smart approach
smart systems
smart metering systems plc
annual report and accounts 2014
smart metering systems plc annual report and accounts 2014 strategic report
01 our highlights
02 our story
04 our business model
05 our strategy and markets
06 risk management
08 chairman’s statement
10 chief executive officer’s statement
12 financial review
corporate governance
14 board of directors
16 corporate governance statement
17 directors’ remuneration report
19 directors’ report
20 directors’ responsibilities statement
financial statements
22 independent auditor’s report 
23  c o n s o l i d at e d s t at e m e nt 
of comprehensive income
24  c o n s o l i d at e d s t at e m e nt 
of financial position
25  c o n s o l i d at e d s t at e m e nt 
of changes in equity
26  c o n s o l i d at e d s t at e m e nt  
of cash flows
27 accounting policies
33 notes to the financial statements
50 parent company balance sheet
51  notes to the parent company 
financial statements
smart metering systems plc sms 
connects owns operates and maintains 
metering systems and databases on 
behalf of major energy companies
more online
read more about sms online at our 
investor website smsplccom strategic report corporate governance financial statements
smart metering systems plc
annual report and accounts 2014 01
financial highlights
 › revenue increased by 52 to £424m 2013 £279m 
– increase of 25 excluding upl
 › total annualised recurring revenues increased by 43 
to £262m 2013 £183m
 › gas metering and data meter recurring rent increased 
41 to £219m and data recurring income reached £10m
 › electricity metering and data meter recurring rent doubled 
to £06m and data recurring income grew 29 to £27m
 › gross profit increased by 55 to £276m 2013 £178m 
– increase of 38 excluding upl
 › gross profit margin at 65 2013 64
 › underlying ebitda increased by 64 to £193m 
2013 £118m – increase of 49 excluding upl
 › ebitda margin at 46 2013 42
 › underlying pbt increased by 66 to £128m 2013 £77m
 › underlying earnings per share increased by 77 
to 1436p 2013 810p 
 › final dividend of 188p per ordinary share making 282p 
for the full year 2013 231p an increase of 22
 › net debt of £573m with net debt to ebitda at 29x
 › available cash and unused debt facility of £475m 
at 31 december 2014
 › in november 2014 renegotiation of £105m club 
facility with existing club of lenders to provide further 
funding flexibility
  additional revenue streams incorporated in 2014 result from upl
  underlying ebitda and pbt are before exceptional items 
and intangible amortisation
  underlying earnings per share is profit after taxation but before 
exceptional items and intangible amortisation divided by the weighted 
average number of ordinary shares in issue 
operational highlights
 › total gas meter portfolio increased by 29 to 607000 
2013 469000 with industrial and commercial ic 
meters nearly trebling electricity meter numbers more 
than doubled to 12000 2013 5000
 › capital expenditure on meters increased by 52 to £35m 
reaching a monthly run rate of approximately £3m in 
december 2014
 › £14m acquisition of upl on 14 april 2014 adding in excess 
of £2m ebitda annual run rate and electricity connections 
meters data and energy services to sms’ services
 › rhys wynne previously managing director of upl 
appointed to the new role of chief operating officer of sms
 › strengthened board with the appointments of energy 
sector and corporate finance experts miriam greenwood 
and willie macdiarmid as nonexecutive directors 
in february 2014 and april 2014 respectively
 › contract extensions or additions with major customers 
including bes utilities bes and total gas  power ltd 
tgp both after full year in february 2015 british gas 
business bgb dong energy services limited 
dong limited and opus energy opus
 › adm™ installations more than doubled to 41000 units 
by 31 december 2014 2013 16000 
 › received full accreditation for water market in the uk
 › international trials continuing
our highlights 
strategic report
a year of continued growth across all business areas recurring 
meter rental a strong performance in the uk gas connection 
and a good set of initial figures for our electricity activity 
in both segments from our upl acquisition
measuring our progress
our key performance indicators monitor our progress and keep our focus on delivery we monitor our performance 
by measuring and tracking key performance indicators kpis that we believe are important to our longerterm success 
longterm sustainable performance of these kpis is linked to the remuneration arrangements of our management team strategic report
smart metering systems plc
annual report and accounts 2014 02
our story
smart metering systems celebrates its 20th anniversary in 2015 and is still 
the only independent business providing gas and electricity infrastructure 
connection services gas and electricity meter asset management services 
together with the development of advanced smart metering technology 
solutions to key gas and electricity suppliers in the uk ic market
we provide a comprehensive package of solutions driven by our indepth market knowledge and insight
1995
the group was established to provide 
services in the gas infrastructure 
connections market which emerged 
following ofgem’s move to 
deregulation and liberalisation of 
the gas industry since that period 
the uk gas market has evolved 
from the original british gas single 
monopoly to an unbundled market 
our future
there is the further potential to work with new water 
industry customers and in 2014 sms received full 
accreditation for water markets in the uk sms is 
also exploring avenues to increase its penetration into 
geographic markets including through upl’s energy 
management propositions already established in italy 
and the caribbean and sms’ adm™ device which is 
currently undergoing trials across three continents 
sms’ success story is based on consistently growing 
and delivering trusted relationships with customers in 
the gas and electricity supplier markets the culture is 
based on the firm’s employees knowing their customers 
and understanding of the market in the uk and has 
been instrumental in creating a trusted relationship 
based on good counsel prudence and knowledge
2011
the business floated 
on aim 
2004
in the early years sms started 
a ukwide contracting services 
business using subcontractors from 
a main base in scotland in 2004 
a meter asset management service 
was established and became an 
ofgem approved meter asset 
manager mam 
2009–2011
a meter asset portfolio was created and built 
with all gas suppliers in the uk followed by 
a new smart metering and data management 
offering serving the ic market in addition to 
preparing for the potential roll out of smart 
metering in the domestic market the uk 
government’s objective is to have all domestic 
gas and electricity consumers installed with 
a smart metering solution by 2020 
2014
2014 has been a landmark year in sms’ story as 
we launched electricity service offerings through 
the acquisition of utility partnership limited 
upl a leading manager of electricity meters 
in the uk and provider of electricity connections 
design meter installation data management 
and energy management services sms and upl 
are highly complementary businesses that share 
similar histories founded in 1995 and 1996 
respectively and a vision of becoming the 
leading independent supplier of smart metering 
solutions to suppliers in the utility sector 
providing the highest levels of customer service 
less than a year after the acquisition of upl in 
april 2014 our businesses are fully integrated and 
sms now provides gas and electricity customers 
with a full endtoend dual fuel gas and electricity 
service incorporating connections metering 
assets installation ownership and management 
as well as data management services strategic report corporate governance financial statements
smart metering systems plc
annual report and accounts 2014 03
uk gas and electricity markets and 
the sms integrated service offering
end consumers
uk licensed gas and electricity suppliers
ofgem approved 
meter asset manager mam
helping customers manage 
energy cost and usage
sms plc
gas and electricity 
suppliers have 
an obligation for 
metering services
gas and electricity 
suppliers are mandated 
to supply energy cost 
and usage management
asset management
meter 
services
energy 
management
asset installation
infrastructure facilitator 
administration and 
management of utility 
connections and 
meter installations
gas and electricity 
suppliers are obligated 
to arrange connections 
for their customers
utility 
connection
esta approved 
smart metering data 
collector and aggregator
gas and electricity 
suppliers are now 
mandated to provide 
smart metering systems
data 
services strategic report
smart metering systems plc
annual report and accounts 2014 04
our business model
our business operation is based on connecting owning operating and 
maintaining metering systems and databases on behalf of major energy 
companies and energy brokers as part of an integrated service offering 
in the gas and electricity connection and metering services markets
we have contracts with gas and electricity suppliers that provide recurring revenues 
and visibility of earnings backed by robust termination payment arrangements
the company has four wholly owned subsidiaries offering the following services in gas and electricity
utility connection
infrastructure facilitator administration and management 
of utility connections and meter installations
gas and electricity suppliers arrange connections 
for their clients
our utility connection service is one of the uk’s largest 
independent operators we work in partnership with 
many of the leading providers in the uk gas and 
electricity markets to deliver meter installations removals 
and exchanges new gas and electricity supplies 
and increases in capacity
meter services
meter asset manager operations for every uk gas 
and electricity supplier
gas and electricity suppliers are mandated to provide 
metering services
our meter services are ofgem approved meter asset 
management companies that own operate and manage 
commercial and domestic gas and electricity meters on 
behalf of the uk’s leading gas and electricity suppliers 
and independent meter asset managers
the new enlarged group is now the largest independent 
provider of gas and electricity meter assets in the uk 
and has two defined business streams offering gas 
and electricity services
data services
smart meter data collector supply and installation 
of smart meter devices
gas and electricity suppliers have an obligation 
to provide meter data management services
smart metering is seen as the key to the future efficiency 
of the uk’s energy system our data services are esta 
approved smart metering data collectors and aggregators 
that deliver the company’s patented adm™ smart 
metering solution which is very simple to install and 
highly cost effective and competitive we strive to 
maintain our clientcentric culture and we focus 
on client needs not product features
energy management
helping customers manage energy cost and usage
gas and electricity suppliers are mandated to supply 
energy cost and usage management
our energy management services delivers energy 
management services to organisations in the uk italy 
and the caribbean further cost savings and reductions 
in energy consumption and carbon emissions can be 
achieved through our invoice management facility 
automatic monitoring and targeting amt programme 
and environmental and energy management service strategic report corporate governance financial statements
smart metering systems plc
annual report and accounts 2014 05
our strategy and markets
our strategy is to be the market leader in the independent 
ownership of gas and electricity meters in the uk
market size and outlook
sms operates in a large uk market with few operators 
currently we focus on the industrial and commercial ic 
market throughout the uk whilst also operating in the domestic 
market the market size is estimated to be circa 16 million ic 
gas meters and 22 million domestic gas meters in electricity 
this breaks down as 21 million ic electricity meters 
and 27 million domestic electricity meters 
the government’s smart metering initiative currently requires 
every home and business in the uk to have smart or advanced 
meter functionality by 2020 this will form the foundation 
of the smart grid and will require significant investment for 
rolling out and replacing approximately 22 million domestic 
gas meters and 27 million electricity meters
sms is well positioned for this new market segment since gas 
suppliers will be required by regulation to appoint a mam meter 
asset manager uk meter assets of sms will be one of the 
few participants competing in the market nevertheless 
the growth of our business in the domestic market is not 
predicated on this potential rollout from 2016 which is 
subject to a timeframe set by the uk government
our current market share is 65000 ic gas meter assets 
41 of the market and 542000 domestic gas meter assets 
25 of the market the group has contracts in place with 
companies accounting for over 80 of the total ic market 
and over 40 of the domestic market in electricity our 
current market share is 12000 ic electricity meter assets 
06 of the market
the sms adm™ smart metering solution has considerable 
potential to be rolled out in the ic market as 16 million ic 
gas meters and 21 million electricity meters will need to be 
smart enabled by 2020 the group has accelerated growth in 
domestic meters and our focus is on becoming the preferred 
partner to our 28 existing gas supplier contracted clients 
in the ic market and electricity through our adm™ smart 
metering solution in electricity 21 million electricity meters 
will need to be smart enabled
we are also looking to expand into other applications including 
water and liquefied petroleum gas lpg and other geographical 
markets where “smart” applications such as remote reading 
and halfhourly consumption data are important
increase growth rate
grow our domestic meters business 
organically and through new contracts
key priorities
upsell the adm™ solution
establish our technology adm™ as the industry 
standard smart metering solution for 
industrial and commercial ic clients
our progress in 2014
 › annualised recurring 
revenues from gas and 
electricity increased by 
43 to £262m
29
total gas meter portfolio 
increased to 607000 
domestic and ic 
our focus for 2015
 › increase recurring rental 
 › increase meter 
installations in domestic 
and ic markets
 › crosssell multiutility 
connections metering 
and data management 
services
our progress in 2014
 › annualised recurring 
adm™ data income 
increased by 233 
to £10m 
156
total adm™ portfolio 
increased to 41000 
domestic and ic 
our focus for 2015
 › increase recurring rental 
 › continue to explore 
markets excluding 
the uk
 › trial the device in uk 
electricity markets
 › explore markets 
for water and lpg 
applications strategic report
smart metering systems plc
annual report and accounts 2014 06
risk management 
the attention of investors is drawn to the fact that ownership of 
ordinary shares will involve a variety of risks which if they occur may 
have a materially adverse effect on the group’s business and financial 
