Sprue Aegis plc 
Annual Report and Accounts 2015
Sprue’s purpose is to protect, save and improve our customers’ lives by 
making innovative, leading edge technology simple and accessible &
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Sprue, who are we? 
 
Sprue makes products that save lives.  It is a simple philosophy. 
We are a company with market leading products with brands everyone can 
trust.  We aspire to be the company of choice for our customers’ home safety 
product needs of today and tomorrow. 
 
 
 
 
 
 
 
 
 
 
 
 
 
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Sprue’s range of products is comprehensive, 
allowing the Group to tailor its smoke 
alarms, CO alarms and accessories to suit its 
customer needs at various price points 
under the following brands: 
 
The UK’s No1 Retail brand and the brand of 
choice for over 90% of UK’s Fire and Rescue 
Services. Within European markets the 
FireAngel brand is targeted at the Trade 
customer 
 
 
AngelEye.  Launched in 2012, Sprue sells 
smoke alarms and CO detectors 
predominantly into the French market under 
AngelEye.  AngelEye has become a leading 
brand targeted at the DIY channel in France 
and is also sold in UK Retail by Sainsbury’s 
 
 
 
 
 
SONA.  A new, energy saving mains powered 
range of smoke and heat alarm products 
plus CO detection that are market leading 
and which can be wirelessly interconnected 
with up to 50 products on a single wireless 
network 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
FireAngel Pro.  Mains-powered smoke 
alarms with a 10 year, sealed for life lithium 
battery back-up.  Modern design, quick 
fitting, tamper-proof mounting plate which 
locks the alarm head securely in place.  
Mounting plate has wide, easily accessible 
connection to the mains feed. Cable knock-
out allows for compatibility with YT2 cable 
trunking 
 
 
 
 
Pace Sensors.  CO sensors used within 
Sprue’s CO products are developed by Sprue 
and Pace Sensors, Sprue’s wholly owned 
subsidiary in Canada. Pace Sensors’ CO 
sensors are used within all FireAngel, 
AngelEye and Pace Sensors’ CO detectors 
and certain First Alert branded CO detectors 
 
 
 
 
Sprue has the exclusive rights to distribute 
the products and brands of BRK Brands 
Europe Limited (a subsidiary of Jarden 
Corporation) in Europe namely, First Alert, 
BRK and Dicon.  First Alert is one of the 
leading safety products brands in North 
America
 
 
 
 
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History of the business 
 
 
 
 
 
 
 
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Sprue Aegis plc 10 year growth in revenue and operating profit pre-exceptional* items and share-based 
payments charge 
 
* Exceptional items include hostile bid defence costs of £0.4m in 2013, AIM costs of £0.5m in 2014 and £5.5m of warranty charge 
for 2015.  Share-based payments charge was £0.01m in 2013, £0.2m in 2014 and £0.5m in 2015.  
 
“Sprue's purpose is to protect, save and improve our customers' lives by 
making innovative, leading edge technology simple and accessible”  
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Overview 
07   Executive Chairman’s review 
 
Strategic report 
10   Our business model at a glance 
12   Extension of BRK distribution deal 
12   Risks and risk management 
16   Quality assured and quality control 
17   Key performance indicators 
18   Group CEO review 
21   Finance review 
25   Corporate social responsibility 
 
Corporate governance 
26   Executive Chairman’s introduction to corporate governance 
27   Board of Directors 
30   Corporate governance statement 
35   Audit Committee  
37   Directors’ remuneration report 
44   Directors’ report 
50   Statement of Directors’ responsibilities 
51   Independent auditor’s report 
 
Financial statements 
53   Consolidated income statement 
54   Consolidated statement of comprehensive income 
55   Statement of consolidated and Company financial position 
56   Consolidated statement of changes in equity 
57   Company statement of changes in equity 
58   Cash flow statements 
59   Notes to the financial statements 
   89   Corporate directory 
   90   Shareholder information 
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Executive Chairman’s review 
       
The Group reported a robust operating profit of 
£12.8m (£10.4m) on record sales of £88.3m 
(2014: £65.6m).  It is hugely disappointing that 
our results have been overshadowed by the 
battery warranty issue which was only 
discovered recently.  With new product 
certifications underway already and sales into 
Germany expected to recover strongly, we 
expect to build momentum in trading in the 
second half of 2016 and into 2017 
Whilst 2015 was a record year of sales for 
Sprue, it was overshadowed by the 
announcement released on 18 April 2016 of a 
significantly increased warranty provision which 
is hugely disappointing for the Company and all 
stakeholders.  This is due to a percentage of 
certain smoke alarm products indicating a 
premature end of life battery warning chirp 
resulting in an additional £5.5m warranty 
charge which the Group has booked to cover 
the expected cost of dealing with the issue over 
the next six years.  I wish to reassure our 
customers that we will continue to meet our 
customer service obligations and we have very 
much appreciated those messages of support 
received.  The Board is keen to stress that this 
is not a safety critical issue. Further details on 
the battery warranty issue are set out below. 
Strong sales into France and record trading 
within the UK combined to help generate the 
highest ever annual Group sales, up 35% to 
£88.3m, and operating profit before £5.5m 
exceptional charge and £0.5m share based 
payments charge increased 23% to £12.8m 
(2014: £10.4m ). 
Despite the warranty issue which we are 
addressing, I am pleased with the new strategic 
plan which Neil Smith, Sprue’s CEO, has led 
from inception since joining the Group in 
February 2015.  The strategic plan was 
approved by the Board in H2 2015, from which 
we are already seeing significant results. 
Traditionally Sprue has had a low market share 
in the UK Trade sector, primarily selling the BRK 
mains powered range.  The introduction of our 
new SONA range represents an exciting new 
growth opportunity for Sprue as we start to sell 
the range of mains powered SONA branded 
smoke and heat alarms along with carbon 
monoxide alarms and accessories designed 
specifically for the UK Trade market. These 
products and accessories went into full 
production in December 2015.  SONA, which 
incorporates Sprue's own Thermoptek, 
Thermistek and Wi-Safe 2 technology has 
unique patented energy saving technology.  
Over time, we expect to secure a greater market 
share of the UK Trade sector with this exciting 
new range of market leading mains powered 
products. 
Throughout 2015, we have sought to 
strengthen the Coventry based Technical team 
and, in particular, our firmware capability, 
increasing the Technical headcount from 15 to 
24.  In 2015, we invested in approximately 
£0.3m of specialist test equipment to 
accelerate our time to market for new products 
by being able to replicate many of the third 
party tests performed by the certification 
bodies in-house as part of our own in-house 
product development. 
 
Innovation – The Connected Home 
Exceptional £5.5m charge for battery warranty 
issue 
On 18 April 2016, the Company announced that 
it had recently identified an issue in certain 
batteries supplied by a third party supplier that 
may cause a premature low battery warning 
chirp in certain of its smoke alarm models sold 
in the UK and in Continental Europe. 
 
As a result, to support the Company’s customer 
service obligations, the Board has increased the 
Group’s warranty provision as at 31 December 
2015 by £5.5m to £6.8m (2014: £0.9m).  The 
cash cost of dealing with this issue is expected 
to be incurred over the next six years.  As at 31 
December 2015, the Company had cash of 
£22.4m and no debt.  !
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I am deeply disappointed about the impact this 
third party component issue is having and I wish 
to reassure customers and all stakeholders that 
the quality of all of our products is of the utmost 
importance to the Company.  The failure mode 
in the battery in affected smoke alarms has 
only recently become apparent and typically 
occurs after around three years from the date 
of battery manufacture.   To prevent the issue 
happening in the future and to ensure all the 
Group’s smoke products perform to the highest 
standards, the Group has introduced additional 
screening processes on the production line at 
CICAM, its principal supplier, prior to the battery 
being fitted into finished smoke alarms. 
Review of product warranty 
The Group provides a warranty on the entire 
product including the battery which is typically 
between one and ten years in duration.  The 
Board believes that Sprue’s product warranty 
policies are generally in line with UK and 
European smoke/CO industry “norms”.   
However, in light of the battery warranty issues 
recently identified, the Group is reviewing its 
warranty policies. 
 
More extensive testing of product returns is to 
be introduced to reduce the number of free of 
charge replacement products issued to 
customers.   Where products are found to have 
“no fault found”, the Group will restrict free of 
charge replacement products.   This review has 
just commenced and although the work is not 
complete, the Board expects to be able to 
reduce the Group’s future warranty costs.    
 
Dividends 
Despite the reduction in distributable reserves 
as a result of the additional charge for expected 
warranty costs, subject to shareholder approval 
at the Company’s AGM, the Board recommends 
the payment of a final dividend for the year 
ended 31 December 2015 of 5.5p per share 
which when added to the interim dividend of 
2.5p per share gives a total dividend unchanged 
on last year’s. The total 2015 dividend is 1.6x 
covered by post tax profit (2014: 2.2x).   Subject 
to shareholder approval at the Company’s 
Annual General Meeting to be held on 30 June 
2016, the final dividend will be paid on 22 July 
2016 to shareholders on the register on 8 July 
2016. 
 
Board changes 
There have been a number of Board changes 
during 2015 which have been made principally 
to support the business in the next phase of its 
growth and to comply with the principles of 
sound corporate governance.   In accordance 
with the commitment made in the Company’s 
admission document published in connection 
with the Company’s admission to AIM in 2014, 
I relinquished the role of Group Chief Executive 
on 2 February 2015 on the appointment of Neil 
Smith as Group Chief Executive.  Neil was 
appointed to the Board at the Company’s AGM 
in June 2015.  I remain Executive Chairman of 
the Company.   
 
As announced in April 2015, I am delighted that 
John Shepherd has joined the Board as a Non-
Executive Director.  John has held a number of 
senior positions in technology companies, 
including Non-Executive Chairman and Chief 
Executive.   
 
After 15 years on the Board, Peter Lawrence 
retired at the Company’s AGM in 2015.  We 
wish Peter well for the future and thank him for 
his commitment and contribution to Sprue. 
 
Early last year, Nick Rutter’s role as Managing 
Director was reshaped to allow him more time 
to focus on innovation and emerging 
technologies and on the delivery of our core 
technology to keep Sprue at the forefront of our 
current and potential new markets by 
optimising our future product and service 
offerings. 
 
Relocation of CICAM’s manufacturing 
I would like to thank BRK for successfully 
moving CICAM’s production to a new facility 
ahead of schedule and for ensuring that the 
certification of the new facility was seamless.  
In July 2015, the Board decided to acquire 
around £7.0m of additional buffer stock ahead 
of the year end to mitigate against potential 
supply disruption which I am pleased to report 
was ultimately not needed.  We expect to sell 
this buffer stock over the next twelve months. 
 
The new CICAM facility 
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New supply terms with DTL post year end 
Agreed in March 2016, but with effect from 1 
January 2016, supply arrangements with DTL 
(which buys Sprue’s products from CICAM) 
supplying 100% of Sprue’s own smoke 
products and accessories and BRK’s smoke 
and CO products were revised.  For the duration 
of the manufacturing agreement (which has a 
rolling 12 months’ notice period), the parties 
have agreed to an annual volume and 
GBP/USD exchange rate rebate mechanism.   
 
Should Sterling strengthen against the US 
Dollar and/or production volumes increase 
from the expected level in 2016, Sprue will 
benefit through reduced product costs and vice 
versa.   In addition, Sprue and DTL have agreed 
to work together to seek to balance the loading 
of CICAM to improve the operational efficiency 
of the facility by smoothing out production.  This 
will result in an increase in Sprue’s stock in 
certain months of the year, but stock at the year 
end is not likely to be materially affected. 
 
Despite the significant product on-cost for the 
Group in 2016 to implement the new 
arrangement, this is an important agreement 
for the Group with its key supplier DTL.  The new 
terms allow Sprue to share equitably the impact 
of changes in production volumes and 
movements in the GBP/US Dollar exchange 
rate with DTL whilst ensuring its key supplier 
has sufficient capacity and the appropriate 
investment base from which to deliver the 
products to support Sprue’s strategic plan. 
 
Outlook 
As the Company announced on 18 April 2016, 
challenging trading conditions in France, 
principally due to overstocking, and weaker 
sales in Germany, due to product certification 
delays are likely to significantly adversely 
impact the Group’s expected results for this 
year. 
 
Subject to no major changes in exchange rates, 
the Board now expects: 
 
• sales and operating profit* in 2016 of 
circa £55.0m and £1.9m respectively;   
• H1 2016 operating loss* of approximately 
£1.9m which includes a restructuring 
charge of £0.2m as a result of reducing 
certain fixed overheads; and 
• an operating profit* in H2 2016 of 
approximately £3.8m 
 
We expect to rebuild trading momentum in the 
second half of 2016 with certified new products 
and enter 2017 with normal levels of trading. 
 
Whilst regrettable, the overhead reductions will 
put the Group onto a lower cost base, saving an 
estimated £0.8m in 2017, and keep the Group 
on the right course to deliver our longer term 
strategic objectives as set out last year by Neil 
Smith, the Group’s CEO.  The Board’s priority 
remains to continue to improve the operational 
and financial performance of the Group and 
deliver value for our customers and 
shareholders. 
 
 
 
Product range into Continental Europe 
 
We expect to strengthen our product portfolio 
with SONA now selling in the market, Nano 
being included in finished 7 year CO products, 
entry into new smoke and CO markets in H2 
2016 and the launch of our exciting new 
connected homes strategy.     
 
As we rebuild confidence in our products in 
Germany and put the brand damage behind us 
with new certified products, we expect to 
increase sales significantly into Germany in H2 
2016 and into 2017 with 10 million German 
homes required by law to install smoke alarms 
by the end of 2017.     
 
CO detector sales are a key part of the strategic 
plan to drive revenue in emerging markets 
which will also help boost production volumes 
at Pace Sensors and improve our gross margin. 
 
*Stated before share-based payments charge 
 
 
 
Graham Whitworth 
Executive Chairman 
25 April 2016  !
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Strategic Report 
In this section 
!! Our business model at a glance 
!! Extension of BRK distribution deal 
!! Risks and risk management 
!! Quality assured and quality control 
!! Key performance indicators 
!! Group CEO review 
!! Finance review 
!! Corporate social responsibility 
 
Our business model at a glance 
The Sprue story started in 1998 when the 
business model was conceived by one of the 
two founders, Nick Rutter, who wanted to 
design and sell products that met the following 
criteria: 
!! Where existing product solutions were 
not meeting customer needs 
!! Products must have potential global 
product reach 
!! Products must use plastics and 
electronics as this was the area most 
familiar to Nick 
!! An ability to leverage economies of 
scale with low cost manufacturers in 
the Far East 
 
After a huge amount of product testing and 
validation work, Sprue launched the world’s first 
plug in smoke alarm and has gradually and 
significantly extended its range products to 
expand its range to become the business it is 
today with over 500 stock keeping units 
(“SKUs”) of smoke, CO and wireless products 
sold under 8 brands. 
 
PS101 - the world’s first plug in smoke alarm launched 2001 
 
Our customer -centric approach, combined with 
a comprehensive product range, world class 
third party manufacturing capabilities and third 
party distributors in Continental Europe 
combined with high barriers to entry through 
product certification, makes our business 
model robust and defensible.  In turn, this 
enables us to build strong, long lasting 
partnerships with key customers to maintain 
and gain market share.  Over time, we are 
aiming to be the market leader selling the 
brands of choice in every one of the markets we 
serve. 
The strong product and brand advocacy we 
have from being the supplier of choice of smoke 
and hearing impaired alarms to the UK Fire & 
Rescue Services who continue to fit our 
Thermoptek products today, supports the 
general broad customer loyalty and following 
we have been able to create.  This philosophy 
shapes our business model. 
Our flexible sourcing model enables us to 
expand our product range leveraging the 
economies of scale at each of our smoke and 
CO product manufacturers.  Our manufacturing 
partners continue to invest   to expand, develop 
and enhance their engineering and 
manufacturing facilities to deliver best in class 
products. 
 
 
 
 
 
 
 
 
 
 
 
 
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Sprue operates from worldwide locations:
 
                 
Third party logistics warehouse in Cambridge 
                                       
                                                                           HQ & Technology Centre in Coventry  !
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Extension of BRK distribution deal 
As announced on 21 March 2014, Sprue 
entered into a three year extension to its 
existing exclusive distribution agreement with 
BRK Brands and Jarden. The extension, which 
is on improved terms, came into effect on 1 
April 2015, when the existing distribution 
agreement expired.  The distribution fee for 
2015 is £3.5m (2014:  £4.2m) and reduces to 
£3.0m and £2.9m in calendar years 2016 and 
2017 respectively. 
Risks and risk management 
Like every business, the Group faces risks 
undertaking its day to day operations and in 
pursuit of its longer term objectives. 
 
Further information on those risks and how the 
Group manages those risks is set out on the 
following pages.  It is recognised that the 
Group is exposed to a number of risks wider 
than those identified here.  However, we have 
chosen to disclose those currently of most 
concern to the Board and those that have been 
the subject of debate at recent Board or Audit 
Committee meetings. 
 
Through the management of our business 
units, the Group has an established risk 
management process for identifying, 
assessing, evaluating and managing 
significant risks whereby the Executive 
Directors, in conjunction with the Board and 
Audit Committee, seek to identify, assess and 
manage risk. 
 
The Board of Directors has overall 
responsibility for the establishment and 
oversight of the Group’s risk management 
framework.  Its role is to set the tone and 
influence the culture of risk management 
within the Group, determine the Group’s risk 
prioritisation and monitor and manage the 
fundamental risks which the business faces. 
 
The Executive Directors are responsible for 
identifying, evaluating and mitigating risks in a 
timely manner, ensuring that there is an open 
and receptive approach to solving risk  
problems in the Group, embedding risk 
management as part of the system of internal 
controls within the Group and updating the 
Board on the status of risks and controls where 
significant issues are identified.   
 
Significant risks, which are defined with 
reference to magnitude of impact and 
likelihood of occurrence, are escalated to the 
Group Chief Executive, Executive Chairman 
and Group Finance Director and if appropriate, 
formally reviewed by the Board during Board 
meetings to assess the financial impact on the 
Group and to determine the optimum course 
of action to address these risks. 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
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  Issue         Risk           Mitigation 
Competition There are around a handful of home safety 
product competitors who compete in our major 
markets.  These companies vary in the relative 
strength of their product offering in each of the 
markets we serve and some of the competitors 
have a broad product offering and significant 
installed production capacity.  In addition, as 
Sprue launches new products, our success may 
lead to those companies investing further in 
product offering or reducing prices to be 
competitive with Sprue 
Sprue maintains a state of high vigilance over the products 
and actions of its competitors which are monitored by our 
sales teams and the Sprue management team.  Our 
continued investment in new products and the expansion of 
our range provide a barrier to new entrants in the market 
place.  Certification costs per product are estimated at 
approximately £0.1m per product which also acts as a barrier 
to new entrants 
Changing 
trends in the 
market place 
The introduction of connected home solutions 
with established and new emerging companies 
seeking to connect and monitor products in the 
home via the internet could potentially reduce 
the popularity of standalone safety products in 
Sprue’s market place and competitors’ product 
offerings will compete with the Company’s 
products 
Sprue is developing its connected home solution and already 
has its own Wi-Safe 2 connected home technology and is 
increasing investment to connect its home products to the 
internet.  We continue to invest heavily in product technology 
to reduce the cost of our connected home solutions and to 
seek to ensure we are the company of choice in this market 
Supplier 
relationships 
Sprue has two principal suppliers, one for all its 
smoke detector needs, which is a Jarden 
Corporation owned subsidiary and one for all 
its CO product needs, which is part of an 
independently owned business.  Ensuring 
these suppliers remain competitive and that 
they provide Sprue with the optimum 
combination of product cost and quality is a 
key challenge for the Group whilst not 
becoming over dependent on either business 
for product supply 
Relationships with suppliers are managed through Sprue’s 
supply chain team and senior management involvement 
from both companies.  Sprue has established long standing 
relationships with its principal suppliers and protects itself 
with manufacturing agreements with each supplier outlining 
the key terms of supply which provides the freedom to Sprue 
to seek third party quotes for products and provide a product 
“target price” should Sprue not accept prices quoted by its 
incumbent suppliers   
Product 
defensibility 
It is possible that new products and 
technologies may emerge in the future as 
viable alternatives to Sprue’s products  
Sprue dedicates significant levels of resources in product 
development and research to keep the business and its 
products at the forefront of the technology available in the 
market.  Sprue seeks to stay abreast of emerging market 
trends to position the Group to exploit and commercialise 
such technologies as they appear and Sprue routinely 
reviews potential small bolt on acquisitions, but to date has 
concluded its own technology offering is a good source of 
competitive advantage 
Intellectual 
property 
Many aspects of Sprue’s products are 
protected by intellectual property rights and 
the market can be characterised as having 
relatively high barriers to entry in this regard.  
Before introducing new products, Sprue 
carefully checks that it is not infringing the 
patented technology of third parties.  
Potentially, customers could seek to copy or 
find a “work around” Sprue’s registered 
technology to make competitive products 
Sprue believes that its principal protection in the market lies 
in its business model rather than through any specific 
intellectual property rights.  The breadth of Sprue’s product 
range and its ability to add new products to its product range 
and leverage its brands across the markets it serves 
represents a barrier to entry to competitors.  Sprue is not 
dependent on any one single patent for sales which are 
typically supported by a number of different patents.  Our 
products are protected by over 52 granted patents in our 
major markets and we continue to register new patents and 
maintain existing patents to protect our IP where the Group 
believes it is appropriate to do so 
Distributor 
relationships 
Sprue works through third party distributors of 
its products in Continental Europe who 
undertake marketing support activities and 
provide local logistical support.  Sprue is highly 
dependent upon these distributors to fulfill 
these roles in an effective and efficient manner 
to continue to grow sales in these markets / 
countries.  The distributors act as key 
customers for Sprue and therefore represent a 
financial risk for uncollected account balances 
Sprue has contracts with most of its major distributors who 
are carefully selected before appointment.  Many of these 
relationships are well established and in some cases, the 
distributor only sells Sprue’s products so the relationship is 
very close.  Sprue ensures that the contractual relationships 
with its customers are fair and commercially beneficial for 
both parties and carefully monitors outstanding credit 
balances to ensure distributors settle amounts owed to 
Sprue within terms to minimise potential bad debt risk for 
the Group. In some cases, the element of individual 
distributor sales that is represented by Sprue products are 
negligible, but in other businesses, particularly in Germany 
for example, the Board believes that sales of Sprue products 
represent the vast majority of the third party distributor’s 
sales and profit.  In addition, from time to time, overstocking 
in the distribution channel may cause financial pressures on 
our third party distributors depending on the sales conditions 
in the relevant market.  The Group keeps in close contact with 
each of its distributors to monitor market conditions and to 
assess the level of credit to be afforded to individual 
distributors   
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  Issue         Risk           Mitigation 
Foreign 
currency 
exposure 
The Group has significant sales into 
Continental Europe which are predominantly in 
Euros and a significant proportion of its 
purchases are in USD, being sourced from 
China / Hong Kong.  The Group has minimal 
natural hedges in which it can offset the Euro 
and USD exchange risk as it has minimal costs 
in Euro and minimal sales in USD.  After 
utilising part of its Euro income to fund its USD 
purchase requirements, the Group generates a 
surplus of Euro which are exchanged into 
Sterling 
The Board’s policy is hedge a significant proportion of its 
foreign exchange rate risk selling Euros for both US Dollars 
and Sterling under forward contracts typically for up to 12 
months out to hedge the transaction risk on its cash flow.  
However, long term movements in the relative strength of 
Sterling against the US Dollar and the Euro both significantly 
impact the Group’s profits.  It is estimated that for each Euro 
cent movement against Sterling and each US Dollar cent 
movement against Sterling, the Group’s profit is impacted by 
approximately £0.2m and £0.1m respectively and therefore 
the impact on operating profit and net margin of movements 
in foreign exchange are significant.   
Complexity The size of our organisation and the number of 
employees has grown rapidly in recent years.  
This brings with it a number of challenges of 
managing staff over larger geographical 
distances / cultures / languages and 
implementing appropriate systems, policies 
and compliance procedures in different 
jurisdictions to ensure local risks are properly 
managed 
Sprue has grown rapidly for a number of years and is familiar 
with the types of issues this presents.  The Group continues 
to invest in its infrastructure and to apply the appropriate 
resources necessary to support its business and ensure that 
appropriate controls are in place to safeguard its assets, its 
future business and to protect its reputation.  Controls are 
regularly kept under review and the senior management 
team work closely with the key members of staff in each 
business unit 
Product 
warranty  
Each year, the installed number of Sprue’s 
smoke and carbon monoxide products in the 
market place increases and it is inevitable, 
given the nature of Sprue’s products that 
despite best efforts to produce a product with 
zero defects, from time to time, the Group will 
incur product warranty issues.  Products are 
designed to “fail safe” so that if a product stops 
working, it is designed to alert the user that it 
requires replacing.  Many products have a ten 
year life and if there are product issues, it is not 
unusual to experience the same product issues 
over a number of years 
Sprue seeks to ensure that products manufactured by its 
suppliers comply with the relevant product specification 
which are approved by various test houses and regulatory 
bodies.  If a product is not compliant to the relevant 
specification, potentially Sprue has a warranty claim on its 
supplier.  Typical warranty issues experienced are usually 
around the battery and where there are known issues with 
batches of a certain product, Sprue typically provides free of 
charge replacements with a “no quibble” policy which is 
managed by Sprue’s in-house Technical Support team.  Sprue 
also maintains product recall insurance to mitigate the 
potential cost of a product recall should one of its approved 
and fully certified designs be found to be at fault.  The Group 
makes a specific provision for the expected future cost of 
replacing products with known warranty issues above a set 
nominal percentage of normal returns which amounted to 
£6.8m as at 31 December 2015 (2014: £0.9m)   
Staff  
recruitment 
and retention 
The contribution by Sprue’s dedicated staff and 
management team has been, and continues to 
be, important to Sprue’s future success.  As the 
Group’s profile increases, it is important that it 
is able to recruit and retain high-calibre staff 
Sprue places great emphasis on open communication with 
its employees, including regular staff updates and an annual 
staff away day.  There is also a wide scale share ownership 
scheme across the Company with rewards based on 
seniority.  Sprue looks to create a supportive working 
environment and employees are encouraged to learn and 
develop in their roles and seeks to promote internally where 
possible 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
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15"|"Sprue"Aegis"plc"Annual"Report"and"Accounts"2015"
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  Issue         Risk           Mitigation   
International 
trade 
regulations 
The Group’s activities involve importing 
products from the Far East and exporting 
products into Continental Europe and other 
overseas markets.  Any changes in the 
regulations covering such movements might 
have an effect on the Group’s trading activities.  
Increasing geographical reach and continual 
expansion of our customer base, particularly 
into Continental Europe exposes the Group to a 
potentially wider set of regulatory restrictions 
Sprue closely monitors changes to international import and 
export regulations and seeks to adapt its procedures 
wherever possible to ensure that the movement of its 
products is not affected, while maintaining compliance with 
such regulations and seeking to minimise its import duty 
costs 
Health and 
safety  
As the Group’s product range expands, the 
number of potential health and safety / 
regulatory risks grows and the Group is storing 
potentially more products containing batteries 
and /or in some cases, very small levels of 
radioactive particles in the “foils” contained 
within ionisation alarms which are sold in the 
UK  
 
