Financial highlights
· Group revenue of £57.1m (2015: £88.3m) impacted by volume declines in France and H1 2016 product certification delays in Germany
– At constant currency, total revenue up 5% to £60.0m
– Total sales in H2 2016 of £31.2m (H1 2016: £25.9m)
– H2 2016 sales into Germany increased 165% compared to H2 2015
– UK Retail sales increased by £1.5m, or 11%, to £15.4m (2015: £13.9m)
· Adjusted operating profit* of £2.2m (2015: £12.8m)
· Adjusted profit before tax* of £2.3m (2015: £12.8m)
· Adjusted gross margin** of 28.6% (2015: 30.3%), decrease principally due to:
– Lower proportion of sales into Continental Europe;
– Higher proportion of UK Retail sales; and
– £0.4m increase in stock provisions compared to 31 December 2015
· Strong balance sheet, no debt and net cash of £14.3m as at 31 December 2016 (2015: £22.4m)
· After deducting the BRK distribution fee of £3.0m (2015: £3.5m), the gross profit on BRK product sales was £nil (2015: £4.6m)
· Basic EPS of 4.0p per share (2015: 13.2p per share)
· The Board recommends paying a maintained final dividend of 5.5p per share; total 2016 dividend maintained of 8.0p per share (2015: 8.0p per share)
Operational highlights
· Acquisition of Intamac Systems' source code for a maximum cash consideration of £2.8m (initial consideration paid of £1.6m), to expand the Group's addressable market into connected home products
· Launched Wi-Safe Connect and Z-Wave compatible alarms to further enhance connected homes proposition
· Maintained market-leading position in CO alarm provision in the UK
· Increased focus on marketing in Continental Europe to drive CO awareness and sales from a relatively low base
· Battery warranty exposure now ring-fenced
– £0.8m settlement reached with battery supplier with the benefit to be provided to Sprue through free of charge replacement batteries over the next 2-3 years (benefit received in 2016 £nil)
– Product returns and warranty costs were in line with the Board's expectations with a net £2.2m of total £6.8m warranty provision as at 31 December 2015 utilised during the year
– Net FireAngel warranty expensed in the year was £0.7m, just over 1% of total sales