GLASGOW-based Smart Metering Systems has returned to the acquisition trail south of the border announcing deals to buy three companies for up to around £7 million in total and posted a near 60 per cent increase in annual profits.

The company made £17.5m pre-tax profit in the year to 31 December compared with £11m in the preceding year as it capitalised on regulatory changes in the UK that are intended to reduce carbon emissions.

Smart Metering Systems installs and manages sophisticated meters for energy firms, who will have to make them available to millions of householders and businesses by 2020.

Chief executive Alan Foy said given the scale of the programme it would not be surprising to see some delay, even though the Government has committed to the roll–out timetable.

However, Aim-listed SMS has positioned itself to cope with a big increase in workloads by using two of the acquisitions announced yesterday to secure access to a big pool of skilled engineers. The deals will result in a dramatic increase in employee numbers at the firm.

The two firms, CH4 Gas Utility and Maintenance and Trojan Utilities, specialise in installing meters and already do some work for SMS. They employ a total of 180 engineers. Smart Metering Systems had an average 310 employees last year.

Mr Foy noted: “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 (industrial and commercial) and domestic meter markets.”

The acquisition of the third company, Qton Solutions, allowed the firm to gain direct control and ownership of software applications it uses for work in the field.

The company previously used the £14m acquisition of Cardiff based Utility Partnership in 2014 to grow in the electricity market after focusing on gas meters. It said yesterday the business has been integrated successfully.

The company’s latest results suggest Smart Metering Systems has carved out a lucrative niche in a fast-growing specialised market which is set to become very big.

In the year to December the company increased revenues by 27 per cent to £53.9m from £42.4m.

The success in the latest year was accompanied by a 15 per cent increase in the total remuneration of Mr Foy, the company’s highest paid director, to £488,000 from £423,000.

The company charges energy firms rentals for meters which could be in operation for years. It also supplies technology that can be used for tasks such as monitoring usage remotely, such as the ADM device.

Mr Foy noted the potential for some 22 million gas meters and 27 million electricity meters to be rolled out in the UK domestic market if official targets are to be met, with a substantial proportion of 3.7m meters used by the country’s businesses still to be upgraded.

The company is one of only four companies operating in the market for smart domestic meters.

In January it signed agreements to supply domestic meters for five independent energy firms, including Our Power.

The company underlined its growth ambitions earlier this month by securing a further £45m bank funding, giving it £150m firepower for expansion.

Smart Metering Systems said it will pay up to £3m in shares for CH4, which is based in Yorkshire. The company had £7.6m sales in the year to February 2015.

SMS will pay up to £1m in shares for Lancashire-based Trojan, which had around £5.8m revenues in the year to October.

It will pay up to £2.9m for Qton. The Cambridge-based firm had £1m turnover in the year to March 2015.

The number of meters SMS manages increased by 21 per cent in 2015, to 752,000 from 619,000.

The number of data monitoring systems the company supplies increased by 52 per cent annually, to 227,000 from 149,000.

Mr Foy said: “2016 has started well with the signing of five new domestic smart meter agreements along with three important strategic acquisitions to control our installation capacity ... We remain confident in our outlook for the business and market development in 2016.”

Shares in Smart Metering Systems closed down 0.5p at 390.5p, giving it a market capitalisation of £336m.

The total boardroom paybill rose 11 per cent annually to £842,000 in 2015, from £759,000 the preceding year.