Carbon reduction has been the driving purpose of SMS since it was admitted to AIM in 2011. Now its Green Economy Mark accreditation is building up its profile and visibility among investors.

25 energetic years

Starting life in 1995 as a gas connections company – the same year as the launch of AIM – Glasgow-based SMS has grown into an enterprise that is at the forefront of transforming and decarbonising the UK’s energy networks. And, says its CEO Alan Foy, the opportunities in front of the business are “incredible.”

The company finances, installs, manages and maintains smart meters. At the end of 2019 there were 16.5m smart and advanced meters operating in the UK, leaving more than 36m still to be exchanged. That spells a full order book. “There is tremendous growth on the smart meter front,” says Foy. (The government’s goal is to have 85% of all meters being smart by the end of 2024).

And SMS is already embracing a far wider role in the decarbonisation of the UK by providing end-to-end energy management services – such as grid connections and energy monitoring and targeting – to a customer base that includes energy utilities and telecoms companies, Network Rail and local authorities. For example, it is a lead consultant and delivery partner for the Orkney Energy Project, which aims to make the island 100% green.

"Our business exists to reduce carbon, and we can create a very valuable business in the process of doing this."

Alan Foy

CEO, SMS plc

Investing for the long term

"The UK is the first major economy to adopt net zero emissions by 2050, mainly by electrification strategies,” says Foy. “A decentralised and decarbonised energy system as well as substantial capital will be required to meet that target."

As SMS identifies opportunities for its customers to reduce their carbon, so they will also require new assets – energy efficiency systems (such as LED lighting, data and controls), energy storage, distributed generation and EV charging infrastructure. These require investment, so SMS has established a partnership agreement with the Columbia Threadneedle Sustainable Infrastructure Fund (“ESIF”) to provide additional balance sheet heft. “We have always brought innovative solutions to the market and now our partnership with ESIF provides capital support,” says Foy.

The partnership will enable SMS to make further inroads into the domestic market. ‘We can help reduce consumers’ bills and, through efficient use of renewable energy, have the UK getting to zero carbon quicker than 2050.”

16.5m

At the end of 2019 there were 16.5m smart and advanced meters operating in the UK, leaving more than 36m still to be exchanged.

“We have been committed to the green economy for some time so I was delighted that we were accredited with a Green Economy Mark. It clearly demonstrates our credentials to investors.”

Green Economy Mark

Carbon reduction, says Foy, is not “a percentage of our business – it’s 100 per cent. Everything that we do is about reducing carbon.” So it was a natural step to seek to gain the Green Economy Mark from London Stock Exchange. The Green Economy Mark identifies London-listed companies and funds that generate between 50% and 100% of total annual revenues from products and services that contribute to the global green economy. It includes but also looks beyond ‘pure-play’ green or clean technology companies to highlight those of all sizes, across all industries, driving the transition to a sustainable, low carbon economy – such as SMS.

“It is a must have, not just a desirable badge. We have been committed to the green economy for some time so I was delighted that we were accredited with a Green Economy Mark. It clearly demonstrates our credentials to investors,” says Foy. The Green Economy Mark is a central element in the company’s discussions about its wider ESG credentials and is making the company increasingly attractive to new investors.

About half of the investors attending our roadshows are prospective new ones, he says. “We have had many new investors coming into our stock as they can see that we are a well-positioned ESG business.”

Foy is certain that this is the direction of travel. “All companies considering an IPO will need to demonstrate not just that they comply with high ESG standards but that they live and breathe these standards. You can’t just tick the boxes.”

Public market credentials and international growth

Alan Foy led the flotation of SMS on AIM in July 2011 and believes that the company would not be in its current position had it not been a public company.

He cites the example of gaining trials in Australia and Malaysia for its data logging ADM product. “As a public listed company on AIM, public institutions in other countries can see that your business is governed properly. We could have spent too much time trying to convince them that as a private business we could look after their data. The badge of being a public listed company – with strong ESG credentials – really helps.”

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