condition and on the market price of the ordinary shares
risk description mitigation
failure of physical 
infrastructure or services 
of the company
the company operates with a wellestablished it support 
infrastructure service interruptions and equipment failures 
may expose the company to financial loss and damage its 
reputation which could have a material adverse effect on 
the company’s business financial condition and results of 
operations the company’s business includes the ownership 
and management of gas and electricity meters if the 
company fails to register a meters on its it system 
wrongly classifies a meter or loses track of a meters 
within the system then this could also have a material 
adverse effect
the company’s it infrastructure is subject to failure from 
a variety of causes including human error power loss and 
physical or electronic security breaches other factors 
which are out of the company’s control include sabotage 
vandalism network failures natural disasters fibre optic cable 
cuts improper building maintenance by the landlords of the 
buildings in which the it infrastructure is located and terrorism
to mitigate against these 
risks the company has 
deployed a fully redundant 
failover infrastructure which 
is mirrored in real time 
with all primary nodes 
the mirrored servers are 
hosted on a secondary 
site at a tier 1 data centre 
a full business continuity 
plan is in place and is 
tested regularly this plan 
facilitates the use of a 
secondary office place 
which is fully equipped 
with computers phones 
and other office equipment 
full disaster recovery 
failover to a new office 
environment can occur 
within four hours
dependency on 
key clients terms 
of contracts 
financing costs and 
performance levels
in its ukma business the company is in commercial contracts 
with and largely dependent on a small number of key gas 
suppliers whilst there are termination provisions within such 
contracts loss of these key clients could have a material 
adverse effect on the future growth of the company in 
addition approximately 90 of the ukma business revenue 
at the end of december 2014 was derived from consumers 
who are clients of suppliers contracted with the company 
for meter asset management the balance of the revenue was 
derived from consumers who had changed to noncontracted 
gas suppliers in the event that such noncontracted suppliers 
used another mam and management of the gas and electricity 
meters was changed to the new asset manager the company 
would suffer a loss in revenue and of the beneficial 
termination provisions
the key contracts with gas suppliers have certain performance 
obligations in particular the company is required to provide 
meter assets for an agreed price
in addition if the company is unable to meet an appropriate 
level of service in its ukgc business its reputation may be 
damaged impairing its ability to retain existing and attract 
new clients and users
to mitigate these risks 
the company has now put 
in place full mam service 
contracts that cover over 
80 of the ic gas market 
and over 40 of the 
domestic gas market 
these contracts ensure 
that either redemption 
penalties or recurring 
rentals will be payable on the 
vast majority of occasions 
where a meter point moves 
from one supplier to another 
strict service levels are 
monitored daily throughout 
all core business functions 
to ensure the company 
meets and exceeds 
customer expectations strategic report corporate governance financial statements
smart metering systems plc
annual report and accounts 2014 07
risk description mitigation
unforeseen delays 
and cost overruns 
when rolling out new 
and upgrading existing 
products and services
in the future the company may experience unforeseen 
delays and expenses in connection with a particular 
project or initiative although the company 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 
may negatively affect the company
the company has 
considerable experience 
in forecasting and 
managing project 
implementation timetables 
in addition the company 
periodically upgrades and 
replaces its it infrastructure
the company may 
experience accelerated 
demand for its products 
and services
the company expects to be able to meet its current capital 
expenditures from internal resources and debt facilities in the 
event that the company wins a large order for adm™ devices 
andor new smart meters it may consider supporting the 
working capital requirements for such orders by the issue 
of new equity andor debt finance
if the company is unable to raise the necessary financing it could 
adversely affect the company’s ability to expand its business
the company maintains 
close relationships with 
funding partners to give 
the directors confidence 
that future growth can 
be funded
the company 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 company’s systems 
and the personal 
data of users
the company relies on systems and personnel in the company’s 
locations to physically secure it infrastructure and user data 
any accidental or intentional actions including computer 
viruses and unauthorised access could result in increased 
operating costs or claims the company may incur significant 
additional costs to protect against such disruptions the threat 
of security breaches or to alleviate problems caused 
by such interruptions
a party who is able to breach the physical premises andor 
electronic security measures of the company’s systems could 
damage the company’s equipment andor misappropriate 
its proprietary and personal information of the company’s 
users causing interruptions or malfunctions if a third party 
were able to misappropriate data held on the company’s 
system then the company could be subject to claims litigation 
or other potential liabilities any security breach could lead 
to a loss of clients andor existing clients seeking to claim 
damages this could have a material adverse effect on 
the company’s business financial condition and results 
of operations or future growth
our reliable and secure it 
systems are designed to 
be highly resilient against 
the most serious levels of 
disruption disaster recovery 
facilities are in place to 
provide a fully functional 
alternate location for 
operations with access 
to all production data 
all production data is 
backed up live 247 
to a highly secure offsite 
facility disaster events 
are planned for and 
insured against while 
solutions are tested
the group’s operations 
could be damaged and 
profitability reduced 
if the group is not 
able to manage its 
growth effectively
the group has experienced rapid growth and if it fails 
to effectively manage this growth its operations could be 
harmed and profitability reduced this future growth could 
place significant demands on the group’s operational and 
financial infrastructure the growth of the group’s sales and 
profits in the future will depend in part on its ability 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
in order to manage its 
planned expansion the 
group will need to continually 
evaluate the adequacy of 
its management capability 
operational procedures 
financial controls and 
information systems 
accordingly there can be 
no assurance that the group 
will be able to achieve 
its expansion goals on a 
timely or profitable basis strategic report
smart metering systems plc
annual report and accounts 2014 08
review of the year
2014 has been a year of expansion and firsts for sms 
putting the business in good stead as we now enter our 
20th anniversary year in the first half of the year sms 
established its electricity service offerings within both 
segments and welcomed 168 new colleagues through the 
acquisition of upl on 14 april 2014 during the second half 
of the year sms appointed rhys wynne as chief operating 
officer coo of the company a new role created following 
the upl acquisition sms is delighted with the success of the 
upl integration which has helped secure contract extensions 
or additions from a number of major customers including 
bes utilities bes british gas business bgb dong 
energy services limited dong opus energy opus 
and total gas  power ltd tgp sms and our customers 
are already clearly benefiting from the company’s full 
endtoend dual fuel service 
our business
i am pleased to confirm sms has continued to make 
considerable progress in 2014 across all segments 
of the business
through the establishment of sms’ electricity sms has a 
clearly defined growth strategy in the gas and electricity 
supplier markets positioning the business to fulfil our vision 
of becoming the leading independent provider of metering 
services to the utility sector with the highest level of 
customer service together with the potential to establish 
adm™ as the industry standard smart metering device 
the group has a very promising outlook 
sms has consistently demonstrated yearonyear growth 
and has an established and growing market position in the 
uk smart metering market the business strategy in the 
medium term is to maintain high levels of service to customers 
in the gas and electricity supplier markets increase the run 
rate with these customers and continue to grow the meter 
asset portfolio
the uk meter assets business presents a large market 
opportunity with a substantial proportion of an estimated 
16 million ic meters in the uk to be exchanged for a smart 
metering solution by 2020 with the added potential of a 
domestic market roll out of some 22 million gas meters 
and in the electricity market this is estimated to be 21 million 
ic meters and 27 million domestic meters 
the order book for the adm™ device has continued to grow 
and our current gas and electricity supplier contracts provide 
potential access to over 80 of uk ic gas meters and 40 
of residential gas meters international trials of adm™ overseas 
in gas electricity water and lpg markets continue where 
we remain encouraged by the progress
chairman’s statement
highlights
 › considerable progress 
across all segments
 › established electricity 
service offering 
 › expanding order book with 
key gas suppliers in the ic 
market for meter assets 
and adm device
paul dollman
nonexecutive chairman strategic report corporate governance financial statements
smart metering systems plc
annual report and accounts 2014 09
our priority in 2015 and beyond is to focus on our three 
strategic areas
 › grow our domestic meters business organically and 
through new contracts with an emphasis on driving 
recurring income
 › establish our adm™ technology as the industry standard 
smart metering solution for ic clients and
 › increase levels of business with and services provided to 
key gas and electricity suppliers with a focus on crossselling 
between the gas and electricity across our horizontal 
suite of services
sms has developed a strong and evolving business model 
and strategy that provides the most effective scope for 
continued expansion of the business to reward our customers 
and shareholders 
people and corporate culture 
the acquisition of upl this year marked sms’ firstever 
acquisition it also marked the coming together of two 
companies that have very similar histories and share the 
same values culture and approach to customer service 
it was paramount that for any sort of acquisition to take 
place it needed to be one that maintained sms’ culture 
based on a commitment by its employees to know and 
serve their customers 
this has been instrumental in developing building and 
maintaining trusted relationships with our customers the 
gas and now also electricity suppliers who have responded 
positively to the acquisition of upl our core values around 
good counsel prudence and wisdom have ensured we 
continue to maintain these strong relationships
equally important in terms of operational performance is how 
our it systems and compliance management work with the 
gas and electricity suppliers these are integral to how we 
achieve customer satisfaction and the building of a trusted 
relationship we are excited to be driving forward our strategic 
vision values and culture through our enlarged team 
and strengthened senior management
board composition
the board comprises five directors of whom three are 
nonexecutive with me as your nonexecutive chairman 
we have sought to build our board structure to ensure 
we have a balanced board and in the first half of 2014 we 
welcomed two new nonexecutive directors miriam greenwood 
and willie macdiarmid while nigel christie retired from the 
board as a nonexecutive director the board would like to 
thank nigel for his very significant contribution to the company 
energy and corporate finance expert miriam greenwood 
is chair of sms’ audit committee and energy sector 
expert willie macdiarmid is chair of the company’s 
remuneration committee
miriam is a qualified barrister and has spent much of her 
career in corporate finance working for a number of leading 
investment banks and other financial institutions she is a 
nonexecutive director of a number of companies and was 
for nine years until 2013 a nonexecutive director of the gas 
and electricity markets authority ofgem for whom she is 
currently chair of the gas network innovation expert panel 
a deputy lieutenant of the city of edinburgh miriam was 
awarded an obe for services to corporate finance in 2000 
willie is a reputed senior executive in the energy sector 
with experience at the highest level with the last two uk 
governments on a variety of strategic and operating 
working groups as a member of the scottish power 
executive team he successfully led scottish power through 
the deregulation of the uk energy market and served 
on their investment committee and was involved in various 
mergers and acquisitions scottish power’s successful 
metering business was part of his portfolio
outlook
under alan foy’s leadership the expanded dual fuel offer 
our strengthened senior management and the expertise 
of our nonexecutive directors alongside our robust it 
infrastructure sms is ideally positioned to maintain our 
competitive advantage and continue to make progress on our 
strategic priorities 
as we continue to invest in providing the highest levels of 
service to the gas and electricity supplier markets we remain 
confident on the outlook for the business and we view the 
outlook for the market in 2015 as highly promising for our 
business model
paul dollman
nonexecutive chairman strategic report
smart metering systems plc
annual report and accounts 2014 10
we are delighted with the continued strong performance 
of the business for the year ended 31 december 2014 
recurring income now represents 53 of our total revenue 
compared to 49 of total income in 2013 as we see the 
benefits of our business model of building up the recurring 
income streams the recurring revenues are as a result of 
the longterm nature of our contracts which provide an 
indexlinked revenue stream 
acquisition of upl
on 14 april 2014 sms acquired the entire issued share 
capital of upl with this acquisition sms has doubled the 
number of recurring income streams and we are growing 
the electricity meter portfolio further increasing our 
recurring rental revenue 
the acquisition is in line with the strategic vision of sms to 
become the leading independent supplier of smart metering 
solutions to suppliers in the utility sector with the highest 
levels of customer service 
