Good morning!

Sorry for the slow start today.

Candidates for coverage:

Any other requests? Please let me know. (Edit: Switched in Elecosoft (LON:ELCO) to the above list, took out Spaceandpeople (LON:SAL) as too small.)



Sprue Aegis (LON:SPRP)

Share price: 210p (unch.)

No. of shares: 46 million

Market cap: £97 million

Half-year report

This is a maker and marketer of fire alarms and carbon monoxide detectors which has been making decent share price gains in 2017 (up from c. 180p in January).

It had some damaging inventory problems in 2016 which it now appears to have moved on from, and has recovered to profitability. Basic EPS is 2.8p per share, up from a 1.3p loss in H1 2016.


  • Group revenue of £26.0m (H1 2016: £25.9m)
  • Adjusted operating profit* of £1.5m (H1 2016: operating loss* £0.9m)
  • Gross margin pre-BRK distribution fee up by 6.2% to 31.7% (H1 2016: 25.5%)

Note that the BRK distribution fee is a specific payment to one of its suppliers in exchange for the right to distribute that company's products. The agreement with that supplier is ending next year, so it's probably irrelevant to analysis of Sprue's future value!

Sprue has net cash of £10 million and the dividend is maintained.

Adjusted operating profit is before £0.2 million of share-based payments, so I would make sure to also deduct them from the profit figure.

The highlights also mention that inventory has reduced - making the probability of another stocking mishap less likely! Continuing to reduce inventory remains an objective, so hopefully the probability will reduce even further.

I won't pretend to be an expert in the alarm industry but the strategic report sounds quite promising, with new partnerships and products on the way, e.g. "Europe's first domestic battery powered gas alarm"!

Today's share price is unchanged because ultimately, today's numbers and the outlook are in line with expectations:

Our product roadmap out to 2020 provides…

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