o l i d at e d s t at e m e nt 
of comprehensive income
26  C o n s o l i d at e d s t at e m e nt 
of financial position
27  C o n s o l i d at e d s t at e m e nt 
of changes in equity
28  C o n s o l i d at e d s t at e m e nt  
of cash flows
29 Accounting policies
35 Notes to the financial statements
54 Parent company balance sheet
54  Company statement of changes 
in equity
55  Notes to the parent company 
financial statements FINANCIAL STATEMENTS
Smart Metering Systems plc
Annual report and accounts 2015 24
Independent auditor’s report 
To the members of Smart Metering Systems plc
We have audited the financial statements of Smart Metering 
Systems plc for the year ended 31 December 2015 which 
comprise the Consolidated statement of comprehensive 
income, Consolidated statement of financial position, 
Consolidated statement of changes in equity, Consolidated 
statement of cash flows, Accounting policies, parent company 
balance sheet, Company statement of changes in equity, the 
related notes 1 to 31 of the consolidated financial statements 
and notes 1 to 6 of the parent financial statements. The financial 
reporting framework that has been applied in the preparation 
of the Group financial statements is applicable law and 
International Financial Reporting Standards (IFRSs) as 
adopted by the European Union. The financial reporting 
framework that has been applied in the preparation of the 
parent company financial statements is applicable law and 
United Kingdom Accounting Standards (United Kingdom 
Generally Accepted Accounting Practice), including FRS 102.
This report is made solely to the Company’s members, 
as a body, in accordance with Chapter 3 of Part 16 of the 
Companies Act 2006. Our audit work has been undertaken 
so that we might state to the Company’s members those 
matters we are required to state to them in an auditor’s 
report and for no other purpose. To the fullest extent 
permitted by law, we do not accept or assume responsibility 
to anyone other than the Company and the Company’s 
members as a body, for our audit work, for this report, 
or for the opinions we have formed. 
Respective responsibilities of Directors and auditor
As explained more fully in the Directors’ Responsibilities 
Statement set out on page 22, the Directors are responsible 
for the preparation of the financial statements and for being 
satisfied that they give a true and fair view. Our responsibility 
is to audit and express an opinion on the financial statements 
in accordance with applicable law and International Standards 
on Auditing (UK and Ireland). Those standards require us to 
comply with the Auditing Practices Board’s Ethical Standards 
for Auditors.
Scope of the audit of the financial statements
An audit involves obtaining evidence about the amounts 
and disclosures in the financial statements sufficient to give 
reasonable assurance that the financial statements are free 
from material misstatement, whether caused by fraud or error. 
This includes an assessment of whether the accounting policies 
are appropriate to the Group’s and the parent company’s 
circumstances and have been consistently applied and 
adequately disclosed; the reasonableness of significant 
accounting estimates made by the Directors; and the overall 
presentation of the financial statements. In addition, we read 
all the financial and non-financial information in the Annual 
Report and Accounts to identify material inconsistencies 
with the audited financial statements and to identify any 
information that is apparently materially incorrect based on, 
or materially inconsistent with, the knowledge acquired by 
us in the course of performing the audit. If we become aware 
of any apparent material misstatements or inconsistencies 
we consider the implications for our report.
Opinion on financial statements
In our opinion:
 X the financial statements give a true and fair view of the 
state of the Group’s and of the parent company’s affairs as 
at 31 December 2015 and of the Group’s profit for the year 
then ended;
 X the Group financial statements have been properly 
prepared in accordance with IFRSs as adopted by the 
European Union; 
 X the parent company financial statements have been 
properly prepared in accordance with United Kingdom 
Generally Accepted Accounting Practice; and
 X the financial statements have been prepared in accordance 
with the requirements of the Companies Act 2006.
Opinion on other matters prescribed by the Companies 
Act 2006
In our opinion the information given in the Strategic Report 
and the Directors’ Report for the financial year for which 
the financial statements are prepared is consistent with 
the financial statements.
