Proving the Business Case for the Internet of Things

Smart Metering Systems agrees $23.5 million takeover of Utility Partnership

Iain Morris
April 22, 2014
UK-based Smart Metering Systems has agreed a £14 million ($23.5 million) takeover of Utility Partnership as it looks to embellish its portfolio of services in advance of a deployment of smart meters across the entire country.

The deal is to comprise £9.7 million in cash – funded through a new corporate debt facility – and the remainder in shares.

Smart Metering Systems (Glasgow, UK) operates and maintains metering systems and databases on behalf of energy providers and brokers and says the Utility Partnership business is highly complementary to its own.

While it has traditionally focused on serving the gas sector, most of Utility Partnership’s (Cardiff, UK) work has been carried out for electricity customers.

Through the acquisition, Smart Metering Systems hopes to position itself as the leading independent provider of smart metering services to the UK’s utility sector, with UK authorities requiring all households and businesses to install smart meters by 2019.

“The acquisition of UPL will enable Smart Metering Services to expand its service offering across the gas and electricity sectors, and the enlarged group will now offer a fully integrated service in these markets,” said Alan Foy, chief executive of Smart Metering Systems. “It positions the enlarged company as a dual gas and electricity service provider and establishes a base from which we can enhance our existing respective client relationships.”

“It will ensure that SMS is well positioned with suppliers of domestic gas and electricity for the future UK domestic smart metering roll out,” he added.

Specifically, Smart Metering Services says that following the takeover it will be able to develop an end-to-end “dual fuel service”, incorporating connections, metering assets installation, ownership and management and data management services for gas and electricity customers.

It also expects to be able to work with new water industry customers and address opportunities in other geographic markets, including Italy and the Caribbean, following the acquisition.

Utility Partnership reported gross profit of £3.7 million for its 2013 financial year, on revenues of about £11.1 million, and Smart Metering Services reckons the takeover will be “immediately earnings accretive”.

Last month, Smart Metering Systems reported profit growth of 53% for 2013, flagging net income of £6.6 million and revenues of £27.9 million.

Under the transaction, Utility Partnership will become a new electricity division within Smart Metering Systems led by Rhys Wynne, the co-founder of Utility Partnership.

Gary Mawer, the other co-founder, is set to retire following the completion of the deal, but the electricity division that replaces Utility Partnership will continue to operate from the company’s current headquarters in Cardiff.

Meanwhile, Smart Metering Systems will set up a new water division to promote water services in both the UK and international markets.
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