upl is now operationally fully integrated into sms resulting 
in additional income streams across both segments and is 
driving acceleration of the overall strategic vision of sms’ 
enlarged business in three key areas
 › drive growth opportunities through connections metering 
and data management services to an expanded gas and 
electricity customer base
 › position our business as a dual gas and electricity 
meter provider for the uk’s future smart meter roll out 
programme and
 › provide further opportunities to expand internationally
in the first year of acquisition sms has already added clients 
including dong limited and tgp to our electricity division 
and extended existing contracts upl’s existing portfolio 
included customers such as centrica sse and edf as well 
as network rail vodafone santander sainsbury’s o2 uk 
and cable  wireless
in addition to contract wins and extensions already 
secured through the dual fuel gas and electricity service 
offering there is the further potential to work with new 
water industry customers 
sms also believes there is scope to expand internationally 
through upl’s energy management propositions already 
established in italy and the caribbean and sms’ adm™ device 
which is currently undergoing trials across three continents 
chief executive officer’s statement 
highlights
 › increase in recurring revenues
 › 29 increase in meter portfolio
 › contract additions and extensions
 › ic
 › domestic
 › contracts in place with companies 
representing over 80 of the 
total ic market and over 40 
of the domestic market 
 › underlying earnings per share 
increased by 77
 › final dividend of 188p per 
ordinary share
  underlying earnings per share is profit after taxation 
but before exceptional items and intangible amortisation 
divided by the weighted average number of ordinary 
shares in issue
alan foy
chief executive officer strategic report corporate governance financial statements
smart metering systems plc
annual report and accounts 2014 11
operational review
during 2014 we made substantial progress across all 
segments of the business following a strong first half where 
we saw our gas meter portfolio break the halfmillion mark with 
an increase of 65000 growth accelerated in the second half 
to reach a total of 607000 gas meters with a further 73000 
added or a 29 increase year on year the number of electricity 
meters more than doubled to 12000 from 5000 in 2013 bringing 
our overall gas and electricity meter portfolio to 619000 
the progress we have made in establishing longterm recurring 
revenue was underlined by an increase in yearend annualised 
recurring meter rental revenue of 41 to £219m and data 
provision sales from our adm™ device more than trebled 
to reach the £1m level through the establishment of our 
electricity services we have added an additional two recurring 
revenue streams where meter recurring rent doubled to 
£567000 and data recurring income grew 29 to £27m 
for the first time recurring income now makes up the 
majority of our total revenue
industrial and commercial meters
we were delighted to announce a number of new contracts 
or contract extensions with major customers during 2014 
we more than doubled our ic gas meter portfolio to 65000 
meters from 27000 meters in 2013 in the gas market we 
secured a significant contract with bgb while in the electricity 
market we won contracts with opus and dong limited 
both existing customers of sms more recently in the first 
quarter of 2015 in the electricity market we were awarded 
contracts with bes utilities and with tpg part of total sa 
which is a current client of our gas services 
the increase in customer base during 2014 now means that 
sms has contracts in place with over 80 of the total ic 
meter market
once installed these meters will be on sms’ longterm 
index linked contracts and will provide recurring revenue 
for the lifetime of the assets expected to be 25 years
the size of ic meters is typically much greater than that 
of domestic meters and therefore the revenue per meter 
is substantially higher the equivalent number of domestic 
meters for these 22000 contracts would be in the order 
of 300000
adm™
the adm™ device is sms’ advanced metering solution which 
allows for remote meter reading on a halfhourly basis and has 
been designed in line with our own customer requirements 
sms has deployed more than 25 times the number of adm™ 
devices in the uk in 2014 up to 41000 from 16000 in 2013 
the company remains confident that its adm™ device technology 
has a broad range of potential applications in gas electricity 
water and lpg markets and has been continuing with trials 
of the device internationally
the ability of remote reading alongside sms’ full service 
capability in the ic market provides a major opportunity 
for the company in extending the service we offer and the 
ability to seek out further markets for our overall service 
as over the last two years all new contracts announced in 
2014 allow for the introduction of the adm™ device into ic 
premises during meter replacement programmes
domestic meters
we grew our domestic gas meter portfolio by 24 
from 437000 in 2013 to 542000 by 31 december 2014 
our combined gas and electricity full service offering has 
strengthened our position and sms’ opportunity in the 
domestic meter market ideally positioning the business for 
the current uk domestic smart meter roll out programme 
while we are well placed to capitalise on this roll out of smart 
meters in the uk domestic market our future strategic growth 
is not reliant on this taking place either in terms of capturing 
market share or in terms of increasing revenue growth
other markets
we were very pleased to announce during 2014 that 
following an extensive accreditation process the products 
sms has developed for the uk water market have passed 
all tests and received full accreditation
alan foy
chief executive officer strategic report
smart metering systems plc
annual report and accounts 2014 12
financial review
highlights
 › revenues increased by 52
 › recurring revenue up 62 
representing 53 of total 
revenue
 › gross profit increased by 55 
 › underlying ebitda increased 
by 64 
 › capital investment on meters up 
by 52
 › new banking club arrangement 
announced on 12 march 2014 for 
£1050m
 › available cash resources of 
£475m at the end of year
 excluding exceptional items and intangible amortisation
glen murray
finance director
results for the year
during 2014 sms increased revenue by 52 to £424m or 
by 25 to £349m excluding upl recurring revenue in line 
with the company’s strategy increased to 53 of total 
revenue in 2014 compared to 49 in the same period in 2013
gross profit increased by 55 from £178m to £276m 
of which the new electricity offerings contributed £27m 
underlying ebitda grew 64 from £118m to £193m 
with the electricity offerings contributing £11m of this total 
cash and borrowings
sms was delighted to announce in november 2014 an 
agreement with our existing lenders barclays bank plc 
lead bank clydesdale bank plc and bank of scotland plc 
together the “lenders” on a significant amendment to 
the existing longterm £105m revolving credit facilities rcf 
announced in march 2014 the rcf fund the purchase of 
meter assets as part of a phased installation programme in 
line with recent substantial contract wins the result of the 
amendment was an increase in the loantovalue ratio 
ie the percentage of the value of each meter asset available 
to be funded through the rcf from 85 to 100 
as at 31 december 2014 the company had net debt 
of £573m compared to £333m in 2013 cash resources 
including unused facilities of £475m compared to £117m 
in 2013 and gearing of 159 2013 147 
capital investment in meters in 2014 was £345m compared 
to £233m in 2013
treasury policies
the company uses interest rate swaps to manage interest 
rate fluctuations on interestbearing loans and borrowings 
which means that the company pays a fixed interest rate 
rather than being subject to fluctuations in the variable rate
interest rate swaps covered an amount of £300m as at 
31 december 2014 2013 £282m the interest rate swap results 
in a fixed interest rate of 280–282 the termination date for 
the derivatives is 15 september 2016
glen murray
finance director  corporate
 go v ernance
14 board of directors
16 corporate governance statement
17 directors’ remuneration report
19 directors’ report
20 directors’ responsibilities statement corporate governance
smart metering systems plc
annual report and accounts 2014 14
board of directors
paul is a chartered accountant 
and was group finance director of 
john menzies plc for over ten years until 
may 2013 john menzies plc is a ftse 250 
international support services business 
with two divisions and has revenues 
of around £2bn paul was particularly 
involved in the growth and development 
of the aviation division which nearly 
trebled in size in ten years prior to that 
he was group finance director of william 
grant and sons ltd and previously held 
senior finance positions in inveresk plc 
maddox group plc and clydesdale 
retail group he is a nonexecutive 
director of scottish amicable life 
association society and is a member 
of the audit committee of the national 
library of scotland
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 commercial it investment 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 contracts 
a professionally qualified engineer 
alan places strong emphasis on safety 
operational performance 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 satisfaction
glen joined sms in 2009 as a business 
accountant prior to assuming his current 
role as finance director a qualified 
accountant and experienced financier 
he provides the business with the 
structure and controls to diligently 
manage and report on all business 
activities glen has key responsibility 
for financial reporting business plan 
modelling and business performance 
monitoring and reporting against the 
plan glen qualified with french duncan 
in 1995 and in 1997 joined shinetsu 
handotai europe as an accountant 
with responsibilities including treasury 
management budgetary control 
monthly branch accounts and 
management accounting he later 
joined gilchrist  company which 
merged with baker tilly in may 2009 
as a senior manager responsible for 
a team of five delivering accountancy 
audit corporate finance and vat services
paul dollman
nonexecutive chairman
alan foy
chief executive officer
glen murray
finance director
date of appointment 7 november 2013
committees a r n
date of appointment 24 december 2009
committees a r n
date of appointment 1 january 2011
committees a r n strategic report corporate governance financial statements
smart metering systems plc
annual report and accounts 2014 15
miriam is a partner in spark advisory 
partners a corporate advisory boutique 
a nonexecutive director of mithras 
investment trust plc eclipse shipping 
and a trustee of fiscal affairs scotland 
she was for nine years until 2013 
a nonexecutive director of the gas 
and electricity markets authority 
ofgem for whom she is currently 
chair of the gas network innovation 
expert panel a deputy lieutenant of 
the city of edinburgh miriam was 
awarded an obe for services to 
corporate finance in 2000 
miriam greenwood
nonexecutive director
audit committee a
remuneration committee r
nomination committee n
committee chair
date of appointment 3 february 2014
committees a r n
a proven executive with a track record 
of delivering outstanding results 
in complex environments 
willie is chairman and nonexecutive 
director at fallago rig and a non
executive director at business stream 
where he also chairs the remuneration 
committee he is also a nonexecutive 
of grove ltd the jersey based 
healthcare company
in 2012 he acted as nonexecutiveceo 
of may gurney plc which was aim listed 
here he led a significant turnaround after 
a profits warning which culminated 
in the sale of the business to kier plc 
this turnaround received the times 
turnaround of the year award 
during 2009 to 2012 willie was the main 
board director of eaga plc a ftse 
250 energy services company which 
after successfully entering the green 
energy sector was sold to carillion plc
as a member of the scottish power 
executive team energy retail director 
he successfully led scottish power 
through the deregulation of the uk 
energy market he played a major role 
in the integration of scottish power and 
iberdrola scottish power’s successful 
metering business was part of his portfolio
willie had involvement at the highest 
level with the last two uk governments 
utilising experience and skills on a variety 
of working groups with strategic and 
operational dimensions reporting to the 
uk energy ministerdirector generals
willie macdiarmid
nonexecutive director
date of appointment 14 april 2014
committees a r n corporate governance
smart metering systems plc
annual report and accounts 2014 16
corporate governance statement
paul dollman 
miriam 
greenwood
willie 
macdiarmid 
chair
remuneration 
committee
paul dollman  
 chair
alan foy
miriam 
greenwood
willie 
macdiarmid
nomination 
committee
miriam greenwood 
chair
paul dollman 
willie 
macdiarmid
the board 
of directors
audit 
committee
the company has regard so far as is practicable and 
appropriate for a company of its size and nature to the provisions 
of the uk corporate governance code as modified by the 
recommendations of the quoted companies alliance qca 
board structure
during the year the company had three independent 
nonexecutive directors on the board to bring an independent 
view and to provide a balance to the executive directors 
the board is responsible for formulating reviewing and 
approving the group’s strategy budgets and corporate actions 
the directors hold eight board meetings per annum
board committees 
the board delegates certain matters to its three principal 
committees which deal with audit remuneration and nomination
audit committee
during the year the audit committee comprised miriam 
greenwood chair who succeeded nigel christie paul dollman 
and willie macdiarmid meetings are also attended by invitation 
by the group finance director the audit committee is 
responsible for monitoring the quality of internal controls 
and ensuring that the financial performance of the group is 
properly measured and reported on it receives and reviews 
reports from the group’s management and external auditor 
relating to the interim and annual accounts and the accounting 
and internal control systems in use throughout the group the 
audit committee meets at least twice in each financial year 
and has unrestricted access to the group’s external auditor
remuneration committee
during the year the remuneration committee comprised 
willie macdiarmid chair paul dollman previously chair 
and miriam greenwood the remuneration committee 
reviews the performance of the executive directors and 
makes recommendations to the board on matters relating to 
their remuneration and terms of service the remuneration 
committee also makes recommendations to the board on 
proposals for the granting of share options and other equity 
incentives pursuant to any employee share option scheme 
or equity incentive plans in operation from time to time 
the remuneration committee meets at least annually 
in exercising this role the directors have regard to the 
recommendations put forward in the qca guidelines 