Matters on which we are required to report by exception
We have nothing to report in respect of the following 
matters where the Companies Act 2006 requires us 
to report to you if, in our opinion:
 X adequate accounting records have not been kept by the 
parent company, or returns adequate for our audit have 
not been received from branches not visited by us; or
 X the parent company financial statements are not in 
agreement with the accounting records and returns; or
 X certain disclosures of Directors’ remuneration specified 
by law are not made; or
 X we have not received all the information and explanations 
we require for our audit.
Annie Graham (Senior Statutory Auditor)
for and on behalf of Ernst & Young LLP, Statutory Auditor
Glasgow
21 March 2016
Notes
1.  The maintenance and integrity of the Smart Metering Systems plc 
website is the responsibility of the Directors; the work carried out 
by the auditor does not involve consideration of these matters 
and, accordingly, the auditor accepts no responsibility for any 
changes that may have occurred to the financial statements since 
they were initially presented on the website.
2.  Legislation in the United Kingdom governing the preparation and 
dissemination of financial statements may differ from legislation 
in other jurisdictions.  25
CORPORATE GOVERNANCE
2
FINANCIAL STATEMENTS
3
STRATEGIC REPORT 1
Smart Metering Systems plc
Annual report and accounts 2015
Consolidated statement of comprehensive income 
For the year ended 31 December 2015
2014
2015 Restated
Notes £’000 £’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) (2,015)
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
The profit from operations arises from the Group’s continuing operations.
Earnings per share attributable to owners of the parent during the year:
2014
Notes 2015 Restated
Basic earnings per share (pence) 8 17.46 10.46
Diluted earnings per share (pence) 8 16.78 10.06 FINANCIAL STATEMENTS
Smart Metering Systems plc
Annual report and accounts 2015 26
Consolidated statement of financial position
As at 31 December 2015
31 December 1 January
31 December 2014 2014
2015 Restated Restated
Notes £’000 £’000 £’000
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 24 861 856 838
Share premium 9,650 9,291 8,971
Other reserve 26 4,258 4,258 1
Treasury shares 25 (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
The financial statements on pages 24 to 53 were approved and authorised for issue by the Board of Directors and signed 
on its behalf by:
Glen Murray Company registration number
Director SC367563
21 March 2016 27
CORPORATE GOVERNANCE
2
FINANCIAL STATEMENTS
3
STRATEGIC REPORT 1
Smart Metering Systems plc
Annual report and accounts 2015
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: £’000 £’000 £’000 £’000 £’000 £’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 25 and 26 for details of the treasury shares and other reserve. FINANCIAL STATEMENTS
Smart Metering Systems plc
Annual report and accounts 2015 28
Consolidated statement of cash flows
For the year ended 31 December 2015
2015 2014
£’000 £’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 29
CORPORATE GOVERNANCE
2
FINANCIAL STATEMENTS
3
STRATEGIC REPORT 1
Smart Metering Systems plc
Annual report and accounts 2015
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.
Basis of preparation 
The consolidated financial statements, which have been prepared in accordance with EU-endorsed International Financial 
Reporting Standards (IFRSs), and IFRIC interpretations and the Companies Act 2006 applicable to companies reporting 
under IFRSs.
The consolidated financial statements are presented in British Pounds Sterling (£) and all values are rounded to the nearest 
thousand (£’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 £26m.
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.  FINANCIAL STATEMENTS
Smart Metering Systems plc
Annual report and accounts 2015 30
Accounting policies continued
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
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 timeframe 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 overdrafts, 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. 31
CORPORATE GOVERNANCE
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FINANCIAL STATEMENTS
3
STRATEGIC REPORT 1
Smart Metering Systems plc
Annual report and accounts 2015
Financial liabilities continued
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 and 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.  FINANCIAL STATEMENTS
Smart Metering Systems plc
Annual report and accounts 2015 32
Accounting policies continued
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. 
