Strong H2 reduces impact of tough year for home safety firm Sprue Aegis

Graham Whitworth, executive chairman of Sprue Aegis

A strong second half has helped offset – but not turnaround – a difficult year for home safety products supplier Sprue Aegis.

The Coventry firm has reported full year sales down from £88.3m to £57.1m, with adjusted operating profit falling to £2.2m (2015: £12.8m) – at constant foreign exchange rates with 2015 this would have been £1.7m (2015: £12.8m).

The fall in sales was primarily due to reduced demand in France (post- implementation of new smoke alarm legislation in 2015) and delays in product certification in Germany.

Nevertheless, the business was much stronger in the second half of the year with total sales in Germany and UK Retail significantly ahead of the previous year.

H2 2016 sales into Germany increased 165% compared to H2 2015, underpinned by the launch of the new FireAngel products in the second half. Due to the staggered introduction of regional regulation in Germany and replacement cycles, the board said it expected Germany to remain a robust market going forward and to deliver sustainable profitable growth for the business.

The firm’s balance sheet remains strong with £14.3m of cash at the year-end (2015: £22.4m) and no debt. In addition, total warranty costs incurred in 2016 were in-line with the board’s expectations.

It said the acquisition of Intamac Systems’ source code with development rights, for a maximum cash consideration of £2.8m, had expanded the firm’s addressable market into connected home products, which the board believes is a key growth area.

Sales of connected home products are already underway in the UK and Germany which enable customers to remotely monitor their connected devices from their smartphone, tablet device or interoperate with other smart devices.

Sprue is looking to use the data it collects from these products to not only detect fires but also to identify properties at an elevated risk of experiencing a fire in the future.  It believes this is a major development for the company as it significantly extends its technical capability and provides an opportunity to sell a wide range of internet-enabled products and services as part of a new connected home strategy.

Over time, it said this had the potential to deliver recurring revenues for the business.

Graham Whitworth, executive chairman of Sprue, said: “Sprue has emerged fitter, leaner and better placed to capitalise on a number of pivotal strategic initiatives despite facing a number of challenges during 2016.

“Our strong performance in the second half of last year gives a clear indication of the positive momentum we are now experiencing across the business.

“We have made a solid start to 2017, which serves as a sound foundation to announce a number of transformational initiatives, which we believe will provide a springboard to expand our technological and operational footprint into new markets and territories and greatly enhance the group’s earnings potential.”

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