9,000
65,000
69,000
10,000
30,000
9,000
20,000
19,000
9,000
14,000
Smart Metering Systems plc
Annual report and accounts 2011
smart approach
smart systems
 254,000 meter assets at 31 December 2011
Smart Metering Systems plc Annual report and accounts 2011  Smart Metering Systems plc (SMS) connects, 
owns, operates and maintains metering 
systems and databases on behalf of major 
energy companies.  
Our focus is on gas meters in the UK, where we aim to:
  be the market leader in the independent ownership 
of industrial and commercial meters;
  establish our technology ADM™ as the industry standard 
smart metering solution for industrial and commercial 
(I&C) clients; and
  grow our domestic meters business organically 
and through new contracts.
Through our dedicated people we offer a unique integrated 
service to our clients and are looking to expand into other 
applications, including water and LPG, and other geographical 
markets where ‘smart’ applications such 
as remote reading and half-hourly 
consumption data are important.
In this report
Overview
 IFC About us
 01 Highlights
 02 Our approach
 04 Business overview
 06  Chairman’s statement
Business review
 08 Chief Executive’s review
 12 Financial review
 14 Risk management
Corporate governance
 16 Board of directors
 18 Directors’ report
 20 Corporate governance statement
 21 Directors’ remuneration report
 23 Directors’ responsibilities statement
Financial statements
 24 Independent auditor’s report 
 25  Consolidated state ment 
of comprehensive income
 26 	 	 Consoli dated 	 statement 	 of 	 financi al 	 posi ti on
 27 Statement of changes in equity
 28 	 Co nsolidated	 state ment	of	cash	flows
 29 Accounting policies
 33 	 Notes	to	the	fi nan cial	statements
 48  Reconciliation of consolidated equity
 49  Reconciliation of consolidated total 
comprehensive income 
 50 Parent company balance sheet
 51  Notes to the parent company 
financial	statements
More on our ADM solution on page 11 01
Smart Metering Systems plc Annual report and accounts 2011
Overview Business review Corporate governance Financial statements
Highlights
Financial highlights
 — Successful admission to trading on AIM and £10m 
of gross proceeds raised in July 2011
 — Revenues increase by 29% to £16.0m (2010: £12.4m)
 — Recurring revenues increased by 51% to £6.6m 
(2010: £4.4m)
 —  Gr osspr ofitincr easedb y61%to£8.9m
(2010: £5.5m) with gross margin increased 
to 55.5% (2010: 44.4%)
 — Adjusted EBITDA* increased by 96% to £5.7m 
(2010: £2.9m)
 —  I ncr easedleasefinancef aci li t ymadea v ailableb y
Clydesdale Bank plc in October 2011, extending 
the available facility from £12m to £19.5m
 —  A v ailabler esour cesaty earend£14 .8m
 — EPS increased by 301% to 2.93p (2010: 0.73p)
Operational highlights
Gas connections
 — 1,333 in 2011 (2010: 1,275)
Meter asset management
 — Total meter portfolio increased by 19% to 254,000
 — Increase of 77% in capital investment on meter 
assets to £9.2m as a result of increasing run rate in 
meter installations with existing gas supplier clients
 — Increase in annualised recurring revenue of 29% 
to £7.6m
 —  Clientbasegr ewf r om12to15r epr esenting80%
of the industrial and commercial market
Data management
 — ADM device received zone zero accreditation and 
preliminary EU patent approval
+29%
Revenue £m
2010 2011
12.4
16.0
+61%
Gross profit £m
2010 2011
5.5
8.9
+96%
EBITDA* £m
2010 2011
2.9
5.7
+123%
EBT* £m
2010 2011
1.8
4.0
Full Financial Review begins on page 12 * Excluding exceptional items and fair value adjustments 02
Smart Metering Systems plc Annual report and accounts 2011
Our approach
We believe that the highest quality customer 
care makes a real difference.
We work hard to offer clients the highest standards 
of care and seek to achieve this through investment 
in the best technology and the most talented people 
we  can  find.
Talented people
           Customer focused 
                                    Technology focused 
Exceptional client 
experience
We take the time to fully 
understand the nature 
andsignificanceofour
clients’ problems. 
Valuable solutions
We seek to create value at 
every interface with our clients 
using our bespoke technology. 03
Smart Metering Systems plc Annual report and accounts 2011
Overview Business review Corporate governance Financial statements
We are dedicated to creating exceptional client experiences
 
 
 
 
We remain true to our 
values with 
every interaction 
Our team understands our culture 
and our values; together we  
work towards a common  
goal of exceptional 
client experiences
Our blueprint for 
ensuring that we 
deliver this is 
based on three 
key principles
An exceptional client experience is critical to the success 
and  gr owth  of  SM S  whi ch  al l ows  us  to  i n v est  i n  finding 
new solutions which add value to our clients’ businesses. 
Exceptional experience 
must be a competence 
not a function
From top to bottom  
we strive to maintain  
our client‑centric  
culture
We focus on client needs, 
not product features
Every client‑centred action must 
take account of the nature and  
significanceofour 
clients’ problems  
and how our  
solutions impact 
 their customers 04
Smart Metering Systems plc Annual report and accounts 2011
Business overview
SMS provides the UK’s leading gas suppliers and 
large corporations with comprehensive solutions 
focused primarily on gas infrastructure and 
metering services. 
Gas producer
41%
Licensed gas 
supplier and 
shipper
37%
Licensed gas 
transporter
22%
Gas suppliers are 
mandated to provide 
smart meter services
Gas suppliers have  
an obligation to provide 
metering services
Gas suppliers arrange 
gas connections for  
their clients
The UK gas market supply chain
Read the full business review on pages 6 to 13 05
Smart Metering Systems plc Annual report and accounts 2011
Overview Business review Corporate governance Financial statements
UK Meter Assets
Meter asset management: 
gas meter asset operations 
for every UK gas supplier
UK Meter Assets is an Ofgem‑ approved 
meter asset management company 
which owns, operates and manages 
commercial and domestic gas meters on 
behalf of the UK’s leading gas suppliers 
and independent meter asset managers.
Installation
1,333 connections
(2010: 1,275)
Installation and 
managed assets
UK Gas Connection
Infrastructure facilitator: 
management of gas 
connections and meter 
installations
UK Gas Connection is one of the 
UK’s largest independent operators. 
We work in partnership with many of the 
leading providers in the UK gas industry 
to deliver meter installations, removals 
and exchanges, new gas supplies and 
increases in supply capacity.
Managed assets
UK Data Management
Smart meter data collector:  
supply and installation of 
smart meter devices
Smart metering is seen as the key 
tothef utur eefficiencyoftheUK’ s
energy system. UK Data Management 
delivers the Company’s patent pending 
ADM smart metering solution which is 
very simple to install and highly cost 
effective and competitive.
SMS is organised into three operating 
subsidiaries which form the basis of the 
Company’s reportable operating segments.
Operating segments within those subdivisions are 
combined on the basis of their similar long‑term 
economic characteristics and similar nature of their 
products and services.
Provision of 
gas infrastructure 
and installation  
of meters
Our structure
Ownership and 
management  
of meter assets
2009 2008 2010 2011
166,672
214,003
253,749
138,348
Trials complete with the 
Company’s gas supplier 
clients in the Industrial and 
Commercial (I&C) market. 06
Smart Metering Systems plc Annual report and accounts 2011
Thisisthefirstsetoff ul ly earr esul tssincethe
Compan y ’ sadmissiontotr adingonAIMon8July2011
raising £10m of gross proceeds. 
The  proceeds  of  the  float  have  strengthened  our
financial  r esour ces  enabli ng  the  Compan y  to  ac cel er ate
the organic growth of the business mainly based on 
connecting, owning, operating and maintaining gas 
meters and their associated databases on behalf of 
gas suppliers. 
I am pleased to report a solid set of results for the year 
ended 31 December 2011 and a positive outlook for 2012.
Financial highlights
The results for the year have been strong, with revenues 
incr easingb y29%to£16m,pr ofitf r omoper ations
bef or eex ceptionalitemsandfinancecostsincr easing
b y119%to£4 .5m,andpr ofitf r omoper ationsafter
ex ceptionalitemsandfinancecostsincr easingf r om
£0.9m to £3.3m.
I nadditiontothepr oceedsf r omtheIPOandcashflow
from operations of £4.9m (2010: £3.6m), the Company 
also secured additional bank borrowing to support 
further capital investment in meters which amounted 
to £9.2m in the year compared to £5.2m in 2010. 
At the year end our available resources including 
cashandborr owingf aci li tiesamountedto£14 .8m.
I am also pleased to announce that all major KPIs across 
our three business divisions were met and are detailed 
in the Chief Executive’s Review.
People
The move from a private to publicly listed company has 
involved a number of changes for SMS. I was delighted 
to accept the invitation to be Chairman in advance of 
the IPO. In addition, Nigel Christie has also joined the 
Board as a Non‑executive Director, bringing with him a 
weal thoffinancialandseniormanagementexperience.
We will keep the composition of the Board, including the 
possibility of appointing a further Non‑executive Director, 
u n d e r  r e v i e w duringthecurr entfinan cialy ear .
Chairman’s statement
Highlights
  The Company’s admission to trading 
on AIM raised £10m of gross proceeds.
  C a s h fl o wf r o mop e r a t i o n so f£ 4 . 9m
(2010: £3.6m).
  The Company also secured additional bank 
borrowing which amounted to £7.5m.
  Our available resources including 
cash and borrowing facilities amounted 
t o£ 1 4 . 8 m .
  All major KPIs across our three business 
segments were met.
  The Directors intend to declare a maiden 
dividend which we anticipate will be paid 
in November 2012 subject to performance.
Kevin Lyon
Chairman and Non‑executive Director
“ 2011 was an important year for 
SMSwi thi tsflotationonthe
London Stock Exchange.” 07
Smart Metering Systems plc Annual report and accounts 2011
Overview Business review Corporate governance Financial statements
A critical part of our operations is our people. We have 
an exceptional team and I would like to take this opportunity 
to thank them all for their efforts during the year. In the 
year of IPO, I would also like to thank the advisers that 
worked hard alongside the Company’s executive team 
to make it happen, in what can best be described 
as challenging markets. 
Strategy
The business activities are focused on managing the 
installation and registration of new meter assets onto 
our systems each year. Full revenue from the installed 
meters is realised the following year, installation and 
registration of new meter installations from the same 
overhead annually leads to compounding of recurring 
rental s  and  i ncreasi ng  of  r evenues  and  pr ofits, 
as  demonstr ated  i n  our  financi al  performance.
Annualised recurring rental is now £7.6m, Group net 
debt is £3.4m and we have £16m current available facility 
including £5.2m cash from operations to invest in 
meter assets. 
During 2012 the Company expects to increase banking 
facilities for the purpose of continuing to accumulate meter 
assets in the domestic market and, with the objective 
of establishing the ADM smart metering solution as the 
market standard in the I&C market, leading to further 
accumulation of meters.
No major investment in operations infrastructure is 
currently foreseen with systems operating at 5% capacity. 
The Company owns all intellectual property rights to 
its developed and fully deployed IT systems and new 
ADM smart metering solution focused on the I&C 
metering market.
Dividend
At the time of our admission to AIM, we stated that 
we intended to adopt a dividend policy that will take 
ac count  of  the  Compan y’ s  pr ofitabili t y ,  underl yi ng  gr owth
prospects and availability of cash and distributable 
reserves, while maintaining an appropriate level of 
dividend cover. 
Subject  to  the  Compan y’ s  conti nui ng  financial  perf ormance,
the Directors intend to declare a maiden dividend as a 
publi c  compan y  as  an  i nterim  divi dend  f or  the  financi al
year ending 31 December 2012, which we anticipate 
will be paid in November 2012. 
Outlook
SMS has a robust business model, a strong management 
team and leading smart meter technology which has 
been underlined by the strong set of results announced 
in this annual report.