The 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 
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 property  Shorter of the lease term or 15% and 20% on cost 
Plant and machinery   5% and 10% on cost 
Fixtures, fittings and equipment 15% and 33% on cost
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. 33
CORPORATE GOVERNANCE
2
FINANCIAL STATEMENTS
3
STRATEGIC REPORT 1
Smart Metering Systems plc
Annual report and accounts 2015
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 
Consolidated 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 Consolidated 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. FINANCIAL STATEMENTS
Smart Metering Systems plc
Annual report and accounts 2015 34
Accounting policies continued
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
Amendment 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 
Associate or Joint Venture*
1 January 2016
Amendments to IAS 16 and IAS 38 Clarification of Acceptable Methods of Depreciation  
and Amortisation*
1 January 2016
Amendment to IFRS 11 Accounting for Acquisition of Interests in Joint Operations* 1 January 2016
IFRS 16* Leases 1 January 2019
Amendment to IAS 7* Disclosure Initiative* 1 January 2017
Amendment to IAS 12* Recognition of Deferred Tax Assets for Unrealised Losses* 1 January 2017
* 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 finalise 
the standards before formalising their view. 35
CORPORATE GOVERNANCE
2
FINANCIAL STATEMENTS
3
STRATEGIC REPORT 1
Smart Metering Systems plc
Annual report and accounts 2015
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 and 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 before 1 January 2014 is considered immaterial at both revenue and profit level.
The impact is as follows:
31 December 1 January
2014 2014
£’000 £’000
Increase in advance payments 3,448 3,448
Decrease to accruals (1,517) (1,517)
Decrease to income tax payable/increase to income tax repayable (386) (386)
Decrease in equity (1,545) (1,545)
In addition, in 2014, a credit of £1,918,000 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
£’000
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 previously
As restated 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 FINANCIAL STATEMENTS
Smart Metering Systems plc
Annual report and accounts 2015 36
Notes to the financial statements continued
For the year ended 31 December 2015
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™ units within the UK.
Asset installation of meters comprises installation of domestic and I&C 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 Group’s reportable segments together with additional 
balance sheet information:
Asset Asset Energy Total
Management Installation Management Unallocated operations
31 December 2015 £’000 £’000 £’000 £’000 £’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) — 4 8 (2,115)
Profit before tax 17,991 8,644 1,793 (10,963) 17,465
Tax expense    (2,463)
Profit for the year 15,002 37
CORPORATE GOVERNANCE
2
FINANCIAL STATEMENTS
3
STRATEGIC REPORT 1
Smart Metering Systems plc
Annual report and accounts 2015
2 Segmental reporting continued
Asset Asset Energy Revised total
Management Installation Management Unallocated operations
31 December 2014 £’000 £’000 £’000 £’000 £’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 3,193 — 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 the 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
£’000 £’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 £’000 £’000 £’000 £’000
Assets by segment
Intangible assets 10,028 — — 10,028
Property, 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
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 FINANCIAL STATEMENTS
Smart Metering Systems plc
Annual report and accounts 2015 38
Notes to the financial statements continued
For the year ended 31 December 2015
2 Segmental reporting continued
Segment assets and liabilities continued
Asset Asset Energy Total
Management Installation Management operations
31 December 2014 £’000 £’000 £’000 £’000
Assets by segment
Intangible assets 10,932 — — 10,932
Property, 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
£’000 £’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 £Nil (2014: £479,691) acquisition costs and £Nil (2014: £157,500) 
redundancy costs. Included within other direct sales costs and systems rental are staff costs of £2,924,000 (2014: £2,245,000). 39
CORPORATE GOVERNANCE
2
FINANCIAL STATEMENTS
3