The Group seeks to comply with the requirements of ISO 
audits and detailed records are maintained to ensure that 
products are correctly stored and disposed of  
Product 
certification 
compliance 
Products are required to comply with the 
appropriate certification standards and if 
products do not comply with the relevant 
standards, certification bodies could seek to 
insist on quarantining product for further 
testing / rework, or in worst case scenario, in a 
potential product recall  
In conjunction with suppliers, Sprue seeks to ensure that all 
products are manufactured in accordance with the relevant 
product certification standards and detailed compliance 
records are maintained for each product which is approved 
for sale.  In addition, detailed testing is performed on each 
product with traceability of key components operated as a 
contractual commitment by each of the Group’s suppliers.  
Sprue works closely with the standard review bodies to 
ensure that its products remain of the highest quality.  
Sprue’s suppliers are also audited by independent third 
parties to ensure that they maintain the highest quality 
standards 
Viability of 
intangible 
assets  
New products are required to be properly 
certified and it is usual for a business like 
Sprue to carry an intangible asset on its 
balance sheet reflecting capitalised people 
and non-people costs incurred in developing 
the products, some of which may relate to 
products which are not yet in the market as 
relevant testing and final certification may not 
have been completed.  The risk is whether the 
carrying amount reflects the viability of the 
product and whether an impairment of the 
product is necessary 
Expenditure on research is written off as incurred.  However, 
specific product development expenditure is capitalised on a 
case by case basis where the Group believes that the product 
(or the technology) is technically feasible and the level of 
capitalised costs is sensible relative to the expected level of 
returns to be derived from the capitalised costs.  Intangible 
assets are periodically reviewed for impairment at the time 
of the half year and full year results with any adjustment 
taken to the Income Statement if the capitalised costs do not 
meet the Group’s recognition criteria.  Impairment review is 
based on sales to date and forecasted on products and future 
products.  The Group would only undergo a product 
development if there is a market for that specific product 
therefore reducing the inherent risk of impairment 
Credit risk Credit risk predominantly arises from trade 
receivables and cash and cash equivalents. 
  
 
Credit exposure is managed on a Group basis.  External credit 
ratings are obtained for new customers and the Group policy 
is to assess the credit quality of each customer internally 
before accepting any terms of trade.  Internal procedures 
take into account the customers’ financial position as well as 
their reputation within the industry and past payment 
experience where relevant.   
 
 
 
 
 
  
 
 
 
 
 
 
  !
16"|"Sprue"Aegis"plc"Annual"Report"and"Accounts"2015"
!
We work closely with our customers to ensure our products are practical, innovative and 
market leading and so all products go through a vigorous quality review. 
 
Quality Assured 
 
 
 
 
Quality Control 
 
 
 
  !
17"|"Sprue"Aegis"plc"Annual"Report"and"Accounts"2015"
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!
Key performance 
indicators 
As part of Sprue’s growth strategy, the 
executive management team is focusing its 
attention on a set of financial and non-
financial KPIs that best support the growth 
initiatives referred to above. 
 
The Group is looking to increase shareholder 
value as its principal objective.  To focus on 
achieving this objective, the Group reviews 
financial performance on a number of levels 
which are set out in this section: 
 
!! OPIC – operating profit after investment 
charge.  The Group charges each business 
unit with a notional cost of capital at 12% 
against the net assets and liabilities 
required to support the sales growth of 
that business unit.  This notional charge is 
deducted from the operating profit of the 
business unit and the objective is to 
increase the operating profit after 
investment charge year on year through a 
combination of increasing operating profit 
and minimising the asset base required to 
generate the returns.  OPIC is a 
methodology of ensuring that business 
decisions are made in the Group’s best 
interests by creating a level playing field 
for each business unit to propose future 
plans for growth.  
 
!! Gross margin %.  Gross margins by 
customer, by product and by business unit 
are constantly reviewed to identify areas 
to improve the profitability of the Group. 
 
!! Net working capital %.  The Group seeks 
to proactively manage its working capital 
to ensure that it minimises its asset base 
to maximise cash flow from which to pay 
dividends. 
 
!! Cash flow from operating activities.  Cash 
flow is a key measure of the Group’s 
financial performance and is closely 
monitored. 
 
In addition to the financial KPI’s set out above, the 
Group monitors technical support and customer 
services and aims to respond to calls within a 
defined time period to deliver optimum customer 
satisfaction. 
 
Commentary on Key Performance Indicators as 
above are set out in the Finance Review on pages 
21 to 24. !
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Group CEO review 
I share the disappointment and dissatisfaction 
of shareholders and colleagues in the 
discovery of the battery issue within certain 
smoke alarms and, along with my Board 
colleagues, will take the necessary learnings 
and implement the required changes to ensure 
no future repetition. 
The warranty issue has unfortunately, though 
understandably, overshadowed our 2015 
results.  However, since joining the business 
last year, it is clear we have a talented and 
committed team at Sprue with exciting new 
products and marketing campaigns which 
have been recognised by our customers in 
their purchase decisions and our resultant 
record year of revenue. 
 
We have an authentic and important purpose 
– to protect, save and improve our customers’ 
lives by making innovative, leading edge 
technology simple and accessible, with strong 
values which run through our entire business 
with a shared culture of continuous 
improvement benefitting Sprue’s customers 
and shareholders. 
 
We have a clear future growth strategy built 
upon:  
 
! ! Increasing sales within existing markets 
through our strong brand portfolio and new 
technology 
! ! Incremental growth through new European 
markets  
! ! New product launches 
! Accelerating our Connected Home 
proposition  
! ! Leading through best ever quality, service 
& availability 
 
In supporting our new purpose and strategy, 
we have made good progress in implementing 
the necessary changes to deliver continued 
growth, including  
! !A new, strengthened organisational 
structure with new talent joining the team 
and expanded opportunities for existing 
colleagues to maximise their potential 
through a new people plan 
! ! The creation of a new business unit with 
focussed expertise to launch our 
Connected Home proposition 
! ! A new product road map which ensures we 
are focused on delivering solutions which 
have the greatest benefit to our customers 
and shareholders 
! ! A marketing strategy with increased 
emphasis on digital and own brand 
product development as demonstrated 
through our successful “Project Shout” 
campaign 
! ! A new financial reporting regime utilising 
our existing strong IT infrastructure  
 
 
A strong balance sheet provides the platform 
for growth as we seek to operate with focus to 
develop and launch new products on time to 
the highest quality and with an enhanced 
service proposition. 
We remain focused on driving the productivity 
loop to leverage our operating expense.  The 
most important way to deliver against this 
objective is to increase sales, but we are also 
driving process improvements combined with 
capital discipline and efficiency to ensure we 
operate effectively.
 
New technology enhancing Sprue’s product offering 
The strategic plan is being delivered through 
organic growth rather than acquisition.  
However, acquisition opportunities continue to 
be under review to establish whether Sprue’s 
technology and product offering could be 
enhanced through a strategic purchase to 
accelerate incremental revenue, profit 
opportunities and thereby increase shareholder 
value.  Strict financial and commercial 
justification criteria will be applied to any  !
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acquisition, prior to it being approved by the 
Board. 
European home safety is an attractive and 
growing market and as an established and 
trusted brand leader, with the actions we are 
taking, I am excited at the opportunities ahead 
and growth potential as we implement our 
plans. 
Legislative and advertising drivers 
UK.  The fitting of domestic smoke alarms in 
homes has been a key factor in the continuing 
reduction in house fires, fire-related injuries 
and deaths in the UK.  In the last 10 years in the 
UK, there has been a 63% reduction in house 
fires and fire deaths are at an all-time low 
according to Government published statistics. 
 
In 2015, the Energy Act 2013 came into force 
which requires all private sector landlords in 
England and Scotland to install a smoke alarm 
on every floor of their property, a carbon 
monoxide alarm to be installed in those 
properties which burn solid fuels and for 
landlords to check that alarms are working at 
the start of every new tenancy.  The enforcing 
body will be the local council and the 
regulations allow penalties of up to £5,000 per 
property to be imposed.  The Company sees 
this as another important step towards 
increasing awareness of the dangers of smoke 
and CO in the home. 
 
 
Sprue promoted through its websites and on TV 
channels during last year, “Project Shout”, an 
advertising campaign designed to encourage 
action to protect against the dangers of CO. The 
campaign generated significant amounts of 
publicity across various media channels, 
including national TV coverage and social 
media which significantly increased CO sales in 
Retail by 75% compared with the previous year.
Germany. The smoke alarm legislation in 
Germany which is already in place in Nordrhein-
Westfalen and Bayern (Rauchmeldegesetz ab 
01.04.2013 and Bayerische Bauordnung Art. 
46 Abs. 4 BayBO) requires smoke alarms to be 
fitted in every bedroom, children’s room and 
hallway by 31 December 2016 and 31 
December 2017 respectively. In addition, the 
ten year replacement cycle of smoke alarms 
previously installed from 2006 is about to 
commence which offers additional revenue 
opportunities with increased level of 
technology and higher local currency 
replacement product prices. 
France.   Legislation requiring smoke alarms to 
be fitted in every home in France has had a 
significant impact on Sprue’s revenue and 
increased awareness of the dangers of fire and 
smoke.  
The Group expects further new legislation will 
be announced in other parts of Europe as 
governments seek to improve home safety.  
This is expected to continue to drive sales, in 
particular CO products, where market 
penetration levels in countries such as France 
and Germany are still significantly lower than 
smoke alarms. 
Technical review 
Sprue has launched a new fully certified range 
of mains-powered SONA branded smoke and 
heat alarms along with carbon monoxide 
alarms and accessories for the UK Trade sector 
which includes  a remote test and reset 
product.  SONA provides a technology 
advantage over competitor products especially 
with its market leading low power 
consumption, which is particularly important 
for new “sustainable” housing projects.  
Customer feedback to date is highly positive 
and full scale production of this range of 
products commenced in December 2015. 
 
 
SONA range for Trade  
 
Sprue continues to invest in its Connected 
Homes Solutions (“CHS”) business unit and 
will shortly be connecting a wider range of its 
products through its interface gateway 
technology to the internet.  At the same time, 
Sprue is expanding and enhancing the skills 
of its Technical team, which increased from 
15 to 24 engineers over the course of the 
year, to accelerate product development.  !
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Connecting products to the internet 
Based on our research, sales opportunities 
from CHS appear significant.  To bring greater 
certainty and accountability to our CHS 
proposition, we have formed a new business 
unit to focus on this opportunity.  In January 
2016, Sprue prepaid £0.45m for a number of 
user licences to support its connected homes 
business proposition and is continuing to work 
closely with its third party supplier to develop 
and enhance bespoke software for its own 
commercial needs and those of its customers. 
 
 
 
The Wi-Safe 2 Connected Home Solution 
 
We are pleased that the Nano-905 CO sensor 
is finally being fitted into finished 7 year life 
carbon monoxide detectors and we expect 
further growth in CO detector sales across 
Europe. 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Nano-905 fitted CO alarm
 
 
By the end of 2016, consistent with our new 
five year strategy, we expect to enter a number 
of new markets, including the Nordic countries, 
Poland and the Germany Retail market. 
 
I look forward to working with my Board 
colleagues and everyone at Sprue to take the 
business onto its next phase of development.  
We are committed to working through the 
issues that have been created by the 
premature end of life battery warning chirping 
and we will honour all of our customer service 
commitments.  This will be a challenging 
period for the business but I am confident that 
we will get through it, and ultimately continue 
to thrive. 
 
 
 
 
 
 
Neil Smith !
Group ! "hief Executive Director  
25 April 2016 
 
                                             !
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Finance review 
A summary of the income statement for the Group is as follows: 
Consolidated income statement  
   % change  2015       2014 
    £000 £000 
 
#$ ! Revenuer Revenue 34.6% 
 
88,303 65,600 
 Cost of sales excluding BRK distribution fee and  
exceptional warranty charge 47.6% 
 
(61,548) (41,699) 
 BRK distribution fee (16.9%)  (3,460) (4,164) 
 Exceptional warranty charge -  (5,500) - 
 Total cost of sales 53.7%  (70,508) (45,863) 
 
Gross profit (9.8%)  17,795 19,737 
 Distribution costs (14.6%)  (750) (878) 
 Administrative expenses excluding share-based 
payments charge and exceptional items 15.2% 
 
(9,788) (8,498) 
 Share-based payments charge 157.1%  (527) (205) 
 Exceptional items -  - (525) 
 Total administrative expenses  11.8%  (10,315) (9,228) 
 Total fixed costs 9.5%  (11,065) (10,106) 
Profit from operations pre-exceptional items and 
share-based payments charge 
% of sales 23.1% 
12,757 
14.5% 
10,361 
15.8% 
 Profit from operations post exceptional items pre-
share-based payments charge (26.2%) 
 
7,257 9,836 
 Profit from operations  (30.1%)  6,730 9,631 
 Finance income 122.6%  89 40 
 
Profit before tax (29.5%)  6,819 9,671 
 Income tax (58.5%)  (810) (1,952) 
 Profit attributable to equity owners of the parent (22.2%)  6,009 7,719 
Earnings per share     
From continuing operations: 
Basic (25.2%) 
   
 13.2 17.6 
Diluted  (25.2%)  13.1 17.5 
Adjusted basic pre-exceptional items* 26.8%  24.3 19.2 
Adjusted diluted pre-exceptional items* 26.8%  24.2 19.1 
All amounts stated relate to continuing activities. 
*Adjusted basic and diluted EPS on a management basis are stated before the exceptional £5.5m warranty charge (2014: AIM costs 
of £0.5m) and share based payments charge £0.5m (2014: £0.2m) 
 
The chart below shows the movement in the mid share price for Sprue Aegis plc taken from the London 
Stock Exchange throughout the year. 
  !
!
!
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Summary 
Revenue for 2015 increased by 35% to 
£88.3m (2014: £65.6m) helped by the 
£13.8m increase in sales into Continental 
Europe, largely due to growth in sales into 
France.  Total sales in the UK increased by 32% 
largely due to higher CO sales with sales by 
every business unit up on 2014. 
The 2015 results include an exceptional 
warranty charge of £5.5m (2014: exceptional 
AIM costs of £0.5m). 
In total, the Group had warranty provisions as 
at 31 December 2015 of £6.8m (2014: 
£0.9m) of which, the largest element relates to 
the expected cost of replacing smoke alarm 
products over the next six years where an issue 
in certain batteries supplied by a third party 
supplier may cause a premature low battery 
warning chirp.  The smoke alarms affected 
have been sold in the UK and in Continental 
Europe.     
 
Operating profit* increased by 23.1% to 
£12.8m (2014: £10.4m) whilst return on sales 
decreased slightly to 14.5% (2014: 15.8%).   At 
like-for-like exchange rates with the previous 
year, operating profit* would have been 
approximately £7.6m higher at £20.4m.   
 
With a key focus on cash generation to 
optimise working capital, the Group’s year end 
cash increased by £6.5m to £22.4m (2014: 
£15.9m).  The balance sheet remains strong 
with no debt. 
 
*Stated before exceptional items representing £5.5m 
warranty charge (2014: £0.5m AIM costs) and share-based 
payments charge £0.5m (2014: £0.2m) 
  
 
 
Sprue Aegis plc 6 year growth in net assets and net 
cash 
 
!
!
Revenue by business unit 
The table below summarises the reported 
revenue for each of the Group’s business units 
and Pace Sensors.  At like-for-like exchange 
rates with 2014, the Sterling value of 
European revenue in 2015 would have been 
approximately 12% or £6.5m higher than 
reported. 
  
 2015 2014
  
change
e 
 
Revenue 
 
Revenue 
Revenue from continuing 
operations 
% £m £m 
Business Units: 
   
 Europe 35 53.8 39.9 
 Trade 21 7.3 6.0 
 Retail* 37 13.9 10.2 
 
Fire & Rescue 
Services 29 7.8 6.1 
 Utilities* 55 2.6 1.7 
 Pace Sensors Limited 70 2.9 1.7 
Total revenue from external 
customers 
35 88.3 65.6 
 
Note* in 2015, certain Leisure accounts were transferred into 
the Retail business unit and therefore, we have restated the 
2014 Retail comparative which increased by £0.4m and the 
Utilities comparative which decreased by £0.4m 
 
The principal changes in revenue are as 
follows: 
 
• The Group benefitted from significant smoke 
alarm sales into France following the legal 
requirement for all domestic homes to fit at 
least one working smoke alarm 
 
•Strong growth in CO detector sales by all UK 
business units.  CO market penetration levels 
in France and Germany in particular remain 
very low compared to the UK as the markets 
are less mature which remains an opportunity 
for Sprue 
 
• Sales of the Group’s new SONA range have 
now commenced and initial signs are  
encouraging 
 
 
New UK trade SONA heat alarm 
 
• Sales in 2015 of CO sensors by Pace Sensors 
increased by 38% and were helped by higher 
CO detector sales through each UK business 
unit  !
!
!
!
23"|"Sprue"Aegis"plc"Annual"Report"and"Accounts"2015"
!
Gross margin 
Gross margin (before taking account of the 
fixed £3.5m BRK distribution fee and the 
exceptional £5.5m warranty charge) 
decreased to 30.3% (2014: 36.4%).  The 
reduction in gross margin reflected the 
significant net adverse impact of the strength 
of Sterling against the Euro affecting the 
translation of Euro income into Sterling, 
Sterling’s weakness against the US Dollar 
increasing US Dollar sourced product costs and 
£1.5m product cost increase from DTL.  In 
addition, an increase in the charge for other 
legacy warranty issues of £1.2m to £2.8m 
(2014: £1.6m) also impeded gross margin.     
 
Exchange rates 
Average month end exchange rates against 
Sterling are summarised below.  
 
                    Av for year             Av for H1                Av for H2 
  2015 2014 2015 2014 2015 2014 
Euro 1.38 1.24 1.36 1.22 1.39 1.27 
US Dollar 1.53 1.64 1.52 1.67 1.53 1.62 
Canadian  1.95 1.82 1.89 1.81 2.02 1.82 
 
This table shows that on average, in 2015, 
Sterling strengthened against the Euro by 11%, 
thereby reducing Sprue’s revenue and profit on 
its Euro denominated income, and weakened 
against the US Dollar by 7% increasing the 
Sterling equivalent of Sprue’s USD purchases.  
In 2015, Sterling also strengthened by 
approximately 7% against the Canadian Dollar 
although the net adverse financial impact on 
Group profit was not material. 
 