and where appropriate the uk corporate governance 
code guidelines
nomination committee
during the year the nomination committee was chaired 
by paul dollman and also comprised miriam greenwood 
willie macdiarmid and alan foy the nomination committee 
considers the selection and reappointment of directors 
it identifies and nominates candidates to fill board vacancies 
and regularly reviews the structure size and composition 
including the skills knowledge and experience of the board 
and makes recommendations to the board with regard 
to any changes
internal control
the board has overall responsibility for the group’s system 
of internal control and risk management and for reviewing 
the effectiveness of this system such a system can only be 
designed to manage rather than eliminate the risk of failure 
to achieve business objectives and can therefore only provide 
reasonable and not absolute assurance against material 
misstatement or loss
the board is of the view that due to the current size and 
composition of the group it is not necessary to establish 
an internal audit function
relationship with shareholders
the company values its dialogue with both institutional 
and private investors effective twoway communication 
with fund managers institutional investors and analysts 
is actively pursued and this encompasses issues such 
as performance policy and strategy
private investors are encouraged to participate in the 
annual general meeting at which the chairman presents 
a review of the results and comments on current business 
activity the chairs of the audit and remuneration 
committees will be available at the annual general meeting 
to answer any shareholder questions
notice of the annual general meeting is posted 
as an enclosure of the annual report
going concern 
the directors confirm that having given consideration to 
various alternative outcomes of future performance together with 
the available bank facilities 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
 glen murray attends audit committee meetings by invitation strategic report corporate governance financial statements
smart metering systems plc
annual report and accounts 2014 17
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 nonexecutive 
director willie macdiarmid paul dollman nonexecutive 
chairman and nonexecutive director miriam greenwood
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
nonexecutive directors
remuneration of the nonexecutive directors including 
the chairman is determined by the executive directors 
nonexecutive 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 nonexecutive directors 
has a letter of appointment stating their annual fee and that 
their appointment is initially for a term of three years their 
appointment may be terminated 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 pension benefits 2014 2013
basic salary bonus contribution in kind total total
£ £ £ £ £ £
executive
s p timoney — — — — — 48335
a h foy 319507 100000 15732 4090 439329 422121
g murray 103200 50000 5160 1489 159849 131169
nonexecutive
k j lyon — — — — — 67080
p dollman 75000 — — — 75000 10333
n b christie 21475 — — — 21475 51540
m greenwood 33333 — — — 33333 —
w macdiarmid 30000 — — — 30000 —
total 582515 150000 20892 5579 758986 730578
directors’ interests
the directors who held office at 31 december 2014 had the following interests in the shares of the company
ordinary shares
2014 2013
£001p each £001p each
executive
a h foy 8889958 8889958
g murray — —
nonexecutive
p dollman 10000 —
m greenwood 10000 —
w macdiarmid — —
8909958 8889958 corporate governance
smart metering systems plc
annual report and accounts 2014 18
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 granted are summarised below
number of
shares earliest
under exercise date of date
type option price grant exercisable
executive
g murray approved 35974 76p 150711 150714
unapproved 666667 60p 200611 200616
unapproved 28700 60p 200613 200613
glen murray exercised 3500 approved share options during the year
the share price at 31 december 2014 was 395p the range in the period 1 january to 31 december 2014 was 30125p 
to 4255p
details of share options granted by the company at 31 december 2014 are given in note 25 
directors’ remuneration report continued strategic report corporate governance financial statements
smart metering systems plc
annual report and accounts 2014 19
directors’ report
the directors submit their annual report on the affairs 
of the group together with the financial statements and 
auditor’s report for the year ended 31 december 2014
principal activities
the principal activity of the group during the year was that 
of an integrated metering services company that connects 
owns operates and maintains current generation and new 
advanced metering assets and databases
the subsidiary undertakings principally affecting the profits 
and net assets of the group in the year are listed in note 12 
of the consolidated accounts and 2 to the parent company 
financial statements
review of the business
the company is required by section 417 of the companies 
act 2006 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 2014 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 
officer’s review on pages 8 to 11
information on the use of financial instruments by the group 
is given in note 20 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
p dollman nonexecutive chairman 7 november 2013
n b christie nonexecutive director 27 may 2011 14 april 2014
a h foy chief executive 24 december 2009
m greenwood nonexecutive director 3 february 2014
w macdiarmid nonexecutive director 14 april 2014
g murray finance director 1 january 2011
charitable and political donations
during the year the group made charitable donations of £2880 
2013 £7421
no political donations were made during the year 2013 £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 payables of the group 
at 31 december 2014 were equivalent to 39 2013 36 days’ 
purchases based on the average daily amount invoiced 
by suppliers during the year
substantial shareholdings
on 1 february 2015 the company had been notified in accordance with sections 791 to 828 of the companies act 
of the following interests in the ordinary share capital of the company
name of holder number  held
s p timoney 15144344 1770
liontrust asset management 9455257 1105
a h foy 8889958 1032
cazenove capital management 8834738 1032
old mutual asset manager uk 6652138 777
standard life investments 6613750 773
legal  general investment management 5071600 593
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 heshe ought to 
have taken as a director in order to make himselfherself 
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 has expressed its willingness to continue 
in office as auditor and a resolution to reappoint 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
finance director
13 march 2015 corporate governance
smart metering systems plc
annual report and accounts 2014 20
directors’ responsibilities statement
in the preparation of financial statements
the directors are responsible for preparing the directors’ report 
the strategic report the directors’ remuneration report 
the separate corporate governance statement and the financial 
statements in accordance with applicable law and regulations
company law requires the directors to prepare group and 
company financial statements for each financial year the 
directors are required by the aim rules of the london stock 
exchange to prepare group financial statements in accordance 
with international financial reporting standards 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 ifrs 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 financial 
statements
22 independent auditor’s report 
23  c o n s o l i d at e d s t at e m e nt 
of comprehensive income
24  c o n s o l i d at e d s t at e m e nt 
of financial position
25  c o n s o l i d at e d s t at e m e nt 
of changes in equity
26  c o n s o l i d at e d s t at e m e nt  
of cash flows
27 accounting policies
33 notes to the financial statements
50 parent company balance sheet
51  notes to the parent company 
financial statements  financial st a tements
smart metering systems plc
annual report and accounts 2014 22
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” which comprise the 
consolidated statement of comprehensive income the consolidated statement of financial position the consolidated 
statement of changes in equity the consolidated statement of cash flows the parent company balance sheet and the 
related notes 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 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 financial reporting council’s website 
at httpwwwfrcorgukauditscopeukprivate
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 2014 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 strategic report and the directors’ report for the financial year for which 
the financial statements are prepared is consistent with the financial statements
matters on which we are required to report by exception
we have nothing to report in respect of the following matters where the companies act 2006 requires us to report 
to you if in our opinion
 › 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 
andrew allchin 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 march 2015 strategic report corporate governance financial statements
smart metering systems plc
annual report and accounts 2014 23
2014 2013
notes £’000 £’000
revenue 2 42386 27916
cost of sales 3 14766 10101
gross profit 27620 17815
administrative expenses 3 14832 9625
other operating income 3 215 —
profit from operations 3 13003 8190
attributable to
operating profit before exceptional items 14795 8452
amortisation of intangibles 1155 262
exceptional items and fair value adjustments 3 637 —
finance costs 6 2015 1122
finance income 6 30 403
profit before taxation 11018 7471
taxation 7 225 896
profit for the year attributable to equity holders 10793 6575
other comprehensive income — —
total comprehensive income 10793 6575
the profit from operations arises from the group’s continuing operations
earnings per share attributable to owners of the parent during the year
notes 2014 2013
basic earnings per share pence 8 1271 786
diluted earnings per share pence 8 1223 743
consolidated statement of comprehensive income 
for the year ended 31 december 2014  financial st a tements
smart metering systems plc
annual report and accounts 2014 24
2014 2013
notes £’000 £’000
assets
noncurrent
intangible assets 10 10932 2018
property plant and equipment 11 91277 57382
investments 12 83 —
102292 59400
current assets
inventories 14 1211 2504
trade and other receivables 15 9474 6099
cash and cash equivalents 16 4285 2073
other current financial assets 20 — 207
14970 10883
total assets 117262 70283
liabilities
current liabilities
trade and other payables 17 15140 8879
bank loans and overdrafts 18 7904 3933
commitments under hire purchase agreements 19 90 3
other current financial liabilities 20 70 —
23204 12815
noncurrent liabilities
bank loans 18 53645 31475
commitments under hire purchase agreements 19 64 6
deferred tax liabilities 22 4395 3395
58104 34876
total liabilities 81308 47691
net assets 35954 22592
equity
share capital 24 856 838
share premium 9291 8971
other reserve 26 4258 1
treasury shares 25 92 —
retained earnings 21641 12782
total equity attributable to equity holders of the parent company 35954 22592
the financial statements on pages 23 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 march 2015 
consolidated statement of financial position
as at 31 december 2014 strategic report corporate governance financial statements
smart metering systems plc
annual report and accounts 2014 25
share share other treasury retained
attributable to the owners capital premium reserve shares earnings total
of the parent company £’000 £’000 £’000 £’000 £’000 £’000
as at 1 january 2013 833 8653 1 — 7109 16596
total comprehensive income 
for the year — — — — 6575 6575
transactions with owners 
in their capacity as owners
dividends note 9 — — — — 1546 1546
shares issued 5 318 — — — 323
share options — — — — 644 644
as at 31 december 2013 838 8971 1 — 12782 22592
total comprehensive income 
for the year — — — — 10793 10793
transactions with owners 
in their capacity as owners
dividends note 9 — — — — 2174 2174
shares issued 18 320 4257 — — 4595
shares held by sip — — — 92 — 92
share options — — — — 240 240
as at 31 december 2014 856 9291 4258 92 21641 35954
see notes 25 and 26 for details of the treasury shares and other reserve
consolidated statement of changes in equity
for the year ended 31 december 2014  financial st a tements
smart metering systems plc
annual report and accounts 2014 26
2014 2013
£’000 £’000
cash flow from operating activities
profit before taxation 11018 7471
finance costs 1738 1122
finance income 30 26
fair value movement on derivatives 277 377
depreciation 4526 2754
amortisation 1155 262
sharebased payment expense 148 644
movement in inventories 1636 2131
movement in trade and other receivables 1709 2961
movement in trade and other payables 3159 826
cash generated from operations 25336 7584
taxation 220 206
net cash generated from operations 25116 7378
investing activities
payments to acquire property plant and equipment 35779 24595
disposal of property plant and equipment 52 563
payments to acquire intangible assets 539 364
acquisition of subsidiary 12632 —
cash acquired with subsidiary 3420 —
finance income 30 26
net cash used in investing activities 45448 24370
financing activities
new borrowings 33003 17830
capital repaid 6862 2875
hire purchase repayments 10 —
finance costs 1738 1122
net proceeds from share issue 325 323
dividend paid 2174 1546
net cash generated from financing activities 22544 12610
net increase in cash and cash equivalents 2212 4382
cash and cash equivalents at the beginning of the financial year 2073 6455
cash and cash equivalents at the end of the financial year note 16 4285 2073
consolidated statement of cash flows
for the year ended 31 december 2014 strategic report corporate governance financial statements
smart metering systems plc
annual report and accounts 2014 27
the company is incorporated and domiciled in the uk the group’s activities consist of integrated metering services 
that connects owns operates and maintains current generation and new advanced metering assets and databases
basis of preparation 
the consolidated financial statements have been prepared on a historical cost basis except where otherwise stated 
the consolidated financial statements are presented in british pounds sterling £ which is also the functional currency 
of the group and all values are rounded to the nearest thousand £’000 except where otherwise indicated the financial 
statements have been prepared on a consolidated basis with december 2013 with no changes to the accounting framework 
adopted or accounting policies applied
going concern
management prepares budgets and forecasts on a rolling 24 month basis these forecasts cover operational cash flows 
and investment capital expenditure the group has committed bank facilities which extend to march 2016 and available 
cash resources at 31 december 2014 of £475m
based on the current projections and facilities in place the directors consider it appropriate to continue to prepare 
the financial statements on a going concern basis
basis of consolidation 