STRATEGIC REPORT 1
Smart Metering Systems plc
Annual report and accounts 2015
3  Income statement by nature and items of expenditure included in the Consolidated statement 
of comprehensive income continued
Auditor’s remuneration can be analysed as:
2015 2014
£’000 £’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
£’000 £’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 was:
2015 2014
£’000 £’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 £’000 £’000
Total emoluments 488 423
Pension contributions 16 16 FINANCIAL STATEMENTS
Smart Metering Systems plc
Annual report and accounts 2015 40
Notes to the financial statements continued
For the year ended 31 December 2015
5 Directors’ emoluments continued
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
£’000 £’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
7 Taxation
2014
2015 Restated
£’000 £’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 41
CORPORATE GOVERNANCE
2
FINANCIAL STATEMENTS
3
STRATEGIC REPORT 1
Smart Metering Systems plc
Annual report and accounts 2015
8 Earnings per share
The calculation of EPS is based on the following data and number of shares: 
2014
2015 Restated
£’000 £’000
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
£’000 £’000
Equity dividends
Paid during the year:
Interim dividend paid in respect of 2015: 1.10p per share 947 —
Final dividend paid in respect of 2014: 1.88p per share 1,617 —
Interim dividend paid in respect of 2014: 0.70p per share — 1,370
Final dividend paid in respect of 2013: 1.61p per share — 804
Total dividends 2,564 2,174 FINANCIAL STATEMENTS
Smart Metering Systems plc
Annual report and accounts 2015 42
Notes to the financial statements continued
For the year ended 31 December 2015
10 Intangible assets
Customer
Goodwill contracts Development Software Total
£’000 £’000 £’000 £’000 £’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
As at 31 December 2015 4,112 1,162 1,831 2,923 10,028
As at 31 December 2014 4,112 1,828 1,427 3,565 10,932
As at 1 January 2014 — — 1,148 870 2,018
11 Property, plant and equipment
Freehold/
leasehold 
property
Plant and 
machinery
 Fixtures, 
fittings and
 equipment
Motor
vehicles Total
£’000 £’000 £’000 £’000 £’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
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
As at 31 December 2015 1,974 123,117 586 23 125,700
As at 31 December 2014 2,025 88,504 670 78 91,277
As at 1 January 2014 86 57,041 92 163 57,382 43
CORPORATE GOVERNANCE
2
FINANCIAL STATEMENTS
3
STRATEGIC REPORT 1
Smart Metering Systems plc
Annual report and accounts 2015
11 Property, plant and equipment continued
Hire purchase agreements
Included within the net book value of £125,700,000 (2014: £91,277,000; 2013: £57,382,000) is £73,258 (2014: £208,000; 
2013: £84,000) 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 £65,060 (2014: £79,000; 2013: £31,000).
The assets are secured by a bond and floating charge (note 18).
12 Financial asset investments
Shares in Group 
undertaking
Unlisted 
investments Total
£’000 £’000 £’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 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 five-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
£’000 £’000
Finished goods 996 913
Consumables 103 298
1,099 1,211 FINANCIAL STATEMENTS
Smart Metering Systems plc
Annual report and accounts 2015 44
Notes to the financial statements continued
For the year ended 31 December 2015
15 Trade and other receivables
2015 2014
£’000 £’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
£’000 £’000
Accrued income 901 1,172
The Directors consider that the carrying amount of trade and other receivables approximates to their fair value.
The Group’s credit risk is primarily attributable to trade receivables and accrued income. The amounts presented in the 
statement of financial position are net of allowances for doubtful receivables. The allowance for doubtful receivables 
or provision against accrued income in the year was £367,253 (2014: £33,414; 2013: £Nil). The ageing profile of trade 
receivables past due date is shown below:
2015 2014
£’000 £’000
31–60 days 1,168 528
60–90 days 321 127
Over 90 days 776 263
2,265 918
Allowance for doubtful receivables (367) (33)
1,898 885
Trade receivables are non-interest bearing and are generally on 30–90-day terms. 
Trade receivables due from related parties at 31 December 2015 amounted to £Nil (2014: £Nil; 2013: £Nil). 
Receivables are all in Sterling denominations. 