The impact of the movement between Sterling 
and the USD on the Group in 2015 was far less 
significant than the movement between 
Sterling and the Euro as the Group purchased 
a significant proportion of its product costs (all 
DTL products) in Sterling.   This has changed 
with effect from 1 January 2016 as the Group 
is now effectively sharing the impact of 
movements in the exchange rate between 
Sterling and the US Dollar with its key supplier, 
DTL, despite continuing to purchase in Sterling.   
All the Group’s CO detector requirements 
continue to be sourced in US Dollars from a 
third party supplier. 
 
Total fixed costs 
Total fixed costs* as a percentage of sales in 
2015 reduced to 11.9% (2014: 14.3%), slightly 
below the Group’s target fixed costs range of 
12-15% of sales.  However, the Board will 
continue to invest for growth, even if the total 
fixed costs target range is not achieved in the 
short term. 
 
As a result of the £5.5m exceptional warranty 
charge, the 2015 year end bonus was not 
payable saving £0.7m which was added back 
to profit in the year. 
 
Earnings and tax 
Adjusted basic EPS* increased by 27% to 24.3 
pence per share (2014: 19.2 pence per share). 
 
Excluding deferred tax and the impact of the 
exceptional items, the effective cash tax rate 
decreased from 16.8% in 2014 to 7.3% in 
2015 due to the benefit of Patent Box, higher 
R&D tax credit rates (as Sprue is again a 
“small” company for tax purposes) and a 1% 
reduction in the rate of corporation tax in the 
UK from 1 April 2015. 
 
We are aware that there continue to be 
ongoing challenges by certain Continental 
European states to the fairness of Patent Box 
although we have been advised that for 
companies already in, Patent Box is “here to 
stay for the foreseeable future”.  The benefit of 
Patent Box in the tax charge in 2015 reduced 
to approximately £0.1m (2014: £0.2m) as the 
taxable profit was lower than the 2014 
comparative. 
 
*Stated before exceptional items representing £5.5m 
warranty charge (2014: £0.5m AIM costs) and share-based 
payments charge £0.5m (2014: £0.2m) 
 
Balance sheet and cash flow 
Sprue continues to increase its investment in 
product development and capitalises specific 
people and non-people costs which meet the 
relevant criteria.  Product development costs 
are typically amortised over a period of 7 to 10 
years and reviewed periodically for 
impairment.   We have reviewed the intangible 
assets as a result of the recently announced 
battery warranty issue and have concluded 
that there are no impairment issues that affect 
the intangible asset base. 
 
The net book value of intangible capitalised 
product development costs at 31 December 
2015 was £6.4m (2014: £4.3m), equivalent to 
7.2% of sales (2014: 6.6% of sales).  
   !
!
!
!
24"|"Sprue"Aegis"plc"Annual"Report"and"Accounts"2015"
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The annual amortisation charge is expected to 
increase significantly as capitalised costs for 
Nano-905, SONA and other new products are 
amortised through the income statement as 
sales of products including this technology 
commence. 
 
Net working capital as a percentage of 
annualised sales improved materially in 2015 
to 8.0% of sales (2014: 11.6% of sales), 
despite high stock holding levels to offset the 
risk of moving the manufacturing activities of 
CICAM before the year end.  Overall, net 
working capital decreased by £0.5m 
compared to 2014 despite sales increasing in 
the year by 35%.  Whilst there have been no 
major supply chain issues from the relocation 
of CICAM last year, the Board believed it was a 
prudent decision to increase year end stock to 
mitigate against such potential risk.     
 
Cash generation continues to be a key 
objective for the Group and management 
regularly reviews the stock requirements of 
each business unit to optimise the Group’s 
stock holding.   It is expected to take around 
12 months to sell through the approximate 
£7.0m of additional buffer stock acquired last 
year. 
 
The significant reduction in total debtors year 
on year reflects the lower Q4 2015 sales 
compared to the last three months of 2014, 
largely due to the reduction of sales into 
France.  Average debtor days in 2015 
increased to 67 days (2014: 54 days), as one 
of Sprue’s principal customers in France took 
extended terms on repayment of its debts and 
the proportion of UK Retail sales increased.  
 
Average creditor days in 2015 increased to 82 
days (2014: 57 days) with the extension in DTL 
creditor terms with effect from 1 April 2015.  
The Group aims to settle its debts in line with 
supplier payment due dates.   
 
Cash flow from operations increased to 
£13.6m (2014: 8.8m).  The balance sheet 
remains robust with net cash at 31 December 
2015 of £22.4m (2014: £15.9m) and no debt. 
 
Relocation of CICAM’s 
manufacturing activities 
The smoke alarm and accessory 
manufacturing activities of CICAM, the 
Company's principal supplier in China, were 
successfully transferred to a nearby alternative 
facility before the year end.  The new facility 
was formally opened on 9 December 2015 
slightly ahead of schedule and Sprue acquired 
approximately £7.0m of buffer stock to 
mitigate against any potential supply chain 
disruption which ultimately was not needed. 
 
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, which if approved by shareholders at the 
Company’s AGM to be held on 30 June 2016, 
takes the full year 2015 dividend to 8.0 pence 
per share (2014: 8.0 pence per share).  2015 
dividend cover is significantly reduced at 1.6x 
post-tax profit (2014: 2.2x).  The Board will 
keep its dividend policy under review in the 
light of the lower trading outlook for 2016 and 
expected recovery in 2017. 
 
 
 
 
John Gahan 
Group Finance Director 
25 April 2016 
 
 
 
 
 
 
  !
25"|"Sprue"Aegis"plc"Annual"Report"and"Accounts"2015"
!!
!
Corporate social 
responsibility 
Corporate social responsibility is integral to our 
success.  We aspire to carry out our business 
activities to the highest ethical standards, act 
responsibly and make a positive impact in our 
interactions with stakeholders. 
 
Respect for people and diversity 
Employee experience and satisfaction in the 
work place are very important to us.  Operating 
our business in a non-discriminatory manner 
that focuses on the fair treatment and respect 
for each other is a core value and underpins 
our interactions with employees, our 
customers and our suppliers. 
 
 
 
The Board and the human resources function 
are responsible for ensuring that our policies 
and practices reflect best practice for equality 
of opportunity and long-term professional 
development for our employees.  All senior 
management seek to ensure that throughout 
the business our work place is free of 
harassment and bullying and we strive to 
create a positive environment that is 
supportive, enables employees to fulfil their 
maximum potential and drives business 
performance. 
 
We are committed to ensuring that within the 
framework of the law, Sprue is free from 
discrimination along any grounds.  Sprue is an 
equal opportunities employer and ensures that 
all applications for employment are given full 
and fair consideration.  Every effort is made to 
support employees to be successful in their 
careers.  Our people and development policies 
are reviewed regularly to ensure that they are 
non-discriminatory and promote equal 
opportunity.  In particular, recruitment, 
selection, promotion, training and 
development are monitored to ensure that all 
employees have the opportunity to train and 
develop according to their abilities. 
 
Supporting our community 
We regularly donate to various charities, 
including various CO and fire fighters charities. 
We have established a committee to manage 
our involvement with, and support of, local and 
national charities.  We also work closely with 
local universities to give presentations and 
support students with their career progression 
including work experience in the Group from 
time to time. 
 
Health, safety and the environment 
Supporting health, safety and the environment 
are important elements to our success.  We 
view the standards of health and safety 
required by law as being only the minimum 
and endeavour to follow best practice at each 
of our sites.  The Group complies with local 
legislation relevant to the respective territories 
with regards to health, safety and the 
environment. 
 
Well being 
To support the environment, we have a range 
of initiatives from recycling to encouraging 
staff to cycle to work.  We believe that we were 
the first company in our industry to have a 
smoke alarm with its own carbon footprint 
where the product range has been specifically 
designed to minimise power consumption 
using approximately 10% of the stand-by 
power of a conventional alarm. 
 
 
 
 
 
 
 
 
 
  !
26"|"Sprue"Aegis"plc"Annual"Report"and"Accounts"2015"
!
Corporate governance 
In this section 
!! Executive Chairman’s 
introduction to corporate 
governance 
!! Board of directors 
!! Corporate governance statement 
!! Audit Committee 
!! Directors’ Remuneration report 
!! Directors’ report 
Executive Chairman’s 
introduction to corporate 
governance 
Good corporate governance at Sprue 
At Sprue we value corporate governance highly 
and this is reflected in our governance 
principles, policies and practices. We believe 
that effective governance, not only in the 
boardroom but right across the business and 
at each business unit level, ultimately 
produces a business that supports improving 
long-term financial performance.  
The reports on the following pages explain our 
governance arrangements in detail and 
describe how we apply sound corporate 
governance in the business.   
Considerable time and effort has been spent to 
ensure that our Annual Report and Accounts 
provide shareholders with high quality and 
useful information, including the operations of 
the Board. 
The core activities of the Board include: 
!! providing entrepreneurial leadership 
within a framework of prudent and 
effective controls for risk assessment 
and management, 
!! setting the strategic aims of the Group 
and reviewing individual management 
performance to ensure we remain 
highly effective and to ensure that 
appropriate resources are in place for 
the Group to create long-term 
shareholder value; and  
!! to position the Group to be the market 
leader in each of the markets in which 
it serves in terms of products, 
technology and services.  
The current Board with four Executive Directors 
and four Non-Executive Directors has 
continued to play a highly active role in 
ensuring that these principles are core to the 
way Sprue does business.  Commitment to 
these principles extends throughout the 
business. 
 
Monitoring risk and compliance with expected 
governance rules 
Monitoring the level of risk and ensuring 
appropriate governance to support this 
remains a key objective, involving the support 
of the Audit Committee.  It is imperative that 
we continue to openly challenge and regularly 
debate the various risks our business faces as 
our business evolves. 
I continue to be pleased with the performance 
and strategic direction of the Group and 
believe that we have a strong and very capable 
Board in place which has demonstrated its 
commitment to continue to drive the business 
for future growth on an ethical and transparent 
basis.  The changes we have made to 
individual roles reflects our commitment to 
optimise the management of the Group. 
 
Sound corporate governance 
The Board manages the affairs of the 
Company with regard to the Corporate 
Governance guidance issued by Quoted 
Company Alliance.  The Board confirms that 
the 2015 Annual Report and Accounts, taken 
as a whole, is fair, balanced and 
understandable, and provides the information 
necessary for shareholders to assess the 
performance, strategy, key risks and business 
model of the Group. 
 
 
 
 
 
Graham Whitworth 
Executive Chairman  
25 April 2016 
 
  ! !!!!!!!!! ! !!!!
27"|"Sprue"Aegis"plc"Annual"Report"and"Accounts"2015"
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Board of Directors 
Sprue’s Board of Directors has the breadth and 
depth of skills necessary to guide the Group as 
it seeks to take full advantage of new 
opportunities and contend with new 
challenges. 
Further to the appointment of Neil Smith as 
Group Chief Executive on 2 February 2015 and 
in accordance with the commitment made in 
the Company’s AIM admission document 
published on 24 April 2014, Graham 
Whitworth relinquished his role as Group Chief 
Executive to Neil and became Executive 
Chairman of the Company from 2 February 
2015.   A resolution to appoint Neil as a 
Director of the Company was passed by 
shareholders at the June 2015 AGM. 
As confirmed in the announcement made in 
April 2015, John Shepherd joined the Board as 
a Non-Executive Director.  We are very pleased 
to welcome John to the Board and he brings a 
wealth of international and technology 
business experience.   
Peter Lawrence retired from the Board at the 
Company’s AGM in June.  On behalf of the 
Board, I would like to thank Peter, who was a 
seed investor in the business for his significant 
contribution to the business since the 
Company listed on what was then OFEX in 
2001.  
 
A brief biography of each of the Directors is set 
out below: 
 
 
Graham Whitworth, Executive Chairman, 
Aged 62 
 
Prior to investing as a seed investor in Sprue, 
Graham developed a diverse set of 
international business skills from the 
corporate boardroom to his own start up. 
Graham has worked in a number of  
technology businesses, initially in engineering 
and then IT based design technology roles, 
where he led a number of strategic initiatives 
and directed many multi-million Dollar 
contracts with leading blue chip companies 
across a diverse set of industries with 
ComputerVision Corporation, a leading US 
CAD/CAM provider. From the late 1980s 
Graham was Sales Director, Managing Director 
and then Executive Vice-President, before 
leaving in 1997. In 1998, Graham started his 
own company which he later merged with 
Division Plc where he became Managing 
Director before disposing of the enlarged 
business to Parametric Technology in 2000. 
Graham led the original Sprue IPO and until 
February 2015 was the Group Chief Executive 
and Chairman; he is the now Executive 
Chairman. 
 
 
Neil Smith, Group Chief Executive, Aged 44 
 
Neil has a background as a successful senior 
leader with strategic retail and brand 
experience gained at market leading blue chip, 
multi-channel businesses spanning Kingfisher 
plc (B&Q), Halfords Group plc, Home Retail 
Group plc and Boots Retail Group. In addition, 
Neil has extensive knowledge and success of 
Far East sourcing, brand development and 
international retailing. Neil holds a degree in 
Business Studies and a Diploma in Marketing. 
 
 
  ! !!!!!!!!! ! !!!!
28"|"Sprue"Aegis"plc"Annual"Report"and"Accounts"2015"
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John Gahan, Group Finance Director, Aged 
46 
 
John joined Sprue in January 2010 as the 
Group Finance Director and was appointed to 
the Board in April of that year.  John led Sprue’s 
bid defence of Jarden’s failed hostile take over 
in 2013 and Sprue’s move to AIM and fund 
raising in April 2015.  Qualifying as a chartered 
accountant with KPMG in Birmingham, John 
worked in Transaction Services performing 
financial due diligence on companies for sale 
in the UK and overseas.  John has also worked 
in senior financial, operational and M&A roles 
with GKN plc.   John lived in Singapore for four 
years where he was the Regional Finance 
Director and Regional Mergers and 
Acquisitions Director for GKN Driveline 
Driveshafts.  John is a Fellow of the Institute of 
Chartered Accountants for England and Wales. 
 
 
Nicholas (‘Nick’) Rutter, Managing Director, 
Aged 43 
 
Nick is one of the co-founders of Sprue; he 
began his career with Sprue as Technology 
Director before being appointed Managing 
Director in 2008. Nick’s design skills and 
product vision have fundamentally shaped 
Sprue’s product offering and brand strategy.  
Nick is also responsible for the development of 
the Group’s product technology and design.  
Prior to co-founding Sprue, Nick achieved a BA 
in Industrial Design from Coventry University 
and worked as a product designer based in 
Hong Kong, designing portable audio products 
for Philips. 
 
 
William Payne, Non-Executive Director, 
Senior Independent Director, Aged 50 
 
William joined the Sprue Board in 2000 and 
acted as its finance director until January 
2010. William is a partner at chartered 
accountants, Wilkins Kennedy LLP, where he 
acts for a broad range of clients across various 
industry sectors, providing audit and 
assurance advice to clients as well as 
assistance in planning, reporting and 
compliance. Having obtained an accounting 
degree from Exeter University, William 
qualified as a chartered accountant with what 
is now part of KPMG in London. William was 
made a partner at WH Payne & Co in 1991, 
prior to its merger with Wilkins Kennedy LLP in 
2003. William is also a director of a number of 
companies, including Ariana Resources plc, 
which is quoted on AIM.  ! !!!!!!!!! ! !!!!
29"|"Sprue"Aegis"plc"Annual"Report"and"Accounts"2015"
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Ashley Silverton, Non-Executive Director, 
Aged 56 
 
Ashley was appointed to the Board in February 
2011 and is jointly nominated by Sprue and 
BRK Brands. Ashley has worked for Brewin 
Dolphin and its predecessor firms for more 
than 25 years and has represented Brewin 
Dolphin at the National Association of Pension 
Funds. Having joined a City based stockbroking 
partnership after graduation, he was elected to 
Membership of the Stock Exchange in 1985 
and is a Fellow of the Chartered Institute for 
Securities & Investment. Throughout his career 
Ashley has specialised in investment 
management for private clients and charities. 
Ashley has served as a committee member of 
the FTSE/WMA Private Investor Indices.  
Ashley was previously Head of the Brewin 
Dolphin London office and a member of the 
Advisory Board. 
 
 
John Shepherd, Non-Executive Director, 
Aged 62 
 
John began his career at British Aerospace 
where he held various systems and software 
engineering management positions. In 1990, 
he joined Smiths Industries where, as 
Managing Director of the Smiths Detection 
division, he was responsible for building a 
world leading transport, security and military 
detection systems business. Subsequently, he 
was appointed as Chief Executive of First 
Technology Group plc where he built up a 
substantial gas sensor and detection systems 
business prior to the company being acquired 
by Honeywell. Since 2008 until his retirement 
earlier this year, John served as Chief Executive 
of Synectics plc, an AIM quoted leader in the 
design, integration, control and management 
of advanced surveillance technology and 
networked security systems. 
 
Thomas Russo, Non-Executive Director, Aged 
62 
 
Thomas was appointed to the Board in 
September 2011 and represents BRK Brands.  
Thomas has been President and CEO of BRK 
Brands Inc./First Alert (Aurora, Illinois), a 
subsidiary of Jarden, since 2006. Thomas has 
been a noted business leader in the home 
safety category for more than 25 years. 
 
For so long as Jarden and its affiliates hold at 
least 12 per cent. of the Ordinary Shares of the 
Company, Jarden has the right, at any time, to 
appoint and maintain in office (subject to the 
Articles) a director (the ‘Jarden Director’), to 
remove any director so appointed and, upon 
his removal (whether by Jarden or otherwise), 
to appoint another person to act as the Jarden 
Director in his place. The current Jarden 
Director is Thomas Russo. 
 
 
 
 
 
 
 
 
  ! !!!!!!!!! ! !!!!
30"|"Sprue"Aegis"plc"Annual"Report"and"Accounts"2015"
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Corporate governance 
statement 
Leadership and operation of the board 
The Board holds full meetings approximately 
7-9 times per annum, with attendance by the 
UK based directors generally made in person.  
Occasionally, board members may dial in if 
sickness / travel / other commitments prevent 
attendance in person.  In addition, ad hoc 
board meetings are called to approve the 
annual and interim accounts or other 
administrative matters. 
The “chief operating decision making” 
authority is the Board and delegates day to day 
responsibility for managing the Group to the 
Executive Management Team (“EMT”) led by 
Graham Whitworth as Executive Chairman and 
to the Trading Reviews (“TR”), led by Neil Smith 
as Group Chief Executive.  Details of the EMT 
and TR are set out below. 
The EMT is responsible for developing and 
implementing the strategy approved by the 
Board and led by the Executive Chairman. In 
particular, it is responsible for ensuring that 
the Group’s budget and forecasts are properly 
prepared, that targets are met and for 
generally managing and developing the 
business within the overall budget.  Any 
changes in strategy or significant deviation 
from budget require approval from the Board. 
The EMT typically meets once a week and 
comprises the four Executive Directors. 
EMT meetings are attended by other senior 
operational personnel, as appropriate. 
Managers of each of the five business units 
report into the Chief Executive and TR 
meetings are held every week.  Business unit 
meetings are typically held once per month 
and together with the TR meetings, this  
provides the forum to ensure a consistent 
implementation of Sprue’s strategy across the 
business.  Business unit meetings are also 
attended by other senior departmental 
managers as required. 
With the appointment of Neil Smith on 2 
February 2015 and with effect from that date, 
the role of Executive Chairman and Chief 
Executive Officer now vest in separate 
individuals, each with clear allocation of 
accountability and responsibility.  The main 
responsibilities of the Executive Chairman 
include: 
!! Ensuring that the Board as a whole 
plays a full and constructive part in the 
development of strategy and overall 
commercial objectives 
!! Leadership of the Board and creating 
the conditions for overall Board and 
individual Director effectiveness and a 
constructive relationship with good 
communications between the 
Executive and Non-Executive Directors 
!! Promoting the highest standards of 
integrity, behaviour, probity and 
corporate governance throughout the 
Company, particularly at Board level 
!! Ensuring that the performance of the 
Board as a whole, its Committees and 
individual Directors is formally and 
rigorously evaluated at least once a 
year 
!! Ensuring that there is effective 
communication with shareholders 
!! Managing the EMT 
The main responsibilities of the Group Chief 
Executive include: 
!! Chairing the TR meetings on a week to 
week basis  
!! Managing the five Business Unit 
heads, Sprue’s Group Operations 
Director (who looks after operations 
and logistics) and the Marketing and 
Creative teams 
!! Ensuring initiatives for long-term 
growth are championed and 
appropriately resourced within the 
Company; and 
!! Fostering good relationships with key 
stakeholders. 
William Payne has been identified as the 
Senior Independent Director, who provides a 
communication channel between the 
Executive Chairman and the Non-Executive 
Directors and is available to discuss matters 
with shareholders when required. 
The Directors have the benefit of directors’ and 
officers’ liability insurance and have access to 
the advice of the Company Secretary, William 
Payne. 
The Board agenda 
The Board agenda focuses on the themes of 
driving the business strategy, monitoring 
financial performance and the risks of  ! !!!!!!!!! ! !!!!
31"|"Sprue"Aegis"plc"Annual"Report"and"Accounts"2015"
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executing the strategy via regular business, 
financial and departmental updates. 
During the year, the Executive Chairman meets 
with the Executive Directors prior to scheduled 
and ad hoc meetings to discuss and set each 
Board agenda.  In addition, regular discussions 
between Board members is encouraged. 
The culture of Board meetings is to encourage 
rigorous debate and the Non-Executive 
Directors constructively challenge the 
performance of management in meeting 
agreed goals and objectives and help develop 
the Group’s overall strategy.  
Effectiveness and ensuring the Board is 
effective 
We have considered the overall balance 
between Executive and Non-Executive 
Directors and believe that the structure of the 
Board with 4 Executive and 4 Non-Executive 
Directors and the integrity of each Director 
ensures that there is no one individual or 
interest group dominating the decision making 
process.   
The Board reflects a good balance between 
financial, sector specific, technology and 
general international business skills, with a 
highly experienced team leading the business 
in both Executive and Non-Executive roles. 
Before each meeting, the Board is provided 
with operational updates on each area of the 
business and information setting out the 
financial position of the Group, year to date 
financial results, plus forecast financial results 
of the business to the half year / full year in a 
timely manner, and in a form of appropriate 
quality appropriate to enable it to discharge its 
duties.   
Should they wish to, Non-Executive Directors 
are able to influence agendas for Board 
discussions and to ensure the amount of time 
spent reviewing strategic and operational 
issues is appropriately balanced. 
In the event that Directors are unable to attend 
a meeting or a conference call, they receive 
and read the papers for consideration and 
have the opportunity to relay their comments 
either before or after the meeting to the 
Executive Chairman. 
 