2011w asanimportanty earf orSMSwi thi tsflotationon
the London Stock Exchange. This milestone has allowed 
the Board to support an ambitious strategy for growth 
in our core areas, in developing new and exciting 
markets by product and geography and by providing 
thefinancialstr engthandflexibi li t ytotak eadv antage
of new opportunities as they arise. 
2012 has, to date, delivered on that strategy through 
the ongoing accumulation of meter assets installed 
on request of the Company’s existing gas supply 
clients, and very positive conclusion on the trialling of the 
Company’s smart meter technology. This has allowed 
the Company to further strengthen the quality of the 
management team in key areas. I look forward to 
a successful year ahead with a strong performance 
against challenging KPIs, a dedicated and motivated 
teamand,mostimportantly ,asatisfied,lo y aland
expanding client base.
Kevin Lyon
Chairman and  
Non-executive Director
“ 2012 has, to date, seen increasing meter 
installation run rates, new clients, and 
very positive progress on the trialling of 
the Company’s smart meter technology.”  08
Smart Metering Systems plc Annual report and accounts 2011
Chief Executive’s review
Highlights
  We managed the installation of over 
39,000 meters on request of the 
Company’s 15 gas supplier clients.
  Domestic meters increased by over 19% 
and I&C meters by over 14%.
  In 2012 we aim to accelerate growth in 
domestic meters and focus on becoming 
the preferred partner to our 15 existing 
gas supplier contracted clients in the 
I&C market through our ADM smart 
metering solution.
  We are currently seeing increased meter 
installation run rates in the domestic market.
  Our ADM smart metering solution has 
successfully trialled over the last two 
years with our gas supplier clients and is 
now a proven robust solution for the I&C 
metering market.
I am pleased to report that SMS has made a strong 
start as a listed company. These results are testament 
to the quality of our clients, our people and our ability 
to deliver relevant and valuable solutions to support 
our clients’ businesses. 
Our business
Our business operation is based on connecting, 
owning, operating and maintaining metering systems 
and databases on behalf of major energy companies. 
Our core focus is on gas meters in the UK, where we 
aim to:
 — be the market leader in the independent ownership 
of industrial and commercial meters;
 — establish ADM as the industry standard smart 
metering solution for industrial and commercial 
(I&C) clients; and
 — grow our domestic meters business organically 
and potentially through new contracts. 
We will also seek out new domestic and international 
markets for our products and services to widen our footprint 
in the UK and establish an international presence.
Business performance
Gas connections 
Our Gas Connections business is a transactional support 
services business which manages new gas connections 
and meter installations for our clients. The business acts 
both as a steady and consistent revenue stream in its 
own right and as an important feed into our Meter Asset 
Management business. 
In 2011, we continued to support both contracted and 
non‑contracted energy clients by undertaking over 
1,333 connections, a similar level to the year before.
Meter asset management
Our Meter Asset Management business works across 
both the domestic and I&C gas markets working on 
perpetuity, index linked contracts. We own, operate 
and manage meter assets on behalf of our clients, 
securing revenue through a rental of the meter asset 
to gas suppliers. 
For more information visit 
www.sms-plc.com
Alan Foy
ChiefEx ecutiv eOfficer
“ Activities are focused on accumulation 
of recurring annual rental from gas 
meters. This activity is automated 
and currently operating at 5% system 
capacity with 254,000 meter assets.” 09
Smart Metering Systems plc Annual report and accounts 2011
Corporate governance Financial statements Overview Business review
In 2011, our total meter portfolio increased by 
19% to 254,000. At 31 March 2012 the portfolio was 
265,000. This was achieved by an increase in capital 
investment in meter assets of 77% to £9.2m, delivering 
a recurring rental income increase of 51% to £6.6m. 
At 31 December the annual equivalent recurring rental 
income was £7.6m.
Asset accumulation
In 2011 the Company was delighted to welcome new 
gas supplier clients, increasing our base of major clients 
to15r epr esentingo v er80%oftheI&Cmetersmark et.
In 2012 we will continue to focus on accumulation of 
meter assets organically and potentially through new 
contract wins.
TheCompan yhasseenasignificantincr easethusf arin
2012 in our domestic meter installation run rate secured 
from existing gas supplier clients.
The ADM smart metering solution has been designed to 
the exacting requirements as requested by the Company’s 
existing client base for the I&C market and, following trials, 
is now an established proven solution. 
The objective is to add a further recurring meter rental 
income to the Company from the provision of data 
services, generated by the installation of the ADM device 
to I&C meters by gas supplier customers. Additionally 
however, a new meter is intended to be installed at the 
same time as an ADM device installation, thereby further 
increasing the Company’s meter asset portfolio in this 
market segment.
Data management – ADM
SMS has developed a cost effective and reliable data 
collection solution incorporating a smart meter device 
called ADM, principally aimed at the I&C market. The 
device has been granted preliminary European patent 
appr o v alandsaf et ycertificationf oroper ationinthe
most hazardous environments and has been trialled 
by three major energy suppliers in the UK during the 
course of 2011. 
Our approach
We have a strategy to deliver 
strong growth.
1
Increase growth rate
Increase our penetration in ownership 
and management of gas meters in both 
residential and I&C metering markets.
Grow domestic gas market in the UK. 
Increase growth rates in meter asset 
ownership with gas supplier clients.
 —  Ov er  80 %  o f  t h e  I & C  m e ter i n g  m a rk e t  is
potentially available through contracted 
arrangements with our 15 existing gas 
supplier clients
 — Current IT platform operates at less 
than 5% capacity
2
Upsell the ADM smart 
metering solution
Establish ADM as the industry standard 
smart metering solution for the I&C 
metering market.
Upsell the ADM smart metering solution 
to existing contracted gas suppliers to 
accelerate meter asset ownership.
3
Explore new opportunities
Explore future prospects to expand the 
range of solutions and services to all utility 
markets within the UK and internationally. 10
Smart Metering Systems plc Annual report and accounts 2011
Chief Executive’s review continued
Business performance continued
Data management – ADM continued
A key advantage of ADM is that it does not require 
pre‑installation programming and is very much ‘plug 
and play’. Supported by a comprehensive IT solution, 
the ADM device will provide an important source of 
new income and act as a feeder into the meter asset 
management business, in a similar way to our gas 
connections business.
Following extensive trials we can now provide clients 
with a proven full service offering incorporating installation 
of gas meters through to advanced metering services 
providing many opportunities for the Company to build 
further value from its existing client base.
The market for I&C meters which represents an estimated 
1.6m clients has two distinct options with respect to 
advanced or smart metering. Up to 2014 small I&C 
meter clients have the opportunity to opt for an 
advanced metering solution such as the ADM device 
or alternatively be included in the proposed domestic 
roll out of smart meters. The Company believes that this 
market segment is attractive for implementing the ADM 
solution and will increase marketing efforts in this area 
throughout 2012.
Gas suppliers have already got a licence condition 
to install advanced meters, such as the ADM device 
to large meters, combined with large consumer group 
portfolios the Company estimates these immediately 
addr essablemark etstobear ound378,000meters.
Further expansion to new areas 
During 2011 we established that the ADM device was 
a suitable technology for other market sectors such 
as water meter data collection. We have had early 
success and are currently trialling the ADM device 
in the I&C sector. 
The addressable market is large and estimated 
at 1.6m units.
People
Asignificantpartofourbusinesspr oposi tionhasalw a ys
focused on how we interact with our clients through 
attention to detail and excellent customer service. 
These core values have underpinned our business 
since its inception in 1995. 
Our team
It is the dedication and professional work ethic of our 
team that has provided the strongest of foundations 
for the successful growth of our business and I wish 
to thank all those individuals that have fostered our 
key relationships with clients over the years.
Several of our clients are now celebrating ten years 
working with SMS. The trust developed over such long 
periods has helped us accumulate our meter portfolio 
to date. This strong growth is anticipated to continue 
through 2012 and beyond. Throughout the course 
of this review, I have highlighted areas where we will 
focus our efforts and, as always, keeping true to our 
core values within a dedicated and professional team 
will be important in the delivery of targeted growth. 
We look forward to many more milestones achieved 
throughout 2012.
Alan Foy
Chief Executive Officer
“ The Company has built a strong 
track record of identifying business 
opportunities, nurturing them and 
creating results.” 11
Smart Metering Systems plc Annual report and accounts 2011
Corporate governance Financial statements Overview Business review
1
Easily installed by 
non-technical operators
No on site programming, just activate with 
a ‘fob’, this eliminates human error in data 
entry during commissioning and training 
of workforces to perform installations.
2
Fits directly to 
any pulse enabled
 — Standard U6 to U160 gas meter
 — Rotary or turbine gas meter
 — Water meter
 — Electricity pulse output meters
4
Low cost
Installed easily in around 30 seconds with no 
requirement for programming components 
increases reliability and lowers cost.
3
Integrated into BMS 
and in-home displays
Output can be repeated to other 
appliances and to mobile devices seamlessly.
5
Web delivered 
communication 
of meter reads
Delivers half hourly usage information 
daily, weekly or monthly.
ADM smart metering solution
ADM is a bespoke metering solution tailored 
to the I&C gas and water meter markets 
that dovetails with our clients’ systems.
The inventive steps are ‘plug and play’ and ‘no manual 
commissioning’ enabling installation anywhere within 
around 30 seconds and thereafter delivering low‑cost, 
reliable half hourly meter reads and consumption alerts. Patent pending WO 2010041062 12
Smart Metering Systems plc Annual report and accounts 2011
Highlights
 Total revenue up 29%.
 Recurring revenue up 51%.
 G r o s sp r o fi tu p6 1 % .
 Adjusted EBITDA up 96%.
 Annual capital investment up 77%.
Results for the year
In 2011, the Group generated £16m in revenue, 
an increase of 29% over 2010, as the Company 
continued its growth of owned meters and meters 
under management. Recurring revenue, in line with 
the Company’s strategy, increased from 35% of the 
total in 2010 to 41% in 2011. 
Administration expenses at £4.4m (excluding exceptional 
costs) were up 27% compared to 2010, substantially 
due to investment in staff numbers which have 
increased from 35 to 42 in line with the growth 
of the Company and its listed status, and increased 
depreciation due to the increased meter base held 
by the Company.
Finance costs increased from £250k to £535k, in line 
with the increased borrowings that have supported 
our investment in meter assets.
Pr ofitbef or etaxincr easedf r om£857kto£3.3m
andpr ofitaftertaxf r om£490kto£2.2m.
Cash and borrowings
As at 31 December 2011, the Company had cash 
balances of £7.3m and unused facilities of £7.5m. 
In October 2011, SMS was pleased to announce 
that Clydesdale Bank plc had agreed to extend the 
master lease facility, originally made available to SMS 
on 24 September 2010, by increasing the lease facility 
from £12m to £19.5m. The increased amount of £7.5m 
will be available for drawdown until 12 October 2012 
and will be used to continue to expand investment 
in meter assets.
Gearing was 32% compared to 493% in 2010.
Capital investment in meters was £9.2m compared 
to £5.2m in 2010. 
Financial review
For more information visit 
www.sms-plc.com
Glen Murray
Finance Director
“ The Group realised sales 
of £16m during the year, 
asignificantincr easef r omthe
£12.4m realised during 2010.” 13
Smart Metering Systems plc Annual report and accounts 2011
Corporate governance Financial statements Overview Business review
Treasury policies
The Company uses interest rate swaps to manage 
inter estr atefluctuationsoninter est -bearingloansand
borr owingswhichmeansthattheCompan ypa ysafix ed
interest r ater ather  than  bei ng  subject  to  fluctuati ons  i n
the variable rate. 
Interest rate swaps covered an amount of £5.5m as at 
31December2011(2010:£3.8m)andaninter estr ate
cap over an amount of £5.5m as at 31 December 2011 
(2010: £4m).
Theinter estr atesw apr esul tsinafix edinter estr ate
of2.99%andtheinter estr atecapappliesafloating
rate with a cap of 2.99%. The termination date for 
both derivatives is 15 September 2015.
