Smart Metering Systems plc (SMS) has acquired three companies: CH4 Gas Utility and Maintenance services Limited, Trojan Utilities Limited and Qton Solutions Limited for a total consideration of up to £6.895 million.
CH4 will add approximately 100 engineers and 60 contractors, of whom approximately 40 are domestic smart gas and electricity installation engineers, alongside the approximately 80 domestic smart gas and electricity installation engineers from Trojan Utilities, which will significantly enhance SMS’ capability. Out of the approximately 1.6 million domestic smart meters installed so far in the UK, they together represent approximately 23% (368,000) of that figure, independent of SMS. Alongside these installation businesses, IT systems specialist Qton Solutions will help to serve SMS’ existing and future contractors, most of whom use its systems already.
CH4 Gas Utility and Maintenance Services Limited
CH4 is a specialist in traditional and smart gas and electricity metering installations to the domestic and I&C sectors. It operates throughout the UK and is a current service provider to SMS.
Established in 2011, for the year ended 28 February 2015, CH4 reported turnover of £7.64 million with gross profit of £2.95 million and EBITDA (after exceptional items) of £0.89 million.
The initial consideration for CH4 is up to £2 million in SMS shares. In addition, a further up to £0.995 million may be payable through an earn out over three years.
Trojan Utilities Limited
Trojan Utilities is an installation service provider to energy suppliers in the UK and delivers domestic smart gas and electricity trained and accredited installation services. Established in 2011, Trojan Utilities has over 80 fully trained engineers operates throughout the UK and has installed over 270,000 gas and electric domestic smart meters, representing over 17% of the national smart metering installed to date. It is currently installing over 3,000 domestic smart meters per week outside of its SMS business.
For the year ended 31 October 2014, Trojan Utilities recorded turnover of £2.86 million with gross profit of £1.26 million and EBITDA of £0.5m. Trojan Utilities has seen additional growth in 2015 with estimated turnover for year ended 31 October 2015 of £5.76 million, gross profit of £2.13 million but with a reduced EBITDA of £0.067 million as a result of increased investment in operational capacity and UK-wide infrastructure.
The initial consideration for Trojan Utilities is up to £0.5 million and is SMS shares. In addition, a further up to £0.5 million may be payable through an earn out over the three years.
Qton Solutions Limited
Established in Cambridge in 2009, Qton Solutions has a team of 17 IT professionals specialising in the provision of work and field management IT systems applications for gas and electricity metering installations for energy suppliers, installation contractors and meter asset managers and owners in the UK with specific applications tailored for domestic dual fuel smart installations.
These systems have already been responsible for the completion of over 1 million meter installations and are widely used by a number of domestic smart meter installers, energy suppliers, and meter asset owners and managers including SMS.
For the year ended 31 March 2015, Qton Solutions reported turnover of £0.99 million with gross profit of £0.34 million and EBITDA (after exceptional items) of £0.23 million, backed with annually recurring licence fee income on it software products of over £0.8 million.
The consideration for Qton Solutions is up to £2.9 million in SMS shares.
Commenting on the acquisitions, Alan Foy, Chief Executive Officer, said:
“The acquisitions of CH4 and Trojan Utilities are part of the Company’s strategy to gain direct control of a large proportion of our installation capacity for ongoing delivery of our customer contracts in the I&C and domestic meter markets. This will provide confidence to customers in our delivery model for the new domestic smart metering market. In addition, the acquisition of Qton Solutions allows us to gain direct control and ownership of all software applications used by SMS.”