Director independence 
All Directors maintain conflicts of interest 
declarations and any planned changes in their 
interests including directorships outside the 
Group are notified to the Board.  None of the 
relationships declared are considered to be of 
a material nature to Sprue’s business and 
none are therefore deemed to impact on the 
independence of the Directors, although this is 
constantly reviewed given Tom Russo’s 
involvement in BRK Brands Europe Limited, a 
key supplier to the Group.  The obligation to 
notify the Company of any potential new 
conflict is immediate. 
The beneficial interests of all Directors in the 
share capital of the Company are set out on 
page 46 of the annual report.   
Performance evaluation 
On behalf of the Board, the Remuneration 
Committee (“Remco”) undertakes a regular 
evaluation of the performance of senior 
managers and the last review was undertaken 
during late 2015.  This concluded that the 
Board and its individual members continue to 
perform effectively in an environment where 
there is constructive challenge from the Non-
Executive Directors and operates within a 
framework of sound governance and practices. 
 
Subjects covered during the review include a 
general overview as to the operation of the 
Board, opinions on shareholder relationships, 
views on the Board’s input into strategy 
discussions, governance and compliance, risk 
management and succession planning, the 
Board culture and relationships with senior 
management, as well as how new members 
are selected and inducted. 
 
The Executive Chairman holds meetings with 
the Non-Executive Directors without the 
Executive Directors present and the Non-
Executive Directors, led by the Senior Non–
Executive Director, meet without the Chairman 
present at least once annually to appraise the 
Chairman’s performance, with no issues 
arising from the review performed this year. 
 
Accountability and our approach to risk 
management 
The Board acknowledges its responsibility for 
safeguarding the shareholders’ investment 
and the Group’s assets and has established 
processes for identifying, evaluating and 
managing the significant risks the Group 
faces.  ! !!!!!!!!! ! !!!!
32"|"Sprue"Aegis"plc"Annual"Report"and"Accounts"2015"
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The Board has overall responsibility for 
ensuring the Group maintains an adequate 
system of internal control and risk 
management, whilst the Audit Committee 
reviews its effectiveness on behalf of the 
Board.  The implementation of internal control 
systems is the responsibility of management. 
We have implemented an internal control 
system designed to help ensure: 
!! the effective and efficient operation of 
the Group by enabling management to 
respond appropriately to significant 
risks to achieving the Group’s business 
objectives; 
!! the safeguarding of assets from 
inappropriate use or from loss and 
fraud and ensuring that liabilities are 
identified and managed; 
!! high quality of internal and external 
financial reporting; 
!! compliance with applicable laws and 
regulations and with internal policies 
on the conduct of the Group’s 
business; and 
!! the ability to recover in a timely 
manner from the effects of disasters 
or major accidents which originate 
from outside the Group’s direct control 
The principal risks and uncertainties the Group 
faces are set out on pages 12 to 15 of the 
Annual Report.  It is recognised that the Group 
is exposed to a number of risks, wider than 
those listed.  However, we have chosen to 
disclose those of most concern to the business 
at this moment in time including those that 
have been the subject of debate at recent 
Board or Audit Committee meetings. 
During the course of its reviews of the system 
of internal control during the year, the Board 
has not identified nor been advised of any 
failings or weaknesses or management 
override of controls which it has determined to 
be significant. 
At this stage of the Group’s development, we 
do not have a separate internal audit function.  
However all key processes and controls are 
documented and are periodically reviewed by 
the Finance function to ensure that they 
remain appropriate.  The auditor reports to the 
Audit Committee (and to the Board) on any 
areas identified where controls are weak or 
missing which come to their attention and then 
prompt necessary action is taken to rectify any 
control deficiencies identified. 
The Audit Committee reviews the need for a 
separate internal audit function on an annual 
basis and has concluded that, despite the rate 
of growth in recent years, the structure of the 
Group and the level of control exercised by the 
management team are both sufficient, such 
that an internal audit function is not necessary 
nor cost effective at this time. The Directors 
have taken steps to ensure that the Group has 
an appropriate control environment for its size 
and complexity.  The management team will 
ensure that the internal control environment 
develops with the size of the Group, with 
respect to the identification, evaluation and 
monitoring of risk. 
Given the relative size of the business, the 
Company does not maintain a separate 
Nominations Committee and regularly keeps 
this decision under review.  Instead, the Board 
as a whole, considers and approves any 
nominations to join the Board. 
 
Financial reporting 
The Board is responsible for reviewing and 
approving the Annual Report and Accounts, 
the interim financial information and for 
ensuring these statements present a balanced 
assessment of the Group’s trading results and 
financial position.  Drafts of these reports are 
provided to the Board in a timely manner and 
Directors’ feedback is discussed and 
incorporated where appropriate, prior to 
publication. 
 
Whistleblowing procedures 
The Group operates a whistleblowing policy 
which provides a mechanism for all employees 
to raise concerns to senior management in 
strict confidence about any unethical business 
practices, fraud, misconduct or wrongdoing.  
They can do so without fear of recrimination 
and the Audit Committee would receive any 
such confidential reports.  There were no 
whistleblowing reports throughout 2015 and 
none up to the date of this report. 
 
Anti-bribery and anti-corruption policy 
The Company seeks to prohibit bribery and 
corruption in any form whether direct or 
indirect and has documented procedures to 
counter bribery and corruption. These 
principles are based on a board commitment 
to fundamental values of integrity,  ! !!!!!!!!! ! !!!!
33"|"Sprue"Aegis"plc"Annual"Report"and"Accounts"2015"
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transparency and accountability.  The 
Company aims to create and maintain a trust-
based and inclusive internal culture in which 
bribery and corruption is not tolerated. 
 
The Company would cease to trade with any 
third parties it has reasonable grounds to 
suspect are involved in bribery or corruption.  
The Group would not hesitate to take legal 
and/or disciplinary action against employees 
and third parties who breach the Company’s 
anti-bribery and anti-corruption programs. 
 
Relations and dialogue with shareholders and 
institutional shareholders 
The Board believes it is important to have open 
communications with shareholders and seeks 
to ensure that all communications with 
shareholders are informative and transparent.  
To this end, the EMT, working in consultation 
with the Company’s corporate advisors, make 
themselves available and expect to meet with 
major shareholders at least twice a year to 
explain the published financial results. 
Where appropriate and from time to time, the 
Company may consult with major 
shareholders on any significant issues. 
Members of the Board develop an 
understanding of the views of major 
shareholders through direct contact that may 
be initiated by the Company’s broker or 
through shareholder feedback following the 
EMT’s investor roadshows, and through 
analysts’ and brokers’ briefings.  We also 
regularly host investor days at our Coventry 
head office and seek investor feedback on our 
performance. 
Stockdale Securities Limited (formerly 
Westhouse Securities Limited) remains the 
Company’s nominated advisor, financial 
advisor and broker.  
Constructive use of the AGM 
The Board actively encourages the 
participation of all Directors in the AGM, which 
is the principal forum for dialogue with private 
shareholders.  A presentation is made 
explaining the financial results and outlining 
recent developments in the business and an 
open question-and-answer session follows to 
enable shareholders to ask questions about 
the business in general.   
Based on feedback from investors, we have 
decided that this year’s AGM will be held at the 
Nailcote Hall Hotel, Nailcote lane, Berkswell, 
Coventry, CV7 7DE at 10:30am on 30 June 
2016.  We hope as many shareholders will 
attend as possible. 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
  ! !!!!!!!!! ! !!!!
34"|"Sprue"Aegis"plc"Annual"Report"and"Accounts"2015"
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Board meeting attendance 
Excluding ad-hoc Board meetings to approve share options and other administrative matters, the 
number of Board meetings attended in person or telephonically is set out below: 
                     
              
Position Name Scheduled  
Board 
meetings 
Attended    
Executive Chairman Graham Whitworth 8 8 
Executive Directors Nick Rutter 
John Gahan 
Neil Smith (appointed 3 June 2015) 
8 
8 
6 
8 
8 
6 
Non-Executive 
Directors 
William Payne 
John Shepherd (appointed 1 April 2015) 
Ashley Silverton  
Tom Russo* 
Peter Lawrence (retired 3 June 2015) 
8 
7 
8 
8 
2 
7 
7 
8 
8 
2 
 
*Tom Russo typically joins the Board meetings by telephone as he is based in the United States of 
America. 
 
Peter Lawrence retired from the Board at the AGM in 3 June 2015. 
 
John Shepherd was appointed to the Board on 1 April 2015. Neil Smith was appointed to the Board 
on 3 June 2015. 
 
Board committees and committee attendance 
Summary of Committee membership and attendance 
 
Name Audit  
Committee 
Remuneration 
Committee 
Audit Committee 
attendance 
Remuneration 
Committee attendance 
Graham Whitworth No Yes N/A 2(2) 
William Payne Yes Yes 2(2) 2(2) 
John Shepherd (appointed 1 April 2015) Yes Yes 2(2) 2(2) 
Peter Lawrence (retired 3 June 2015) Yes Yes - - 
Ashley Silverton Yes Yes 2(2) 2(2) 
 
Figures in brackets denote the maximum number of meetings that could have been attended. 
 
 
 
 
 
 
 
  ! !!!!!!!!! ! !!!!
35"|"Sprue"Aegis"plc"Annual"Report"and"Accounts"2015"
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Audit Committee  
Composition 
The Committee’s key objectives are the 
provision of effective financial governance and 
assistance to the Board in ensuring the 
integrity of the Group’s financial reporting.  The 
Committee oversees the external audit 
process and reviews the Group’s risk 
management framework, the effectiveness of 
its risk management processes and the 
system of internal control. 
 
Details of the Audit Committee membership in 
the year and the number of Audit Committee 
meetings attended in respect of 2015 are 
given on page 34.  The Committee meetings 
are also attended by invitation, by other 
members of the Board and other senior 
executives as required in order to ensure that 
all the information required by the Audit 
Committee for it to operate effectively is 
available.  Representatives of the Group’s 
external auditor meet with the Audit 
Committee at least twice a year without any 
Executive Directors or other Company 
management being present. 
 
In accordance with best practice, the Audit 
Committee is required to include one 
financially qualified member (as recognised by 
the Consultative Committee of Accountancy 
Bodies).  I am deemed by the Board to have 
recent and relevant financial experience as a 
qualified chartered accountant with more than 
20 years’ experience in the financing and 
management of businesses generally. 
 
I would like to thank committee members, the 
EMT and RSM UK Audit LLP (formerly Baker 
Tilly UK Audit LLP) for the open discussions 
that took place at our meetings and 
acknowledge the importance we all attach to 
this work. 
 
Role of the Committee 
The primary responsibilities of the Committee 
are to: 
!! To monitor the integrity of the financial 
statements of the Group and any 
formal announcements relating to the 
Group’s financial performance and 
review significant financial reporting 
judgements contained therein;  
!! To consider whether in its view the 
Annual Report taken as a whole is fair, 
balanced and understandable and 
provides the information necessary to 
assess the Group’s performance, 
business model and strategy, the 
ultimate approval of which is decided 
by the Board; 
!! Review the effectiveness of the 
Group’s financial reporting and the 
internal control and risk management 
policies and systems; 
!! Review annually, the need for an 
internal audit function; 
!! Make recommendations to the Board 
for a resolution to be put to 
shareholders for their approval in 
general meeting, on the appointment 
of the external auditor and approval of  
its remuneration and terms of 
engagement; 
!! Review the external auditor’s 
independence and objectivity and the 
effectiveness of the audit process, 
taking into consideration relevant UK 
professional and regulatory 
requirements; 
!! Review the appropriateness of 
accounting policies; 
!! Develop and implement a policy on 
the engagement of the external 
auditor to supply non-audit services, 
taking into account relevant guidance 
regarding the provision of non-audit 
services by the external audit firm; and  
!! Review the arrangements by which 
staff, may in confidence, raise 
concerns about possible 
improprieties. 
 
Work of the committee in 2015 
To assist us in our work, we received 
representations from the Group Finance 
Director, John Gahan and other key senior 
personnel and reviewed the audit findings 
report of the Group’s auditor, RSM UK Audit 
LLP.  These reports and representations 
covered key accounting judgements and 
estimates and internal controls and risk 
management.   
 
We also reviewed the Committee’s own terms 
of reference. 
 
Internal control 
The Committee reviews the processes by 
which the control environment is assessed to 
seek to identify and resolve any weaknesses 
and have satisfied themselves that internal 
controls are appropriate.  
 
 
 
  ! !!!!!!!!! ! !!!!
36"|"Sprue"Aegis"plc"Annual"Report"and"Accounts"2015"
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External auditor 
The external audit is a continuous process.  At 
the start of the audit cycle, RSM UK Audit LLP 
presented its audit strategy, identifying its 
assessment of the key risks for the purposes 
of the audit and the scope of their work. 
 
RSM UK Audit LLP reports to the Committee on 
the full-year results setting out its assessment 
of the Group’s judgements and estimates in 
respect of these risks and the adequacy of the 
reporting.   I met with the lead audit partner in 
private before each meeting and the whole 
Committee physically meets with RSM UK 
Audit LLP to have discussions in private at 
least once a year. 
 
Non-audit services provided by RSM UK Audit 
LLP 
The main non-audit related services provided 
by RSM UK Audit LLP during the year were in 
respect of tax and advisory matters for the 
financial year with fees of £16,000 compared 
to this year’s audit fee of £145,000.   
 
The non-audit fees comprise advice on the 
Group’s corporate tax and patent box claims.  
The nature and level of all services provided by 
the external auditor is a factor taken into 
account by the Audit Committee in its annual 
review of the external auditor. 
 
Services provided by RSM UK Audit LLP are 
pre-approved by the Board in accordance with 
an agreed policy.  We review the non-audit fees 
charged by RSM UK Audit LLP and annually 
review the approval limits. 
 
Reappointment of auditor 
Following the completion of the audit, we 
reviewed the effectiveness and performance 
of RSM UK Audit LLP with feedback from 
Committee members and senior finance 
personnel covering overall quality, 
independence and objectivity, business 
understanding, technical knowledge, quality 
and continuity of personnel, responsiveness 
and cost effectiveness.    
 
RSM UK Audit LLP was appointed as auditor in 
2001 and this appointment has not been 
subject to a tender process since that date 
although from time to time, the Board has 
bench marked the audit cost with other third 
parties. 
 
The lead audit partner is required to rotate 
every five years and Charles Fray took over as 
lead audit partner in 2012 and will retire from 
his role as lead auditor during 2016 after the 
2015 audit is completed.  Mr Fray had no 
previous involvement with Sprue Aegis plc in 
any capacity.  
 
No contractual obligations restrict our choice 
of external auditors.  
 
We concluded that RSM UK Audit LLP provides 
an effective audit and the Committee and the 
Board have recommended their 
reappointment at the 2016 AGM. We do not 
plan to recommend a tender of the audit in 
2016 as a tender would be unnecessarily 
disruptive and appropriate procedures are in 
place to ensure RSM UK Audit LLP’s audit 
effectiveness is maintained.  
 
 
 
        William Payne 
                       Chairman of the Audit Committee 
          25 April 2016 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
  ! !!!!!!!!! ! !!!!
37"|"Sprue"Aegis"plc"Annual"Report"and"Accounts"2015"
!
Directors’ Remuneration 
Report  
On behalf of the Board, I am pleased to present 
our Directors’ Remuneration Report for the 
year ended 31 December 2015, which sets out 
our policy on pay, benefits and the amounts 
earned by Directors during the year.  The report 
is divided into two sections. A policy report 
which sets out the approach to remuneration 
and a remuneration report which details what 
has been paid to the directors during 2015.   
Basis of preparation 
This report has been prepared in accordance 
with Schedule 8 of the Accounting Regulations 
Act 2006.  Although not required to provide all 
the information detailed in this report, the 
Directors have chosen to do so in accordance 
with best practice and in order to provide 
greater transparency to shareholders.  This 
includes details of our policy on Directors’ 
remuneration, which will be put to an advisory 
vote at the 2016 AGM.  Any changes to this 
policy in future will also be subject to an 
advisory vote at the forthcoming AGM. 
Remuneration Committee 
Remuneration philosophy 
The Remuneration Committee’s policy is to 
attract and retain individuals of the highest 
calibre by offering remuneration competitive 
with comparable publicly quoted companies, 
and to drive the Group’s financial performance 
by providing arrangements which fairly and 
responsibly reward individuals for their 
contribution to the success of the Group.  
Performance-related bonuses and long term 
equity based remuneration linked to 
demanding targets represent a significant 
proportion of Executive Directors’ potential 
remuneration, which aligns the interests of the 
individuals with those of the shareholders. 
Key remuneration decisions for 2015 
The Committee continues to seek to ensure 
that the remuneration of Executive Directors, 
as well as the wider senior management team, 
is sufficient to attract, retain and motivate 
quality individuals.  The key decisions made by 
the committee in relation to 2015 include: 
!! to consider and make recommendations 
to the Board on the policy for the 
remuneration package of the Executive 
Directors   
!! to determine the whole remuneration 
package for Senior Executives  
!! to recommend to the Board the 
remuneration package for the Chairman 
!! to determine the terms and conditions of 
service contracts for Senior Executives 
!! to determine the design, conditions and 
coverage of the annual long-term 
incentive schemes for Senior Executives 
and to approve total and individual 
payments under these schemes 
!! to determine targets for any annual and 
long-term incentive schemes 
!! to determine the issue and terms of all 
share-based plans available to all 
employees 
!! to determine compensation in the event 
of termination of service contracts of any 
of the Senior Executives 
 
We have a clearly defined strategy to drive the 
business forward to be successful through  
understanding the product needs of our 
customers, a focus on product innovation and 
working to develop market leading positions in 
each of the markets which we serve.  Our 
remuneration policy supports the delivery of 
this strategy and aligns the interests of our 
Directors with the interests of our 
shareholders.  This is achieved by short-term 
profit based bonus incentives and longer-term 
share based incentive plans which focus on 
delivering key business objectives, profitable 
growth and strong shareholder returns.    
We have had to acknowledge that the Group 
has significantly increased turnover, EBIT and 
net assets in recent years, particularly 
following the bid defence in 2013 and the 
move to AIM in April 2014 which have 
transformed the Group into a leading business 
on AIM.   With this in mind, the Committee 
continues to monitor the market 
competitiveness of the overall remuneration 
package for each member of the Group’s 
senior management team in order to ensure 
we are able to retain and attract new talent as 
required. 
Annual bonus 
For Executive Directors (and all senior 
managers), the annual bonus is payable as a 
cash contribution after the year end financial 
results have been reviewed by the auditor.  
An important principle of the annual bonus 
plan is that a bonus can only be paid provided 
the Group delivers at least 90% of the Group’s 
EBIT budget for the year as approved by the 
Board.   Apart from the senior management 
team who have their own incentive schemes, 
the rest of the UK staff are eligible to 
participate in the Group’s incentive scheme 
which typical pays out up to 6% of annual  ! !!!!!!!!! ! !!!!
38"|"Sprue"Aegis"plc"Annual"Report"and"Accounts"2015"
!
salary.  Bonus potential is uncapped for the 
EMT and capped for staff  
The total cost of the Group’s bonus payments 
for all directors and staff in 2015 was £0.03m 
(2014: £0.9m).  
The Board sets the Group’s budget with 
reference to the prior year the business plans 
for the coming year, expected foreign 
exchange rates against Sterling and ensuring 
the levels to achieve a bonus pay-out are 
appropriately challenging.   
The performance condition may be replaced or 
varied if an event occurs or circumstances 
arise which cause the Committee to determine 
that the performance conditions have 
fundamentally ceased to be appropriate.  If the 
performance condition is varied or replaced, 
the amended performance conditions must, in 
the opinion of the Committee, be fair, 
reasonable and materially no more or less 
difficult than the original conditions when set. 
Enterprise management incentive (“EMI”) 
In the event of a takeover, scheme of 
arrangement or winding up of the Company 
(not being an internal reorganisation), EMI 
Awards shall, at the discretion of the Remco 
vest early in respect of a time pro-rated 
proportion of the awarded options. If the 
Remuneration Committee considers it 
appropriate, it may use its discretion to permit 
additional vesting by varying the application of 
time pro-rating to the number of awarded 
options subject to the provisions of relevant 
service agreement.   
We believe our current remuneration practices 
are appropriate and in line with reporting 
regulations and that our remuneration policy is 
aligned with the Group’s strategy to enhance 
long-term value for our stakeholders. 
2015 LTIP award 
In June 2015, the Board approved the award of 
the 2015 LTIP and the initial grant of awards 
of nil cost options that vest following a 
performance period of three years and are 
subject to the achievement of total Sprue 
shareholder return targets as outlined below. 
The following members of the Sprue’s 
management team are included in the award: 
Director Position 
Number of nil cost 
options awarded 
G Whitworth Executive Chairman 
200,000 
N Rutter Managing Director 
200,000 
N Smith Group Chief Executive 
300,000 
J Gahan Group Finance Director 
200,000 
 
The key elements of the 2015 LTIP include: 
!! Measurement period is three years from 
the date of grant being 3 June 2015 to 3 
June 2018 
!! Any 2015 LTIP award is subject to 
delivering a minimum total shareholder 
return ("TSR") of at least 25% over the 
measurement period  
!! If TSR is less than 25% over the 
measurement period, none of the share 
options vest 
!! For TSR of between 25% and 100%, 
25% up to 100% of the options vest on a 
straight line basis 
!! For 100% TSR or more over the 
measurement period, only 100% of the 
share options vest  
!! Options are exercisable to the extent 
that the performance target is met as at 
3 June 2018 at any time up to the tenth 
anniversary of the date of grant (or 
earlier in the case or a corporate event) 
!! If the option holder leaves the Group by 
reason of death, injury, ill health or 
disability, redundancy, or because the 
business he works for is sold outside the 
Group, or otherwise at the discretion of 
the Remuneration Committee, then his 
2015 LTIP award shall vest on a time 
prorated proportion subject to the 
performance criteria being met or 
having been deemed to have been met 
by the Remuneration Committee 
!! If the option holder leaves the Group for 
any other reason, his 2015 LTIP award 
will lapse 
 
Options under the 2015 award were valued 
using the Monte Carlo model (given the 
increased uncertainty around potential 
vesting) and the assumptions are set out in 
note 28. 
 
