Sprue Aegis Share Discussion Threads

[glasshalfull] 26/7/2016 15:29

Back from hols.

Reassuring update from SPRP while I was away...essentially the outcome for H1 2016 resulted in a £1 million improvement on expectations.

I was also pleased that they are flagging an unchanged 2.5p interim dividend and therefore strong possibility of maintaining an 8p dividend for the full year. Sign of confidence IMHO.

Stockdale have raised their price target from 200p to 250p on the back of this update but maintain 2016 profit figures which I think prudent at this stage given the present macro conditions which change markedly on an almost daily basis at the moment.

The positives are clearly the growth in UK sales & also with Pace Sensors CO detectors, coupled with German certification during the period. I believe that Stockdale have increased sales forecasts from £55m to £58m for 2016 and continue to take a "conservative stance" on potential upside from Germany.

I provided 2016 forecasts a few posts back and will update the header when time permits with slight upgrade in sales forecast for the full year.


Regards,
GHF

[the big fella] 22/7/2016 10:53

Purely my take on things at the moment:
June trading is a plus, can that be continued for the remainder of the year? Maybe or maybe not….but it certainly leaves room for some uplift in this year’s numbers as they haven’t changed.
I see no reason why next year can’t see a return to 2014 levels of profitability, which puts us on a single digit forward PE.
Euro exchange rate will help. USD exchange rate will not. US election uncertainty might help weaken the USD a bit but who knows.

[davebowler] 22/7/2016 10:34

Trading update

Sprue (AIM: SPRP), one of Europe's leading home safety products suppliers, today issues a trading update ahead of the release of its unaudited interim results for the six months ended 30 June 2016 ("H1 2016"), which are expected to be announced in late September 2016. All figures set out in this announcement are subject to review by the Group's auditors.

The Board expects sales for H1 2016 to be approximately GBP25.9 million (H1 2015: GBP56.5 million) and to report an operating loss* of GBP0.9 million (H1 2015: GBP9.0m operating profit*). Due to stronger than expected trading in June 2016, the operating loss* for H1 2016 is significantly lower than the Board's expectations as previously announced in the Company's final results on 26 April 2016.

While total sales in H1 2016 were GBP30.6m lower than in H1 2015, sales into France in H1 2016 declined by GBP33.7m compared to H1 2015, which was partially offset by growth in UK sales and at Pace Sensors.

Net cash at 30 June 2016 of GBP14.7 million (2015: GBP28.9 million) was adversely impacted mainly by the H1 2016 operating loss* and the GBP7.0m payment for buffer stock acquired in Q4 2015. Sprue remains debt free (30 June 2015: nil debt).

The Board is pleased to announce that at the time of the announcement of the interim results for the six months ended 30 June 2016, it intends to declare a maintained interim dividend of 2.5 pence per share.

Outlook

The Company continues to invest in product innovation and technology to expand and improve the Group's product range and enhance its competitive position in each of the markets that it serves.

Subject to there being no further net adverse foreign exchange rate movements, the Board expects Sprue's sales and operating profit for the year ending 31 December 2016 to be approximately GBP58.0 million and GBP1.9 million respectively.

A further update on trading will be provided at the time of the release of the Company's H1 2016 results, which are expected to be announced in late September 2016.

*Operating loss is stated after a GBP0.2m restructuring charge (H1 2015: GBPnil) and before share based payments charge of GBP0.3m (H1 2015: GBP0.2m)

[rcturner2] 08/7/2016 09:36

Glaws, this is actually a massive potential market.

In the UK, the longer a vulnerable person can be kept in their own home, the bigger the savings for the NHS and social care. I personally know there is a lot of VC activity in an all-in-one monitoring solution that can be installed in a persons home and tell when they have stopped moving etc. The installation cost of such a system could easily be £1000 and this would still save the state a huge amount of money if it means that person stays in their own home just 12 months longer, for example.