The Company completed a transaction for a further 
interest rate cap in November 2011 with an effective 
dateofJanuary2012applyingafloatingr atewi thacap
of 2.25%. This will eventually apply to future drawdowns 
up to £5m.
Glen Murray
Finance Director
December
 2011 
£’000
December
 2010 
£’000 Increase
Sales 15,964 12,3 68 29%
Gr osspr ofit 8,8 55 5,492 61%
Gr osspr ofitmar gin 55% 44% 25%
EBITDA* 5,672 2,8 89 96%
EBITDA margin 36% 23% 52%
PBT* 3,9 88 1,792 123%
Earnings per share 2.93p 0.73p 301%
Financial highlights
* Excluding exceptional items
Gross profit
+61%
Earnings per share
+301% 14
Smart Metering Systems plc Annual report and accounts 2011
Risk management 
Gr oupspecificrisks
Risk Description and mitigating actions
Failure of physical 
infrastructure 
or services 
of the Group
The Group’s business is dependent on its IT infrastructure. Service interruptions and equipment failures 
ma y  expose  the  Gr oup  to  financi al  l oss  and  damage  i ts  r eputati on,  whi ch  coul d  ha v e  a  materi al  adv erse
ef f ectontheGr oup’ sbusiness,financialcondi tionandr esul tsofoper ations.TheGr oup’ sbusiness
includes the ownership and management of gas meters. If the Group fails to register a meter(s) on its 
IT  system,  wr ongl y  cl assifies  a  meter  or  i t  l oses  tr ack  of  a  meter(s)  wi thi n  the  system  then  thi s  could
also have a material adverse effect.
The Group’s IT infrastructure is subject to failure from a variety of causes largely outwith the Group’s 
control, including human error, equipment failure, power loss, failure of services related to the internet 
and telecommunications provided by the Group, physical or electronic security breaches, as well as 
factors outwith the Group’s control, such as sabotage, vandalism, system failures of network service 
pr o viders,  fir e,  earthquak e,  v ol cani c  ash,  flood  and  other  natur al  disasters,  w ater  damage,  fibr e  opti c
cable cuts, power loss not caused by the Group, improper building maintenance by the landlords of 
the buildings in which the IT infrastructure is located and terrorism.
Dependency 
on key clients, 
terms of contracts, 
financi ng  costs  and
performance levels
In its UKMA business, the Group is largely dependent on a small number of key gas suppliers 
with which it has entered into commercial contracts. Whilst there are termination provisions within 
such contracts which are designed to protect the Group in the short term, loss of one or more 
of these key clients could have a material adverse effect on the future growth of the Group’s business. 
In addition, approximately 90% of the UKMA business revenue at the end of December 2010 was 
derived from consumers who are clients of suppliers which had contracted with the Group for meter 
asset management (MAM). The balance of the revenue was derived from consumers who had 
changed gas supplier to non‑contracted suppliers. In the event that such non‑contracted supplier 
used another MAM and management of the gas meter was changed to the new asset manager, 
thentheGr oupwouldsuf f eralossinr ev enueandwouldnotbenefitf r omthecontr acttermination
provisions outlined above. 
Thek eycontr actswi thgassuppl iersobligetheGr ouptof ulfi lcertainperf ormanceobligations.
In particular, the Group is required to provide meter assets for an agreed price. If the Group enters 
into such contracts on uneconomic terms or was unable to secure appropriate levels of asset 
financeonsuitabletermsthenthiswouldha v eamaterialadv erseimpactontheGr oup’ sbusiness,
financialcondi tionandr esul tsofoper ations.
In addition, should the Group be unable to meet an appropriate level of service in its UKGC business 
thi s  ma y  damage  i ts  r eputati on  and  could  r educe  the  confidence  of  the  Gr oup’ s  cli ents  and  users  of
its services, impairing its ability to retain existing clients and users and attract new clients and users.
The attention of prospective investors is drawn 
to the fact that ownership of ordinary shares will 
involve a variety of risks which, if they occur, may 
have a materially adverse effect on the Group’s 
business and financial condition and the market 
price of the ordinary shares could decline. 15
Smart Metering Systems plc Annual report and accounts 2011
Corporate governance Financial statements Overview Business review
Risk Description and mitigating actions
Unforeseen delays 
and cost overruns 
when rolling out 
new and upgrading 
existing products 
and services
M anagement  ef f ort  and  financi al  r esour ces  ar e  bei ng  empl o y ed  b y  the  Gr oup  i n  r ol li ng  out  the  ADM
device. In addition, the Group periodically upgrades and replaces its IT infrastructure. Although the 
Group has budgeted for expected costings, additional expenses in the event of unforeseen delays, 
cost overruns, unanticipated expenses, regulatory changes and increases in the price of equipment 
ma y  negati v ely  af f ect  the  Gr oup’ s  business,  financi al  condi ti on  and  r esul ts  of  oper ati ons.
The Group has considerable experience in forecasting and managing project implementation 
timetables. However, it may in the future experience unforeseen delays and expenses in connection 
with a particular project or initiative.
The Group 
may experience 
accelerated 
demand for 
its products 
and services
The Group expects to be able to meet its current capital expenditures from internal resources, 
debt facilities and the net proceeds of the placing. In the event that the Group wins a large order 
for ADM devices and/or new smart meters then the Group may consider supporting the working 
capi talr equir ementsf orsuchor der(s)b yw a yofanissueofnewequi t yordebtfinanceora
combination of both.
IftheGr oupisunabletor aisethenecessaryfinancingitcouldadv erselyaf f ecttheGr oup’ sabili t y
to expand its business.
The Group could be 
subject to increased 
operating costs, 
as well as claims, 
litigation or other 
potential liabilities, 
in connection with 
the security and 
control of the 
Group’s systems 
and the personal 
data of users
The Group relies on systems and personnel in the Group’s locations to physically secure IT 
infrastructure and user data. Any accidental or intentional actions, including computer viruses and 
unauthorised access, as well as other disruptions could result in increased operating costs or claims. 
TheGr oupma yincursignificantaddi tionalcoststopr otectagainstsuchdisruptions,thethr eat
of security breaches (whether physical or electronic) or to alleviate problems caused by such 
interruptions or breaches.
A party who is able to breach the physical premises and/or electronic security measures of the Group’s 
systems could damage the Group’s equipment and/or misappropriate either its proprietary information 
or the personal information of the Group’s users and cause interruptions or malfunctions in its operations. 
If a third party were able to misappropriate data held on the Group’s system then the Group could 
be subject to claims, litigation or other potential liabilities. Whilst security remains one of the Group’s 
highest priorities, there can be no certainty that the security of its systems will not be breached and 
the information of the Group’s clients and customers put at risk. Any security breach (whether physical 
or electronic) could have a serious effect on the Group’s reputation and could lead to a loss of 
clients and/or existing clients seeking to claim damages. This could have a material adverse effect 
on  the  Gr oup’ s  business,  financi al  condi ti on  and  r esul t  of  oper ations  or  f utur e  gr owth.
If the Group is not 
able to effectively 
manage its growth, 
its operations could 
be damaged and 
pr ofitabili t y r educed
The Group’s business and operations have experienced rapid growth. If the Group fails to effectively 
manage this growth in the future, its operations could be harmed. This future growth could place 
si gni ficant  demands  on  the  Gr oup’ s  oper ational  and  financi al  i nfr astructur e.  If  the  Gr oup  i s  unabl e
toef f ectiv elymanageitsgr owthi tsoper ationscouldbeharmedandpr ofitabi li t yr educed.The
gr owthoftheGr oup’ ssalesandpr ofitsinthef utur ewi l ldepend,inpart,oni tsabili t ytoexpand
its operation through the roll out of new products, the exchange of existing gas meters and the 
launching of its services into new markets and geographies. Furthermore, in order to manage its 
planned expansion, it will need continually to evaluate the adequacy of its management capability, 
oper ationalprocedures,financi al  contr ol s  and  i nf ormati on  systems.  Ac cor di ngl y ,  ther e  can  be  no
a s s u r a n c e  t h a t  t h e  G r o u p  w i l l  beable toachiev ei tsexpansiongoalsona timelyorpr ofitablebasis. Heading
underhead
16
Smart Metering Systems plc Annual report and accounts 2011
16
Board of directors
Kevin Lyon
Non‑executive Chairman
Steve Timoney
Deputy Chairman
Alan Foy
ChiefEx ecutiv eOfficer
A  quali fied  charter ed  ac countant,  K evi n  spent
two years in merchant banking before joining 
the UK’s leading private equity business, 3i plc. 
In a 17 year career with 3i, Kevin built and 
developed several successful investment teams 
across the UK and led transactions in a wide 
r angeofsectors,man yleadingtopr ofitable
exits or successful stock exchange listings. 
He also held a number of leadership and 
management positions including latterly 
managing director at UK Private Equity. 
He left in 2004 and, in the last eight years, 
he has served as an independent chairman 
or non‑executive director on 16 boards. 
Of these, he has taken three to a public 
listing to raise capital or deliver an exit 
for shareholders, has sold ten in line with 
shareholder strategy and orchestrated a 
secondary MBO of two. Kevin is currently 
chairman of each of AIM‑quoted Valiant 
Petroleum plc and of Mono Global Group. 
He also currently serves as an independent 
director of Adele Food Group. He was chair 
of the audit committee and senior independent 
director of Booker plc, a £4bn revenue 
wholesale cash and carry business, when 
i t  floated  on  AIM  i n  J une  2007 .  He  gr aduated
f r omEdinbur ghUniv ersi t yin1982and
has attended Management and Business 
Development courses at INSEAD, IESE 
and Ashridge.
Steve founded the Company in 1995. Prior 
to starting the business, he spent 14 years 
with British Gas Transco (now NGT) working 
wi thintheengineeringf unctionwithspecific
responsibility for gas pipelines and meter 
assets. He then moved on to work for 
Shell UK as Commercial Manager (Scotland) 
responsible for all commercial aspects of 
the marketing of natural gas to consumers. 
Steve became the recognised expert on 
contract development under the Network 
Code regime and was also responsible for 
setting up systems and procedures for the 
management of gas connection projects. 
Steve is a professional engineer and also has 
a Masters Degree in Corporate Leadership, 
studying both at Emory University, Atlanta 
and Napier University, Edinburgh, graduating 
with distinction in 2006.
Alan has responsibility for business growth, 
client management and business operations. 
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 independent gas transporter in the 
UK. He gained considerable experience in 
utility asset ownership, as well as supply 
and shipping activities. Working within 
very complex and regulated frameworks, 
his position required a full understanding 
of utility business activities such as customer 
recruitment, licensing, regulation, safety, 
commer ci al ,  IT ,  i n v estment  and  financial 
policies. Prior to this Alan was a director of 
an international energy consultancy practice 
specialising in energy utilisation and design. 
In addition to adding valuable experience 
to the overall business, during his tenure 
with SMS Alan has successfully implemented 
a restructuring and systemising of the 
Company’s activities, as well as successfully 
gaining and retaining new clients and 
contr acts. A pr of essional ly qualified engineer ,
Alan places strong emphasis on safety, 
oper ationalperf ormanceandfinancial
accountability. He also places great importance 
on training of staff members to ensure they 
are receptive and adaptable to business 
needs and operate to a high level of 
efficiencyandcustomersatisf action.
Smart Metering Systems plc Annual report and accounts 2011 Heading
underhead
17
Smart Metering Systems plc Annual report and accounts 2011
17
Glen Murray
Finance Director
Nigel Christie
Non‑executive Director
Glen joined SMS in 2009 as a business 
accountant prior to assuming his current role 
as  Fi nance  Di r ector .  A  quali fied  acco untant
and  experi enced  financi er ,  h e  p r o v i d e s  t h e
business with the structure and controls to 
diligently manage and report on all business 
activities. Glen has key responsibility for 
financi al  r eporti ng,  business  pl an  model li ng
and business performance monitoring and 
reporting against the plan. Glen is also 
responsible for ensuring compliance with 
statute during the formation of the group 
structure and manages the migration of 
resources throughout the Company. Glen 
qualifiedwi thFr enchDuncanin1995and
in 1997 joined Shin‑Etsu Handotia 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 
f or  a  team  of  fiv e  deli v eri ng  ac countancy ,
audi t,  corpor ate  finance  and  V A T  servi ces.