 
  ! !!!!!!!!! ! !!!!
39"|"Sprue"Aegis"plc"Annual"Report"and"Accounts"2015"
!
Total remuneration 
The total remuneration (excluding the value of share options) for the directors of the Company for the 
financial year ended 31 December 2015 is detailed below: 
 
 
Salary and car 
allowance (a) 
£ 
Benefits 
(b) 
£ 
Bonuses 
(c) 
£ 
   Fees     
(a) 
£ 
  Pension 
(d) 
£ 
2015 
Total 
£ 
 
2014 
Total 
£ 
 
G Whitworth 207,987 2,300 - - 25,361 235,648 299,832 
N Rutter 164,219 1,000 - - 21,596 186,815 266,579 
J Gahan  162,407 1,000 - - 14,132 177,539 253,072 
N Smith (f) 153,817 1,000 - - 14,667 169,484 - 
W Payne - - - 39,500 - 39,500 12,000 
P Lawrence - - - 7,896 - 7,896 10,200 
A Silverton - - - 28,374 - 28,374 14,400 
J Shepherd - - - 24,750 - 24,750 - 
T Russo (e) - - - - - - - 
 688,430 5,300 - 100,520 75,756 870,006 856,083 
 
 
Notes 
(a) Salary/fees – cash paid in the year all in £ 
sterling 
(b) Benefits – taxable value of all benefits paid 
in the year represents the only benefit payable 
for Executive Directors being private medical 
insurance 
(c) Bonus. This is the total annual bonus 
earned;  
(d) Pension payments are into defined 
contribution pension plans 
(e) Tom Russo waived his non-executive 
director fees in both the current and preceding 
years 
(f) Neil Smith joined the Company on 2 
February 2015  
 
Share options exercised 
On 22 September 2015, John Gahan exercised 
55,555 of his 125,000 share options awarded 
24 April 2014 at an option price of 200.00p 
per share. At the date of exercise the share 
price was 320.00p per share and the gain on 
these share options amounted to £0.1m. 
 
Group employee considerations 
The Group employs circa 140 people in 5 
countries. Inevitably remuneration 
arrangements differ to reflect local markets, 
but some common themes apply to employees 
at all levels as the Group aims to offer 
competitive levels of remuneration, benefits 
and incentives to attract and retain employees.   
 
At more senior levels, remuneration has a 
larger variable proportion dependent on the 
financial performance of the Group. 
 
Shareholders’ views 
We have considered the guidance provided by 
shareholder advisory groups in preparing this 
policy and have followed this insofar as it is 
appropriate in the context of our business.  
Prior to the introduction of this policy, we have 
sought to base the principles on current 
market practice.  Looking ahead, we welcome 
an open dialogue with shareholders. 
 
Remuneration policy framework 
The Group is committed to achieving sustained 
improvements in performance and this 
depends crucially on the individual 
contributions made by the executive team and 
by employees at all levels.  The Board believes 
that an effective remuneration strategy plays 
an essential part in the future success of the 
Group. Accordingly, the remuneration policy 
will continue to reflect the following broad 
principles: 
 
!! the remuneration of Executive Directors and 
senior managers reflects their 
responsibilities and contains incentives to 
deliver the Group’s performance objectives 
without encouraging excessive risk taking 
!! remuneration must be capable of attracting 
and retaining the individuals necessary for 
business success 
!! total remuneration should be based on the 
Group and individual performance, both in 
the short and long term 
!! the system of remuneration should establish 
a close identity of interest between senior 
executives and shareholders by ensuring a 
significant proportion of senior executive 
remuneration from equity based incentives 
!! when determining remuneration, the 
committee will take into account pay and 
employment conditions in the market  
 
  ! !!!!!!!!! ! !!!!
40"|"Sprue"Aegis"plc"Annual"Report"and"Accounts"2015"
!
Non-Executive Directors’ (“NEDs”) remuneration policy is as follows: 
 
Element Purpose and link to 
strategy 
Operation Maximum opportunity Performance 
measures 
Fees To reward individuals for 
fulfilling the relevant role 
and to attract individuals 
of the skills and calibre 
required. 
The committee makes 
recommendations to the 
Board on the remuneration of 
the NEDs. The level of 
remuneration is set within a 
limit approved from time-to-
time by shareholders.  NEDs 
are paid a base fee covering 
Board and committee 
membership.  
Fees are set at a level 
appropriate for the role and 
are reviewed regularly, 
taking into account fees 
payable to Non-Executive 
Directors of companies of a 
similar size and complexity. 
None 
 
Executive Directors’ remuneration policy is set out below: 
 
Element Purpose and link to 
strategy 
Operation Maximum opportunity Performance 
measures 
Salary It is essential that the 
Company provides 
competitive salaries, 
suitable to attract 
and retain individuals 
of the right calibre to 
develop and execute 
the business strategy 
Salary levels are set using 
careful judgement, taking into 
account the scope of the role 
and responsibilities, 
performance, experience, 
potential, retention issues and 
salaries elsewhere in the 
Group and in the market 
place. Judgement will be 
informed, but not led, by 
reference to companies of a 
similar size, complexity and 
internationality. Salaries are 
reviewed annually and 
normally fixed for 12 months 
from 1 April each year. 
However, salary increases are 
not automatic. Exceptionally, 
salaries may be increased on 
other dates in the year.   
 
Annual salary increases will 
not normally exceed average 
increases for employees in 
other appropriate parts of 
the Group. On occasion, 
increases may be larger 
where the committee 
considers this to be 
necessary to align with 
market rate or exceptional 
performance. Circumstances 
where this may apply 
include: growth into a role, to 
reflect a change in scope of 
role and responsibilities or 
where market conditions 
indicate a level of under 
competitiveness and the 
committee judges that there 
is a risk in relation to 
attracting or retaining 
Executives.  Where the 
committee exercises its 
discretion to award increases 
above the average for other 
employees, the resulting 
salary will not exceed the 
competitive market range. 
None, although 
individual 
performance is the 
primary 
consideration in 
setting salary 
alongside overall 
Company 
affordability and 
market 
competitiveness. 
Benefits To provide market 
competitive benefits 
Sufficient to recruit and 
retain, and to support the 
Executive to give 
maximum attention to 
their role. 
Benefits provided include life 
assurance and medical 
insurance. 
Benefits will be market 
competitive taking into 
account the role and the 
local market.  
None. 
Pension To provide market 
competitive pensions 
sufficient to recruit and 
retain. 
New Executives to the 
Company are offered 
membership to the Group’s 
defined contribution pension 
plan.  Pension contributions 
are based only on an 
individual’s salary. Executives 
may opt to receive a pension 
contribution to an alternative 
pension provider of their 
choosing should they prefer. 
The maximum employer 
contribution to defined 
contribution pension 
arrangements is 5% of gross 
salary and this increased to 
10% from 1 April 2015 
None. 
Annual 
Bonus 
To incentivise and reward 
execution of the business 
strategy, delivery of 
financial performance 
targets and the 
Company’s strategic 
plan. 
 
The Board approves the 
budget for the Group and 
bonus achievement is based 
on delivery of Group EBIT 
against the Group’s EBIT 
budget. At the end of the year, 
business performance 
determines the bonus pay out 
level.  
 
Bonus potential is uncapped 
to ensure that there is no 
incentive for Executives to 
restrict revenue and profit 
once the target level of 
performance has been met. 
The bonus pay out 
level is 
determined 
primarily by Group 
financial 
performance  ! !!!!!!!!! ! !!!!
41"|"Sprue"Aegis"plc"Annual"Report"and"Accounts"2015"
!
Service contracts 
Executive Directors’ contracts include the 
following provisions: 
 
!! 12 months’ notice of termination from 
Sprue Aegis plc; 
!! 12 months’ notice of termination from 
the Executive; and 
!! Re-imbursement of reasonable 
business expenses. 
 
All contracts also include the entitlement to 
paid holidays, sick pay and other standard 
employee terms.  
 
Policy on exit payments 
The notice period the Company is required to 
give to Executive Directors under their 
contracts of employment is 12 months, with 
the exception of the Group Chief Executive 
Director which is 6 months.  Payment in lieu of 
notice will not exceed the value of 12 months’ 
salary, bonus, benefits, car allowance and 
pension contributions. Both mitigation and the 
staggering of payments through the notice 
period will be considered by the committee 
where appropriate, as will the funding of 
professional fees.  Should additional 
compensation matters arise, such as a 
settlement or compromise agreement, the 
committee would exercise judgement and will 
take into account the specific commercial 
circumstances. 
 
The committee has the discretion to preserve 
incentive awards pro-rated to service.  In 
exercising this discretion, the committee will 
have regard to performance and the 
circumstances of the Director leaving the 
Group and the terms of the relevant service 
agreement. 
 
For share options, the rules state that unvested 
awards may be preserved at the committee’s 
discretion according to the circumstances. In 
such cases vesting will be at the normal date, 
subject to the established performance 
conditions, and pro rata to employment in the 
performance period. In cases such as death 
and terminal illness, the committee also has 
the discretion to vest the awards immediately. 
 
The treatment of leavers in the Company’s 
Share Option scheme is governed by the plan 
rules. The UK scheme rules are HMRC 
approved.     
 
In the event of a change of control of the 
Company, share option awards may vest in full 
at the discretion of the Remuneration 
Committee.  
 
Policy on new appointments 
The committee would normally award newly 
appointed Executive Directors with a 
remuneration package which is consistent 
with the policy and principles as set out in this 
report.  Base salary may be set at a level higher 
or lower than previous incumbents and in 
certain circumstances, to facilitate the 
recruitment of individuals of the required 
calibre, the committee may use its discretion 
to make individual additional incentive 
awards.  This level of discretion is considered 
appropriate given the Group’s growth strategy. 
 
 
   ! !!!!!!!!! ! !!!!
42"|"Sprue"Aegis"plc"Annual"Report"and"Accounts"2015"
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External directorships 
The Directors currently hold (in addition to the Company) the following directorships or are partners in 
the following partnerships and have held the following directorships and have been partners in the 
following partnerships within the five years prior to the year end date: 
 
Name Current Directorships/partnerships 
Graham Whitworth AngelEye Corporation (Canada)  
AngelEye, Inc (USA)  
Pace Sensors Limited (Canada) 
Sprue Safety Products Limited 
Nicholas Rutter Sprue Safety Products Limited 
Pace Sensors Limited (Canada) 
Neil Smith Sprue Safety Products Limited 
John Gahan Calmwater Limited  
Sprue Safety Products Limited 
Catesby House Management Company Limited 
William Payne Ariana Exploration & Development Limited 
Ariana Resources plc  
Ferensway Limited  
Marlowe Investments (Kent) Limited  
Millard Estates Limited  
Millard Properties Limited 
Paynard Investments Limited 
ReallyEnglish.Com Limited 
ReallyEnglish (UK) Limited 
Sprue Safety Products Limited 
West Bridge Consulting Limited 
Wilkins Kennedy LLP 
Ashley Silverton Silverton Advisory 
John Shepherd A1 Presentations Limited 
Coex Limited 
Falcon Equipment and Systems Limited 
Fotovalue Limited 
IES Integrated Electronic Systems Limited 
Integrated Environmental Systems Limited 
Look CCTV Limited 
Look Closed Circuit T.V. Limited 
Protec 2001 Limited 
Protec Plc 
Quadnetics Group Limited 
Quadrant Research & Development Limited 
Quadrant Security Group Limited 
Quadrant Video Systems Plc 
SDA Network Solutions Limited 
SDA Protec Limited 
SDA Protec (2001) Limited 
SSS Managed Services Limited 
SSS Management Services Limited 
Sanpho Pension Trustees Limited 
Sectronic (Marketing) Limited 
Security Design Associates (1979) Limited 
Software Developments (Digital Direct) Limited 
Stanmore Systems Limited 
Synectic Systems (Asia) Pte Ltd 
Synectic Systems GmbH 
Synectic Systems Group Limited 
Synectic Systems Limited 
Synectic Systems (Macau) Ltd 
Synectics Managed Services Limited 
Synectics No. 2 Limited 
Synectics Plc 
Synectics Technology Centre Limited 
Tom Russo Imaging Solutions LLC  
Shenzen CICAM Manufacturing Co. Limited (China) 
 
 
  ! !!!!!!!!! ! !!!!
43"|"Sprue"Aegis"plc"Annual"Report"and"Accounts"2015"
!
Executive Chairman remuneration  
This section of the report enables our remuneration arrangements to be seen in context by providing 
a five-year history of our Executive Chairman remuneration compared to the year end market 
capitalisation of the Group. 
 
Year CEO Total remuneration 
including bonus and 
pension       (excluding 
share options) £000 
Sprue Aegis plc year 
end market    
capitalisation           
£000 
CEO total 
remuneration as a % 
of average market 
capitalisation at year 
end 
2015 G Whitworth 235 148,000 0.16% 
2014 G Whitworth 300 153,000 0.20% 
2013 G Whitworth 259 50,500 0.51% 
2012 G Whitworth 175 24,450 0.72% 
2011 G Whitworth 205 19,620 1.04% 
 
 
Excluding Executive Directors remuneration, the average remuneration per employee from 2011 to 
2015 inclusive is as follows: 
 
 
Year Total remuneration 
including bonus and 
pension       (excluding 
share options) £000 
Average number of 
employees excluding 
Executive and non-
executive directors  
Average remuneration 
per employee £000 
2015 6,050 140 43 
2014 5,832 124 47 
2013 3,695 104 35 
2012 2,679 77 35 
2011 2,481 65 38 
 
 
Directors’ interests in unvested and vested share option awards 
 
 Options 
at 
1.1.15 
 
Options 
granted 
in year 
Options 
lapsed in 
year 
Options 
exercised 
in year 
Options at 
31.12.15 
 
Exercise 
price 
(pence) 
 
Market 
price at 
date of 
exercise 
(pence) 
Exercise 
period 
(years) 
Expiry date 
 
 
G Whitworth 125,000 - - - 125,000 200 - 10 28/04/24 
N Rutter 125,000 - - - 125,000 200 - 10 28/04/24 
J Gahan 
N Rutter 
G Whitworth 
N Smith 
J Gahan 
125,000 
- 
- 
- 
- 
 
- 
200,000 
200,000 
300,000 
200,000 
- 
- 
- 
- 
- 
(55,555) 
- 
- 
- 
- 
69,445 
200,000 
200,000 
300,000 
200,000 
200 
2 
2 
2 
2 
 
3.20 
- 
- 
- 
- 
10 
10 
10 
10 
10 
 
28/04/24 
03/06/25 
03/06/25 
03/06/25 
03/06/25 
 
 
The remuneration policy report was approved by the Board on 25 April 2016 and signed on its behalf 
by: 
 
 
 
 
 
William Payne 
Chairman of the Remuneration Committee 
25 April 2016 ! !!!!!!!!! ! !!!!
44"|"Sprue"Aegis"plc"Annual"Report"and"Accounts"2015"
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Directors’ report   
The directors present their report and the 
audited financial statements for the Group for 
the year ended 31 December 2015.   
 
Pages 44 to 49 inclusive (together with 
sections of the Annual Report incorporated by 
reference) consist of a Directors’ Report that 
has been drawn up and presented in 
accordance with and in reliance upon the 
applicable laws of England and Wales and the 
liabilities of the Directors in connection with 
that report shall be subject to the limitations 
and restrictions provided by such law. 
 
The following additional disclosures to be 
included in the Directors’ Report are made in 
compliance with the Companies Act 2006. 
 
Likely future developments 
The outlook for the business and the likely 
future developments are outlined in the Group 
CEO review of the Strategic Report on page 18 
and in the Chairman’s review on pages 7 to 9 
and are incorporated in the Directors’ Report 
by cross reference. 
 
Post balance sheet events   
Information on any events occurring after the 
balance sheet year end is described in note 31 
of the Annual Report. 
 
Results and Dividends   
The financial results for the year and financial 
position of the Group and the Company are as 
shown on pages 53 to 58 inclusive. Profit 
before tax for the year before exceptional 
items and share-based payments charge was 
£12.8m (2014: £10.4m)  
      
The directors recommend the payment of a 
final dividend of 5.5 pence per ordinary share 
(2014: 6.0 pence per share) taking the total 
dividend in respect of 2015 to 8.0 pence per 
share (2014: 8.0 pence per share).   
    
Employee information   
Details of the Group’s policy in respect of the 
employment and training are given in the 
Corporate social responsibility statement on 
page 25. 
 
Charitable contributions 
The group made charitable contributions 
amounting to £10,265 (2015:  £3,250) during 
the year. 
 
 
Financial instruments   
The Group’s financial risk management 
objectives and policies, including the policy for 
hedging future foreign exchange rate risk are 
outlined in note 4.   The Group does not adopt 
hedge accounting and all future contracts are 
marked to market at the balance sheet date 
and the gain or loss on those contracts is taken 
to profit and loss account in the period.  Net 
losses on foreign exchange contracts and 
taken to profit in the year amounted to 
£(0.5)m (2014: profit of £0.2m).  Information 
on the principal risks and uncertainties and 
how they are managed by the Group is 
included in the Strategic Report on pages 13 
to 15.  
 
Control and share structure   
Details of the authorised and issued share 
capital, together with details of the 
movements in the Company’s issued share 
capital during the year, are shown in note 26.  
The Company has one class of ordinary share 
which carries no right to fixed income.  Each 
share carries the right to vote at general 
meetings of the Company. 
 
Other than the specific lock in and orderly 
marketing provisions negotiated with the 
Directors in connection with the admission of 
the Company’s shares to AIM, there are no 
specific restrictions on the size of a holding nor 
on the transfer of shares, which are both 
governed by the general provisions of the 
Articles of Association and prevailing 
legislation.  The Directors are not aware of any 
agreements between shareholders of the 
Company’s shares that may result in 
restrictions on the transfer of securities or 
voting rights. 
 
Details of employee share schemes are set out 
in note 28.  No person has any special rights of 
control over the Company’s shares capital and 
all issued shares are fully paid. 
 
Agreements affected by change of control 
Other than some customer and supplier 
contracts that have an option to be terminated, 
the Company is not a party to any agreements 
which take effect, alter or terminate upon a 
change of control of the Company following a 
take over bid.  There are no agreements 
between the Company and its Directors or 
employees providing compensation for loss of 
office or employment (whether through 
resignation, purported redundancy or 
otherwise) that occurs because of a take over 
bid.  ! !!!!!!!!! ! !!!!
45"|"Sprue"Aegis"plc"Annual"Report"and"Accounts"2015"
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Research and development   
The Group continues to invest in research and 
development. The people and non-people 
costs of product development on specific 
projects are capitalised in accordance with the 
accounting policy set out on page 61.  General 
research costs undertaken in respect of the 
Group's principal activities are charged to the 
profit and loss account as incurred.   
 
Directors 
The following directors have held office since 1 
January 2015:     
 
  
G Whitworth       Executive Chairman 
J Gahan Group Finance Director 
N Rutter    Managing Director 
N Smith Group Chief Executive Director (appointed 3 June 
2015) 
  
W Payne Senior Independent Director 
P Lawrence                Non-Executive Director (resigned 3 June 
2015) 
J Shepherd Non-Executive Director (appointed 1 April 
2015) 
A Silverton                 Non-Executive Director 
T Russo                        Non-Executive Director 
  
 
 
Re-election of directors                      
The Company’s articles of Association require 
that a minimum of one third of the Directors 
must retire by rotation each year, or if their 
number is not 3 or a multiple of 3 then the 
number nearest to but not exceeding one third 
shall retire from office, excluding Directors 
who are retiring and standing for election at 
the first AGM following their appointment to 
the Board.  If the number of Directors subject 
to retirement by rotation is fewer than 3, one 
of such Directors shall retire.  At the AGM to be 
held on 30 June, Graham Whitworth, Tom 
Russo and Ashley Silverton will retire and 
stand for re-election. 
 
Appointment of directors   
Sprue shareholders may by ordinary resolution 
appoint any person to be a Director.  Sprue 
must not have less than three and no more 
than twelve directors holding office at any 
time.  Sprue may by ordinary resolution from 
time to time vary the minimum and / or the 
maximum number of directors. 
 
Articles of association    
Sprue’s Articles of Association may be 
amended only by a special resolution at a 
general meeting of shareholders. 
 
 
 
 
Powers of directors    
The Board may delegate to a Director holding 
any executive office any of the powers, 
authorities and discretions exercisable by the 
Board for such time and on such terms and 
conditions as it thinks fit.  The Board may 
revoke or alter the terms and conditions of the 
delegation and may retain or exclude the right 
of the Board to exercise the delegated powers, 
authorities or discretions collaterally with the 
Executive Director. 
 
Corporate governance 
The Company’s statement on corporate 
governance can be found in the Corporate 
Governance Report on pages 30 to 34 of these 
financial statements.  The Corporate 
Governance Report forms part of this 
Directors’ Report and is incorporated into it by 
cross reference. 
 
The policy of the Board is to manage the affairs 
of the Company with regard to the Corporate 
Governance guidance issued by Quoted 
Company Alliance. The Directors support the 
principles underlying this guidance in so far as 
it is appropriate to a group of the size of Sprue 
Aegis plc. 
 
Directors’ interests in shares  
Directors’ interests in the shares of the 
Company including connected persons were as 
follows: 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
  ! !!!!!!!!! ! !!!!
46"|"Sprue"Aegis"plc"Annual"Report"and"Accounts"2015"
!
 
 Ordinary shares of 
2.0 pence each 
Ordinary shares of 
2.0 pence each 
 31 Dec 2015 1 Jan 2015 31 Dec 2014 1 Jan 2014 
Executive Directors     
G Whitworth 3,521,937 3,540,000 3,540,000 3,666,700 
N Rutter 3,000,000 3,000,000 3,000,000 3,184,250 
J Gahan 10,000 23,000 23,000 - 
N Smith - - - - 
     
Non-Executive Directors 
    
W Payne 100,000 100,000 100,000 289,167 
J Shepherd 23,063 - - - 
A Silverton 15,000 20,000 20,000 20,000 
T Russo - - - - 
     
On 22 September 2015, the following 
Directors transacted in shares: 
 
John Shepherd purchased 23,063 shares at 
£3.25 per share, following which he is 
interested in 23,063 shares representing 
approximately 0.05 per cent of the Company’s 
issued share capital. 
 
John Gahan sold 10,000 shares at £3.20 per 
share, following which he is interested in 
10,000 shares, representing approximately 
0.02 per cent of the Company’s issued share 
capital.   
 
Graham Whitworth sold 18,063 shares at 
£3.25 per share, following which together with 
controlled parties he is interested in 
3,521,937 shares representing approximately 
7.7 per cent of the Company’s issued share 
capital. 
 
Ashley Silverton sold 5,000 shares at £3.25 
per share, following which he is interested in 
15,000 shares representing 0.03 per cent of 
the Company’s issued share capital. 
 
Details of Directors share options are set out in 
note 28. 
 
