European legislation requiring homes in France to be fitted with at least one working smoke alarm resulted in Sprue Aegis (SPRP) delivering record revenues and almost doubling operating profits to £9.6m. Although customers reduced inventories in the more saturated UK market, revenues increased by 114 per cent on the continent as French and German homeowners fitted out their houses with the group's home safety products.
But generating well over half of sales from continental Europe has also exposed Sprue to the weak euro. That and legacy warranty issues saw adjusted gross margins tighten by 1.2 percentage points, sending the shares plummeting by 13 per cent on results day. Every one cent move in the euro-sterling exchange rate leads to a £0.3m-£0.4m change in group revenues and profits, calculates brokerage Westhouse Securities. Meanwhile, management warned that its supplier, Jarden, may have to relocate its operations, as the Chinese government considers building a railway line through its current facility.
These headwinds took the shine off a significant order book in France. Yet chairman Graham Whitworth is confident about Sprue's growing product range and ongoing investment into wireless technology, which enables the remote monitoring of products over the internet.
Westhouse Securities has slashed its adjusted pre-tax profit forecasts by 3 per cent to £10.2m in response to the currency problems.
| SPRUE AEGIS (SPRP) | ||||
|---|---|---|---|---|
| ORD PRICE: | 298p | MARKET VALUE: | £136m | |
| TOUCH: | 290-305p | 12-MONTH HIGH: | 357p | LOW: 210p |
| DIVIDEND YIELD: | 2.7% | PE RATIO: | 17 | |
| NET ASSET VALUE: | 61p | NET CASH: | £15.9m | |
| Year to 31 Dec | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2010 | 29.9 | 3.0 | 6.3 | 1.0 |
| 2011 | 33.3 | 3.4 | 7.7 | 2.0 |
| 2012 | 37.2 | 3.2 | 6.5 | 4.0 |
| 2013 | 48.4 | 5.1 | 10.6 | 6.0 |
| 2014* | 65.6 | 9.7 | 17.6 | 8.0 |
| % change | +36 | +90 | +66 | +33 |
Ex-div: 18 Jun Payment: 3 Jul *Floated in April 2014 | ||||