The Directors are of the opinion that £367,253 of the overdue debts as at 31 December 2015 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. 45
CORPORATE GOVERNANCE
2
FINANCIAL STATEMENTS
3
STRATEGIC REPORT 1
Smart Metering Systems plc
Annual report and accounts 2015
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
£’000 £’000
Cash 5,711 4,285
5,711 4,285
17 Trade and other payables
2014
2015 Restated
£’000 £’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
£’000 £’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
£’000 £’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 £105.0m 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). FINANCIAL STATEMENTS
Smart Metering Systems plc
Annual report and accounts 2015 46
Notes to the financial statements continued
For the year ended 31 December 2015
19 Commitments under hire purchase agreements
Future minimal commitments under hire purchase agreements are as follows:
2015 2014
£’000 £’000
Current
Amounts payable within one year 64 90
Non-current
Amounts payable between two and 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
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
£’000 £’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 £26,400,000 as at 31 December 2015 (2014: £30,000,000; 
2013: £28,200,000).
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
£’000 £’000
Interest rate swap
Opening position (70) 207
Adjustment to fair value 24 (277)
Closing position (46) (70) 47
CORPORATE GOVERNANCE
2
FINANCIAL STATEMENTS
3
STRATEGIC REPORT 1
Smart Metering Systems plc
Annual report and accounts 2015
20 Other financial liabilities and assets continued
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:
 X Level 1: quoted (unadjusted) prices in active markets for identical assets or liabilities;
 X 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
 X 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 1 Level 2 Level 3
Liabilities measured at fair value £’000 £’000 £’000 £’000
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 or 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 £’000
2015 1% 329
2014 1% 195 FINANCIAL STATEMENTS
Smart Metering Systems plc
Annual report and accounts 2015 48
Notes to the financial statements continued
For the year ended 31 December 2015
21 Financial risk management continued
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
£’000 £’000 £’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 £5,711,000 
(2014: £4,285,000; 2013: £2,073,000) 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 is covered within the relevant liability note or below.
2015 2014
£’000 £’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 
which 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 £9,960,000 (2014: £8,278,000; 2013: £5,211,000) 
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. 49
CORPORATE GOVERNANCE
2
FINANCIAL STATEMENTS
3
STRATEGIC REPORT 1
Smart Metering Systems plc
Annual report and accounts 2015
21 Financial risk management continued
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
The movement in the deferred taxation liability during the period was:
2014
2015 Restated
£’000 £’000
Opening deferred tax liability 4,395 3,395
Increase in provision through the Consolidated statement of comprehensive income 1,467 1,771
Increase in provision through equity 97 (1,918)
Deferred tax on intangibles acquired as part of UPL — 1,137
Other 180 10
Closing deferred tax liability 6,139 4,395
All movements identified have gone through the Consolidated statement of comprehensive income.
The Group’s provision for deferred taxation consists of the tax effect of temporary differences in respect of:
2014
2015 Restated
£’000 £’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:
2014
2015 Restated
£’000 £’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. FINANCIAL STATEMENTS
Smart Metering Systems plc
Annual report and accounts 2015 50
Notes to the financial statements continued
For the year ended 31 December 2015
23 Related party transactions
A number of key management personnel hold positions in other entities that result in them having control or significant 
influence over the financial or operating policies.
A number of these entities transacted with the Group in the reporting period. The terms and conditions of the transactions 
with key management personnel and their related parties were no more favourable than those available, or which might 
reasonably be expected to be available, on similar transactions to non-key management personnel and related entities 
on an arm’s length basis.
During the period, the Group entered into the following transactions with related parties:
During the year the Group paid rent amounting to £41,500 (2014: £41,500; 2013: £41,500) to the Directors’ pension scheme, 
Eco Retirement Benefit Scheme, for the use of certain premises. Alan Foy is a trustee of the scheme. At the year-end date, 
an amount of £4,150 (2014: £4,150; 2013: £4,150) was outstanding in this regard.
The Group also paid rent of £32,000 (2014: £122,000) to another individual classified as key management for the use 
of certain premises.