2015 LTIP  
Executive directors included in the 2015 LTIP 
are as follows: 
  
Director Position 
Number of nil cost 
options awarded 
G Whitworth Executive Chairman 200,000 
N Rutter Managing Director 200,000 
N Smith Group Chief Executive 300,000 
J Gahan Group Finance Director 200,000 
 
 
The key elements of the 2015 LTIP include: 
 
!! Measurement period is three years from 
the date of grant being 3 June 2015 to 3 
June 2018 
!! Any 2015 LTIP award is subject to 
delivering a minimum total shareholder 
return ("TSR") of at least 25% over the 
measurement period  
!! If TSR is less than 25% over the 
measurement period, none of the share 
options vest 
!! For TSR of between 25% and 100%, 
25% up to 100% of the options vest on a 
straight line basis  
!! For 100% TSR or more over the 
measurement period, only 100% of the 
share options vest  
!! Options are exercisable to the extent 
that the performance target was met as 
at 3 June 2018 at any time up to the 
tenth anniversary of the date of grant (or 
earlier in the case or a corporate event) 
!! If the option holder leaves the Group by 
reason of death, injury, ill health or 
disability, redundancy, or because the 
business he works for is sold outside the 
Group, or otherwise at the discretion of 
the Remuneration Committee, then his 
2015 LTIP award shall vest on a time 
prorated proportion subject to the 
performance criteria being met or 
having been deemed to have been met 
by the Remuneration Committee 
!! If the option holder leaves the Group for 
any other reason, his 2015 LTIP award 
will lapse 
 
The Group recognised a 2015 LTIP share 
based expense of £149,000 (2014: £Nil) 
relating to equity-settled share-based payment 
transactions.  ! !!!!!!!!! ! !!!!
47"|"Sprue"Aegis"plc"Annual"Report"and"Accounts"2015"
!
Conflicts of interest    
Tom Russo, a Non-Executive Director of the 
Company, is a Director of BRK Brands Europe 
Limited, part of Jarden Corporation.  The Group 
has a distribution agreement which gives 
exclusive rights to distribute BRK products and 
brands in Europe.    
 
The Group has procedures in place for 
managing conflicts of interests.  If a Director 
becomes aware that they, or a connected party 
have an interest in an existing or proposed 
transaction with the Group, they should notify 
the Company Secretary as soon as possible.  
Directors have a continuing obligation to 
update any changes to conflicts and the Board 
formally reviews any such conflicts 
periodically. 
      
Directors' and Officers’ Liability Insurance 
The Group maintains a management 
protection policy including directors’ and 
officers’ liability insurance which is reviewed 
annually.  The insurance covers the directors 
and officers of the ultimate holding company 
of the Group, Sprue Aegis plc and its 
subsidiaries against the costs of defending 
themselves in civil proceedings taken against 
them in their capacity as a director or officer of 
a Group company and in respect of damages 
or civil fines or penalties resulting from the 
unsuccessful defence of any proceedings to a 
value of £1m.  
 
Policy on payment of suppliers 
It is and will continue to be the Group's policy 
to negotiate with suppliers so as to obtain the 
best available terms taking account of quality, 
delivery, price and period of settlement, and 
having agreed those terms, to abide by them.  
Average trade creditor days during 2015 were 
82 days (2014: 57 days).  
 
Related party transactions Jarden Corporation 
Jarden and its subsidiaries and associates 
(collectively referred to as “Jarden”) are related 
parties to the Group with a 23.4% interest in 
the ordinary share capital of the Company and 
the appointment of a Jarden nominated Non-
Executive Director, Tom Russo to the Sprue 
Aegis plc board on 29 September 2011.   
 
Jarden, through its subsidiary BRK Brands 
Europe Limited, represents the single largest 
supplier to the company supplying 100% of the 
Group’s smoke alarm and wi-safe products 
and many accessories (Sprue's own brand 
carbon monoxide alarms are supplied by an 
independent third party).   In 2015, total net 
purchases from Jarden amounted to £53.5m 
of which, £3.5m relates to the distribution fee 
(2014: net purchases from Jarden were 
£33.1m which included £4.16m for the BRK 
distribution fee).  Total net creditors relating to 
Jarden as at 31 December 2015 amounted to 
£11.2m (2014: £13.5m). 
 
In early 2012, the Company appointed Mapa 
Spontex, part of Jarden as its supplier to the 
hypermarket channel in France.  Net sales to 
Mapa Spontex in 2015 amounted to £3.2m 
(2014: £2.8m).  As at 31 December 2015, the 
net debtor related to Mapa Spontex amounted 
to £nil (2014: £0.6m). 
 
Wilkins Kennedy LLP 
WJB Payne, a Non-Executive Director of the 
Company, is a partner of Wilkins Kennedy LLP, 
Chartered Accountants, which is the firm that 
provides his services. During the period Wilkins 
Kennedy LLP were paid £39,500 (2014: 
£12,000) for the provision of WJB Payne's 
services as a Non-Executive Director and 
£11,665 (2014: £33,000) for accounting and 
management services.  At the year end, the 
Company owed Wilkins Kennedy LLP £nil 
(2014: £7,000). 
    
Going concern 
The Group’s business activities, together with 
the factors likely to affect its future 
development, performance and position are 
set out in the Chairman’s Statement, Strategic 
Report and Financial Review on pages 7 to 24. 
 
In determining whether the Group and Parent 
Company’s financial statements can be 
prepared on a going concern basis, the 
Directors considered the Group’s business 
activities, together with the factors likely to 
affect its future development, performance 
and position. The review also included the 
financial position of the Group, its cash flows, 
and borrowing facilities.  
 
The key factors considered by the Directors 
were:  
 
!! the implications of the current 
economic environment and future 
uncertainties around the Group’s 
revenues and profits by undertaking 
forecasts and projections on a 
regular basis 
!! the impact of the competitive 
environment within which the 
Group’s businesses operate 
!! the potential actions that could be  ! !!!!!!!!! ! !!!!
48"|"Sprue"Aegis"plc"Annual"Report"and"Accounts"2015"
!
taken in the event that revenues are 
worse than expected, to ensure that 
operating profit and cash flows are 
protected 
 
As at the date of this report, the Directors have 
a reasonable expectation that the Group and 
Parent Company have adequate resources to 
continue in business for the foreseeable 
future.  Accordingly, the financial statements 
have been prepared on the going concern 
basis. 
 
Auditor 
RSM UK Audit LLP (formerly Baker Tilly UK 
Audit LLP) has indicated their willingness to 
continue in office and a resolution that they be 
re-appointed as auditors will be proposed at 
the annual general meeting.  
 
Share capital and voting rights 
As at 31 December 2015, there were 
45,855,365 ordinary shares of 2 pence each in 
issue. The ordinary shares are listed on AIM. 
 
Payments to shareholders 
In line with its progressive dividend policy and 
taking account of the Group’s future prospects 
and cash resources, the Board is pleased to 
recommend a final dividend of 5.5 pence per 
share (2014: 6.0 pence per share) taking the 
total dividend for the year to 8.0 pence per 
share (2014: 8.0 pence per share).  The 
proposed total cost to the Group amounts to 
£2.5 million and is covered 1.6x by post-tax 
profit (2014: 2.2x).  If approved by 
shareholders at the AGM on 30 June 2016, the 
record date will be 8 July 2016 and the 
dividend will be paid to shareholders on 22 July 
2016.  
 
Share class rights 
The rights and obligations attaching to the 
different classes of shares are summarised 
below. The full rights are set out in the 
Company’s Articles of Association, the latest 
copy of which can be found on the Group’s 
website at www.sprueaegis.com 
 
Ordinary shares 
Holders of ordinary shares are entitled to 
receive the Company’s annual report. They are 
also entitled to attend and speak at general 
meetings of the Company, to appoint one or 
more proxies or, if they are corporations, 
corporate representatives, and to exercise 
voting rights. They have the right to ask 
questions at the AGM relating to the business 
of the meeting and for these to be answered, 
unless such answer would interfere unduly 
with the business of the meeting, involve the 
disclosure of confidential information, if the 
answer has already been published on the 
Group’s website or if it is not in the interests of 
the Group or the good order of the meeting 
that the question be answered.   
 
Restrictions on transfer of shares and 
limitations on holdings 
There are no restrictions on transfer or 
limitations on the holding of the ordinary 
shares other than under the Articles of 
Association (as described here), under 
restrictions imposed by law or regulation (for 
example, insider trading laws) or pursuant to 
the Company’s share dealing code.  
 
Shareholder agreements and consent 
requirements 
There are no known arrangements under 
which financial rights carried by any of the 
shares in the Company are held by a person 
other than the holder of the shares and no 
known agreements between the holders of 
shares with restrictions on the transfer of 
shares or exercise of voting rights.   
 
Authority to issue and purchase own shares 
At the AGM on June 2015, authority was given 
to the directors to allot new ordinary shares up 
to a nominal value of £303,000 equivalent to 
33% of the issued share capital of the 
Company.  These authorities are valid until 3 
September 2016. 
 
In addition, authority was given to the directors 
to allot a further new ordinary shares up to a 
nominal value of £45,497 equivalent to 5% of 
the issued share capital of the Company.  
These authorities are valid until 3 September 
2016. 
 
The authority was given for the Company to 
make market purchases of its ordinary shares 
provided that the maximum aggregate 
number of ordinary shares that may be 
purchased is limited to 4.5m, the minimum 
price paid for each ordinary share is £0.02 and 
the maximum price which may be paid for 
each ordinary share is an amount not 
exceeding 105% of the average of the mid-
market price as derived from AIM.  These 
authorities are valid until 3 September 2016.  
 
Voting rights 
Deadlines for exercising voting rights must be 
received by the Company’s Registrar not less 
than 48 hours before a general meeting. ! !!!!!!!!! ! !!!!
49"|"Sprue"Aegis"plc"Annual"Report"and"Accounts"2015"
!
 
 
 
Major shareholdings 
At 31 December 2015, the following companies had notified an interest in the issued ordinary share 
capital of the Company: 
 
 % of issued ordinary share capital 
BRK BRANDS EUROPE LIMITED 23.4 
GRAHAM WHITWORTH ESQ 7.7 
HSBC GLOBAL CUSTODY NOMINEE (UK) LIMITED  7.2 
AURORA NOMINEES LIMITED  6.9 
NICHOLAS ALEXANDER RUTTER ESQ  6.5 
ROCK (NOMINEES) LIMITED  4.8 
LION NOMINEES LIMITED  4.3 
JOLYON WILLIAM MONEY ESQ  3.3 
STATE STREET NOMINEES LIMITED  2.7 
DARTINGTON PORTFOLIO NOMINEES LIMITED  2.6 
THE BANK OF NEW YORK (NOMINEES) LIMITED  2.3 
BROOKS MACDONALD NOMINEES LIMITED  1.9 
GOLDMAN SACHS SECURITIES (NOMINEES) LIMITED  1.8 
HAREWOOD NOMINEES LIMITED 1.7 
NORTRUST NOMINEES LIMITED  1.6 
JIM NOMINEES LIMITED  1.6 
CHASE NOMINEES LIMITED 1.4 
RULEGALE NOMINEES LIMITED 1.2 
SECURITAS SERVICES NOMINEES LIMITED 1.2 
OTHER 15.9 
 
100.0 
 
 
 
 
Statement as to disclosure of information to the 
auditor 
 The directors who were in office on the date of 
approval of these financial statements have 
confirmed, that as far as they are aware, there 
is no relevant audit information of which the 
auditor is unaware.  
 
Each of the directors have confirmed that they 
have taken all the steps that they ought to 
have taken as directors in order to make 
themselves aware of any relevant audit 
information and to establish that it has been 
communicated to the auditor. 
 
 
 
 
 
John Gahan 
Group Finance Director 
25 April 2016 
 
  
 
 
 
 
 
 
 
 
 
 
 
 
  ! !!!!!!!!! ! !!!!
50"|"Sprue"Aegis"plc"Annual"Report"and"Accounts"2015"
!
Statement of Directors’ 
responsibilities 
The directors are responsible for preparing the 
Strategic Report and the Directors’ Report, and 
the financial statements in accordance with 
applicable law and regulations. 
 
Company law requires the directors to prepare 
group and company financial statements for 
each financial year. Under that law the directors 
have elected to prepare the financial 
statements of the group and the company in 
accordance with International Financial 
Reporting Standards ("IFRS") as adopted by the 
European Union (“EU”).  
  
The financial statements are required by law 
and IFRS adopted by the EU to present fairly the 
financial position of the Group and the Company 
and the financial performance of the Group. The 
Companies Act 2006 provides in relation to 
such financial statements that references in the 
relevant part of that Act to financial statements 
giving a true and fair view are references to their 
achieving a fair presentation. 
 
Under company law the directors must not 
approve the financial statements unless they 
are satisfied that they give a true and fair view 
of the state of affairs of the Group and the 
Company and of the profit or loss of the group 
for that period.  
  
In preparing the Group and Company financial 
statements, the directors are required to: 
 
 
 
•! select suitable accounting policies and 
then apply them consistently; 
•! make judgements and accounting 
estimates that are reasonable and 
prudent; 
•! state whether they have been prepared 
in accordance with IFRSs adopted by 
the EU; 
•! prepare the financial statements on the 
going concern basis unless it is 
inappropriate to  presume that the 
Group and the Company will continue in 
business 
 
The directors are responsible for keeping 
adequate accounting records that are sufficient 
to show and explain the Group’s and the 
Company’s transactions and disclose with 
reasonable accuracy at any time the financial 
position of the Group and the Company and 
enable them to ensure that the financial 
statements comply with the Companies Act 
2006. They are also responsible for 
safeguarding the assets of the Group and the 
Company and hence for taking reasonable 
steps for the prevention and detection of fraud 
and other irregularities. 
 
The directors are responsible for the 
maintenance and integrity of the corporate and 
financial information included on the Sprue 
Aegis plc website. 
 
Legislation in the United Kingdom governing the 
preparation and dissemination of financial 
statements may differ from legislation in other 
jurisdictions. 
 
By order of the Board 
 
 
 
 
 
Neil Smith                                                   John Gahan 
Group Chief Executive Director                                    Group Finance Director 
25 April 2016                                                                25 April 2016 
   ! !!!!!!!!! ! !!!!
51"|"Sprue"Aegis"plc"Annual"Report"and"Accounts"2015"
!
Independent auditor’s 
report to the members of 
Sprue Aegis plc 
We have audited the Group and parent 
company financial statements (“the financial 
statements”) on pages 53 to 88.  The financial 
reporting framework that has been applied in 
their preparation is applicable law and 
International Financial Reporting Standards 
(IFRSs) as adopted by the European Union and, 
as regards the parent company financial 
statements, as applied in accordance with the 
provisions of the Companies Act 2006.  
 
This report is made solely to the company’s 
members, as a body, in accordance with 
Chapter 3 of Part 16 of the Companies Act 
2006.  Our audit work has been undertaken so 
that we might state to the company’s 
members those matters we are required to 
state to them in an auditor’s report and for no 
other purpose.  To the fullest extent permitted 
by law, we do not accept or assume 
responsibility to anyone other than the 
company and the company’s members as a 
body, for our audit work, for this report, or for 
the opinions we have formed. 
 
Respective responsibilities of directors and 
auditor 
As more fully explained in the Directors’ 
Responsibilities Statement set out on page 50, 
the directors are responsible for the 
preparation of the financial statements and for 
being satisfied that they give a true and fair 
view.  Our responsibility is to audit and express 
an opinion on the financial statements in 
accordance with applicable law and 
International Standards on Auditing (UK and 
Ireland).  Those standards require us to comply 
with the Auditing Practices Board’s (APB’s) 
Ethical Standards for Auditors. 
 
Scope of the audit of the financial statements 
A description of the scope of an audit of 
financial statements is provided on the 
Financial Reporting Council’s website at 
http://www.frc.org.uk/auditscopeukprivate 
 
Opinion on financial statements 
In our opinion  
 
•! the financial statements give a true and 
fair view of the state of the Group’s and the 
parent’s affairs as at 31 December 2015 
and of the Group’s profit for the year then 
ended; 
•! the Group financial statements have been 
properly prepared in accordance with 
IFRSs as adopted by the European Union; 
•! the parent financial statements have been 
properly prepared in accordance with 
IFRSs as adopted by the European Union 
and as applied in accordance with the 
Companies Act 2006; and 
•! The financial statements have been 
prepared in accordance with the 
requirements of the Companies Act 2006. 
 
Opinion on other matter prescribed by the 
Companies Act 2006 
In our opinion the information given in the 
Strategic Report and the Directors’ Report for 
the financial year for which the financial 
statements are prepared is consistent with the 
financial statements. 
 
Matters on which we are required to report by 
exception 
We have nothing to report in respect of the 
following matters where the Companies Act 
2006 requires us to report to you if, in our 
opinion: 
•! adequate accounting records have not 
been kept by the parent company, or 
returns adequate for our audit have not 
been received from branches not 
visited by us; or 
•! the parent company financial 
statements are not in agreement with 
the accounting records and returns; or 
•! certain disclosures of directors’ 
remuneration specified by law are not 
made; or 
•! we have not received all the 
information and explanations we 
require for our audit. 
 
 
 
CHARLES FRAY (Senior Statutory Auditor) 
For and on behalf of RSM UK AUDIT LLP 
(formerly Baker Tilly UK Audit LLP), Statutory 
Auditor 
Chartered Accountants 
St Phillips Point 
Temple Row 
Birmingham B2 5AF 
25 April 2016 
  ! !!!!!!!!! ! !!!!
52"|"Sprue"Aegis"plc"Annual"Report"and"Accounts"2015"
!
Financial statements 
 
In this section 
!! Consolidated income statement 
!! Consolidated statement of comprehensive income 
!! Statement of consolidated and Company financial position 
!! Consolidated statement of changes in equity 
!! Company statement of changes in equity 
!! Cash flow statements 
!! Notes to the financial statements 
!! Corporate directory 
!! Shareholder information 
 
   ! !!!!!!!!! ! !!!!
53"|"Sprue"Aegis"plc"Annual"Report"and"Accounts"2015"
!
Consolidated income statement  
for the year ended 31 December 2015 
 
 Notes  2015       2014 
    £000 £000 
 2.! Revenuer Revenue 6  88,303 65,600 
 Cost of sales excluding BRK distribution fee and 
exceptional warranty charge  
 
(61,548) (41,699) 
 BRK distribution fee   (3,460) (4,164) 
 Exceptional warranty charge   (5,500) - 
 Total cost of sales   (70,508) (45,863) 
 
Gross profit   17,795 19,737 
 Distribution costs   (750) (878) 
 Administrative expenses excluding share-based 
payments charge and exceptional items 
Share-based payments charge 
Exceptional items*  
 
(9,788) 
(527) 
- 
(8,498) 
(205) 
(525) 
 Total administrative expenses   (10,315) (9,228) 
 Total fixed costs   (11,065) (10,106) 
 Profit from operations pre-exceptional items and 
share-based payments charge 
% of sales  
 
12,757 
14.5% 
10,361 
15.8% 
 Profit from operations post exceptional items pre-
share-based payments charge  
 
7,257 9,836 
 Profit from operations  7 
 6,730 9,631 
 Finance income 9 
 89 40 
 
Profit before tax  
 6,819 9,671 
 Income tax 10  (810) (1,952) 
 Profit attributable to equity owners of the parent   6,009 7,719 
Earnings per share 12    
From continuing operations: 
Basic  
   
 13.2 17.6 
Diluted    13.1 17.5 
 
All amounts stated relate to continuing activities. 
 
*Exceptional items represents AIM costs of £0.5m relating to 2014. 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
  ! !!!!!!!!! ! !!!!
54"|"Sprue"Aegis"plc"Annual"Report"and"Accounts"2015"
!
Consolidated statement of comprehensive income  
for the year ended 31 December 2015 
 
   2015 2014 
    £000 £000 
 3.! Revenuer Profit for the year   6,009 7,719 
 Items that may be reclassified subsequently to profit 
and loss: 
  
  
 Exchange differences on translation of foreign 
operations (net of tax) 
  
(60) (21) 
 Other comprehensive expense for the year   (60) (21) 
 Total comprehensive income for the year   5,949 7,698 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
  ! !!!!!!!!! ! !!!!
55"|"Sprue"Aegis"plc"Annual"Report"and"Accounts"2015"
!
Statement of Consolidated and Company financial position 
at 31 December 2015 
 
    Consolidated Company 
   
NOTES 2015     2014 2015  2014 
   £000 £000 £000 £000 
 
Non-current assets 
      
 Goodwill  14 169 169 - - 
 Other intangible assets  15 6,396 4,333 - - 
 Plant and equipment   16 740 536 - - 
 Shares in subsidiaries  17           
17 
- - 149 149 
 Deferred tax assets   24 284 116 - - 
 
 
  
7,589 5,154 149 149 
 
Current assets 
  
    
 Inventories  18 15,557 8,309 - - 
 Trade and other receivables  19 11,717 20,213 28,751 22,626 
 Current tax asset   308 - - - 
 Derivative financial assets  20 91 369 - - 
 Cash and cash equivalents   22,403 15,887 857 142 
 
 
  
50,076 44,778 29,608 22,768 
  
Total assets 
 
4.! 
 