the consolidated financial statements incorporate the consolidated financial statements of the company and the following 
group undertakings being uk gas connection limited uk meter assets limited ukma af limited uk data management 
limited and utility partnership 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 utility partnership limited was acquired during 
the year and acquisition accounting has been applied to this transaction 
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
upl italia srl is deemed immaterial to the group as a whole and as a result has not been consolidated within these 
financial statements
use of estimates and judgements 
the preparation of the financial statements requires the use of estimates and assumptions although these estimates 
are based on management’s best knowledge actual results ultimately may differ from these estimates
the key sources of estimation uncertainty that have a significant risk of causing material adjustment to the carrying amounts 
of assets and liabilities within the next financial year are the estimation of sharebased payment costs and acquisitions and 
business combinations the estimation of sharebased 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 nonmarket performance 
conditions and the continuing participation of employees
when an acquisition arises the group is required under ifrs 3 to calculate the purchase price allocation “ppa” the ppa 
requires companies to report the fair value of assets and liabilities acquired and it establishes useful lives for identified assets
subjectivity is involved in ppa with the estimation of the future value of technology customer relationships and goodwill 
revenue recognition
revenue is recognised to the extent that it is probable that the economic benefits will flow to the group and the revenue 
can be reliably measured revenue is measured at the fair value of the consideration received excluding discounts and vat
revenue is recognised when the significant rewards and risk of ownership have been passed to the buyer the risk and rewards 
of ownership transfer when the group fulfils its contractual obligations to customers by supplying services 
accounting policies  financial st a tements
smart metering systems plc
annual report and accounts 2014 28
meter rental income
rental income is recognised when the group is contractually entitled to it rental income is calculated on a daily basis and 
invoiced monthly rental contracts do not operate on a fixedterm basis and are cancellable by the lessee with immediate 
effect and do not transfer risks and rewards of ownership of the underlying asset they are therefore considered as operating 
lease arrangements and accounted for as such
utility connection
revenue from connection contracts is recognised upon delivery of the related service in line with our contractual entitlement
data management
data provision income is recognised when the group is contractually entitled to it data provision income is invoiced 
in advance and is recognised on a straight line basis over the contract period
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
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 heldtomaturity investments availableforsale 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 ie the date that the group commits 
to purchase or sell the asset
the group’s financial assets include cash and shortterm deposits trade and other receivables loans and other receivables 
quoted and unquoted financial instruments and derivative financial instruments
financial liabilities 
initial recognition and measurement
financial liabilities within the scope of ias 39 are classified as financial liabilities at fair value through profit or loss loans 
and borrowings or as derivatives designated as hedging instruments in an effective hedge as appropriate the group 
determines the classification of its financial liabilities at initial recognition all financial liabilities are recognised initially 
at fair value and in the case of loans and borrowings net of directly attributable transaction costs
the group’s financial liabilities include trade and other payables bank overdraft loans and borrowings financial guarantee 
contracts and derivative financial instruments
derecognition
a financial liability is derecognised when the obligation under the liability is discharged or cancelled or expires when an 
existing financial liability is replaced by another from the same lender on substantially different terms or the terms of an 
existing liability are substantially modified such an exchange or modification is treated as a derecognition of the original 
liability and the recognition of a new liability and the difference in the respective carrying amounts is recognised in the 
consolidated statement of comprehensive income
offsetting of financial instruments
financial assets and financial liabilities are offset and the net amount reported in the consolidated statement of financial 
position if and only if there is a currently enforceable legal right to offset the recognised amounts and there is an intention 
to settle on a net basis or to realise the assets and settle the liabilities simultaneously
initial recognition and subsequent measurement
the group uses derivative financial instruments such as interest rate swaps to hedge its interest rate risk such derivative 
financial instruments are initially recognised at fair value on the date on which a derivative contract is entered into and are 
subsequently remeasured at fair value derivatives are carried as financial assets when the fair value is positive and as 
financial liabilities when the fair value is negative the group has not designated any derivatives for hedge accounting
accounting policies continued  strategic report corporate governance financial statements
smart metering systems plc
annual report and accounts 2014 29
financial liabilities continued 
current versus noncurrent classification
derivative instruments that are not designated as effective hedging instruments are classified as current or noncurrent 
or separated into a current and noncurrent portion based on an assessment of the facts and circumstances ie 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 noncurrent or separated into current and noncurrent 
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 noncurrent 
portion only if a reliable allocation can be made
exceptional items 
the group presents as exceptional items on the face of the consolidated statement of comprehensive income those material 
items of income and expense which because of the nature or expected infrequency of the events giving rise to them merit 
separate presentation to allow shareholders to understand better the elements of financial performance in that year so as 
to facilitate comparison with prior periods and to assess better trends in financial performance
research and development 
expenditure on pure and applied research activities is recognised in the consolidated statement of comprehensive income 
as an expense as incurred
expenditure on product development activities is capitalised if the product or process is technically and commercially 
feasible and the group intends and has the technical ability and sufficient resources to complete development if future 
economic benefits are probable and if the group can measure reliably the expenditure attributable to the intangible asset 
during its development the expenditure capitalised includes the cost of materials direct labour and an appropriate 
proportion of overheads
capitalised development expenditure is stated at cost less accumulated amortisation and accumulated impairment losses
amortisation is calculated when the product or system is commercialised or in use so as to write off the cost of an asset 
less its estimated residual value over the useful economic life of that asset as follows
amortisation  20 on cost straight line
intangible assets 
intangible assets acquired separately from third parties are recognised as assets and measured at cost
following initial recognition intangible assets are measured at cost at the date of acquisition less any amortisation and any 
impairment losses amortisation costs are included within the net administrative expenses disclosed in the consolidated 
statement of comprehensive income
intangible assets acquired as part of a business combination are recognised outside goodwill if the asset is separable or 
arises from contractual or other legal rights and its fair value can be measured reliably
intangible assets are amortised over their useful lives as follows
software  125 and 20 straight line
customer contracts 20
useful lives are examined on an annual basis and adjustments where applicable are made on a prospective basis   financial st a tements
smart metering systems plc
annual report and accounts 2014 30
goodwill
goodwill arising on consolidation represents the excess of the consideration transferred and the fair value of the 
identifiable assets and liabilities of the acquiree at the date of acquisition goodwill on acquisitions of subsidiaries is included in 
‘intangible assets’ goodwill is not amortised but is tested annually for impairment and is carried at cost less accumulated 
impairment losses see note 13 for detailed assumptions and methodology impairment losses are not subsequently reversed
goodwill is allocated to cashgenerating units for the purpose of impairment testing the allocation is made to those 
cashgenerating units or groups of cashgenerating units that are expected to benefit from the business combination 
in which the goodwill arose identified according to operating segment
provisional fair values are adjusted against goodwill if additional information is obtained within one year of the acquisition 
date about facts or circumstances existing at the acquisition date other changes in provisional fair values are recognised 
through profit or loss
changes in contingent consideration arising from additional information obtained within one year of the acquisition date 
about facts or circumstances that existed at the acquisition date are recognised as an adjustment to goodwill other changes 
in contingent consideration are recognised through profit or loss unless the contingent consideration is classified as equity 
in such circumstances changes are recognised within equity
impairment
at each reporting date the group reviews the carrying amounts of its property plant and equipment and intangibles 
to determine whether there is any indication that those assets have suffered an impairment loss if any such indication 
exists the recoverable amount of the asset is estimated in order to determine the extent of the impairment loss if any 
where the asset does not generate cash flows that are independent from other assets the group estimates 
the recoverable amount of the cashgenerating unit cgu to which the asset belongs 
recoverable amount is the higher of fair value less costs to sell and value in use in assessing value in use the estimated 
future cash flows are discounted to their present value using a pretax discount rate that reflects current market assessments 
of the time value of money and the risks specific to the asset for which the estimates of future cash flows have been adjusted
if the recoverable amount of an asset or cgu is estimated to be less than its carrying amount the carrying amount 
of the asset or cgu is reduced to its recoverable amount an impairment loss is recognised as an expense immediately
where an impairment loss subsequently reverses the carrying amount of the asset cgu is increased to the revised 
estimate of its recoverable amount but so that the increased carrying amount does not exceed the carrying amount 
that would have been determined had no impairment loss been recognised for the asset cgu in prior years a reversal 
of an impairment loss is recognised as income immediately
detailed assumptions with regard to discount growth and inflation rates are set out in note 13 to the accounts
accounting policies continued  strategic report corporate governance financial statements
smart metering systems plc
annual report and accounts 2014 31
property plant and equipment 
property plant and equipment is stated at cost net of accumulated depreciation andor accumulated impairment losses 
if any such cost includes the cost of replacing part of the plant and equipment and borrowing costs for longterm 
construction projects if the recognition criteria are met when significant parts of property plant and equipment are 
required to be replaced in intervals the group recognises such parts as individual assets with specific useful lives 
and depreciation respectively 
all other repair and maintenance costs are recognised in the consolidated statement of comprehensive income as incurred 
depreciation is calculated on a straight line basis over the estimated useful life of the asset as follows
freehold property   2 on cost 
short leasehold property  15 and 20 on cost 
plant and machinery   5 and 10 on cost 
fixtures fittings  equipment 15 and 33 on cost
motor vehicles   25 on cost
land is not depreciated
an item of property plant and equipment and any significant part initially recognised is derecognised upon disposal or 
when no future economic benefits are expected from its use or disposal any gain or loss arising on derecognition of the 
asset calculated as the difference between the net disposal proceeds and the carrying amount of the asset is included in 
the consolidated statement of comprehensive income when the asset is derecognised the asset’s residual values useful 
lives and methods of depreciation are reviewed at each financial year end and adjusted prospectively if appropriate
property plant and equipment are initially recorded at cost
inventories
inventories are stated at the lower of cost and net realisable value costs comprise direct materials net realisable value 
represents the estimated selling price for inventories less all estimated costs of completion and costs to be incurred in 
marketing selling and distribution
cash and cash equivalents
cash and cash equivalents in the consolidated statement of financial position comprises cash at bank and in hand and 
shortterm deposits with an original maturity of three months or less for the purpose of the consolidated statement of cash 
flows cash and cash equivalents consists of cash and shortterm deposits as defined above net of outstanding bank overdrafts
hire purchase agreements
assets held under hire purchase agreements are capitalised and disclosed under property plant and equipment at their fair 
value the capital element of the future payments is treated as a liability and the notional interest is charged to the statement 
of comprehensive income in proportion to the remaining balance outstanding
leased assets and obligations
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 
consolidated statement of comprehensive income 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 consolidated statement of comprehensive income on a straight line basis over the lease term
all other leases are operating leases and the annual rentals are charged to the consolidated statement of comprehensive 
income on a straight line basis over the lease term  financial st a tements
smart metering systems plc
annual report and accounts 2014 32
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
sharebased payments