During the year, the Group paid dividends to Alan Foy of £252,178 (2014: £226,694), Paul Dollman of £502 (2014: £94) 
and Miriam Greenwood of £298 (2014: £94).
Remuneration of key management, which includes Executive and Non-executive Directors together with certain 
management personnel, was as follows:
2015 2014
£’000 £’000
Salaries and other short-term employee benefits 1,227 1,122
24 Share capital
2015 2014
£’000 £’000
Allotted and called up:
86,112,912 ordinary shares of £0.01 each (2014: 85,575,452 ordinary shares of £0.01 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.
25 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 £30,000 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.  51
CORPORATE GOVERNANCE
2
FINANCIAL STATEMENTS
3
STRATEGIC REPORT 1
Smart Metering Systems plc
Annual report and accounts 2015
25 Share-based payments continued
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.
Plan
At 
1 January
2015 Granted Exercised Lapsed
At 
31 December 
2015
Exercise 
price
 (pence)
Date
exercisable
Expiry
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 the Board.
The average weighted average share price at the date of exercise was £3.41.
Valuation
The fair value at grant of the share options has been estimated using appropriate option pricing 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 options were 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 £1,800 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
The table below shows the number of shares held in the SIP at the beginning and end of the financial year.
Weighted
At At average
1 January Awarded 31 December acquisition
Type of award 2015 shares Sold Lapsed 2015 price
Partnership 24,387 41,505 (4,997) — 60,895 £3.50
Matching 24,355 41,505 (2,775) (2,536) 60,549 £3.50
Dividend 65 276 (24) — 317 £3.59
Total 48,807 83,286 (7,796) (2,536) 121,761 
  FINANCIAL STATEMENTS
Smart Metering Systems plc
Annual report and accounts 2015 52
Notes to the financial statements continued
For the year ended 31 December 2015
26 Other reserve
This is a non-distributable reserve that initially arose by applying merger relief under section 162 of the Companies Act 2006 
to the shares issued in 2009 in connection with the Group restructuring. This was previously recognised as a merger reserve 
under UK GAAP. Under IFRS, this has been classed as an “other reserve”. Additionally, the premium arising on the issue 
of shares as part of the acquisition of Utility Partnership Limited has been credited to this reserve as required by the 
Companies Act 2006.
27 Commitments under operating leases
The Group has entered into commercial leases for office space. These leases have lives between one and 15 years with no 
renewal option included in the contracts. There are no restrictions placed upon the Group by entering into these leases.
Future minimum rentals payable under non-cancellable operating leases as at each year end are as follows:
2015 2014
£’000 £’000
Future minimal commitments under operating lease agreements are as follows:
Payable within one year 271 205
Payable within two and five years 375 411
Payable after five years 259 135
905 751
28 Ultimate controlling party
There is no ultimate controlling party by virtue of the structure of shareholdings in the Group.
29 Contingent liability
The Group is the subject of an ongoing HMRC enquiry in respect of payments made to Employee Benefit Trusts in prior 
years. Whilst the outcome of the enquiry is, as yet, uncertain, the beneficiaries of the Trusts have provided the Company 
with indemnities against any additional tax that may become payable as a result of these enquiries. As at 31 December 2015 
it is not practicable to assess the financial effect of any findings. 53
CORPORATE GOVERNANCE
2
FINANCIAL STATEMENTS
3
STRATEGIC REPORT 1
Smart Metering Systems plc
Annual report and accounts 2015
30 Business combinations
Acquisition of Utility Partnership Limited
On 14 April 2014 Smart Metering Systems plc acquired 100% of the issued share capital of Utility Partnership Limited (UPL), 
now SMS Energy Services Limited (SMS ES). SMS ES is a manager of electricity meters in the UK and provider of electricity 
connections, design, meter installations, data management and energy management services.