 
 
 57,665 49,932 29,757 22,917 
 Current liabilities       
 Trade and other payables  23 (18,202) (19,946) - - 
 Current tax liabilities   - (505) - - 
 Provisions   22 (2,200) (873) - - 
 Derivative financial liabilities  20 (187) (1) - - 
 
 
  
(20,589) (21,325) - - 
 
Net current assets 
  
29,487 23,453 29,608 22,768 
 
Non-current liabilities       
 Provisions  22 (4,593) - - - 
 Deferred tax liabilities  24 (1,386) (969) - - 
 
 
  
(5,979) (969) - - 
 
Total liabilities 
  
(26,568) (22,294) - - 
 
Net assets 
  
31,097 27,638 29,757 22,917 
 
Equity 
 
     
Share capital 26 917 909 917 909 
Share premium  12,713 12,003 12,713 12,003 
Foreign exchange reserve  (129) (69) - - 
Retained earnings  17,596 14,795 16,127 10,005 
Total equity attributable to the 
owners of the parent 
 
31,097 27,638 29,757 22,917 
 
The financial statements on pages 53 to 88 were approved by the Board of directors and 
authorised for issue on 25 April 2016 and are signed on its behalf by: 
        
 
 
 
Neil Smith      John Gahan 
 
Company registered number: 3991353                                                                                                                                         !
56#|#Sprue#Aegis#plc#Annual#Report#and#Accounts#2015#
!!
Consolidated statement of changes in equity  
for the year ended 31 December 2015 
 
   Share  
capital 
Share     
premium 
Foreign 
exchange 
reserve 
Retained 
earnings 
 
Total 
    £000 £000 £000 £000 £000 
 Balance at 1 January 2014   801 4,123 (48) 10,222 15,098 
 Profit for the year   - - - 7,719 7,719 
 Net foreign exchange losses from overseas subsidiaries   - - (21) - (21) 
 Total comprehensive income for the year   - - (21) 7,719 7,698 
 Transactions with owners in their capacity as owners:        
 Dividends   - - - (3,640) (3,640) 
 Issue of shares   108 - - - 108 
 Premium arising on issue of equity shares   - 8,236 - - 8,236 
 Transaction costs arising on issue of equity shares   - (356) - - (356) 
 Total transactions with owners in their capacity as owners   108 7,880 - (3,640) 4,348 
 Share-based payments charge   - - - 205 205 
 Deferred tax credit on share-based  payments charge   - - - (201) (201) 
 Current tax credit on share-based  payments charge   - - - 490 490 
 Balance at 31 December 2014   909 12,003 (69) 14,795 27,638 
         
         
 Profit for the year   - - - 6,009 6,009 
 Net foreign exchange losses from overseas subsidiaries   - - (60) - (60) 
 Total comprehensive income for the year   - - (60) 6,009 5,949 
 Transactions with owners in their capacity as owners:        
 Dividends   - - - (3,877) (3,877) 
 Issue of shares   8 - - - 8 
 Premium arising on issue of equity shares   - 710 - - 710 
 Total transactions with owners in their capacity as owners   8 710 - (3,877) (3,159) 
 Share-based payments charge   - - - 527 527 
 Deferred tax charge on share-based  payments charge   - - - 63 63 
 Current tax credit on share-based  payments charge   - - - 79 79 
 Balance at 31 December 2015   917 12,713 (129) 17,596 31,097 
  !
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Company statement of changes in equity 
for the year ended 31 December 2015 
 
   Share  
capital 
Share     
premium 
Retained 
earnings 
 
Total 
    £000 £000 £000 £000 
 Balance at 1 January 2014   801 4,123 5,684 10,608 
 Profit for the year   - - 7,961 7,961 
 Total comprehensive income for the year   - - 7,961 7,961 
 Transactions with owners in their capacity as owners:       
 Dividends   - - (3,640) (3,640) 
 Issue of shares    108 - - 108 
 Premium arising on issue of equity shares   - 8,236 - 8,236 
 Transaction costs arising on issue of equity shares   - (356) - (356) 
 Total transactions with owners in their capacity as owners   108 7,880 (3,640) 4,348 
 Balance at 31 December 2014   909 12,003 10,005 22,917 
        
        
 Profit for the year   - - 9,999 9,999 
 Total comprehensive income for the year   - - 9,999 9,999 
 Transactions with owners in their capacity as owners:       
 Dividends   - - (3,877) (3,877) 
 Issue of shares    8 - - 8 
 Premium arising on issue of equity shares   - 710 - 710 
 Total transactions with owners in their capacity as owners   8 710 (3,877) (3,159) 
 Balance at 31 December 2015   917 12,713 16,127 29,757 
 
   !
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Cash flow statements  
for the year ended 31 December 2015 
 
  
 
 
Consolidated Company 
  
NOTES 
 2015 2014 2015 2014 
    £000 £000 £000 £000 
 Profit before tax 
  
6,818 9,671 9,999 8,089 
 Finance income 
  
(89) (40) - - 
 
Operating profit for the year 
  
6,729 9,631 9,999 8,089 
 Adjustments for: 
  
    
 Depreciation of property, plant and equipment 
  
203 131 - - 
 Amortisation of intangible assets 
  
258 294 - - 
 Change in fair value of derivatives  
  
464 (156) - - 
 Share-based payments charge 
  
527 205 - - 
 Operating cash flows before movements in 
working capital 
  
8,181 10,105 9,999 8,089 
 Movement in inventories   (7,248) (639) - - 
 Movement in receivables   8,496 (9,820) (6,125) (12,489) 
 Movement in warranty provision 
  
5,920 139 - - 
 Movement in payables 
  
(1,745) 9,020 - - 
 
Cash generated / (used) by operations 
  
13,604 8,805 3,874 (4,400) 
 Income taxes paid 
  
(1,197) (694) - - 
 Net cash generated / (used) from operating 
activities 
  
12,407 8,111 3,874 (4,400) 
 
Investing activities 
  
    
 Purchase of  intangible assets   (2,321) (1,599) - - 
 Purchase of property, plant and equipment    (411) (234) - - 
 Interest received   89 40 - - 
 
Net cash used on  investing activities 
  
(2,643) (1,793) - - 
 
Financing activities 
  
    
 Proceeds from issue of ordinary shares   718 7,988 718 7,988 
 Dividends paid   11  (3,877) (3,640) (3,877) (3,640) 
 Net cash (used)  / generated from financing 
activities 
  
(3,159) 4,348 (3,159) 4,348 
 Net increase / (decrease) in cash and cash 
equivalents  
 
6,605 10,666 715 (52) 
 
 Cash and cash equivalents at beginning of year 
  
15,887 5,227 142 194 
 Non-cash movements 
  
(89) (6) - - 
 
Cash and cash equivalents at end of year 
  
22,403 15,887 857 142 
 
 
   !
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Notes to the financial statements 
for the year ended 31 December 2015 
 
  1. Principal activities 
Sprue Aegis plc (“the Company”) is registered and domiciled in England and Wales, having been 
incorporated under the Companies Act company registration number 3991353.  The Company is listed 
on AIM.  The Company’s registered office is Bridge House, London Bridge, London, SE1 9QR and the 
address of its principal place of business is The Vanguard Centre, Sir William Lyons Road, Coventry, 
West Midlands, CV4 7EZ. 
 
The Company and its subsidiary undertakings (“the Group”) is in the business of the design, sale and 
marketing of smoke and carbon monoxide detectors and accessories sold under the FireAngel, 
AngelEye, Pace Sensors, First Alert, SONA, BRK and Dicon brands. The Group also operates its own 
carbon monoxide CO sensor manufacturing facility in Canada. 
 
  2. Summary of significant accounting policies 
  The Group has adopted the accounting policies set out below in preparation of the consolidated 
financial statements. All of these policies have been applied consistently throughout the periods 
presented, unless otherwise stated. 
 
Basis of preparation 
These consolidated financial statements are prepared in accordance with International Financial 
Reporting Standards as adopted by the European Union (“IFRS”).   
 
  The preparation of financial statements requires management to exercise its judgement in the process 
of applying the Group’s accounting policies. The areas involving a higher degree of judgement or 
complexity, or areas where the Group’s assumptions and estimates are significant to the consolidated 
financial statements are disclosed in note 3. 
 
 
 
 Basis of consolidation  
The consolidated financial statements of the Group incorporates the financial statements of the 
Company and entities controlled by the Company (its subsidiaries) made up to 31 December each year.  
 
Subsidiaries 
Subsidiaries are entities over which the Group has the power to govern the financial and operating policies 
so as to obtain economic benefits from their activities.  Subsidiaries are consolidated from the date on 
which control is obtained (the acquisition date) up until the date that control ceases. 
 
The acquisition method of accounting is used to account for the acquisition of subsidiaries by the Group.  
The cost of an acquisition is measured as the fair value of the assets given, equity instruments issued, 
contingent consideration and liabilities incurred or assumed at the date of exchange. Costs directly 
attributable to the acquisition are expensed as incurred.  Identifiable assets acquired and liabilities and 
contingent liabilities assumed in a business combination are initially measured at fair value at the 
acquisition date. 
 
Where necessary, adjustments are made to the financial statements of subsidiaries to bring the 
accounting policies used into line with those used by the Group. 
 
5.! Intra-Group transactions, balances, and unrealised gains and losses on transactions between Group 
companies are eliminated on consolidation, except to the extent those intra-Group losses indicate 
impairment.  
 
  Going concern 
The Directors have prepared detailed financial forecasts and cash flows looking beyond 12 months from 
the date of these financial statements.  In developing these forecasts the Directors have made 
assumptions based upon its view of the current and future economic conditions that will prevail over the 
forecast period.  !
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On the basis of the above projections, the Directors are confident that the Company and its Group have 
sufficient working capital to honour all of its obligations to creditors as and when they fall due. Accordingly, 
the Directors continue to adopt the going concern basis in preparing the consolidated financial 
statements. 
 
Adoption of new and revised accounting standards 
New and amended accounting standards: 
The following new standards and amended standards, none of which have a material impact on these 
financial statements, are mandatory and relevant to the Group for the first time for the financial year 
ended 31 December 2015: 
 
      •   Annual improvements 2011-2013 
 
Accounting standards in issue but not yet effective: 
At the date of authorisation of these financial statements the following standards and interpretations, 
which have not been applied in these financial statements and which are considered potentially relevant, 
were in issue but not yet effective (and in some cases had not yet been adopted by the EU): 
 
• Annual improvements 2010-2012 
• Annual improvements 2012-2014 
• IFRS 9: Financial Instruments 
• IFRS 15: Revenue from contracts with customers 
• IFRS 16: Leases 
• Amendments to IAS 1 Disclosure Initiative 
• Amendments to IAS 16 and IAS 38: Clarification of acceptable Methods of Depreciation and 
Amortisation 
• Amendments to IAS 12: Recognition of Deferred Tax Assets for Unrealised Losses 
• Amendments to IAS 7: Disclosure Initiative 
• Clarifications to IFRS 15: Revenue from Contracts with Customers 
 
The Directors anticipate that the adoption of these standards and interpretations in future periods will 
have no material impact on the financial statements of the Group or the Company when the relevant 
standards and interpretations come into effect. 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 5.1.1.! Revenue recognition 
Revenue is recognised when revenue and associated costs can be measured reliably and future 
economic benefits are probable. Revenue is measured at the fair value of the consideration received 
or receivable for goods and services provided in the normal course of business, net of rebates and 
settlement discounts, VAT and other sales related taxes. 
The sales of goods are recognised when the risks and rewards of ownership have been transferred to 
the customer.  For the majority of customers, this is when goods are delivered and title has passed. 
For others it is when goods are delivered for shipment by our contract manufacturers as this depends 
upon the terms and conditions of the sales contracts and when the risks and rewards of ownership is 
transferred. 
Interest income 
Interest income is accrued on a time-apportioned basis, by reference to the principal outstanding and 
at the effective interest rate applicable, which is the rate that exactly discounts estimated future cash 
receipts through the expected life of the financial asset to that asset’s net carrying amount. 
Accounting for discretionary payments made to customers 
The Group made discretionary payments in total amounting to £0.3m to certain UK retailers in respect 
of maintaining the ongoing relationship with these customers and to secure promotional activities 
during the year (2014: £0.3m).  Such costs are taken to the income statement in the year in which 
they relate to.  Prepaid discretionary amounts paid to suppliers as at 31 December 2015 was £nil 
(2014: £nil).  !
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 Goodwill 
Goodwill arising on consolidation represents the excess of the consideration transferred and the fair 
value of any previous interest in the acquired entity over the fair value of the identifiable assets and 
liabilities of a subsidiary at the date of acquisition.  Goodwill on acquisition of subsidiaries is separately 
disclosed. 
 
Goodwill is recognised as an asset and reviewed for impairment at least annually. It is allocated to 
cash generating units which represent the Group’s investment in each country of operation. 
Impairment losses are recognised immediately in profit or loss and are not subsequently reversed. 
 
Other intangibles - Internally generated intangible assets  
Expenditure on research activities is recognised in profit or loss as incurred. 
 
Expenditure arising from the Group’s development of future products  is capitalised only if all of the 
following conditions are met: 
 
•! an asset is created that can be identified; 
•! it is probable that the asset created will generate future economic benefits;  
•! the development cost of the asset can be measured reliably; 
•! the Group has the intention to complete the asset and the ability and intention to use or sell it; 
•! the product or process is technically and commercially feasible; and  
•! sufficient resources are available to complete the development and to either sell or use the asset. 
 
Where these criteria have not been achieved, development expenditure is recognised in profit or loss 
in the period in which it is incurred.  
 
 
  
Development expenditure is also written off, except where the directors are satisfied as to the 
innovative nature and technical, commercial and financial viability of clearly defined projects whose 
outcome can be assessed with reasonable certainty.  In such cases, the identified expenditure is 
carried forward and amortised on a straight line basis over the period during which the Group is 
expected to benefit, which the directors have estimated is between seven and ten years once sales of 
the product commence.   Provision is made for any impairment. The amortisation charge is recognised 
within administration expenses. 
 
Other intangibles - Computer software 
Software capitalised is amortised at rates calculated to write off the cost, less estimated residual 
value, of each asset on a straight line basis over its estimated useful life being 4 years. 
 
  5.1.2.! Plant and equipment 
5.1.3.! All fixtures and fittings, motor vehicles and office equipment are stated at cost less accumulated 
depreciation and any recognised impairment loss. 
 
 
 
 
 
Subsequent costs, including replacement parts and major inspections, are capitalised only when it is 
probable that such costs will generate future economic benefits. Any replaced parts are derecognised. 
All other costs of repairs and maintenance are charged to profit or loss as incurred. 
Depreciation is charged so as to write off the cost or valuation of assets, other than land and properties 
under construction, over their estimated useful lives, using the straight-line method, on the following 
bases: 
 
Fixtures and fittings                                      4 years  
Motor vehicles                                               4 years  
Office equipment                                          3 years  
The gain or loss arising on the disposal or retirement of an asset is determined as the difference 
between the sales proceeds and the carrying amount of the asset and is recognised in Income 
Statement.  !
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 5.1.4.! Impairment of plant and equipment and intangible assets  
5.1.5.! At each reporting date, the Group reviews the carrying amounts of its property, plant and equipment 
and intangible assets to determine whether there is any indication that those assets have suffered an 
impairment loss. Intangible assets with an indefinite useful life and other intangible assets not yet 
available for use are tested for impairment annually and whenever there is an indication that the asset 
may be impaired.  
If any such indication exists, the recoverable amount of the asset is estimated in order to determine 
the extent of the impairment loss (if any). Where the asset does not generate cash flows that are 
independent from other assets, the Group estimates the recoverable amount of the cash-generating 
unit to which the asset belongs. Recoverable amount is the higher of fair value less costs to sell and 
value in use.  In assessing value in use, the estimated future cash flows are discounted to their present 
value using a pre-tax discount rate that reflects current market assessments of the time value of 
money and the risks specific to the asset (or cash-generating unit) for which the estimates of future 
cash flows have not been adjusted. 
 
If the recoverable amount of an asset (or cash-generating unit) is estimated to be less than its carrying 
amount, the carrying amount of the asset (cash-generating unit) is reduced to its recoverable amount. 
An impairment loss is recognised as an expense immediately, unless the relevant asset is carried at a 
revalued amount, in which case the impairment loss is treated as a revaluation decrease. 
 
Where an impairment loss subsequently reverses, the carrying amount of the asset (cash-generating 
unit) is increased to the revised estimate of its recoverable amount, but so that the increased carrying 
amount does not exceed the carrying amount that would have been determined had no impairment 
loss been recognised for the asset (cash-generating unit) in prior years.  A reversal of an impairment 
loss is recognised in profit or loss immediately, unless the relevant asset is carried at a revalued amount, 
in which case the reversal of the impairment loss is treated as a revaluation increase. 
 
 
 
 Operating leases 
5.1.6.! Rentals payable under operating leases are expensed on a straight-line basis over the term of the 
relevant lease. Benefits received and receivable as an incentive to enter into an operating lease are 
also spread on a straight line basis over the lease term. 
 
 
 
 
 
 
 
 5.1.7.! Functional and presentation currency 
Items included in the financial information of each of the Group’s entities are measured using the 
currency of the primary economic environment in which the entity operates (“the functional currency”). 
The consolidated financial statements is presented in UK Sterling (£), which is the functional currency 
of the Company and the Group’s presentational currency. 
 
The financial statements are presented in round thousands of the presentational currency. 
 
Foreign currency transaction and balances 
Foreign currency transactions are translated at the exchange rate prevailing on the dates of the 
transaction.  At each reporting date, monetary assets and liabilities that are denominated in foreign 
currencies are retranslated at the exchange rate prevailing at the reporting date. Non-monetary assets 
and liabilities carried at values that are denominated in foreign currencies are translated at the rates 
prevailing at the date when the values were determined. Gains and losses arising on retranslation are 
included in profit or loss for the period, except for exchange differences on non-monetary assets and 
liabilities, which are recognised directly in other comprehensive income when the changes in fair value 
are recognised directly in other comprehensive income. 
 
On consolidation, the assets and liabilities of the Group’s overseas operations are translated into the 
Group’s presentational currency at exchange rates prevailing at the reporting date. Income and expense 
items are translated at the average exchange rates for the period. All resulting exchange differences are 
recognised in other comprehensive income.  All exchange differences arising, if any, are transferred to 
the Group’s foreign exchange reserve and are recognised as income or as expenses in the period in 
which the operation is disposed of, or when control, significant influence or joint control is lost.   !
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The Group has elected to treat goodwill and fair value adjustments arising on acquisitions before the 
date of transition to IFRS as Sterling denominated assets and liabilities. 
 
  5.1.8.! Retirement benefit costs 
5.1.9.! For defined contribution schemes the amount charged to profit or loss in respect of pension costs and 
other post retirement contributions is the contribution payable in the year.  Differences between 
contributions payable in the year and contributions actually paid are shown as either accruals or 
prepayments in the balance sheet. 
 
 
 
 
 
 
 
 
 5.1.10.!Taxation 
5.1.11.!The tax expense represents the sum of the current tax expense and deferred tax expense. 
Current tax  
The tax currently payable is based on taxable profit for the year.  Taxable profit differs from accounting 
profit as reported in profit or loss because it excludes items of income or expense that are taxable or 
deductible in other years and it further excludes items that are never taxable or deductible. The Group’s 
liability for current tax is measured using tax rates that have been enacted or substantively enacted 
by the reporting date. 
Deferred tax 
Deferred tax is the tax expected to be payable or recoverable on temporary differences between the 
carrying amount of assets and liabilities in the financial statements and the corresponding tax bases 
used in the computation of taxable profit, and is accounted for using the balance sheet liability 
method. Deferred tax liabilities are recognised for all taxable temporary differences and deferred tax 
assets are recognised to the extent that it is probable that taxable profits will be available against 
which deductible temporary differences can be utilised. Such assets and liabilities are not recognised 
if the temporary difference arises from the initial recognition of goodwill or from the initial recognition 
(other than in a business combination) of other assets and liabilities in a transaction which affects neither 
the taxable profit nor the accounting profit. 
Deferred tax is calculated at the tax rates that are expected to apply to the period when the asset is 
realised or the liability is settled based upon tax rates that have been enacted or substantively enacted 
by the reporting date. Deferred tax is charged or credited in profit or loss, except when it relates to 
items credited or charged directly to equity, in which case the deferred tax is also dealt with in equity, 
or items charged or credited directly to other comprehensive income, in which case the deferred tax 
is also recognised in other comprehensive income. 
 
    Financial instruments 
 
 
 Financial assets and financial liabilities are recognised when the Group has become a party to the 
contractual provisions of the instrument. 
 
 
 
 Financial assets 
The Group classifies its financial assets in the following categories: at fair value through profit and 
loss, loans and receivables, and available for sale. The classification depends on the purpose for which 
the financial assets were acquired. Management determines the classification of its financial assets 
at initial recognition. 
 
Loans and receivables 
Loans and receivables are non-derivative financial assets with fixed or determinable payments that 
are not quoted in an active market. They are included in current assets, except for maturities greater 
than 12 months after the end of the reporting period. These are classified as non-current assets.  
 
Financial assets at fair value through profit and loss 
Financial assets at fair value through profit and loss are financial assets held for trading. Derivatives 
are categorised as held for trading unless they are designated as hedges. Assets in this category are 
classified as current assets if expected to be settled within 12 months, otherwise they are classified 
as non-current. 
  !
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Financial liabilities and equity 
Financial liabilities and equity instruments are classified according to the substance of the contractual 
arrangements entered into.  
 
An equity instrument is any contract that gives a residual interest in the assets of the Group after 
deducting all of its liabilities. 
 
Derivative financial liabilities are measured at fair value through profit and loss; all other financial 
liabilities are measured at amortised cost. 
 
Recognition and measurement 
Gains and losses arising from changes in the fair value of the ‘financial assets at fair value through 
profit and loss’ category are presented in the income statement within ‘Cost of sales’ in the period in 
which they arise.  
Impairment of financial assets carried at amortised cost 
The Group assesses at the end of each reporting period whether there is objective evidence that a 
financial asset or group of financial assets is impaired. A financial asset or a group of financial assets 
is impaired and impairment losses are incurred only if there is objective evidence of impairment as a 
result of one or more events that occurred after the initial recognition of the asset (a ‘loss event’) and 
that loss event (or events) has an impact on the estimated future cash flows of the financial asset or 
group of financial assets that can be reliably estimated. 
Evidence of impairment may include indications that the debtors or a group of debtors is experiencing 
significant financial difficulty, default or delinquency in interest or principal payments, the probability 
that they will enter bankruptcy or other financial reorganisation, and where observable data indicate 
that there is a measureable decrease in the estimated future cash flows, such as changes in arrears 
or economic conditions that correlate with defaults. 
For loans and receivables category, the amount of the loss is measured as the difference between the 
asset’s carrying amount and the present value of estimated future cash flows (excluding future credit 
losses that have been incurred) discounted at the financial asset’s original effective interest rate. The 
carrying amount of the asset is reduced and the amount of the loss is recognised in profit or loss. If a 
loan or held-to-maturity investment has a variable interest rate, the discount rate for measuring any 
impairment loss is the current effective interest rate determined under the contract. As a practical 
expedient, the Group may measure impairment on the basis of an instrument’s fair value using an 
observable market price. 
If, in a subsequent period, the amount of the impairment loss decreases and the decrease can be 
related objectively to an event occurring after the impairment was recognised (such as an 
improvement in the debtor’s credit rating), the reversal of the previously recognised impairment loss 
is recognised in the consolidated income statement. 
 
 
 
 
 
 Inventories 
Inventories are stated at the lower of historical cost and net realisable value. Cost comprises direct 
material cost and, where applicable, direct labour costs and those overheads that have been incurred 
in bringing the inventories to their present location and condition.  Cost is calculated using the first-in-
first-out method. Net realisable value represents the estimated selling price in the ordinary course of 
business less all estimated costs to completion and selling costs to be incurred. 
 
Trade receivables 
Trade receivables are classified as loans and receivables and are initially recognised at fair value.  They 
are subsequently measured at their amortised cost using the effective interest method less any 
provision for impairment. 
 
Forward currency derivatives 
The Group enters into derivative foreign currency forward contracts which are classified as financial 
instruments at fair value through profit and loss. They are initially recognised at fair value on the date  !
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a derivative contract is entered into and are subsequently re-measured at their fair value. Fair value 
gains and losses are recognised in profit and loss.  
 
The Group does not have right of offset between such derivatives, and so all derivatives that are 
financial assets are shown separately from all derivatives that are financial liabilities, at each period 
end. 
 
Cash and cash equivalents 
Cash and cash equivalents comprise cash at bank and in hand and other short-term deposits held by 
the Group with maturities of less than three months. 
 
Trade payables 
Trade payables are obligations to pay for goods or services that have been acquired in the ordinary 
course of business from suppliers. Trade payables are classified as current liabilities if payment is due 
within one year or less. 
 
Trade payables are initially recognised at fair value and subsequently at amortised cost using the 
effective interest method. 
 
 
 
 
 
 5.1.12.!Provisions 
5.1.13.!Provisions for product warranty claims, are recognised when the Group has a present obligation as a 
result of a past event which it is probable will result in an outflow of economic benefits that can be 
reliably estimated. 
Where the effect of the time value of money is material, the provision is based on the present value 
of future outflows, discounted at the pre-tax discount rate that reflects the risks specific to the liability.  
The increase in the provision due to passage of time is recognised as interest expense. 
 