[glaws2] 08/7/2016 09:05

GHF

I'm interested in your take on the connected home products. I can see this working very well where there is a a "big" customer who wishes to monitor many alarms. The position in Germany where there is legislation to check alarms annually and sales are in their tens of thousands to housing associations fits this ideally and must be a winner.

However, in others areas that the company has identified , eg the area of monitoring vulnerable people, I don't see who is going to pay for this in volume. I can't see fire brigades or other public sector organisations (in the UK) having the budgets to do it. Those with a vested interest - eg looking after aged relatives - are going to be singletons and expensive to market to and sell - and there is going to be one big backend to finance to monitor alarms.

I'd be interested in your views.

[the big fella] 07/7/2016 15:04

Which would mean EPS of in excess of 20p. If they do that there is no way we will be at £1.50

[glasshalfull] 07/7/2016 14:46

Speedsgh,

No change from Stockdale who by their own admission, retain a "conservative stance" on forecasts for the next couple of years.

Personally, I'd expect Sprue to achieve results in the range of those we witnessed in 2014 when profit from operations were £10.4m. They achieved this result prior to the explosion in French demand & I'd be disappointed if they weren't back to this profit level in 2017.




Forecasts

2016

Turnover £55m
PBT £2.1m (following a £1.9m loss in H1 2016)
EPS 4.3p
Div 8p (yield 5.4%)
Net cash £15m

2017

Turnover £61.5m
PBT £5.7m
EPS 11.2p
Div 9.0p (yield 6.1%)

Kind regards,
GHF

[speedsgh] 07/7/2016 14:06

Mas/GHF - Hope you don't mind me asking. What are current broker forecasts for EPS/DPS in 2016/2017? When do they currently forecast DPS to start growing again? TIA

[glasshalfull] 07/7/2016 11:50

Pleased to hear Mas. A good yield underpinned by strong b/s and hopefully next year from earnings.

I had some discussion with PJ1 previously (on this thread) on the yield having initiated my investment in the 20p region many years ago. Been a great journey, with fantastic dividend growth since 2009/10... notwithstanding 2016's speed bumps.

I've great faith in SPRP's management team and employees and have every confidence they'll replicate the sort of results we saw in 2014, prior to the unprecedented French demand in 2015. Also have high hopes for the Home Connected offering which should materialise later this year & which has the potential to offer a recurring revenue stream in the future.

Kind regards,
GHF

[masurenguy] 07/7/2016 11:38

Hi G - the annual yield at todays Offer price is 5.33%. However, having first invested in April it will be just over 6% for me this year. :-)

[glasshalfull] 07/7/2016 11:09

Ex-Div today for 5.5p final dividend.

"The Board is recommending the payment of a final dividend of 5.5 pence per share on 22 July 2016 to shareholders on the register on 8 July 2016."

...resulting in10p off the shareprice. LOL.

I've also had the opportunity to speak with management following the positive AGM statement.
The weak £ will certainly benefit the company if it remains at current levels and good to see the NEDS taking a good look at the current structure to ensure best meets Sprue's needs.

Stockdale indicate that the company should finish the year with £15m net cash and hopefully now in a position to fully capitalise on the German retrofit opportunity during the remainder of 2016 and into 2017.

Kind regards,
GHF

[the big fella] 30/6/2016 08:27

Hopefully they can put the recent issues behind them.

[masurenguy] 30/6/2016 07:55

The recent positive progress still continues here! "I am pleased to announce that trading so far this year is slightly ahead of management's expectations with improved sales, in particular, in the UK Retail and the European business units." Graham Whitworth

RNS Number : 7182C
30 June 2016
Sprue Aegis plc

AGM Statement

Sprue (AIM: SPRP), one of Europe's leading home safety products suppliers, is holding its AGM today at which Graham Whitworth, Executive Chairman, will make the following statement:

European product certification received
Further to its announcement on 4 May 2016, the Company confirms that it has received the formal certification paperwork for its two European products containing a Panasonic battery. The Group expects to commence shipment of the products, namely the ST622 and the ST630, into Germany in the second half of I am pleased to announce that trading so far this year is slightly ahead of management's expectations with improved sales, in particular, in the UK Retail and the European business units. As such, and subject to no further major movements in exchange rates, the 2016 as planned.