the costs of equitysettled sharebased payments are charged to the consolidated statement of comprehensive income 
over the vesting period the charge is based on the fair value of the equity instrument granted and the number of equity 
instruments that are expected to vest
taxation
tax currently payable is based on the taxable profit for the year taxable profit differs from accounting profit as reported 
in the consolidated statement of comprehensive income because it excludes items of income or expense that are taxable 
or deductible in other years and it further excludes items that are never taxable or deductible the group’s liability for 
current tax is measured using tax rates that have been enacted or substantively enacted by the reporting date
deferred tax is the tax expected to be payable or recoverable on differences between the carrying amount of assets and 
liabilities in the financial statements and the corresponding tax bases used in the computation of taxable profit and is 
accounted for using the balance sheet liability method deferred tax liabilities are recognised for all taxable temporary 
differences and deferred tax assets are recognised to the extent that it is probable that taxable profits will be available 
against which deductible temporary differences can be utilised the deferred tax balance is calculated based on tax rates 
that have been enacted or substantively enacted by the reporting date
deferred tax assets include temporary differences related to employee benefits settled via the issue of share options 
recognition of the deferred tax assets assumes share options will have a positive value at the date of vesting which 
is greater than the exercise price
standards and interpretations
at the date of authorisation of these financial statements the following standards and interpretations which have not been 
applied in these financial statements were in issue but not yet effective
periods commencing
standard or interpretation on or after
ifrs 2 amendment sharebased payment 1 july 2014
ifrs 3 amendment business combinations 1 july 2014
ifrs 8 amendment operating segments 1 july 2014
ifrs 16 amendment property plant and equipment 1 july 2014
ifrs 24 amendment related party disclosures 1 july 2014
ifrs 38 amendment intangible assets 1 july 2014
ifrs 9 amendment financial instruments 1 january 2018
ifrs 10frs 28 amendment consolidated financial statements 1 january 2016
ifrs 12 amendment consolidation 1 january 2016
ifrs 11 amendment joint ventures 1 january 2016
ifrs 14 regulatory deferred accounts 1 january 2016
ifrs 15 reverse from contracts with customers 1 january 2016
ias 1 amendment disclosures 1 january 2016
ifrs 7 amendment financial instruments 1 january 2016
accounting policies continued  strategic report corporate governance financial statements
smart metering systems plc
annual report and accounts 2014 33
1 business combinations
acquisition of utility partnership limited
on 14 april 2014 smart metering systems acquired 100 of the issued share capital of utility partnership limited upl 
upl is a manager of electricity meters in the uk and provider of electricity connections design meter installations data 
management and energy management services
the acquisition has been accounted for using the acquisition method the fair value of the identifiable assets and liabilities 
of upl as at the date of acquisition was
fair value previous 
recognised on carrying 
acquisition value
£’000 £’000
property plant and equipment 2539 2539
software 3258 —
customer contracts 2160 —
other financial assets 83 83
inventories 344 344
trade and other receivables 5074 4998
cash and cash equivalents 3420 3420
total assets 16878 11384
trade and other payables 879 879
deferred tax 1137 —
accruals and deferred income 1966 1950
obligations under hire purchase agreements 106 106
total liabilities 4088 2935
total identifiable net assets at provisional fair value 12790
goodwill arising on acquisition 4112
total acquisition cost 16902
analysed as
new shares in smart metering system plc 4270
cash paid 12632
total acquisition cost 16902
cash paid 12632
acquisition costs 480
net cash acquired with the subsidiary 3420
total acquisition cost 9692
the provisional fair value has been updated to take into account cash balances which were anticipated would be paid out 
to the vendors at completion
the consolidated statements include the results of upl for the period from 14 april to 31 december 2014 during which time 
it contributed £7461k to revenue and £715k to group profit for the period 
sms and upl are highly complementary and the acquisition will enable significant growth opportunities by offering a full 
endtoend dual fuel service incorporating connections meter assets installation ownership and management as well 
as data management services to the respective gas and electricity customers of sms and upl 
in addition to the above synergies the acquisition adds energy management services to the group’s activities
the goodwill recognised above is attributed to the expected benefits of combining gas and electricity offerings
notes to the financial statements
for the year ended 31 december 2014  financial st a tements
smart metering systems plc
annual report and accounts 2014 34
1 business combinations continued
acquisition of utility partnership limited continued
the primary components of this residual goodwill comprise
 › revenue synergies from dual fuel
 › the workforce and
 › new opportunities available to upl as part of the larger aim listed group
the identifiable intangible assets will be amortised as follows
 › software – 20
 › customer contracts – 20
transaction costs of £480k incurred on the acquisition have been included within exceptional items in the consolidated 
statement of comprehensive income
2 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 longterm economic characteristics and similar nature of their products and services as follows
the management of assets comprises regulated management of gas meters electric meters and adm™ units within the uk
the installation of meters comprises installation of domestic and industrial and commercial gas meters and electricity 
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 2014 
and 31 december 2013
asset asset total
management installation unallocated operations
31 december 2014 £’000 £’000 £’000 £’000
segmentgroup revenue 22404 19982 — 42386
cost of sales 3712 11054 — 14766
segment profit – group gross profit 18692 8928 — 27620
items not reported by segment
other operating costsincome — — 8299 8299
depreciation 4200 — 326 4526
amortisation 746 — 409 1155
exceptional items and fair value adjustments — — 637 637
profit from operations 13746 8928 9671 13003
net finance costs 1985 — — 1985
profit before tax 11761 8928 9671 11018
tax expense 225
profit for year 10793
notes to the financial statements continued
for the year ended 31 december 2014 strategic report corporate governance financial statements
smart metering systems plc
annual report and accounts 2014 35
2 segmental reporting continued
asset asset total
management installation unallocated operations
31 december 2013 £’000 £’000 £’000 £’000
segmentgroup revenue 13803 14113 — 27916
cost of sales 2575 7526 — 10101
segment profit – group gross profit 11228 6587 — 17815
items not reported by segment
other operating costsincome — — 6609 6609
depreciation 2654 — 100 2754
amortisation 262 — — 262
profit from operations 8312 6587 6709 8190
net finance costs 719 — — 719
profit before tax 7593 6587 6709 7471
tax expense 896
profit for year 6575
all revenues and operations are based and generated in the uk
the group has one major customer that generated turnover within each segment as listed below
2014 2013
£’000 £’000
customer 1 – asset management 9847 7677
customer 1 – asset installation 5089 4901
14936 12578
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
asset asset total
management installation operations
31 december 2014 £’000 £’000 £’000
assets reported by segment
intangible assets 10932 — 10932
plant plant and equipment 88504 — 88504
inventories 1211 — 1211
100647
assets not reported by segment 16615
total assets 117262
liabilities reported by segment
bank loans 61549 — 61549
obligations under hire purchase agreements 154 — 154
61703
liabilities not reported by segment 19605
total liabilities 81308  financial st a tements
smart metering systems plc
annual report and accounts 2014 36
2 segmental reporting continued
segment assets and liabilities continued
asset asset total
management installation operations
31 december 2013 £’000 £’000 £’000
assets reported by segment
intangible assets 2018 — 2018
plant plant and equipment 57041 — 57041
inventories 2504 — 2504
61563
assets not reported by segment 8720
total assets 70283
liabilities reported by segment
obligations under hire purchase agreements 9 — 9
9
liabilities not reported by segment 47682
total liabilities 47691
3  income statement by nature and items of expenditure included in the consolidated statement 
of comprehensive income
2014 2013
£’000 £’000
revenue 42386 27916
direct rental costs 3712 2575
direct subcontractor costs 6125 6220
other direct sales costs and systems rental 4929 1312
staff costs 6549 4474
depreciation
– owned assets 4447 2723
– leased assets 79 31
amortisation 1155 262
other operating income 215 —
auditor’s remuneration 
– as auditor 68 51
– other services 179 29
exceptional costs and fair value adjustments 637 —
operating lease costs
– plant and equipment 5 1
other operating charges 1713 2048
profit from operations 13003 8190
finance costs 2015 1122
finance income 30 403
profit before taxation 11018 7471
included in exceptional items and fair value adjustments expenses are i £nil 2013 £377143 relates to the interest rate hedge 
fair value adjustment and ii £nil 2013 £644275 that relates to sharebased payments £nil 2013 £nil restructuring debt 
£479691 2013 £nil acquisition costs and £157500 2013 £nil redundancy costs exceptional items totalling £267000 
have been reclassified under their statutory headings as the board consider this to better reflect the nature of these costs 
included within other direct sales costs and systems rental are staff costs of £2245000 2013 £nil
notes to the financial statements continued
for the year ended 31 december 2014 strategic report corporate governance financial statements
smart metering systems plc
annual report and accounts 2014 37
3  income statement by nature and items of expenditure included in the consolidated statement 
of comprehensive income continued
auditors’ remuneration can be analysed as
2014 2013
£’000 £’000
statutory group audit baker tilly uk audit llp 56 39
statutory parent audit 12 12
taxation services baker tilly tax and accounting limited 13 15
corporate finance baker tilly corporate finance llp 157 —
nonstatutory audit services baker tilly uk audit llp 9 14
247 80
4 particulars of employees
the average number of staff employed by the group including executive directors during the financial year was
2014 2013
number number
number of administrative staff 20 9
number of operational staff 208 76
number of sales staff 5 5
number of it staff 12 4
number of directors 2 2
247 96
the aggregate payroll costs including executive directors of the employees were
2014 2013
£’000 £’000
wages and salaries 7654 3364
social security costs 734 384
staff pension costs 145 64
sharebased payment 240 644
director pension costs 21 18
8794 4474
5 directors’ emoluments
the directors’ aggregate remuneration in respect of qualifying services were
2014 2013
£’000 £’000
emoluments receivable 711 589
fees 21 52
value of group pension contributions to money purchase schemes 5 5
other pension 16 15
753 661
2014 2013
emoluments of highest paid director £’000 £’000
total emoluments 423 387
pension contributions 16 15  financial st a tements
smart metering systems plc
annual report and accounts 2014 38
5 directors’ emoluments continued
the number of directors who accrued benefits under company pension schemes was as follows
2014 2013
number number
money purchase schemes 1 1
6 finance costs and finance income 
2014 2013
£’000 £’000
finance costs
bank loans and overdrafts 1731 1121
interest rate hedge fair value 277 —
hire purchase 7 1
total finance costs 2015 1122
finance income
bank interest receivable 30 26
interest rate hedge fair value — 377
total finance income 30 403
7 taxation
2014 2013
£’000 £’000
analysis of charge in the year
current tax
current income tax expense 372 —
over provision in prior year — 11
total current income tax 372 11
deferred tax
origination and reversal of temporary differences 147 885
tax on profit on ordinary activities 225 896
the charge for the period can be reconciled to the profit per the consolidated statement of comprehensive income as follows
profit before tax 11018 7471
tax at the uk corporation tax rate of 21 2013 23 2314 1718
expenses not deductible for tax purposes 121 19
adjustments to tax charge in respect of previous periods 132 3
change in tax rate — 844
deferred tax on share options 2342 —
tax expense in the income statement 225 896
notes to the financial statements continued
for the year ended 31 december 2014 strategic report corporate governance financial statements
smart metering systems plc
annual report and accounts 2014 39
8 earnings per share
the calculation of eps is based on the following data and number of shares 
2014 2013
£’000 £’000
profit for the year used for calculation of basic eps 10793 6575
amortisation of intangible assets 1155 262
exceptional costs 637 —
tax effect of adjustments 394 64
earnings for the purpose of adjusted eps 12191 6773
number of shares 2014 2013
weighted average number of ordinary shares for the purposes of basic eps 84887262 83606102
effect of potentially dilutive ordinary shares
– share options 3370617 4898694
weighted average number of ordinary shares for the purposes of diluted eps 88257879 88504796
earnings per share
– basic pence 1271 786
– diluted pence 1223 743
adjusted earnings per share
– basic pence 1436 810
– diluted pence 1381 765
the directors consider that the adjusted earnings per share calculation gives a better understanding of the group’s earnings 
per share
9 dividends
2014 2013
£’000 £’000
equity dividends
paid during the year
dividends on equity shares £00255 2013 £00185 2174 1546
total dividends 2174 1546  financial st a tements
smart metering systems plc
annual report and accounts 2014 40
10 intangible assets
customer
goodwill contracts development software total
£’000 £’000 £’000 £’000 £’000
cost 
as at 1 january 2013 — — 828 1810 2638
additions — — 364 — 364
as at 31 december 2013 — — 1192 1810 3002
additions — — 356 183 539
additions as part of upl acquisition 4112 2160 — 3258 9530
as at 31 december 2014 4112 2160 1548 5251 13071
amortisation
as at 1 january 2013 — — 17 705 722
charge for year — — 27 235 262
as at 31 december 2013 — — 44 940 984
charge for year — 332 77 746 1155
as at 31 december 2014 — 332 121 1686 2139
net book value
at 31 december 2014 4112 1828 1427 3565 10932
at 31 december 2013 — — 1148 870 2018
at 1 january 2013 — — 811 1105 1916
11 property plant and equipment
freehold
leasehold 
property
plant and 
machinery
 fixtures 
fittings and
 equipment
motor
vehicles total
£’000 £’000 £’000 £’000 £’000
cost
as at 1 january 2013 103 39220 416 — 39739
additions 33 24467 95 — 24595
disposals — 687 — — 687
as at 31 december 2013 136 63000 511 — 63647
additions 5 35715 214 — 35934
additions as part of upl acquisition 1990 — 437 112 2539
