Energy Assets puts extra £40m into meters

John McMorrow hailed the very significant contract

The Livingston-based firm, which floated on the London Stock Exchange in 2012, said it would install half of the  advanced meters that the energy giant is upgrading its business customers with.

Finance director John McMorrow told The Scotsman that the firm would invest about £40 million to install the British Gas meters. He said: “It’s a very significant contract for the business. It gives us a fantastic opportunity to increase recurring revenues in the company.”

Energy Assets already draws revenues from just over 100,000 meters installed since it started out in 2005, at a cost of around £78m.

The British Gas business  meters will have a 20-year contracted term, including an  annual price adjustment to take account of inflation.

The number of meters involved was not released due to commercial confidentiality, but analysts at Numis estimated that British Gas has a total of between 100,000 and 120,000 business customers.

The broker estimates that the installation rate would be about 10,000 a year up to the end of the decade, on top of the 21,000 a year that Energy Assets is already fitting for existing clients Corona and Gazprom.

Analyst Steve Woolf said: “The award represents a step-change to [Energy Assets’] meter installation volumes in the short term, and secures a long-term recurring revenue stream. We remain positive on the long-awaited win, upgrade to ‘buy’ from ‘add’, and increase our  target price to 530p, from 380p previously.”

McMorrow confirmed that the meters would be installed in time for regulatory changes in 2019, and said that the group would add to its current workforce of about 150 to cope with the work. He said the contract would begin later this year and gather pace in the next financial period.

McMorrow added that the company will attempt to win any other similar contracts that arise in the market.