Nigel has served in various management 
posi ti ons  wi thi n  corpor ate  finance 
d e p a r t m e n t s ofin v estmentbankingfi rms.
He began his career in 1976 at Kleinwort 
Benson, working in both London and 
NewY ork.Fr om1985to1989,hew asa
managingdir ectorinthecorpor atefinance
department of S.G. Warburg, New York. 
B etween1989and1991,Nigelserv edas
managingdir ectorofthecorpor atefinance
department of Kidder, Peabody International 
where he was responsible for overseeing 
European mergers and acquisitions. From 
1991 to 1995, Nigel was a director of 
MacArthur & Co. Limited, following which 
he worked for Columbus Asset Management 
between 1995 and 1999 and Value Investing 
Partners, Inc. between 1999 and 2000. 
From 2000 to the present day, he has 
been a director of RP&C International, 
an  i nvestment  banki ng  firm  provi ding
specialist advisory services to public 
and private companies. Amongst other 
directorships, Nigel currently serves 
as chairman of AIM‑quoted Maple Energy plc 
and is a member of Maple Energy plc’s audit 
committee on which he acts as chairman. He 
graduated from the University of St. Andrews 
in Scotland and attended the Program for 
Management Development at Harvard 
Business School.
Corporate governance Financial statements Overview Business review
Smart Metering Systems plc Annual report and accounts 2011 18
Smart Metering Systems plc Annual report and accounts 2011
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 2011.
Change of name
On 14 June 2011 the Company changed its name from UK Smart Matering Group Limited to Smart Metering Systems Limited. The Company 
then re-registered as a plc on 17 June 2011.
Principal activities
The principal activity of the Group during the year was that of rental and management of gas meters and that of laying infrastructure pipes 
for industrial and commercial premises and the provision of specialist technical advice on the use and management of energy for industrial 
and commercial users.
The subsidiary undertakings principally affecting the profits and net assets of the Group in the year are listed in note 2 to the parent 
company financial statements.
Review of the business
The Company is required by section 417 of the Companies Act to set out in this report a fair review of the business and future developments 
of the Group during the financial year ended 31 December 2011 and of the position of the Group at the end of the year. This information can 
be found in the Chairman’s Statement and Chief Executive’s Review on pages 6 to 11. 
Information on the use of financial instruments by the Group is given in note 18 to the financial statements.
Directors
The Directors, who served throughout the year except as noted, were as follows:
Name of Director Board title Date of appointment Date of resignation
K Lyon Non-executive Chairman 27 May 2011
N Christie Independent Non-executive Director 27 May 2011
A Foy Chief Executive 24 December 2009
S Timoney Deputy Chairman 24 December 2009
G Murray Finance Director 1 January 2011
P D Gregory Non-executive Director 5 June 2010 27 May 2011
Rt Hon B Wilson Non-executive Director 24 June 2010 27 May 2011
T E Alison Non-executive Director 8 April 2010 27 May 2011
Charitable and political donations
During the year the Group made charitable donations of £3,450 (2010: £4,476) and sponsorship payments of £9,338 (2010: £15,794).
No political donations were made during the year (2010: Nil).
Supplier payment policy
The Group’s policy is to meet obligations promptly on agreed payment dates, unless there is an unresolved query or dispute over the sum 
due. Trade creditors of the Group at 31 December 2011 were equivalent to 30 (2010: 28) days purchases, based on the average daily amount 
invoiced by suppliers during the year.
Directors’ report 19
Smart Metering Systems plc Annual report and accounts 2011
Overview Business review Corporate governance Financial statements
Substantial shareholdings
On 1 February 2012, the Company had been notified, in accordance with sections 791 to 828 of the Companies Act, of the following interest 
in the ordinary share capital of the Company. 
Name of holder Number % held
Cazenove Capital Management 6,885,000 8.26%
Legal & General Investment Management 6,000,000 7.20%
Investec Asset Management 5,500,000 6.60%
Old Mutual Asset Managers (UK) 5,455,000 6.55%
BlackRock Merrill Lynch Investment Managers 4,844,427 5.81%
Liontrust Asset Management 4,409,442 5.29%
Odey Asset Management 3,440,000 4.13%
Auditor
Each of the Directors at the date of approval of this Annual Report confirms that:
 — so far as the Director is aware, there is no relevant audit information of which the Company’s auditor is unaware; and
 — the Director has taken all the steps that he ought to have taken as a Director in order to make himself 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.
Baker Tilly UK Audit LLP have expressed their willingness to continue in office as auditor and a resolution to re-appoint Baker Tilly Audit UK LLP 
will be proposed at the forthcoming AGM.
Approved by the Board of Directors and signed on behalf of the Board 
Glen Murray
Company secretary
13 April 2012 20
Smart Metering Systems plc Annual report and accounts 2011
The Company complies, so far as is practicable and appropriate for a company of its size and nature, with the provisions of the Corporate 
Governance Code, as modified by the recommendations of the Quoted Companies Alliance (QCA). 
Board structure
During the year the Company appointed two, independent, Non-executive Directors to bring an independent view to the Board, 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 intend 
to hold monthly Board meetings.
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 Nigel Christie (Chair) and Kevin Lyon. 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 
auditors 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 auditors.
Remuneration committee
During the year the Remuneration Committee comprised Kevin Lyon (Chair) and Nigel Christie. 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 Corporate Governance Code guidelines. 
Nomination committee
During the year the Nomination Committee consisted of a committee chaired by Kevin Lyon and also comprising Nigel Christie and Alan Foy. 
The Nomination Committee considers the selection and re-appointment of Directors. It identifies and nominates candidates to fill Board 
vacancies and reviews regularly 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 are of the view that due to the current size and composition of the Group, that 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 Chairmen 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 will be issued in due course.
Going concern 
The Directors confirm that they are satisfied that the Company and 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.
Corporate governance statement 21
Smart Metering Systems plc Annual report and accounts 2011
Overview Business review Corporate governance Financial statements
Directors’ remuneration report
As an AIM Company, Smart Metering Systems PLC is required to comply with Schedule 8 to the Large and Medium sized Companies and 
Groups (Accounts and Report) Regulations 2008. The content of this report is unaudited unless stated.
Remuneration committee
The Remuneration Committee comprises the Non-executive Chairman (Kevin Lyon) and Independent Non-executive Director (Nigel Christie).
The Remuneration Committee reviews the performance of the Executive Directors and makes recommendations to the Board on matters 
relating to remuneration, terms of service, granting of share options and other equity incentives.
The Remuneration Committee meets at least annually.
Remuneration policy
The objectives of the remuneration policy are to ensure that the overall remuneration of Executive Directors is aligned with the performance 
of the Group and preserves an appropriate balance of income and shareholder value.
Non-executive directors
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. They are entitled to participate in share option arrangements relating to the 
Company’s shares. Each of the Non-executive Directors has a letter of appointment stating his annual fee and that his appointment is initially 
for a term of three years. Their appointment may be terminated with three months’ written notice at any time.
Directors remuneration
The normal remuneration arrangements for Executive Directors consist of Directors’ fees, basic salary and annual performance-related bonuses.
In addition, they receive private health care, permanent health insurance and pension contributions.
Directors’ emoluments
Fees/
basic salary
Bonus
£
Pension
contribution
£
Benefits 
in kind
£
2011
Total
£
2010
Total
£
Executive
S P Timoney 196,206 — 6,000 5,177 207,383 328,295
A H Foy 259,897 50,000 9,500 9,225 328,622 228,432
G Murray 66,333 14,000 3,317 925 84,575 — 
Non-executive
K J Lyon 50,000 — — — 50,000 — 
N B Christie 32,000 — — — 32,000 — 
T E Allison 150,000 — — — 150,000 — 
P D Gregory 50,000 — — — 50,000 — 
B Wilson 50,000 — — — 50,000 — 
Total 854,436 64,000 18,817 15,327 952,580 556,727 22
Smart Metering Systems plc Annual report and accounts 2011
Directors’ remuneration report continued
Directors’ interests
The Directors who held office at 31 December 2011 had the following interests in the shares of the Company:
Ordinary shares
£0.01p each
2011
£1 each
2010
Executive
S P Timoney 25,004,810 225
A H Foy 13,334,937 75
G Murray — —
Non-executive
K J Lyon 125,000 —
N B Christie 80,000 —
38,544,747 300
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:
Options that were granted during the year are summarised below:
Type
Number of 
shares
under
option
Exercise
price
Date of
grant
Earliest 
date
exercisable
Executive
G Murray Approved 39,474 76p 15/07/11 15/07/14
Unapproved 666,667 60p 20/06/11 20/06/16
Non-executive
K J Lyon Unapproved 437,500 60p 20/06/11 20/06/12*
N B Christie Unapproved 280,000 60p 20/06/11 20/06/12*
* Only 50% of the options can be exercised at this date.
The share price at 31 December 2011 was 93.5p. The range in the period 8 July to 31 December 2011 was 60p to 97.5p.
Details of share options granted by the Company at 31 December 2011 are given in note 23.  23
Smart Metering Systems plc Annual report and accounts 2011
Overview Business review Corporate governance Financial statements
Directors’ responsibilities statement
In the preparation of financial statements
The Directors are responsible for preparing the Directors’ 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 (IFRS) 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).
The Group financial statements are required by law and IFRS 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:
a. select suitable accounting policies and then apply them consistently;
b. make judgements and accounting estimates that are reasonable and prudent;
c.  for the Group financial statements, state whether they have been prepared in accordance with IFRSs 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
d.  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. 24
Smart Metering Systems plc Annual report and accounts 2011
Independent auditor’s report 
To the members of Smart Metering Systems plc
We have audited the Group and parent company financial statements (the financial statements) on pages 25 to 52 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).
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 more fully explained in the Directors’ Responsibilities Statement on page 23, 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 (APB’s) Ethical Standards for Auditors.
Scope of the audit of the financial statements
A description of the scope of an audit of financial statements is provided on the APB’s website at www.frc.org.uk/apb/scope/private.cfm
Opinion on financial statements
In our opinion:
 — 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 2011 
and of the Group’s profit for the year then ended;
 — the Group financial statements have been properly prepared in accordance with IFRSs as adopted by the European Union; 
 — the parent company financial statements have been properly prepared in accordance with United Kingdom Generally Accepted Accounting 
Practice; and
 — the financial statements have been prepared in accordance with the requirements of the Companies Act 2006.
Opinion on other matter prescribed by the Companies Act 2006
In our opinion the information given in 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:
 — 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
 — the parent company financial statements are not in agreement with the accounting records and returns; or
 — certain disclosures of Directors’ remuneration specified by law are not made; or
 — we have not received all the information and explanations we require for our audit. 
Alan Aitchison (Senior Statutory Auditor)
For and on behalf of BAKER TILLY UK AUDIT LLP, Statutory Auditor 
Chartered Accountants
Breckenridge House
274 Sauchiehall Street
Glasgow G2 3EH
13 April 2012 25
Smart Metering Systems plc Annual report and accounts 2011
Overview Business review Corporate governance Financial statements
Consolidated statement of comprehensive income
For the year ended 31 December 2011
Notes
2011
£‘000
2010
£’000
Revenue 1 15,964 12,368
Cost of sales 2 (7,109) (6,876)
Gross profit 8,855 5,492
Administrative expenses 2 (5,050) (4,385)
Profit from operations 2 3,805 1,107
Attributable to:
Operating profit before exceptional items 4,482 2,042
Exceptional items and fair value adjustments 2 (677) (935)
Finance costs 5 (535) (250)
Finance income 5 41 —
Profit before taxation 3,311 857
Taxation 6 (1,121) (367)
Profit for the year attributable to equity holders 2,190 490
Other comprehensive income — —
Total comprehensive income 2,190 490
The profit from operations arises from the Group’s continuing operations.
