Sprue Aegis (OFEX:SPRP) are an ISDX listed company that are, in their own words, "one of Europe's leading home safety products suppliers and manufactures one of the world's smallest CO sensors for use in CO alarms." For those who aren't aware, ISDX is an even smaller version of the AIM market run by ICAP. This is indeed a company listed on a market most aren't even aware exists - an ideal situation for creating big security mispricings. I believe SPRP to be one such mispriced security.

@Glasshalfull has done a write up fairly recently on Sprue Aegis over at the Motley Fool which covers a lot of the background to Sprue. The one big event since that write up that hasn't been covered is a 90p a share offer by a 30% shareholder, Jarden Corporation. Before I get in to all that though, let's look at the background of this company.

Graham Whitworth, the CEO and Nick Rutter, the MD are long timers at Sprue with Graham joining as CEO and Chairman in 2001 and Nick being a founder in 1998. The FD, John Gahan, joined in 2010 with a background from KPMG. Sprue is an owner-operator company, with insiders and their family owning 25.2% of the business.

In that time, management have built sales from zero to £37.2m last year. The CAGR of sales for the past five years is 38.6% and the most recent trading statement indicates that H1 sales are up 28% on last year. Sprue have been included in the SundayTimes FastTrack100 (for the 100 fastest growing companies in the UK) for five consecutive years. Sales growth is being driven by a series of recent significant contract wins with distributors such as B&Q, British Gas and Baxi. Management credit the impressive performance of the company to significant investment in their product range by aiming for best-in-class products. Sprue have 68 patents granted and a further 27 pending. Stiftung Warentest, the German equivalent of 'Which?' magazine, recently rated their ST-620 product as having the joint highest score out of all the smoke alarms they tested, beating products from larger competitors such as Kidde. This product investment is paying off as Sprue win contracts and take market share from the incumbents.

Sprue operate…

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