Trading update
Board expects the Company's operating loss* in the six months ending 30 June 2016 ("H1 2016"), including the impact of the EU Referendum result on exchange rates, to be slightly lower than the £1.9m operating loss* previously indicated. The Board will provide a further update on trading for H1 2016 by the end of July 2016.

Non-Executive Directors' review
Further to the announcement on 18 April 2016, the Company confirms that the Non-Executive Directors have undertaken a detailed review of the operational controls and processes within the business with a resultant set of proposals, the introduction of which will be led by Neil Smith, Group Chief Executive.
In addition, on an on-going basis, the Non-Executive Directors will review progress against an action plan to be developed by Neil Smith. The Non-Executive Directors have also now instigated a broader strategic review of the business, the outcome of which is likely to lead to some further realignment of responsibilities within the Company, to ensure that it operates in a more effective way in future. A further announcement will be made in due course.

*Operating profit / loss is stated before the impact of share based payments charge but after a £0.2m restructuring charge to reduce fixed costs

[melody9999] 13/6/2016 23:03

I think the SPRP share price is likely to remain firm in spite of increased risk of Brexit because weak holders will have sold following the recent battery revelations.

[kinkell] 13/6/2016 08:13

The average tariff on manufactured goods is said to be 3%. If that applies to Sprue then it is highly likely that the currency weakness will outweigh such a tariff. It would be good to ascertain exactly what the tariff is likely to be. Having said that, the chance of EU imposing tariffs on UK seems very remote - it has too much to loose! Also no change is likely for at least two years. It would be interesting to know how the company views the prospect of free trade deals with countries outside EU.

[cockerhoop] 13/6/2016 07:24

WCB,

Are the smoke alarms technically British goods?

As the products are manufactured in China would there be any difference for SPRP in a post Brexit world. I imagine that they are already subject to WTO tariffs.

[the big fella] 13/6/2016 06:48

Its a difficult one. If they a providing a product suppliers want and need then there is an argument that not much will change apart from the continuing weakening of the £ against the EUR(which obviously benefits them enormously). The last time I spoke to the company about it they said it was unclear but they were confident it would not impact there existing supplier relationshops. Uncertainty doesn't help anyone though

[westcountryboy] 13/6/2016 06:36

I have been starting to think which of my smallcap investments would be hit in the event of Britain deciding to leave the EU trade bloc. Sprue would presumably be among them as there would be a high risk of tariffs imposed on British goods in France and Germany. Also, the market inside the EU for health and safety products like these smoke alarms must be much bigger than the market outside, so how easy would it be to find alternative outlets? Exclusion from the single market would be several years down the line and there would be lots of negotiations in the meantime which I suppose could lead to different outcomes, so I don't think earnings estimates for 2016-18 would be affected. In fact the uncertainties over the future on June 24 would be as great as they currently are. However it surely could not be good news.

I don't want a political discussion, please, but strictly an investment related one. I do find it very curious that this topic is hardly discussed! Or if it is being discussed, please point me to the right board!

[gnnmartin] 07/6/2016 13:00

I've just received the annual report. Strangely, it seems to come in two flavours: a glossy annual report and accounts (90 pages), and a stripped down audited final results (32 pages). As far as I can see, the information in the second is contained in the first. Anyone else got any comments on this?

[glaws2] 05/6/2016 17:21

I don't think there will be one - the RNS of 4 May confirmed testing complete.

[masurenguy] 05/6/2016 17:07

Shareprice quietly treading water over the past 4 weeks. I wonder whether there will be an RNS in the pipeline announcing receipt of formal certification for their smoke alarms in the German market.

[tmmalik] 09/5/2016 11:35

I don't think,will take 6-10 weeks to reach £2

[hirikan] 05/5/2016 19:54

This is looking good for £2.00 within a week or two. Might buy in the morning.