disposals — 69 — — 69
as at 31 december 2014 2131 98646 1162 112 102051
depreciation
as at 1 january 2013 30 3429 176 — 3635
charge for year 20 2654 80 — 2754
disposals — 124 — — 124
as at 31 december 2013 50 5959 256 — 6265
charge for year 56 4200 236 34 4526
disposals — 17 — — 17
as at 31 december 2014 106 10142 492 34 10774
net book value
at 31 december 2014 2025 88504 670 78 91277
at 31 december 2013 86 57041 92 163 57382
at 1 january 2013 73 35791 92 148 36104
notes to the financial statements continued
for the year ended 31 december 2014 strategic report corporate governance financial statements
smart metering systems plc
annual report and accounts 2014 41
11 property plant and equipment continued
hire purchase agreements
included within the net book value of £91277000 2013 £57382000 2012 £36104000 is £208000 2013 £84000 
2012 £115000 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 £79000 2013 £31000 2012 £31000
the assets are secured by a bond and floating charge note 18
12 financial asset investments
shares in group 
undertaking
unlisted 
investments total
£’000 £’000 £’000
cost
as at 1 january 2013 and 31 december 2013 — — —
additions as part of upl acquisition 43 40 83
as at 31 december 2014 43 40 83
subsidiary undertakings
country of proportion of 
incorporation holding shares held nature of business
all held by the company
uk gas connection limited scotland ordinary shares 100 gas utility 
management
uk meter assets limited scotland ordinary shares 100 gas utility 
management
uk data management limited scotland ordinary shares 100 data management
ukma af limited england ordinary shares 100 leasing
utility partnership limited wales ordinary shares 100 electricity utility 
management
upl italia srl italy ordinary shares 100 electricity utility 
management
 the shareholding in this company is indirect via a subsidiary company
13 impairment of goodwill and intangibles with indefinite lives
goodwill arising on acquisitions is allocated to cashgenerating units comprising the acquired businesses 
the directors believe the cashgenerating units comprise the following operating segments which represent the smallest individual 
groups of assets generating cash flows goodwill has been allocated between the group’s operating segments as follows
group
metering
and data
utility services
and energy total
as at 1 january 2014 — — —
arising on acquisition 2921 1191 4112
as at 31 december 2014 2921 1191 4112
in assessing value in use the estimated future cash flows of each operating segment are discounted to their present value 
using a pretax discount rate that reflects current market assessments of the time value of money and the risks specific to 
the asset the estimated cash flows are derived by discounting future cash flows that are based on conservative growth and 
attrition rates and discounted at a rate of 82
the value in use calculated at 31 december 2014 was £200m comparing this to the net asset value of the operating 
segments identified above the directors believe the value of goodwill is not impaired as 31 december 2014 
the accounting treatment resulted in an impairment loss of £nil  financial st a tements
smart metering systems plc
annual report and accounts 2014 42
14 inventories
2014 2013
£’000 £’000
finished goods 913 1737
consumables 298 767
1211 2504
15 trade and other receivables
2014 2013
£’000 £’000
trade receivables 3588 3326
prepayments 542 246
accrued income 4816 1885
other receivables 70 32
income tax repayable 57 47
vat recoverable 401 563
9474 6099
the receivables above include the following amounts falling due after more than one year
2014 2013
£’000 £’000
accrued income 1172 —
the directors consider that the carrying amount of trade and other receivables approximates to their fair value
the group’s credit risk is primarily attributable to trade receivables and accrued income the amounts presented in the 
statement of financial position are net of allowances for doubtful receivables the allowance for doubtful receivables or 
provision against accrued income in the year was £33414 2013 £nil 2012 £nil the ageing profile of trade receivables 
past due date is shown below
2014 2013
£’000 £’000
31–60 days 210 299
60–90 days 156 401
over 90 days 151 198
517 898
allowance for doubtful receivables 33 —
484 898
trade receivables are non interestbearing and are generally on 30–90 days terms 
trade receivables due from related parties at 31 december 2014 amounted to £nil 2013 £nil 2012 £nil 
receivables are all in sterling denominations 
the directors are of the opinion that £33000 of the overdue debts as at 31 december 2014 2013 £nil 2012 £nil 
require impairment
accrued income is invoiced periodically and customers are the same as those within trade receivables due to its nature 
there is no accrued income past due
notes to the financial statements continued
for the year ended 31 december 2014 strategic report corporate governance financial statements
smart metering systems plc
annual report and accounts 2014 43
16 cash and cash equivalents
cash and cash equivalents comprise cash held by the group the carrying amount of the asset approximates the fair value 
all balances are held in sterling 
during each period there were no amounts of cash placed on shortterm deposit
for the purposes of the cash flow statement cash and cash equivalents comprise
2014 2013
£’000 £’000
cash 4285 2073
4285 2073
17 trade and other payables
2014 2013
£’000 £’000
current
trade payables 7767 4569
other payables 428 15
other taxes 861 249
income tax 377 —
deferred income 1623 291
accruals 4084 3755
15140 8879
the directors consider that the carrying amount of trade and other payables approximates to their fair value
the maturity profile of trade payables is given below
2014 2013
£’000 £’000
current 5326 4026
31–60 days 1099 160
60–90 days 539 58
over 90 days 803 325
7767 4569
trade payables are non interestbearing and are normally settled on 30–45 day terms
all trade liabilities are sterling denominated
18 bank loans and overdrafts
2014 2013
£’000 £’000
current
bank loans 7904 3933
bank overdraft — —
7904 3933
noncurrent
bank loans 53645 31475
bank overdraft — —
53645 31475
bank loans at 31 december 2014 relate to a term loan facility of £1050m that was finalised in march 2014
the term loan is available for 24 months is payable in equal quarterly instalments based on a ten year repayment profile 
with a final repayment date of 14 march 2019 the term loan attracts interest at a rate of 19 over the three month libor 
076 is paid on undrawn funds
the banks have a bond and floating charge over current and future property and assets
the group has fixed the bank interest payable through an interest rate swap see note 20  financial st a tements
smart metering systems plc
annual report and accounts 2014 44
19 commitments under hire purchase agreements
future minimal commitments under hire purchase agreements are as follows
2014 2013
£’000 £’000
current
amounts payable within one year 90 3
noncurrent
amounts payable between two to five years 64 6
amounts payable after more than five years — —
64 6
the group has hire purchase contracts for various items of computer equipment these leases have terms of renewal 
but no purchase options and escalation clauses renewals are at the option of the specific entity that holds the lease 
the directors consider that the future minimum lease payments under hire purchase contracts approximate to the present 
value of the minimum payments obligations under hire purchase contracts are secured on the underlying assets
20 other financial liabilities and assets
the group’s treasury policy and management of financial instruments which form part of these financial statements 
are set out in the financial review
2014 2013
£’000 £’000
other financial assets — 207
noncurrent liabilities
other financial liabilities 70 —
other financial assets and liabilities relate to the fair value adjustment on interest rate swaps
the group uses interest rate swaps to manage interest rate risk on interestbearing 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 £30000000 as at 31 december 2014 
2013 £28200000 2012 £13200000
the interest rate swap results in a fixed interest rate of 280–282
the termination date for the derivatives is 15 september 2016
the movement in the fair value is shown below
2014 2013
£’000 £’000
interest rate swap
opening position 207 —
adjustment to fair value 277 207
closing position 70 207
notes to the financial statements continued
for the year ended 31 december 2014 strategic report corporate governance financial statements
smart metering systems plc
annual report and accounts 2014 45
20 other financial liabilities and assets continued
fair values
the directors do not consider there to be any material differences between the fair values and carrying values of any financial 
assets or liabilities recorded within these financial statements at the balance sheet date other than as set out below
fair value hierarchy
the group uses the following hierarchy for determining and disclosing the fair value of financial instruments by valuation technique
 › 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 2014 the group held the following financial instruments measured at fair value
31 december 
2014 level 1 level 2 level 3
liabilities measured at fair value £’000 £’000 £’000 £’000
financial liabilities at fair value through the statement 
of comprehensive income
interest rate derivatives 70 — 70 —
fair value has been assessed on a mark to market basis
the above assets are shown on the statement of financial position as other current financial assets and other current financial liabilities
during the reporting period ended 31 december 2014 there were no transfers between level 1 and level 2 fair value 
measurements and no transfers into and out of level 3 fair value measurements
21 financial risk management
the board reviews and agrees policies for managing the risks associated with interest rate credit and liquidity risk 
the group has in place a risk management policy that seeks to minimise any adverse effect on the financial performance 
of the group by continually monitoring the following risks
interest rate risk
the group’s interest rate risk arises as a result of both its long and shortterm 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
effect on profit 
increasedecrease before tax
pound sterling in basis points £’000
2014 1 195
2013 1 72  financial st a tements
smart metering systems plc
annual report and accounts 2014 46
21 financial risk management continued
interest rate risk profile of financial liabilities
the interest rate profile of the financial liabilities of the group being bank loans and overdrafts obligations under finance 
leases and other financial liabilities as at each period end is as follows
fixed rate variable rate
financial financial
liabilities liabilities total
£’000 £’000 £’000
2014 30153 31550 61703
2013 28209 7208 35417
1 january 2013 13213 7249 20462
the fixed rate financial liabilities relate 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
2014 2013
£’000 £’000
fixed rate
less than one year 3090 2824
two to five years 12063 11286
over five years 15000 14099
30153 28209
variable rate
less than one year 4603 1086
two to five years 19618 4344
over five years 7329 1778
31550 7208
interest rate risk profile of financial assets
the group’s financial assets at 31 december 2014 comprise cash and trade receivables the cash balance of £4285000 
2013 £2073000 2012 £6455000 is a floating rate financial asset
fair values of financial liabilities and financial assets
the fair values based upon the market value or discounted cash flows of financial liabilities and financial assets held 
in the group were not materially different from their book values
foreign currency risk
the group’s exposure to the risk of changes in foreign exchange rates is insignificant as primarily all of the group’s 
operating activities are denominated in pound sterling
liquidity risk
the group manages its cash in a manner designed to ensure maximum benefit is gained whilst ensuring security of investment 
sources the group’s policy on investment of surplus funds is to place deposits at institutions with strong credit ratings
the ageing and maturity profile of the group’s material liabilities are covered within the relevant liability note
credit risk
credit risk with respect to trade receivables and accrued income is due to the group trading with a limited number 
of companies who are generally large utility companies or financial institutions therefore the group does not expect 
in the normal course of events that these debts are at significant risk the group’s maximum exposure to credit risk 
equates to the carrying value of cash held on deposit and trade other receivables and accrued income 
the group’s maximum exposure to credit risk from its customers is £8278000 2013 £5211000 2012 £2786000 
as disclosed in note 15 – trade and other receivables and accrued income 
the group regularly monitors and updates its cash flow forecasts to ensure it has sufficient and appropriate funds to meet 
its ongoing operational requirements whilst maintaining adequate headroom on its facilities to ensure no breach in its 
banking covenants
notes to the financial statements continued
for the year ended 31 december 2014 strategic report corporate governance financial statements
smart metering systems plc
annual report and accounts 2014 47
21 financial risk management continued
capital management
capital is the equity attributable to the equity holders of the parent the primary objective of the group’s capital management 
is to ensure that it maintains a strong credit rating and healthy capital ratios in order to support its business and maximise 
shareholder value the group manages its capital structure and makes adjustments to it in light of changes in economic 
conditions to maintain or adjust the capital structure the group may adjust the dividend payment to shareholders sell 
assets return capital to shareholders or issue new shares
the group monitors capital on the basis of a leverage ratio this ratio is calculated as net debt divided by ebitda net debt 
is calculated as total borrowings less cash ebitda is calculated as operating profit before any significant nonrecurring 
items interest tax depreciation and amortisation
22 deferred taxation
the movement in the deferred taxation liability during the period was
2014 2013
£’000 £’000
opening deferred tax liability 3395 2510
increase in provision through consolidated statement of comprehensive income 1000 885
closing deferred tax liability 4395 3395
all movements identified have gone through the statement of comprehensive income
the group’s provision for deferred taxation consists of the tax effect of temporary differences in respect of
2014 2013
£’000 £’000
excess of taxation allowances over depreciation on property plant and equipment 5330 3385
tax losses available 37 38
deferred tax asset on share options 2021 —
deferred tax on intangible acquired as part of upl 1137 —
fair value of interest rate swaps net 14 48
4395 3395
the deferred tax included in the consolidated statement of comprehensive income is as follows
2014 2013
£’000 £’000
accelerated capital allowances 1945 597
tax losses 1 201
deferred tax asset on share options 2021 —
movement in fair value of interest rate swaps 55 87
130 885  financial st a tements
smart metering systems plc