Earnings per share attributable to owners of the parent during the year:
Notes 2011 2010
Basic earnings per share (pence) 7 2.93 0.73
Diluted earnings per share (pence) 7 2.90 0.73 26
Smart Metering Systems plc Annual report and accounts 2011
Consolidated statement of financial position
As at 31 December 2011
Notes
2011
£’000
2010
£’000
1 January
 2010
£’000
Assets
Non-current
Intangible assets 9 1,885 1,731 1,863
Property, plant and equipment 10 21,327 12,951 8,303
Financial asset investments — — 20
23,212 14,682 10,186
Current assets
Inventories 12 83 — —
Trade and other receivables 13 1,606 1,219 1,958
Financial asset investments 11 — 180 517
Cash and cash equivalents 14 7,317 1,835 592
Other current financial assets 18 18 99 —
9,024 3,333 3,067
Total assets 32,236 18,015 13,253
Liabilities
Current liabilities
Trade and other payables 15 6,379 6,090 5,644
Bank loans and overdrafts 16 1,328 1,003 49
Commitments under hire purchase agreements 17 3 7 510
Other current financial liabilities 18 339 171 —
8,049 7,271 6,203
Non-current liabilities
Bank loans 16 9,845 8,253 427
Obligations under hire purchase agreements 17 13 — 3,973
Deferred tax liabilities 20 1,873 964 559
Other payables — — 554
11,731 9,217 5,513
Total liabilities 19,780 16,488 11,716
Net assets 12,456 1,527 1,537
Equity
Share capital 22 833 — —
Share premium 22 8,653 — —
Other reserve 24 1 1 1
Retained earnings 2,969 1,526 1,536
Total equity attributable to equity holders of the parent company 12,456 1,527 1,537
The financial statements on pages 25 to 52 were approved and authorised for issue by the Board of Directors and signed on its behalf by:
Glen Murray Company Registration Number
Director SC367563
13 April 2012 27
Smart Metering Systems plc Annual report and accounts 2011
Overview Business review Corporate governance Financial statements
Statement of changes in equity 
For the year ended 31 December 2011
Attributable to the owners of the parent company:
Share
capital
£’000
Share
premium
 £’000
Other
reserve
£’000
Retained
earnings
£’000
Total
£’000
As at 1 January 2010 — — 1 1,536 1,537
Profit for the year — — — 490 490
Transactions with owners  
in their capacity as owners:
Dividends (Note 8) — — — (500) (500)
As at 31 December 2010 — — 1 1,526 1,527
Profit for the year — — — 2,190 2,190
Transactions with owners  
in their capacity as owners:
Share bonus issue (Note 22) 666 — — (666) —
Shares issued (Note 22) 167 9,833 — — 10,000
Share issue costs — (1,180) — — (1,180)
Dividends (Note 8) — — — (180) (180)
Share options — — — 99 99
As at 31 December 2011 833 8,653 1 2,969 12,456 28
Smart Metering Systems plc Annual report and accounts 2011
Consolidated statement of cash flows
For the year ended 31 December 2011
2011
£’000
2010
£’000
Cash flow from operating activities
Profit before taxation 3,311 857
Finance costs 535 250
Finance income (41) —
Fair value movement on derivatives 249 71
Depreciation 956 598
Amortisation 234 249
Share-based payment expense 99 —
Investment revaluation — 337
Increase in inventories (83) —
(Increase)/decrease in trade and other receivables (438) 775
Decrease in trade and other payables 128 448
Loss on disposal of investment — 5
Cash generated from operations 4,950 3,590
Taxation — 1
Net cash generated from operations 4,950 3,591
Investing activities
Payments to acquire property, plant and equipment (9,332) (5,246)
Disposal of fixed assets investment 180 15
Payments to acquire intangible assets (388) (118)
Finance income 41 —
Net cash used in investing activities (9,499) (5,349)
Financing activities
Net proceeds of new borrowings less capital repaid 1,937 4,304
Net outflow from other long-term creditors — (554)
Finance costs (535) (250)
Net proceeds from share issue 8,820 —
Dividend paid (180) (500)
Net cash generated from financing activities 10,042 3,000
Net increase in cash and cash equivalents 5,493 1,242
Cash and cash equivalents at the beginning of the financial year 1,824 582
Cash and cash equivalents at the end of the financial year (Note 13) 7,317 1,824 29
Smart Metering Systems plc Annual report and accounts 2011
Overview Business review Corporate governance Financial statements
Accounting policies
The Company is incorporated and domiciled in the UK. The Group’s activities consist of the rental and management of gas meters and 
that of laying infrastructure pipes for industrial and commercial premises and the provision of specialist technical advice on the use and 
management of energy for industrial and commercial users.
Basis of preparation 
The consolidated financial statements have been prepared on a historical cost basis, except for derivative financial instruments which are 
measured at fair value in line with applicable accounting standards. 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
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.
Statement of compliance
For all periods up to and including the year ended 31 December 2010, the Group prepared financial statements in accordance with generally 
accepted accounting practice in the United Kingdom (UK GAAP). These financial statements for the year ended 31 December 2011 are the 
first the Group has prepared under International Financial Reporting Standards (IFRS) as adopted by the European Union. An explanation of 
the principal adjustments made by the Group in restating its UK GAAP statement of financial position as at 1 January 2010 and its previously 
published UK GAAP financial statements for the year ended 31 December 2010 is provided in note 28.
Basis of consolidation 
The consolidated financial statements incorporate the consolidated financial statements of the Company and all Group undertakings being 
UK Gas Connection Limited, UK Meter Assets Limited and UK Data Management Limited. These are adjusted, where appropriate, to conform 
to Group accounting policies and are prepared to the same accounting reference date. The Company was incorporated on 27 October 2009. 
The Group was formed on 24 December 2009 through the acquisition of the entire share capital of UK Gas Connection Limited and UK Meter 
Assets Limited (the only subsidiaries in existence at that time). 
Whilst the Group was newly formed, the ultimate ownership of all companies remained unchanged and, as such, the financial statements 
have been prepared based on a reconstruction under common control, reflecting the Group results for the current and prior years as though 
the Group structure has always existed.
Use of estimates 
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 the estimation of share-based payment costs. The estimation of share-based payment costs 
requires the selection of an appropriate valuation model, consideration as to the inputs necessary for the valuation model chosen and the 
estimation of the number of awards that will ultimately vest, inputs for which arise from judgements relating to the probability of meeting 
non-market performance conditions and the continuing participation of employees. 
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, 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 Company fulfils its contractual obligations to customers by supplying goods and services, or when they have the right to 
receive the income. Where revenue is recognised due to the right to receive the income and the Company has not invoiced for the goods or 
services supplier an accrual is incorporated for the estimate of providing such.
Rental income is accounted for on a straight line basis over the term.
Segment reporting 
An operating segment is a group of assets and operations engaged in providing products or services that are subject to risks and returns 
that are different from those of other business segments. Operating segments are reported in a manner consistent with the reports made 
to the chief operating decision maker which are consistent with the reported results.
The Company considers that the role of chief operating decision maker is performed by the Board of Directors. 30
Smart Metering Systems plc Annual report and accounts 2011
Accounting policies continued
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 time frame established by regulation or convention in the 
marketplace (regular way trades) are recognised on the trade date, i.e. the date that the Group commits to purchase or sell the asset.
The Group’s financial assets include cash and short-term deposits, trade and other receivables, loans and other receivables, quoted and 
unquoted financial instruments, and derivative financial instruments.
Financial liabilities 
Initial recognition and measurement
Financial liabilities within the scope of IAS 39 are classified as financial liabilities at fair value through profit or loss, loans and borrowings, 
or as derivatives designated as hedging instruments in an effective hedge, as appropriate. The Group determines the classification of its 
financial liabilities at initial recognition. All financial liabilities are recognised initially at fair value and in the case of loans and borrowings, 
net of directly attributable transaction costs.
The Group’s financial liabilities include trade and other payables, bank overdraft, loans and borrowings, financial guarantee contracts and 
derivative financial instruments.
Derecognition
A financial liability is derecognised when the obligation under the liability is discharged or cancelled or expires. When an existing financial 
liability is replaced by another from the same lender on substantially different terms, or the terms of an existing liability are substantially 
modified, such an exchange or modification is treated as a derecognition of the original liability and the recognition of a new liability, and 
the difference in the respective carrying amounts is recognised in the income statement.
Offsetting of financial instruments
Financial assets and financial liabilities are offset, and the net amount reported in the consolidated statement of financial position if, and only 
if, there is a currently enforceable legal right to offset the recognised amounts and there is an intention to settle on a net basis, or to realise 
the assets and settle the liabilities simultaneously.
Initial recognition and subsequent measurement
The Group uses derivative financial instruments such as interest rate swaps to hedge its interest rate risk. Such derivative financial instruments 
are initially recognised at fair value on the date on which a derivative contract is entered into and are subsequently remeasured at fair value. 
Derivatives are carried as financial assets when the fair value is positive and as financial liabilities when the fair value is negative. The Group 
has not designated any derivatives for hedge accounting.
Current versus non-current classification
Derivative instruments that are not designated as effective hedging instruments are classified as current or non-current or separated into 
a current and non-current portion based on an assessment of the facts and circumstances (i.e. the underlying contracted cash flows).
Where the Group will hold a derivative as an economic hedge (and does not apply hedge accounting) for a period beyond twelve months 
after the reporting date, the derivative is classified as non-current (or separated into current and non-current portions) consistent with the 
classification of the underlying item.
Derivative instruments that are designated as, and are effective hedging instruments, are classified consistent with the classification of the 
underlying hedged item. The derivative instrument is separated into a current portion and non-current portion only if a reliable allocation 
can be made.
Exceptional items 
The Group presents as exceptional items on the face of the income statement 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.
Research and development 
Expenditure on pure and applied research activities is recognised in the income statement 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, 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 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 13% on cost straight line 31
Smart Metering Systems plc Annual report and accounts 2011
Overview Business review Corporate governance Financial statements
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 operating expenses disclosed in the statement of comprehensive income.
Intangible assets are amortised over their useful lives as follows:
Software  eight years straight line
Useful lives are also examined on an annual basis and adjustments, where applicable, are made on a prospective basis. The Company does 
not have any intangible assets with indefinite lives.
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 income statement as incurred. 
Depreciation is calculated on a straight line basis over the estimated useful life of the asset as follows:
Short leasehold property 20% on cost
Plant and machinery  5% on cost 
Fixtures and fittings  15% on cost
Equipment   33% 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 income statement 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.
All fixed assets are initially recorded at cost.
Impairment of assets
Property, plant and equipment and intangible assets are reviewed for impairment whenever events or changes in circumstances indicate that 
the carrying amount may not be recoverable. An impairment loss is recognised for the amount by which the asset’s carrying amount exceeds 
its recoverable amount. The recoverable amount is the higher of an asset’s fair value less costs to sell and value in use. For purposes of 
assessing impairment assets that do not individually generate cash flows are assessed as part of the cash-generating unit to which they belong. 
Cash-generating units are the lowest levels for which there are cash flows that are largely independent of the cash flows from other assets 
or groups of assets.
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 balance sheet comprise 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 consist 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 tangible fixed assets at their fair value. The capital element 
of the future payments is treated as a liability and the notional interest is charged to the statement of comprehensive income in proportion 
to the remaining balance outstanding.
Leased assets and obligations
Finance leases, which transfer to the Group substantially all the risks and benefits incidental to ownership of the leased item, are capitalised 
at the commencement of the lease at the fair value of the leased property or, if lower, at the present value of the minimum lease payments. 