The acquisition has been accounted for using the acquisition method. The fair value of the identifiable assets and liabilities 
of UPL as at the date of acquisition was:
Fair value 
recognised on 
acquisition 
£’000
Property, plant and equipment 2,539
Software 3,258
Customer contracts 2,160
Other financial assets 83
Inventories 344
Trade and other receivables 5,074
Cash and cash equivalents 3,420
Total assets 16,878
Trade and other payables (879)
Deferred tax (1,137)
Accruals and deferred income (1,966)
Obligations under hire purchase agreements (106)
Total liabilities (4,088)
Total identifiable net assets 12,790
Goodwill arising on acquisition 4,112
Total acquisition cost 16,902
Analysed as:
New shares in Smart Metering Systems plc 4,270
Cash paid 12,632
Total acquisition cost 16,902
Cash paid (12,632)
Acquisition costs (480)
Net cash acquired with the subsidiary 3,420
Total acquisition cost (9,692)
31 Post balance sheet events
On 21 March 2016 the Group announced the acquisition of three companies. 
The Group acquired 100% of CH4 Gas Utility and Maintenance Services Limited for an initial consideration of £2m which is 
being satisfied through the issue of 510,497 ordinary shares of 1p each in SMS (“Ordinary Shares”) at a price of 391.775p per 
Ordinary Share. In addition, a further £0.995m may be payable through the issue of Ordinary Shares pursuant to an earn out 
arrangement based on the CH4 business satisfying certain performance criteria over the three years from the date 
of completion. 
The Group acquired 100% of Trojan Utilities Limited for an initial consideration of £0.5m which is being satisfied through the 
issue of 127,625 Ordinary Shares at a price of 391.775p per Ordinary Share. In addition, a further £0.5m may be payable through 
the issue of Ordinary Shares pursuant to an earn out arrangement based on the Trojan Utilities business satisfying certain 
performance criteria over the three years from the date of completion. 
The Group acquired 100% of Qton Solutions Limited for £2.9m which is being satisfied through the issue of 740,230 
Ordinary Shares at a price of 391.775p per Ordinary Share. 
No further disclosures have been provided under IFRS 3 in respect of business combinations after the balance sheet date 
on the basis that the initial accounting is not yet complete. FINANCIAL STATEMENTS
Smart Metering Systems plc
Annual report and accounts 2015 54
Parent company balance sheet 
As at 31 December 2015
2015 2014
Notes £’000 £’000
Fixed assets
Investments 2 16,902 16,902
Current assets
Debtors 3 808 —
Creditors
Amounts falling due within one year 4 — (492)
Net current assets/(liabilities) 808 (492)
Total assets less current liabilities 17,710 16,410
Capital and reserves
Called up share capital 6 861 856
Share premium 7 9,649 9,291
Other reserve 7 4,257 4,257
Profit and loss account 7 2,943 2,006
Equity shareholders’ funds 17,710 16,410
The parent company financial statements on pages 54 to 56 were approved and authorised for issue by the Board of Directors 
and signed on its behalf by:
Glen Murray Company registration number
Director SC367563
21 March 2016
Company statement of changes in equity
As at 31 December 2015
Share Share Other Retained
capital premium reserve earnings Total
£’000 £’000 £’000 £’000 £’000
As at 1 January 2014 838 8,971 — 1,431 11,241
Total comprehensive income for the year — — — 2,748 2,748
Transactions with owners in their capacity 
as owners:
Dividends (note 9) — — — (2,174) (2,174)
Shares issued 18 320 4,257 — 4,595
As at 31 December 2014 856 9,291 4,257 2,006 16,410
Total comprehensive income for the year — — — 3,500 3,500
Transactions with owners in their capacity 
as owners:
Dividends (note 9) — — — (2,564) (2,564)
Shares issued 5 359 — — 364
As at 31 December 2015 861 9,650 4,257 2,943 17,710
  55
CORPORATE GOVERNANCE
2
FINANCIAL STATEMENTS
3
STRATEGIC REPORT 1
Smart Metering Systems plc
Annual report and accounts 2015
Notes to the parent company financial statements
For the year ended 31 December 2015
The parent company financial statements of SMS plc (the “Company”) for the year ended 31 December 2015 were authorised 
for issue by the Board of Directors on the 21 March 2016 and the balance sheet was signed on the Board’s behalf by Glen Murray. 