annual report and accounts 2014 48
23 related party transactions
a number of key management personnel hold positions in other entities that result in them having control or significant 
influence over the financial or operating policies
a number of these entities transacted with the group in the reporting period the terms and conditions of the transactions 
with key management personnel and their related parties were no more favourable than those available or which might 
reasonably be expected to be available on similar transactions to nonkey 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 £41500 2013 £41500 2012 £41500 to the directors’ pension scheme 
eco retirement benefit scheme for the use of certain premises alan foy is a trustee of the scheme at the yearend date 
an amount of £4150 2013 £4150 2012 £4150 was outstanding in this regard
during the year the group paid dividends to alan foy of £226694 and paul dollman and miriam greenwood of £94 each
remuneration of key management which includes executive and nonexecutive directors together with certain 
management personnel
2014 2013
£’000 £’000
salaries and other shortterm employee benefits 1122 1101
24 share capital
2014 2013
£’000 £’000
allotted and called up
85575452 ordinary shares of £001 each 2013 and 2012 83877872 ordinary shares of £001 each 856 839
on 14 april 2014 1246277 shares were issued in part consideration of acquisition of utility partnership limited
on 23 september 2014 401176 ordinary share options were exercised and subsequently sold by staff
on 13 october 2014 7175 ordinary share options were exercised and subsequently sold by staff
on 27 october 2014 518 ordinary share options were exercised and subsequently sold by staff
on 23 december 2014 42434 ordinary share options were exercised and subsequently sold by staff 3500 of them 
by glen murray
25 sharebased 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 £30000 per employee 
no option can be exercised within three years of its date of grant
notes to the financial statements continued
for the year ended 31 december 2014 strategic report corporate governance financial statements
smart metering systems plc
annual report and accounts 2014 49
25 sharebased payments continued
unapproved plan
the unapproved plan is open to any employee executive director or nonexecutive director of the company or any other 
group company who is required to devote substantially the whole of his time to his duties under his contract of employment 
except in certain specified circumstances no option will be exercisable within five years of its grant
plan
at 
1 january
2014 granted exercised lapsed
at 
31 december 
2014
exercise 
price
 pence
date
exercisable
expiry
date
csop 565794 — 336503 — 229291 760 15714 15721
csop 39088 — — — 39088 1535 28515 28522
unapproved 2979060 — — — 2979060 600 20616 20621
unapproved 1162629 — — — 1162629 1535 28517 28522
unapproved 179375 — 114800 — 64575 600 28613 28623
unapproved — 1430965 — — 1430965 3500 121114 121124
valuation
the fair value of all options granted has been estimated using the blackscholes option model taking into 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 2014
unapproved plan
option strike price £ 350
share price £ 395
the weighted average fair value of share options issued during the year was £350
share incentive plan
the company introduced the smart metering systems share incentive plan “the sip” in october 2014 participants which 
could include directors in the sip are entitled to purchase at market value up to a prescribed number of 1p ordinary shares 
in the company at the end of each month for which they will receive a like for like matching share 
a total of 24382 were purchased in the market by the 163 employees who participated in the sip during the year 
as 31 december 2014 the sip held 24382 shares on their behalf
26 other reserve
this is a nondistributable reserve that initially arose by applying merger relief under s162 ca06 to the shares issued in 2009 
in connection with the group restructuring this was previously recognised as a merger reserve under uk gaap under ifrs 
this has been classed as an “other reserve” additionally the premium arising on the issue of shares as part of the acquisition 
of utility partnership limited has been credited to this reserve as required by companies act 2006
27 commitments under operating leases
the group has entered into commercial leases for office space these leases have lives between one and 15 years with no 
renewal option included in the contracts there are no restrictions placed upon the group by entering into these leases
future minimum rentals payable under noncancellable operating leases as at each year end are as follows
2014 2013
£’000 £’000
future minimal commitments under operating lease agreements are as follows
payable within one year 271 205
payable within two and five years 375 411
payable after five years 259 135
905 751
28 ultimate controlling party
there is no ultimate controlling party by virtue of the structure of shareholdings in the group
29 contingent liability
the group is the subject of an ongoing hmrc enquiry in respect of payments made to employee benefit trusts in prior 
years whilst the outcome of the enquiry is as yet uncertain the beneficiaries of the trusts have provided the company 
with indemnities against any additional tax that may become payable as a result of these enquiries  financial st a tements
smart metering systems plc
annual report and accounts 2014 50
2014 2013
notes £’000 £’000
fixed assets
investments 2 16902 —
current assets
debtors 3 — 11241
creditors
amounts falling due within one year 4 492 —
net current liabilitiesassets 492 11241
total assets less current liabilities 16410 11241
capital and reserves
called up share capital 6 856 839
share premium 7 13548 8971
profit and loss account 7 2006 1431
equity shareholders’ funds 16410 11241
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 march 2015 
parent company balance sheet 
as at 31 december 2014 strategic report corporate governance financial statements
smart metering systems plc
annual report and accounts 2014 51
notes to the parent company financial statements
for the year ended 31 december 2014
1 parent company accounting policies
basis of accounting
the parent company financial statements have been prepared under the historical cost convention and in accordance 
with applicable accounting standards
no separate income statement is provided for smart metering systems plc as permitted by section 4093 
of the companies act 2006
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 nondiscounted 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
group
companies
company £’000
cost
at 1 january 2014 —
additions 16902
at 31 december 2014 16902
net book value
at 31 december 2014 16902
at 31 december 2013 —  financial st a tements
smart metering systems plc
annual report and accounts 2014 52
2 investments continued
subsidiary undertakings
country of proportion of 
incorporation holding shares held nature of business
all held by the company
uk gas connection limited scotland ordinary shares 100 gas utility 
management
uk meter assets limited scotland ordinary shares 100 gas utility 
management
uk data management limited scotland ordinary shares 100 data management
ukma af limited england ordinary shares 100 leasing
utility partnership limited wales ordinary shares 100 electricity utility 
management
upl italia srl italy ordinary shares 100 electricity utility 
management
 the shareholding in this company is indirect via a subsidiary company
3 debtors amounts falling due within one year
2014 2013
£’000 £’000
amounts owed by group undertakings — 11241
— 11241
4 creditors amounts falling due within one year
2014 2013
£’000 £’000
other creditors 492 —
5 related party transactions
the company had no material related party transactions to disclose 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
2014 2013
£’000 £’000
allotted and called up
85575452 ordinary shares of £001 each 2013 83877872 ordinary shares of £001 each 856 839
7 reserves
profit and share share
loss reserve premium capital
£’000 £’000 £’000
as at 1 january 2014 1431 8971 839
retained earnings 2750 — —
share issue — 4577 17
dividend paid 2175 — —
as at 31 december 2014 2006 13548 856
notes to the parent company financial statements 
continued
for the year ended 31 december 2014   smart metering systems plc annual report and accounts 2014
smart metering systems plc
2nd floor  
48 st vincent street  
glasgow g2 5ts
wwwsmsplccom


Summary:
 strategic report
smart metering systems plc
annual report and accounts 2014 10
we are delighted with the continued strong performance 
of the business for the year ended 31 december 2014 
recurring income now represents 53 of our total revenue 
compared to 49 of total income in 2013 as we see the 
benefits of our business model of building up the recurring 
income streams the recurring revenues are as a result of 
the longterm nature of our contracts which provide an 
indexlinked revenue stream 
acquisition of upl
on 14 april 2014 sms acquired the entire issued share 
capital of upl with this acquisition sms has doubled the 
number of recurring income streams and we are growing 
the electricity meter portfolio further increasing our 
recurring rental revenue 
the acquisition is in line with the strategic vision of sms to 
become the leading independent supplier of smart metering 
solutions to suppliers in the utility sector with the highest 
levels of customer service 
upl is now operationally fully integrated into sms resulting 
in additional income streams across both segments and is 
driving acceleration of the overall strategic vision of sms’ 
enlarged business in three key areas
 › drive growth opportunities through connections metering 
and data management services to an expanded gas and 
electricity customer base
 › position our business as a dual gas and electricity 
meter provider for the uk’s future smart meter roll out 
programme and
 › provide further opportunities to expand internationally
in the first year of acquisition sms has already added clients 
including dong limited and tgp to our electricity division 
and extended existing contracts upl’s existing portfolio 
included customers such as centrica sse and edf as well 
as network rail vodafone santander sainsbury’s o2 uk 
and cable  wireless
in addition to contract wins and extensions already 
secured through the dual fuel gas and electricity service 
offering there is the further potential to work with new 
water industry customers 
sms also believes there is scope to expand internationally 
through upl’s energy management propositions already 
established in italy and the caribbean and sms’ adm™ device 
which is currently undergoing trials across three continents 
chief executive officer’s statement 
highlights
 › increase in recurring revenues
 › 29 increase in meter portfolio
 › contract additions and extensions
 › ic
 › domestic
 › contracts in place with companies 
representing over 80 of the 
total ic market and over 40 
of the domestic market 
 › underlying earnings per share 
increased by 77
 › final dividend of 188p per 
ordinary share
  underlying earnings per share is profit after taxation 
but before exceptional items and intangible amortisation 
divided by the weighted average number of ordinary 
shares in issue
alan foy
chief executive officer strategic report corporate governance financial statements
smart metering systems plc
annual report and accounts 2014 11
operational review
during 2014 we made substantial progress across all 
segments of the business following a strong first half where 
we saw our gas meter portfolio break the halfmillion mark with 
an increase of 65000 growth accelerated in the second half 
to reach a total of 607000 gas meters with a further 73000 
added or a 29 increase year on year the number of electricity 
meters more than doubled to 12000 from 5000 in 2013 bringing 
our overall gas and electricity meter portfolio to 619000 
the progress we have made in establishing longterm recurring 
revenue was underlined by an increase in yearend annualised 
recurring meter rental revenue of 41 to £219m and data 
provision sales from our adm™ device more than trebled 
to reach the £1m level through the establishment of our 
electricity services we have added an additional two recurring 
revenue streams where meter recurring rent doubled to 
£567000 and data recurring income grew 29 to £27m 
for the first time recurring income now makes up the 
majority of our total revenue
industrial and commercial meters
we were delighted to announce a number of new contracts 
or contract extensions with major customers during 2014 
we more than doubled our ic gas meter portfolio to 65000 
meters from 27000 meters in 2013 in the gas market we 
secured a significant contract with bgb while in the electricity 
market we won contracts with opus and dong limited 
both existing customers of sms more recently in the first 
quarter of 2015 in the electricity market we were awarded 
contracts with bes utilities and with tpg part of total sa 
which is a current client of our gas services 
the increase in customer base during 2014 now means that 
sms has contracts in place with over 80 of the total ic 
meter market
once installed these meters will be on sms’ longterm 
index linked contracts and will provide recurring revenue 
for the lifetime of the assets expected to be 25 years
the size of ic meters is typically much greater than that 
of domestic meters and therefore the revenue per meter 
is substantially higher the equivalent number of domestic 
meters for these 22000 contracts would be in the order 
of 300000
adm™
the adm™ device is sms’ advanced metering solution which 
allows for remote meter reading on a halfhourly basis and has 
been designed in line with our own customer requirements 
sms has deployed more than 25 times the number of adm™ 
devices in the uk in 2014 up to 41000 from 16000 in 2013 
the company remains confident that its adm™ device technology 
has a broad range of potential applications in gas electricity 
water and lpg markets and has been continuing with trials 
of the device internationally
the ability of remote reading alongside sms’ full service 
capability in the ic market provides a major opportunity 
for the company in extending the service we offer and the 
ability to seek out further markets for our overall service 
as over the last two years all new contracts announced in 
2014 allow for the introduction of the adm™ device into ic 
premises during meter replacement programmes
domestic meters
we grew our domestic gas meter portfolio by 24 
from 437000 in 2013 to 542000 by 31 december 2014 
our combined gas and electricity full service offering has 
strengthened our position and sms’ opportunity in the 
domestic meter market ideally positioning the business for 
the current uk domestic smart meter roll out programme 
while we are well placed to capitalise on this roll out of smart 
meters in the uk domestic market our future strategic growth 
is not reliant on this taking place either in terms of capturing 
market share or in terms of increasing revenue growth
other markets
we were very pleased to announce during 2014 that 
following an extensive accreditation process the products 
sms has developed for the uk water market have passed 
all tests and received full accreditation
alan foy
chief executive officer