Lease payments are apportioned between finance charges and reduction of the lease liability so as to achieve a constant rate of interest on the 
remaining balance of the liability. Finance charges are recognised in the income statement. Leased assets are depreciated over the useful life 
of the asset. However, if there is no reasonable certainty that the Group will obtain ownership by the end of the lease term, the asset is 
depreciated over the shorter of the estimated useful life of the asset and the lease term. Operating lease payments are recognised as an 
expense in the income statement on a straight line basis over the lease term.
All other leases are operating leases and the annual rentals are charged to the statement of comprehensive income on a straight line basis 
over the lease term. 32
Smart Metering Systems plc Annual report and accounts 2011
Accounting policies continued
Pension costs
The Group operates a defined contribution pension scheme for employees. The assets of the scheme are held separately from those of the 
Group. The annual contributions payable are charged to the statement of comprehensive income.
Share-based payments
The costs of equity-settled share-based payments are charged to the income statement 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 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.
Adoption of the international accounting standards 
Standards affecting presentation and disclosure
In the current year, the following new and revised Standards have been adopted but have not had any material impact on the amounts reported 
in these financial statements:
IFRS 1 (amended 2010)  Additional exemptions for first time adopters
IFRS 3 (amended 2010) Business combinations  
IFRS 7(amended 2010) Financial instruments: disclosures
IAS 1 (amended 2010) Presentation of financial statements
IAS 21 (amended 2010) The effects of foreign exchange rates
IAS 24 (revised 2009) Related party disclosures
IAS 27   Consolidated and separate financial statements
IAS 34 (amended 2010) Interim financial reporting
IFRIC 19   Extinguishing financial liabilities with equity instruments
At the date of authorisation of the financial statements, the following Standards and Interpretations which have not been applied in the financial 
statements were in issue but not yet effective (and in some cases had not yet been adopted by the EU):
IFRS 1 (amended 2010) First time adoption of IFRS: Hyperinflation
IFRS 7 (amended 2010) Financial instruments disclosures: transfers of financial assets
IFRS 7 (amended 2011) Financial instruments disclosures: offsetting financial assets and financial liabilities
IFRS 9   Financial instruments
IFRS 10   Consolidated financial statements
IFRS 11   Joint arrangements
IFRS 12   Disclosure of interests in other entities
IFRS 13   Fair value measurement
IAS 1 (amended 2011) Presentation of other comprehensive income
IAS 12 (amended 2010) Income taxes: deferred tax
IAS 19 (amended 2011) Employee benefits
IAS 27 (amended 2011) Separate financial statements
IAS 28 (amended 2011) Investments in associates and joint ventures
IAS 32 (amended 2011) Financial instruments presentation: offsetting financial assets and financial liabilities
The Directors do not expect that the adoption of these Standards or Interpretations in future periods will have a material impact on the financial 
statements of the Company or the Group, except for IFRS 11 Joint arrangements. 33
Smart Metering Systems plc Annual report and accounts 2011
Overview Business review Corporate governance Financial statements
Notes to the financial statements
For the year ended 31 December 2011
1 Segmental reporting
For management purposes, the Group is organised into two core divisions, management of assets and installation of meters, which form the 
basis of the Group’s reportable operating segments. 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:
The management of assets comprises regulated management of gas meters within the UK.
The installation of meters comprises installation of domestic and industrial and commercial gas meters throughout the UK.
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 or loss excluding operating costs not reported by segment, depreciation, amortisation of 
intangible assets and exceptional items.
The following tables present information regarding the Group’s reportable segments for the years ended 31 December 2011 and 31 December 2010.
31 December 2011
Asset
management
 £’000
Asset
installation
£’000
Unallocated
£’000
Total
 operations
 £’000
Segment/Group revenue 6,614 9,350 — 15,964
Operating costs (1,973) (5,136) — (7,109)
Segment profit – Group gross profit 4,641 4,214 — 8,855
Items not reported by segment:
Other operating costs (3,182) (3,182)
Depreciation (918) (38) (956)
Amortisation (235) (14) (235)
Exceptional items (677) (677)
Group operating profit after amortisation and exceptional items 3,488 4,214 (3,897) 3,805
Net finance costs — — (494) (494)
Profit before tax 3,488 4,214 (4,391) 3,311
Tax expense (1,121)
Profit for year 2,190
31 December 2010
Asset 
management
 £’000
Asset 
installation
£’000
Unallocated
£’000
Total
 operations
 £’000
Segment/Group revenue 4,372 7,996 — 12,368
Cost of sales (1,850) (5,026) — (6,876)
Segment profit – Group gross profit 2,522 2,970 — 5,492
Items not reported by segment:
Other operating costs (2,603) (2,603)
Depreciation (551) (47) (598)
Amortisation (235) (14) (249)
Exceptional items (864) (864)
Group operating profit after amortisation and exceptional items 1,736 2,956 (3,514) 1,178
Net finance costs — — (321) (321)
Profit before tax 1,736 2,956 (3,835) 857
Tax expense (367)
Profit for year 490
All revenues and operations are based and generated in the UK. Notes to the financial statements continued
For the year ended 31 December 2011
34
Smart Metering Systems plc Annual report and accounts 2011
Notes to the financial statements continued
For the year ended 31 December 2011
1 Segmental reporting continued
The Group has one major customer that generated turnover within each segment as listed below:
2011
£’000
2010
£’000
Customer 1 – Asset Management 4,380 3,071
Customer 1 – Asset Installation 2,860 1,987
7,240 5,058
The majority of assets and liabilities are managed at subsidiary and Group level and are not integral to the operations of any of the Group’s segments.
No segmentation is presented for the majority of Group assets and liabilities as these are managed centrally, independently of operating segments.
Those assets and liabilities that are managed and reported on a segmental basis are detailed below.
Segment assets and liabilities
31 December 2011
Asset
management
 £’000
Asset
installation 
£’000
Total
operations
£’000
Assets reported by segment
Intangible assets 1,885 — 1,885
Plant and machinery 21,125 — 21,125
Inventories 83 — 83
23,093
Assets not reported by segment 9,143
Total assets 32,236
Liabilities reported by segment
Obligations under hire purchase agreements 16 — 16
16
Liabilities not reported by segment 19,764
Total liabilities 19,780
31 December 2010
Asset
management
£’000
Asset
installation
£’000
Total
operations
£’000
Assets reported by segment
Intangible assets 1,731 — 1,731
Plant and machinery 12,875 — 12,875
Inventories — — —
14,606
Assets not reported by segment 3,409
Total assets 18,015
Liabilities reported by segment
Obligations under hire purchase agreements 7 — 7
7
Liabilities not reported by segment 16,481
Total liabilities 16,488 35
Smart Metering Systems plc Annual report and accounts 2011
Overview Business review Corporate governance Financial statements
2 Income statement by nature and items of expenditure included in the consolidated income statement
2011
£’000
2010
£’000
Revenue 15,964 12,368
Direct rental costs (1,973) (1,655)
Direct subcontractor costs (4,437) (3,684)
Other direct sales costs and systems rental (699) (1,538)
Staff costs (1,965) (1,676)
Depreciation: 
– owned assets (948) (576)
– leased assets (8) (23)
Amortisation (234) (249)
Other operating income — —
Auditor’s remuneration: 
– as auditor (59) (33)
Exceptional costs (677) (935)
Operating lease costs:
– plant and equipment (25) (5)
Loss on disposal of fixed assets — (5)
Other operating charges (1,134) (882)
Operating profit 3,805 1,107
Finance costs (535) (250)
Finance income 41 —
Profit before taxation 3,311 857
Included in exceptional administrative expenses are: i) £329,000 (2010: £Nil) that relates to costs incurred during the listing process, ii) £249,000 
(2010: £71,000) relates to the interest rate hedge fair value adjustment, iii) £Nil (2010: £527,000) of costs associated with new debt facilities, iv) £Nil 
(2010: £337,000) of a write down on current asset investments, and v) £99,000 (2010: £Nil) that relates to share-based payments.
Auditor’s remuneration amounts in total to £247,000 (2010: £47,000).
This can be analysed as:
2011
£’000
2010
£’000
Statutory audit (Baker Tilly UK Audit LLP) 59 33
Reporting accountant services (Baker Tilly Corporate Finance LLP) 167 —
Taxation services (Baker Tilly Tax and Accounting Limited) 15 11
Non-statutory audit services (Baker Tilly UK Audit LLP) 6 3
247 47
3 Particulars of employees
The average number of staff employed by the Group, including Executive Directors’ during the financial year was:
2011
Number
2010
Number
Number of administrative staff 5 4
Number of operational staff 34 28
Number of Directors 3 3
42 35 36
Smart Metering Systems plc Annual report and accounts 2011
Notes to the financial statements continued
For the year ended 31 December 2011
3 Particulars of employees continued
The aggregate payroll costs, including Executive Directors, of the above were:
2011
£’000
2010
£’000
Wages and salaries 1,711 1,468
Social security costs 195 172
Staff pension costs 40 23
Director pension costs 19 13
1,965 1,676
4 Directors’ emoluments
The Directors’ aggregate remuneration in respect of qualifying services were:
2011
£’000
2010
£’000
Emoluments receivable 586 614
Fees 333 —
Value of Group pension contributions to money purchase schemes 3 6
Other pension 16 7
937 627
Emoluments of highest paid Director
2011
£’000
2010
£’000
Total emoluments 310 317
Pension contributions 10 4
The number of Directors who accrued benefits under Company pension schemes was as follows:
2011
Number
2010
Number
Money purchase schemes 2 1
5 Finance costs and finance income 
2011
 £’000
2010
£’000
Finance costs
Bank loans and overdrafts 533 235
Finance leases 2 15
Total finance costs 535 250
Finance income
Bank interest receivable 41 — 37
Smart Metering Systems plc Annual report and accounts 2011
Overview Business review Corporate governance Financial statements
6 Taxation
2011
£’000
2010
£’000
Analysis of charge in the year
Current tax:
Current income tax expense 212 —
Over provision in prior year — (38)
Total current income tax 212 (38)
Deferred tax:
Origination and reversal of temporary differences 909 405
Tax on profit on ordinary activities 1,121 367
The charge for the period can be reconciled to the loss per the consolidated statement of comprehensive income as follows:
Profit before tax 3,311 857
Tax at the UK corporation tax rate of 26.5% (2010: 28%) 877 240
Expenses not deductible for tax purposes 228 170
Adjustments to tax charge in respect of previous periods 51 10
Change in tax rate (35) (36)
R&D enhanced deductions — (17)
Tax expense in the income statement 1,121 367
7 Earnings per share
The calculation of EPS is based on the following data and number of shares: 
2011
£’000
2010
 £’000
Profit for the year used for calculation of basic EPS 2,190 490
Amortisation of intangible assets 235 235
Exceptional costs 677 864
Tax effect of adjustments (92) (242)
Earnings for the purpose of adjusted EPS 3,010 1,347
Number of shares 2011 2010
Weighted average number of ordinary shares for the purposes of basic EPS 74,709,610 66,673,080
Effect of potentially dilutive ordinary shares:
– share options 728,577 —
Weighted average number of ordinary shares for the purposes of diluted EPS 75,438,187 66,673,080
Earnings per share:
– basic (pence) 2.93 0.73
– diluted (pence) 2.90 0.73
Adjusted earnings per share:
– basic (pence) 4.03 2.02
– diluted (pence) 3.99 2.02
The Directors consider that the adjusted earnings per share calculation gives a better understanding of the Group’s earnings per share. Notes to the financial statements continued
For the year ended 31 December 2011
38
Smart Metering Systems plc Annual report and accounts 2011
8 Dividends
2011
£’000
2010
£’000
Equity dividends
Paid during the year:
Dividends on equity shares £600 (2010: £1,166.67) 180 350
Approved and unpaid:
Dividends on equity shares £Nil (2010: £500) — 150
Total dividends 180 500
9 Intangible assets
Research and 
development
£’000
Software
£’000
Total
£’000
Cost 
As at 1 January 2010 53 1,810 1,863
Additions 118 — 118
As at 31 December 2010 171 1,810 1,981
Additions 388 — 388
As at 31 December 2011 559 1,810 2,369
Amortisation
As at 1 January 2010 — — —
Charge for year 14 235 249
As at 31 December 2010 14 235 249
Charge for year — 235 235
As at 31 December 2011 14 470 484
Net book value
At 31 December 2011 545 1,340 1,885
At 31 December 2010 157 1,574 1,731
At 1 January 2010 53 1,810 1,863 39
Smart Metering Systems plc Annual report and accounts 2011
Overview Business review Corporate governance Financial statements
10 Property, plant and equipment
Short leasehold
property
£’000
Plant and
machinery
£’000
Fixtures
and fittings
£’000
Equipment
£’000
Total
£’000
Cost
As at 1 January 2010 18 8,663 8 105 8,794
Additions 13 5,189 16 28 5,246
As at 31 December 2010 31 13,852 24 133 14,040
Additions — 9,168 1 163 9,332
As at 31 December 2011 31 23,020 25 296 23,372
Depreciation
As at 1 January 2010 7 425 — 59 491
Charge for year 5 552 4 37 598
As at 31 December 2010 12 977 4 96 1,089
Charge for year 6 918 5 27 956
As at 31 December 2011 18 1,895 9 123 2,045
Net book value
At 31 December 2011 13 21,125 16 173 21,327
At 31 December 2010 19 12,875 20 37 12,951
At 1 January 2010 11 8,238 8 46 8,303
Hire purchase agreements
Included within the net book value of £21,327,000 (2010: £12,951,000, 2009: £8,703,000) is £145,418 (2010: £Nil, 2009: £4,711,000) 
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 £7,654 (2010: £23,000, 2009: £248,000).