SMS plc is a public limited company incorporated and domiciled in Scotland. The Company’s shares are traded on AIM.
1 Parent company accounting policies
Basis of accounting
These financial statements were prepared in accordance with Financial Reporting Standard 102 (FRS 102). The financial 
statements are prepared under the historical cost convention.
No profit and loss is presented by the Company as permitted by section 408 of the Companies Act 2006.
The results of SMS plc are included in the consolidated financial statements of SMS plc which are available from 
48 St Vincent Street, Glasgow G2 5TS.
The accounting policies of the parent company financial statements follow those policies which apply in preparing the 
consolidated financial statements for the year ended 31 December 2015. The financial statements are prepared in Sterling 
and are rounded to the nearest thousand Pounds (£’000).
Change of GAAP
The Company has transitioned to FRS 102 from previously extant United Kingdom Generally Accepted Accounting Practice 
(UK GAAP) for all periods presented. The transition process resulted in no revised accounting treatments.
The Company has taken advantage of the following disclosure exemptions under FRS 102:
 X section 7 Statement of Cash Flows;
 X section 3 Financial Statement Presentation paragraph 3.17(d);
 X section 11 Basic Financial Instruments paragraphs 11.39 to 11.48A; 
 X section 12 Other Financial Instruments Issues paragraphs 12.26 to 12.29A; and 
 X section 33 Related Party Disclosures paragraph 33.7.
Going concern
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.
Dividends
The Company was advised that the dividend paid on 20 November 2015 should have been preceded by the filing of interim 
accounts with Companies House for the financial year end to a date preceding the distribution. As a result of the Company 
not doing so, the dividends paid on 20 November 2015 did not comply fully with the technical requirements of the Companies 
Act 2006. The Company intends to propose appropriate resolutions to rectify this position at the Company’s 2016 Annual 
General Meeting. 
2 Investments
Group
companies
Company £’000
Cost
As at 1 January 2015 16,902
Additions —
As at 31 December 2015 16,902
Net book value
As at 31 December 2015 16,902
As at 31 December 2014 16,902 FINANCIAL STATEMENTS
Smart Metering Systems plc
Annual report and accounts 2015 56
Notes to the parent company financial statements continued
For the year ended 31 December 2015
2 Investments continued
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.
3 Debtors: amounts falling due within one year
2015 2014
£’000 £’000
Amounts owed by Group undertakings 808 —
4 Creditors: amounts falling due within one year
2015 2014
£’000 £’000
Other creditors — 492
5 Related party transactions
During the year, the Group paid dividends to Alan Foy of £252,178 (2014: £226,694), Paul Dollman of £502 (2014: £94) 
and Miriam Greenwood of £298 (2014: £94).
6 Share capital
2015 2014
£’000 £’000
Allotted and called up:
86,112,912 ordinary shares of £0.01 each (2014: 85,575,452 ordinary shares of £0.01 each) 861 856
7 Other reserve
This is a non-distributable reserve that initially arose by applying merger relief under s162 CA06 to the shares issued in 2009 
in connection with the Group restructuring. This was previously recognised as a merger reserve under UK GAAP. Under IFRS, 
this has been classed as an “other reserve”. Additionally, the premium arising on the issue of shares as part of the acquisition 
of Utility Partnership Limited has been credited to this reserve as required by the Companies Act 2006.  
Design Portolio is committed to planting 
trees or every corporate communications 
project, in association with Trees or Cities. Smart Metering Systems plc Annual report and accounts 2015
SMART METERING SYSTEMS PLC
2nd floor  
48 St. Vincent Street  
Glasgow G2 5TS
WWW.SMS-PLC.COM