The assets are secured by a bond and floating charge (note 15).
11 Financial asset investments
2011
£’000
2010
£’000
1 Jan 2010
£’000
Current
Investments — 180 517
Subsidiary undertakings
Country of 
incorporation Holding
Proportion of 
shares held Nature of business
All held by the Company:
UK Gas Connection Limited  
(formerly Eco Project Management Limited) Scotland Ordinary shares 100% Gas Utility management
UK Meter Assets Limited  
(formerly The UK Meter Exchange Limited) Scotland Ordinary shares 100% Gas Utility management
UK Data Management Limited Scotland Ordinary shares 100% Data management Notes to the financial statements continued
For the year ended 31 December 2011
40
Smart Metering Systems plc Annual report and accounts 2011
12 Inventories
2011
£’000
2010
£’000
1 Jan 2010
£’000
Inventories 83 — —
13 Trade and other receivables
2011
£’000
2010
£’000
1 Jan 2010
£’000
Trade receivables 480 330 838
Other receivables 1,052 823 690
Corporation tax repayable — 51 15
VAT recoverable 74 — 415
Other debtors — 15 —
1,606 1,219 1,958
The debtors above include the following amounts falling due after more than one year:
2011
£’000
2010
£’000
1 Jan 2010
£’000
Other receivables 34 31 30
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. The amounts presented in the statement of financial position are net of 
allowances for doubtful receivables. There was no allowance for doubtful receivables in the year (2010: £Nil, 2009: £Nil). The ageing profile 
of trade receivables is shown below:
2011
£’000
2010
£’000
1 Jan 2010
£’000
Current 435 113 323
31–60 days 20 124 270
60–90 days 15 26 57
over 90 days 10 67 188
480 330 838
Allowance for doubtful receivables — — —
480 330 838
Trade receivables are non-interest-bearing and are generally on 30–90 days terms.
Trade receivables due from related parties at 31 December 2011 amounted to £34,000 (2010: £31,000, 2009: £30,000).
Receivables are all in Sterling denominations. 
The Directors are of the opinion that none of the overdue debts as at 31 December 2011 (2010: £Nil, 2009: £Nil) require impairment. 41
Smart Metering Systems plc Annual report and accounts 2011
Overview Business review Corporate governance Financial statements
14 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:
2011
£’000
2010
£’000
1 Jan 2010
£’000
Cash 7,317 1,835 592
Bank overdraft — (11) (10)
7,317 1,824 582
15 Trade and other payables
2011
£’000
2010
£’000
1 Jan 2010
£’000
Current
Trade payables 2,035 1,568 1,394
Other payables 10 274 72
Other taxes 143 245 59
Corporation tax 161 — —
Accruals and deferred income 4,030 4,003 4,119
6,379 6,090 5,644
The maturity profile of trade payables is given below:
2011
£’000
2010
£’000
1 Jan 2010
£’000
Current 1,530 1,113 673
31–60 days 281 122 584
60–90 days 39 198 72
over 90 days 185 135 65
2,035 1,568 1,394
Trade payables are non-interest-bearing and are normally settled on 30–45 day terms.
All trade liabilities are Sterling denominated. Notes to the financial statements continued
For the year ended 31 December 2011
42
Smart Metering Systems plc Annual report and accounts 2011
16 Bank loans and overdrafts
2011
£’000
2010
£’000
1 Jan 2010
£’000
Current
Bank loans 1,328 992 39
Bank overdrafts — 11 10
1,328 1,003 49
Non-current
Bank loans 9,845 8,253 427
Bank overdraft — — —
9,845 8,253 427
Bank loans at 31 December 2011 relate to a term loan facility of £0.5m and a master lease facility of £19.5m. The master lease facility was 
increased from £12m to £19.5m in October 2011.
The term loan is for a term of five years and is payable in equal quarterly instalments of £25,000. The term loan attracts interest at a rate 
of 3.5% over the three month LIBOR.
The master lease facility has a term of ten years following drawdown period (September 2011) and is repayable in monthly instalments. 
This facility attracts interest at a rate of 3.1% over three month LIBOR for the original facility and 3.25% over three month LIBOR for the 
increase of £7.5m. The bank retains ownership of all assets acquired using this facility until full repayment.
The bank have a bond and floating charge over current and future property and assets.
The Group have fixed the bank interest payable through an interest rate swap and cap (see note 18).
17 Commitments under hire purchase agreements
Future minimal commitments under hire purchase agreements are as follows:
2011
£’000
2010
£’000
1 Jan 2010
£’000
Current
Amounts payable within 1 year 3 7 510
Non-current
Amounts payable between 2 to 5 years 13 — 3,973
Amounts payable after more than 5 years — — —
13 — 3,973
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.
18 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.
2011
£’000
2010
£’000
1 Jan 2010
£’000
Other financial assets 18 99 —
Non-current liabilities
Other financial liabilities 339 171 —
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 £5,500,000 as at 31 December 2011 (2010: £3,800,000, 2009: £Nil) 
and an interest rate cap over an amount of £5,500,000 as at 31 December (2010: £4,000,000, 2009: £Nil). 43
Smart Metering Systems plc Annual report and accounts 2011
Overview Business review Corporate governance Financial statements
18 Other financial liabilities and assets continued
The interest rate swap results in a fixed interest rate of 2.99% and the interest rate cap applies a floating rate with a cap of 2.99%.
The termination date for both derivatives is 15 September 2015.
The Group completed a transaction for a further interest rate cap in November 2011 with an effective date of January 2012 applying 
a floating rate with a cap of 2.25%. 
The movement in the fair value is shown below:
2011
£’000
2010
£’000
1 Jan 2010
£’000
Interest rate swap
Opening position 99 — —
Adjustment to fair value (81) 99 —
Closing position 18 99 —
Interest rate cap
Opening position (171) — —
Adjustment to fair value (168) (171) —
Closing position (339) (171) —
Fair values
The Directors do not consider there to be any material differences between the fair values and carrying values of any financial assets 
or liabilities recorded within these financial statements at the balance sheet date other than as set out below.
Fair value hierarchy
The Group uses the following hierarchy for determining and disclosing the fair value of financial instruments by valuation technique:
 — Level 1: quoted (unadjusted) prices in active markets for identical assets or liabilities;
 — Level 2: other techniques for which all inputs which have a significant effect on the recorded fair value are observable, either directly 
or indirectly; and
 — Level 3: techniques which use inputs which have a significant effect on the recorded fair value that are not based on observable market data.
At 31 December 2011, the Group held the following financial instruments measured at fair value:
Assets measured at fair value
31 December 
2011
£’000
Level 1
£’000
Level 2
£’000
Level 3
£’000
Financial assets at fair value through the income statement:
Interest rate derivatives 18 — 18 —
Liabilities measured at fair value
31 December 
2011
£’000
Level 1
£’000
Level 2
£’000
Level 3
£’000
Financial liabilities at fair value through the income statement:
Interest rate derivatives (339) — (339) —
Fair value has been assessed on a Mark to Market basis.
The above liabilities 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 2011, there were no transfers between Level 1 and Level 2 fair value measurements, 
and no transfers into and out of Level 3 fair value measurements. Notes to the financial statements continued
For the year ended 31 December 2011
44
Smart Metering Systems plc Annual report and accounts 2011
19 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, after the impact of hedge accounting. 
The Group’s profit before tax is affected through the impact on floating rate borrowings as follows:
Pound Sterling
Increase/decrease 
in basis points
Effect on profit 
before tax
£’000
2011 1% 51
2010 1% 49
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
financial liabilities
£’000
Variable rate
financial liabilities
£’000
Total
£’000
2011 5,516 5,673 11,189
2010 5,000 4,434 9,434
1 January 2010 — 4,960 4,960
The fixed rate financial liabilities relates to the portion of the banking facility that is fixed through hedging instruments.
The following is the maturity profile of the Group’s financial liabilities as at 31 December:
2011
£’000
2010
£’000
1 Jan 2010
£’000
Fixed rate
Less than 1 year 642 500 —
2–5 years 2,555 2,000 —
Over 5 years 2,444 2,500 —
5,641 5,000 —
Variable rate
Less than 1 year 630 570 560
2–5 years 2,521 1,567 4,400
Over 5 years 2,522 2,297 —
5,673 4,434 4,960
Interest rate risk profile of financial assets
The Group’s financial assets at 31 December 2011 comprise cash and trade receivables. The cash balance of £7,317,000 (2010: £1,835,000, 
2009: £592,000) 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, was 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. 45
Smart Metering Systems plc Annual report and accounts 2011
Overview Business review Corporate governance Financial statements
19 Financial risk management continued
Liquidity risk
The Group manages its cash in a manner designed to ensure maximum benefit is gained whilst ensuring security of investment sources. 
The Group’s policy on investment of surplus funds is to place deposits at institutions with strong credit ratings.
The ageing and maturity profile of the Group’s material liabilities are covered within the relevant liability note.
Credit risk
Credit risk with respect to trade receivables is due to the Group trading with a limited number of companies who are generally large utility 
companies or financial institutions. Therefore, the Group does not expect, in the normal course of events, that these debts are at significant 
risk. The Group’s maximum exposure to credit risk equates to the carrying value of cash held on deposit and trade and other receivables. 
The Group’s maximum exposure to credit risk from its customers is £480,000 (2010: £330,000, 2009: £838,000) as disclosed in note 12 
– trade and other receivables.
The Group regularly monitors and updates its cash flow forecasts to ensure it has sufficient and appropriate funds to meet its ongoing 
operational requirements whilst maintaining adequate headroom on its facilities to ensure no breach in its banking covenants.
Capital management 
Capital is the equity attributable to the equity holders of the parent. The primary objective of the Group’s capital management is to ensure 
that it maintains a strong credit rating and healthy capital ratios in order to support its business and maximise shareholder value. The Group 
manages its capital structure, and makes adjustments to it, in light of changes in economic conditions. To maintain or adjust the capital 
structure, the Group may adjust the dividend payment to shareholders, sell assets, return capital to shareholders or issue new shares.
The Group monitors capital on the basis of a gearing 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. 
20 Deferred taxation
The movement in the deferred taxation asset during the period was:
2011
£’000
2010
£’000
1 Jan 2010
£’000
Opening deferred tax liability 964 559 131
Increase in provision through income statement 909 405 428
Closing deferred tax liability 1,873 964 559
All movements identified have gone through the income statement.
The Group’s provision for deferred taxation consists of the tax effect of temporary differences in respect of:
Group
2011
£’000
2010
£’000
1 Jan 2010
£’000
Excess of taxation allowances over depreciation on fixed assets 2,329 1,405 928
Tax losses available (371) (421) (369)
Fair value of interest rate swaps (net) (85) (20) —
1,873 964 559
The deferred tax included in the income statement is as follows:
2011
£’000
2010
£’000
Accelerated capital allowances 924 477
Tax losses 50 (52)
Movement in fair value of interest rate swaps (65) (20)
909 405 Notes to the financial statements continued
For the year ended 31 December 2011
46
Smart Metering Systems plc Annual report and accounts 2011
21 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 (2010: £65,500, 2009: £65,500) to the Directors’ pension scheme, Eco 
Retirement Benefit Scheme, for the use of certain premises. Both Stephen Timoney and Alan Foy are trustees of the scheme. At the 
year-end date, an amount of £4,150 (2010: £6,414, 2009: £13,000) was outstanding in this regard.
During the year, the Group paid management charges to FM Assets Limited, a Company owned and controlled by Stephen Timoney and 
Alan Foy of £Nil (2010: £16,000, 2009: £315,000). As at the year end an amount of £27,709 was due from FM Assets Limited (2010: 
£121,000 was due to FM Assets Limited, 2009: £57,000).
22 Share capital
2011
£’000
2010
£’000
1 Jan 2010
£’000
Allotted and called up:
83,339,747 ordinary shares of £0.01 each  
(2010 and 2009: 300 ordinary shares – of £1 each) 833 — —
On 17 June 2011 each of the 300 ordinary shares of £1 each then in issue was sub-divided into 100 Ordinary shares of £0.01 each.
On 17 June 2011 4,980,000 ordinary shares of £0.01 each were issued to Steve Timoney and Alan Foy by means of a bonus issue.
On 20 June 2011 61,663,080 ordinary shares of £0.01 each were issued to Steve Timoney and Alan Foy by means of a bonus issue.
On 8 July 2011 16,666,667 ordinary shares were issued for £0.60.
23 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.
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 it grant.
Plan At 1 January 2011 Granted At 31 December 2011
Exercise 
price 
(pence)
Date
exercisable
Expiry
date
CSOP — 578,947 578,947 76 15/7/14 15/7/21
Unapproved — 3,800,833 3,800,833 60 20/6/16 20/6/21
Valuation
The fair value of all options granted has been estimated using the Black Scholes option model, taking into the account the terms and conditions 
upon which the options were granted. The following table lists the inputs to the model used for the year ended 31 December 2011.
CSOP Unapproved plan
Dividend yield 1.18% 1.25%
Expected share price volatility 45% 45%
Risk-free interest rate 1.18% 2.12%
Expected life of option (years) 3 5
Option strike price (£) 0.76 0.60
Share price (£) 0.765 0.60 47
Smart Metering Systems plc Annual report and accounts 2011
Overview Business review Corporate governance Financial statements
24 Other reserve
This is a non-distributable reserve that arose by applying merger relief under s162 CA06 to the shares issued in 2008 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”.
25 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 ended are as follows:
2011
£’000
2010 
£’000
1 Jan 2010 
£’000
Future minimal commitments under operating lease agreements are as follows:
Payable within one year 68 82 42
Payable within 2 and 5 years 166 166 166
Payable after 5 years 218 291 332
452 539 540
26 Ultimate controlling party
There is no ultimate controlling party by virtue of the structure of shareholdings in the Group.
27 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.
28 Transition to IFRS
For all periods up to and including the year ended 31 December 2010, the Group prepared its financial statements in accordance with 
generally accepted accounting practice in the United Kingdom (UK GAAP). These financial statements for the year ended 31 December 2011, 
are the first the Group has prepared in accordance with International Financial Reporting Standards (IFRS).
The Group has prepared financial statements which comply with IFRS applicable for periods beginning on or after 1 January 2011 as 
described in the accounting policies. The Group’s opening statement of financial position was prepared as at 1 January 2010, the Group’s 
date of transition to IFRS. This note explains the principal adjustments made by the Group in restating its Local GAAP statement of financial 
position as a 1 January 2010 and its previously published UK GAAP financial statements for the year ended 31 December 2010. 48
Smart Metering Systems plc Annual report and accounts 2011
Reconciliation of consolidated equity 
At 1 January 2010
UK GAAP
£’000
Effect of
 transition to 
IFRS
£’000
IFRS
£’000
Assets
Non-current assets
Intangible assets 1,863 — 1,863
Property, plant and equipment 8,303 — 8,303
Financial asset investments 20 — 20
10,186 — 10,186
Current assets
Trade and other receivables 1,958 — 1,958
Financial asset investments 517 — 517
Cash and cash equivalents 592 — 592
Non-current assets classified as held for sales 3,067 — 3,067
Total assets 13,253 — 13,253
Liabilities
Current liabilities
Trade and other payables 5,644 — 5,644
Bank loans and overdrafts 49 — 49
Obligations under finance leases 510 — 510
6,203 — 6,203
Non-current liabilities
Bank loans 427 — 427
Other creditor 554 — 554
Deferred tax liabilities 559 — 559
Obligations under finance leases 3,973 — 3,973
Total liabilities 11,716 — 11,716
Net assets 1,537 — 1,537
Equity 
Share capital
Other reserve 1 — 1
Retained earnings 1,536 — 1,536
Total equity 1,537 — 1,537 49
Smart Metering Systems plc Annual report and accounts 2011
Overview Business review Corporate governance Financial statements
Notes
UK GAAP
£’000
Effect of 
transition to 
IFRS
£’000
IFRS
£’000
Revenue 12,368 — 12,368
Cost of sales 6,876 — 6,876
Gross profit 5,492 — 5,492
Administrative expenses 3,450 — 3,450
Gains/(losses) on remeasurement of investment properties
Profit from operations 2,042 — 2,042
Exceptional costs and fair value adjustments a 865 70 935
Finance costs 250 — 250
Profit before tax a 927 (70) 857
Income tax expense a 387 (20) 367
Profit for the year 540 (50) 490
Notes to reconciliation of consolidated total comprehensive income.
a) Fair value of interest rate derivatives
Under IFRS financial derivatives such as interest rate swaps are recognised in the statement of financial position at fair value with corresponding 
movements in fair value being taken to the income statement. Under UK GAAP the Group did not previously recognise the fair value of these 
derivatives on the balance sheet. Derivatives were entered into during the year ended 31 December 2010, therefore this impact on net assets 
in the statement of financial position at 1 January 2010 but an increase to costs of £70k for the year ended 31 December 2010. Deferred tax 
has been provided in respect of the fair value of the financial instruments.
Reconciliation of consolidated total comprehensive income
For the year ended 31 December 2010 50
Smart Metering Systems plc Annual report and accounts 2011
Notes
2011
£’000
2010
£’000
Fixed assets
Investments 2 — —
Current assets
Debtors 3 9,685 150
Creditors
Amounts falling due within one year 4 5 150
Net current assets 9,680 —
Total assets less current liabilities 9,680 —
Capital and reserves
Called up share capital 6 833 —
Share premium 7 8,653 —
Profit and loss account 7 194 —
Equity shareholders’ funds 9,680 —
The parent company financial statements on pages 50 to 52 were approved and authorised for issue by the Board of Directors and signed on 
their behalf by:
Glen Murray Company Registration Number
Director SC367563
13 April 2012
Parent company balance sheet
As at 31 December 2011 51
Smart Metering Systems plc Annual report and accounts 2011
Overview Business review Corporate governance Financial statements
Notes to the parent company financial statements
For the year ended 31 December 2011
1 Parent company accounting policies
Basis of accounting
The consolidated financial statements have been prepared under the historical cost convention, with the exception of current asset 
investments held at valuation.
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.
Turnover
Turnover represents revenue recognised in the accounts. Revenue is recognised when the Company fulfils its contractual obligations to 
customers by supplying goods and services, or when they have the right to receive the income, and excludes value added tax. Where 
turnover is recognised due to the right to receive the income and the Company has not invoiced for the goods or services supplied 
an accrual is incorporated for the estimate of providing such.
Deferred taxation
Deferred tax is recognised in respect of all timing differences that have originated but not reversed at the balance sheet date where 
transactions or events that result in an obligation to pay more tax in the future or a right to pay less tax in the future have occurred at the 
balance sheet date. Timing differences are differences between the Company’s taxable profits and its results as stated in the consolidated 
financial statements that arise from the inclusion of gains and losses in tax assessments in periods different from those in which they are 
recognised in the consolidated financial statements.
Deferred tax is measured at the average tax rates that are expected to apply in the periods in which timing differences are expected 
to reverse, based on tax rates and laws that have been enacted or substantively enacted by the balance sheet date. Deferred tax 
is measured on a non-discounted basis.
Financial instruments
Financial liabilities and equity instruments are classified according to the substance of the contractual arrangements entered into. An equity 
instrument is any contract that evidences a residual interest in the assets of the entity after deducting all of its financial liabilities.
Where the contractual obligations of financial instruments (including share capital) are equivalent to a similar debt instrument, those financial 
instruments are classed as financial liabilities. Financial liabilities are presented as such in the balance sheet. Finance costs and gains or 
losses relating to financial liabilities are included in the profit and loss account. Finance costs are calculated so as to produce a constant 
rate of return on the outstanding liability.
Where the contractual terms of share capital do not have any terms meeting the definition of a financial liability then this is classed as an 
equity instrument. Dividends and distributions relating to equity instruments are debited direct to equity.
2 Investments
Company
Group 
companies
£’000
Cost
At 1 January 2011 —
Additions —
At 31 December 2011 —
Net book value
At 31 December 2011 —
At 31 December 2010 —
Subsidiary undertakings
Country of 
incorporation Holding
Proportion of 
shares held Nature of business
All held by the Company:
UK Gas Connection Limited  
(formerly Eco Project Management Limited) Scotland Ordinary shares 100% Gas utility management
UK Meter Assets Limited  
(formerly The UK Meter Exchange Limited) Scotland Ordinary shares 100% Gas utility management
UK Data Management Limited Scotland Ordinary shares 100% Data management 52
Smart Metering Systems plc Annual report and accounts 2011
Notes to the parent company financial statements continued
For the year ended 31 December 2011
3 Debtors amounts falling due within one year
2011
£’000
2010
£’000
Amounts owed by Group undertakings 9,685 150
Other debtors — —
9,685 150
4 Creditors amounts falling due within one year
2011
£’000
2010
£’000
Other creditors 5 —
5 —
5 Related party transactions
The Company had no material related party transactions to disclose in line with Financial Reporting Standard 8.
The Group has taken advantage of the exemption in Financial Reporting Standard 8 from the requirement to disclose transactions within 
the Group.
6 Share capital
2011
£’000
2010
£’000
Allotted and called up:
83,339,747 Ordinary shares of £0.01 each (2010: 300 Ordinary shares – of £1 each) 833 —
On 17 June 2011 each of the 300 ordinary shares of £1 each then in issue was sub-divided into 100 Ordinary shares of £0.01 each.
On 17 June 2011 4,980,000 ordinary shares of £0.01 each were issued to Stephen Timoney and Alan Foy by means of a bonus issue.
On 20 June 2011 61,663,080 ordinary shares of £0.01 each were issued to Stephen Timoney and Alan Foy by means of a bonus issue.
On 8 July 2011 16,666,667 ordinary shares were issued for £0.60.
7 Reserves
Profit and 
loss reserve
£’000
Share 
premium
£’000
Share 
capital
£’000
As at 1 January 2011 — — —
Returned earnings 1,040 — —
Dividend paid (180) — —
Bonus issue (666) — 666
Arising on shares issued — 9,833 167
Share issue costs — (1,180) —
As at 31 December 2011 194 8,653 833
8 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.  Smart Metering Systems plc
The Exchange Building  
142 St. Vincent Street  
Glasgow G2 5LA
www.sms-plc.com