Equity instruments 
Equity instruments issued by the Company are recorded at fair value on initial recognition net of 
transaction costs. 
 
 
 
 5.1.14.!Share-based payment transactions 
5.1.15.!The Group issues equity-settled share options to certain employees. Equity-settled share-based 
payments are measured at fair value at the date of grant by reference to the fair value of the equity 
instruments granted.  The fair value determined at the grant date of equity-settled share-based 
payments is expensed on a straight-line basis over the vesting period, based on the Group’s estimate 
of the number of instruments that will eventually vest with a corresponding adjustment to equity.  Fair 
value is measured by use of the Black-Scholes model.  The expected life used in the model has been 
adjusted, based on management’s best estimate, for the effect of non-transferability, exercise 
restrictions, and behavioural considerations.  Options under the new LTIP 2015 award that were 
granted during the year have been valued using the Monte Carlo model (given the increased 
uncertainty around the potential vesting of share options).  
Non-vesting and market vesting conditions are taken into account when estimating the fair value of 
the option at grant date. Service and non-market vesting conditions are taken into account by adjusting 
the number of options expected to vest at each reporting date. 
Options over the Company’s shares granted to employees of subsidiaries are recognised as a capital 
contribution by the Company to the subsidiaries. 
 
Cancelled or settled options are accounted for as an acceleration of vesting.  The unrecognised grant 
date fair value is recognised in profit or loss in the year that the options are cancelled or settled. 
 
Where the terms of the options are modified and the modification increases the fair value or number 
of equity instruments granted measured immediately before and after the modification, the 
incremental fair value is spread over the remaining vesting period. 
  !
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Operating segments  
IFRS 8 requires the presentation of segmental information on the Group in the Annual Report on the 
same basis as information reported to the Board.  The Board is considered the chief operating decision 
maker, for the purposes of resource allocation and assessment of performance is based wholly on the 
overall activities of the Group.  The Board considers that there are no identifiable business segments 
that are engaged in providing individual products or services or a group of related products and 
services that are subject to risks and returns that are different to the core business.  The adoption of 
IFRS 8 has not had any impact on the financial performance or financial position of the Group. 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 3. Critical accounting estimates and areas of judgement 
Estimates and judgements are continually evaluated and are based on historical experience and other 
factors, including expectations of future events that are believed to be reasonable under the 
circumstances. 
 
Critical accounting estimates and assumptions 
The Group makes estimates and assumptions concerning the future.  The resulting accounting 
estimates and assumptions will, by definition, seldom equal the related actual results.  The estimates 
and assumptions that have a significant risk of causing a material adjustment to the carrying amounts 
of assets and liabilities within the next financial year are discussed below. 
 
Warranty provision and exceptional £5.5m warranty charge  
As at 31 December 2015, the Group carried a warranty provision of £6.8m (2014: £0.9m) against the 
cost of replacing products where there were known specific product issues resulting in an expectation 
that the level of returned products will exceed the Group’s maximum long term product returns rate of 
1.0% (2014: 1.0%). 
 
Determining the amount of the provision, which reflects the Board’s best estimate of resolving these 
issues, requires the exercise of significant judgement.  It is necessary, therefore, to form a view on 
matters which are inherently uncertain, such as the returns profile over time, the final return rate, 
whether the return rate of each year of production will be similar, whether the return rates from 
different sales channels will vary and the average cost of redress. 
 
There is a greater degree of uncertainty in assessing these factors when an issue is first identified, as 
in the case of the battery issue which resulted in a £5.5m exceptional warranty charge in 2015 where 
the failure typically occurs around three years from the date of the battery manufacture.   
Consequently, the continued appropriateness of the underlying assumptions will be reviewed on an 
ongoing basis against actual experience and other relevant evidence and adjustment made to the 
provision as required. 
 
The key drivers relating to the battery warranty provision, which equates to £6.1m of the total £6.8m 
provision as at 31 December 2015, and the work the Board has undertaken to assess them, is set out 
below: 
 
• Final return percentage rate.  The Board has used past experience of the Group’s product returns 
with battery related issues to develop a model of the expected returns profile in order to 
estimate the final return percentage rate, using the best available data in respect of batteries 
manufactured in 2012. 
• The return rate for each year affected.  Whilst the Board consider that it is likely that process 
improvements at the battery manufacturer are expected to reduce product return rates in 
respect of later years’ production, in the absence of any data to definitively confirm this, only a 
marginal improvement has been factored into the provision. 
• Different product return rates from different sales channels.  The Board has estimated the 
expected product return rates for different sales channels based on the Group’s past 
experience. 
•Cost of redress.  The cost of issuing free of charge returns is relatively straight forward to 
determine and as such, this is the lowest risk assumption in the model. 
  !
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The provision estimate of £6.1m relates solely to the battery issue and is most sensitive to the 
assumption regarding the final return percentage rate.   For reference, a 10% increase in the estimated 
final return rate, with no further improvement for each subsequent year of affected production, would 
result in an increase in the provision of approximately £0.5m. 
 
Review of warranty policy 
On all of its products, the Group provides a warranty on the whole product, including the battery,  which 
is typically between one to ten years in duration; Sprue’s product warranty policies are thought by the 
Board to be generally in line with UK and European smoke/CO industry “norms”. 
 
However, in light of the battery warranty issues recently identified, the Group is reviewing its policies 
around product warranty.   More extensive testing of product returns is to be introduced to reduce the 
number of free of charge replacement products issued to customers.  Where products are found to 
have “no fault found”, the Group may decide not to provide free of charge replacements.   In addition, 
as the battery is typically less than 10% of the cost of replacing a smoke alarm, the Group may restrict 
its product warranty for shorter periods or seek to not provide a warranty on the battery at all.   The 
Group is also reviewing its “sealed for life” products which are designed to prevent the batteries being 
removed as requested by our UK F&RS customers.  If there is an issue with the battery, the sealed for 
life design exacerbates the warranty cost as the whole product is replaced, rather than just one 
replacement battery. 
 
Impairment of non-financial assets 
At each reporting date, the Group reviews the carrying amounts of its tangible and intangible assets 
(including goodwill) to determine whether there is any indication that those assets have suffered an 
impairment loss. If any such indication exists, the recoverable amount of the asset is estimated in 
order to determine the extent of the impairment loss (if any).  Where it is not possible to estimate the 
recoverable amount of an individual asset, the Group estimates the recoverable amount of the cash-
generating unit to which the asset belongs. Where a reasonable and consistent basis of allocation can 
be identified, corporate assets are also allocated to individual cash-generating units, or otherwise they 
are allocated to the smallest Group of cash-generating units for which a reasonable and consistent 
allocation basis can be identified. 
 
Intangible assets with indefinite useful lives and other intangible assets not yet available for use are 
tested for impairment annually, and whenever there is an indication that the asset may be impaired. 
 
Recoverable amount is the higher of fair value less costs to sell and value in use. 
 
If the recoverable amount of an asset (or cash-generating unit) is estimated to be less than its carrying 
amount, the carrying amount of the asset (or cash-generating unit) is reduced to its recoverable 
amount. An impairment loss is recognized immediately in profit or loss, unless the relevant asset is 
carried at a revalued amount, in which case the impairment loss is treated as a revaluation decrease. 
 
During 2015, the Group did not record any impairment charges upon review of its tangible and 
intangible assets. 
 
Inventory provision 
Inventories are stated at the lower of cost (first-in-first-out method) or net realisable value. The cost of 
inventories comprise net prices paid for materials purchased, charges for freight and customs duties, 
and where applicable, production labour cost and factory overhead. Net realisable value represents 
the estimated selling price less all estimated costs of completion and costs to be incurred in 
marketing, selling and distribution.  
 
Inventory provisions are recognised for slow-moving, obsolete or unsalable inventory and are reviewed 
on a quarterly basis.  Our stock provision methodology involves matching our on-hand and on-order 
inventory with our sales forecast. In determining inventory provisions, we evaluate inventory in excess 
of our forecast needs on a SKU by SKU basis and make appropriate provisions to reflect the risk of 
obsolescence. This methodology is significantly affected by our forecast needs for inventory.  If actual 
demand or usage were to be lower than estimated, additional inventory provisions for excess or  !
68#|#Sprue#Aegis#plc#Annual#Report#and#Accounts#2015#
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obsolete inventory may be required, which could have a material adverse effect on our business, 
financial position and results of operations. 
 
As at 31 December 2015, the provision for inventory obsolescence amounted to £0.3m (2014:  
£0.3m).  The increase/decrease in provision for inventory obsolescence is mainly due to review of slow 
moving and stock obsolescence based on forecast stock figures. 
 
Share-based payments 
On granting of share options, the fair value as at the date of grant is calculated using either the Black-
Scholes option pricing model or the Monte Carlo model, taking into account the terms and conditions 
upon which the options were granted. The amount recognised as an expense is adjusted to reflect the 
actual number of share options that are likely to vest. 
 
For the 2014 share options award, the grant date fair value of stock options is estimated using a Black-
Scholes option valuation model. This Black-Scholes option valuation model requires the use of 
assumptions, including expected stock price volatility, the estimated life of each award and the 
estimated dividend yield.  The risk-free interest rate used in the model is determined, based on 10 
year UK government bonds with a life equal to the expected life of the equity-settled share-based 
payments. See note 28 for further details re the assumptions used in the pricing model. 
 
For the 2015 LTIP share options award, the grant date fair value of stock options is estimated using 
the Monte Carlo option valuation model. This model is similar to the Black Scholes model in which it 
requires the use of assumptions as described previously but differs in the initial calculation taking into 
account the probability that the options will be exercisable dependent on meeting the criteria as seen 
in note 28.  
 
The total gross amount of recognised expenses associated with share-based payments was £0.5m 
(2014: £0.2m). 
 
  4. Financial Risk Management 
The Group’s operations expose it to a variety of financial risks that include the effects of changes in 
market prices including foreign exchange rate risk, credit risk and liquidity risk.  The Group has in place 
a risk management programme that seeks to limit the adverse effects on the financial performance 
of the Group by monitoring these risks and taking appropriate action where necessary. 
 
 Liquidity risk 
Management’s objective is to meet its liabilities as they fall due whilst maintaining sufficient 
headroom to enable the Board to react to unexpected changes in market conditions.   Management 
monitors its cash flows through the preparation of forecasts on a monthly basis.    
 
Cash forecasts are based on historic trading levels, expected settlement of supplier balances and 
collection of trade receivables as they fall due. Subject to unforeseen adverse trading conditions, the 
cash flows from operations are not expected to change significantly from the level of underlying 
business performance.  
 
 
 
 Maturity Analysis 
The table below analyses the Group’s financial liabilities on a contractual gross undiscounted cash 
flow basis into maturity groupings based on amounts outstanding at the reporting date up to the 
contractual maturity date. 
 
 
 
 
 
 
 
  !
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Within 6 
months 
 6 months - 
1 year 
1 to 5  
years 
Over 5 
years 
Total 
  2015 £000 £000 £000 £000 £000 
  Trade payables 15,282 - - - 15,282 
  Derivative financial liabilities 130 57 - - 187 
  Financial liabilities 15,412 57 - - 15,469 
        
   
  2014 £000 £000 £000 £000 £000 
  Trade payables 15,631 - - - 15,631 
  Derivative financial liabilities 1 - - - 1 
  Financial liabilities 15,632 - - - 15,632 
        
  The table below analyses the Group’s financial assets held for managing liquidity risk which are 
considered to be readily saleable or are expected to generate cash inflows to meet cash outflows on 
financial liabilities. 
 
  
 
Within 6 
months 
 6 months - 
1 year 
1 to 5  
years 
Over 5 
years 
Total 
  2015 £000 £000 £000 £000 £000 
  Cash at bank and on hand 22,403 - - - 22,403 
  Trade receivables and other debtors 11,410 - - - 11,410 
  Derivative financial assets 44 47 - - 91 
  Financial assets 33,857 47 - - 33,904 
   
        
  2014 £000 £000 £000 £000 £000 
  Cash at bank and on hand 15,887 - - - 15,887 
  Trade receivables and other debtors 19,169 - - - 19,169 
  Derivative financial assets 355 14 - - 369 
  Financial assets 35,411 14 - - 35,425 
   
The Group would normally expect that sufficient cash is generated in the operating cycle to meet the 
contractual cash flows as disclosed above through effective cash management.  In addition, the Group 
maintains a committed invoice discounting facility secured on UK trade debtors which can be 
accessed as considered necessary.   
        
  Foreign currency risk   
  The Group operates in a number of markets across the world and is exposed to foreign exchange risk 
arising from various currency exposures in particular, with respect to the US Dollar and in particular, 
the Euro.  The Group is exposed to foreign currency risk arising from recognised assets and liabilities 
as well as commitments arising from future trading transactions.  Management has set up a policy to 
manage foreign exchange risk by entering into forward exchange contracts with its banker, HSBC plc. 
 
   Sensitivity analysis 
The Group derived the following sensitivities based on the forward rates readily available for the US 
Dollar and the Euro.  Management believe that these most closely reflect the probable performance 
of the various economies in which the Group’s financial assets and liabilities are located. 
        
      
      2015 2014 
  Impact on equity and profit or (loss) pre tax  £000 £000 
  5% increase in US Dollar fx rate against £  563 999 
  5% decrease in US Dollar fx rate against £  (623) (1,104) 
  5% increase in  Euro fx rate against £  (2,501) (1,918) 
  5% decrease in Euro fx rate against £  2,764 2,120 
       !
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  Interest rate risk   
  The business has remained debt free throughout 2015 and earns modest income on its cash deposits. 
  Credit Risk 
 
 
 Credit risk predominantly arises from trade receivables and cash and cash equivalents. 
  
Credit exposure is managed on a Group basis.  External credit ratings are obtained for new customers 
and the Group policy is to assess the credit quality of each customer internally before accepting any 
terms of trade.  Internal procedures take into account the customers’ financial position as well as their 
reputation within the industry and past payment experience where relevant.   
 
Cash and cash equivalents and derivative financial instruments are almost all held with an AA- rated 
bank, HSBC plc.  
 
The Group’s maximum exposure to credit risk relating to its financial assets is equivalent to their 
carrying value as disclosed below.  All financial assets have a fair value which is equal to their carrying 
value. 
  
  
Maximum exposure to credit risk 
 2015 
£000 
2014 
£000 
  Trade receivables and other debtors  11,410 19,169 
  Cash and cash equivalents  22,403 15,887 
    33,813 35,056 
    
  The Group did not have any financial instruments that would mitigate the credit exposure arising from 
the financial assets designated at fair value through profit or loss in either the current or the preceding 
financial year. 
    
  5. Capital management 
  The Group’s main objective when managing capital is to protect returns to shareholders by ensuring 
the Group will continue to trade profitably in the foreseeable future and cash is managed on a 
conservative basis.   
 
The Group manages its capital with regard to the risks inherent in the business and the sector within 
which it operates by monitoring its cash balances on a daily basis and managing the level of dividends 
paid to ordinary shareholders to ensure reasonable dividend cover compared to post tax profit. 
 
The Group considers its capital to include share capital, share premium, translation reserve and 
retained earnings.   
 
  6. Revenue and segmental reporting 
   2015 2014 
  Revenue £000 £000 
  Continuing operations:   
  Sale of goods 88,303 65,600 
  Total sale of goods 88,303 65,600 
  Finance income (note 9) 89 40 
  Total revenue from continuing operations 88,392 65,640 
      !
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Sprue sells and distributes home safety products and accessories in the UK, Continental Europe and 
certain other countries and undertakes manufacturing activities in Canada. Its major customers are 
mainly based throughout Continental Europe.  Financial information is reported to the Board on a 
consolidated basis with revenue and operating profit stated for the Group.  
 
The Board consider that there are no identifiable business segments that are engaged in providing 
individual products or services or a group of related products and services that are subject to risks and 
returns that are different to the core business. 
 
Segmental revenues for each of the Group’s business units, comprising gross and net sales to external 
customers and movement in gross profit from previous forecasts is the main financial information 
reported to the Board at business-unit level.  Business unit reporting to the Board excludes information 
of overheads and other income statement information reported on an aggregated basis.   
 
All assets are consolidated on a Group basis and reported as such to the Board.    
 
   2015 2014 
   Revenue Revenue 
 Revenue from continuing operations  £000 £000 
 Business Units:    
  Europe  53,781 39,950 
  Trade  7,287 6,040 
  Retail*  13,932 10,151 
  Fire & Rescue Services  7,823 6,081 
  Utilities*  2,572 1,664 
  Pace Sensors Limited  2,908 1,714 
 Total revenue from external customers  88,303 65,600 
  
Note*: In 2015, certain Leisure accounts were transferred into the Retail business unit and therefore, we have restated 
the previous 2014 Retail comparative which increased by £0.4m and the Utilities comparative which decreased by 
£0.4m 
  
All Business Units earn revenue from the sale of smoke and carbon monoxide detectors and 
accessories to end customers.  Pace Sensors Limited earns revenue from the manufacture and sale of 
carbon monoxide sensors to a third party carbon monoxide detector assembler based in China. 
 
For 2015, revenues of approximately £39.0m (2014: £25.5m) were derived from two (2014: two) 
external customers, each of which individually contributed over 10% of total external revenue of the 
Group. These revenues are attributable to the European business units.  An analysis of the Group’s 
revenue is as follows: 
!
!
    2015 
£000 
2014 
£000 
 Continuing operations:    
 United Kingdom   31,614 23,936 
 Continental Europe and Rest of World  56,689 41,664 
    88,303 65,600 
      
 Non-current assets, excluding deferred tax assets, for UK and overseas territories are shown as follows: 
 
 
 
 2015 
£000 
2014 
£000 
 Continuing operations:    
 UK  7,112 4,820 
 Canada  193 218 
 Non-current assets  7,305 5,038 
  !
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 7. Profit from operations 
 The following table analyses the nature of expenses: 
   2015 
£000 
2014 
£000 
 Staff costs (see note 8)  5,529 5,427 
 Depreciation, amortisation and impairment (see notes 15 and 16)  461 425 
 Premises costs  1,150 876 
 Change in inventory of finished goods excluding inventory 
provision movement 
 
7,244 8,502 
 Purchase of finished goods  53,463 31,774 
 BRK distribution fee  3,460 4,164 
 Movement in inventory provisions  (4) 140 
 Distribution costs  750 878 
 Marketing and trade contributions  1,434 872 
 Professional fees   801 1,392 
 Research and development costs  476 668 
 Warranty charge (including exceptional £5.5m for 2015 (see note 22))  5,920 139 
 Other expenses  889 712 
 Total cost of sales, distribution costs and administrative expenses    81,573 55,969 
      
 
 Profit from operations has been arrived at after charging: 
    2015 
£000 
2014 
£000 
 Net foreign exchange losses excluding foreign currency forward 
transactions 
 
186 81 
 Research and development costs  476 668 
 Amortisation of  intangible assets  258 294 
 Depreciation - owned assets  203 131 
 Rentals under operating leases  369 282 
   •!    
 
 
Amounts payable to RSM UK Audit LLP and its associates in respect of both audit and non-audit 
services are set out below: 
 
    2015 2014 
    £000  £000 
 Fees payable to the Company’s auditor and their associates for 
the audit of the Company’s annual accounts 
  
40  32 
   Fees payable to the Company’s auditor and their associates for 
other services to the Group; 
  
   
   The audit of the Company’s subsidiaries   76  43 
 Other audit related services   29  20 
 Total audit fees   145  95 
       
 Other taxation advisory services   16                  22 
 Corporate finance services   -                115 
 Other services   -                  24 
 Total non-audit fees   16  161 
  
 
 
 
 
 
 
 
 
  !
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  8. Staff costs 
 The average monthly number of employees (including Executive Directors) for the year for each of the 
Group’s principal divisions was as follows: 
    2015 
Number 
2014 
Number 
 Pace Sensors manufacturing   43 42 
 Technology  29 24 
 Administration  38 31 
 Sales and Marketing  25 23 
 Executive and Non-Executive Directors  8 6 
 Warehousing  5 4 
    148 130 
      
 The aggregate remuneration for the above persons comprised: 
    2015 
£000 
2014 
£000 
 Wages and salaries  5,701 5,774 
 Social security costs  541 587 
 Other pension costs   151 122 
 Share-based payment expense  527 205 
 Total remuneration   6,920 6,688 
 Less: Capitalised product development costs  
(1,391)               (1,261) 
 Total remuneration charged to Income Statement  5,529                 5,427 
     
 9. Finance income 
 
 
 2015 
£000 
2014 
£000 
 
 Interest on bank deposits  89 40 
 
 10. Income tax 
    
 
2015 
£000 
2014 
£000 
 Current tax    
 UK corporation tax charge   301 1,596 
 UK – Adjustments in respect of prior periods (credit) / charge    (38) 136 
 Foreign tax charge  235 11 
    498 1,743 
 Deferred tax (note 24)    
 Origination and reversal of temporary differences  312 209 
    312 209 
 Income tax expense 
 
 810 1,952 
 
 
Domestic income tax is calculated at 20.5% (2014: 21.5%) of the estimated assessable profit for the 
year.  
 
 
 
 
 
 
 
 
  !
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  The charge for the year can be reconciled to the profit per the statement of consolidated income as 
follows: 
   
 
 
2015 
 
2014 
     £000 % £000 % 
  Profit before tax   6,818  9,671  
         
  Tax at the domestic income tax rate 20.25% (2014: 
21.5%) 
  
1,398  2,080  
  Tax effect of expenses that are not deductible in 
determining taxable profit 
  
142  209  
  Effect of allowance for capitalised development 
expenditure 
  
(692)  (473)  
  Adjustments in respect of prior periods   (38)  136  
  Tax expense and effective tax rate for the year   810 12% 1,952 20% 
     
The weighted average applicable tax rate was 12% (2014: 20%).  The decrease is primarily attributed 
to the adjustment in respect of claiming small company’s enhanced R&D tax relief at the elevated 
230% rate compared to the previous year of claiming R&D tax relief at the large company rate of 
125%, which decreased the tax charge for the year. 
 
During the year, as a result of the change in the UK corporation tax rate from 21% to 20% that was 
substantively enacted on 26 June 2014 and that was effective from 1 April 2015, the relevant deferred 
tax balances have been re-assessed.   
 
 11. Dividends 
 On 3 July 2015, a dividend of £2.7m, 6.0 pence per share, was paid to shareholders.  On 31 October 2015 
an interim dividend of £1.1m, 2.5 pence per share, was paid to shareholders. 
 
In respect of the year ended 31 December 2015, the directors recommend 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.  This 
dividend is subject to approval by shareholders at the Annual General Meeting to be held on 30 June 
2016 and has not been included as a liability in these financial statements.  The total estimated final 
dividend to be paid is £2.5m. 
   
 
 
 
 
 
 
 
 
 
 
 
 The income tax credited / (charged) to equity during the year is as follows: 
 
    
 
2015 
£000 
2014 
£000 
 Current tax    
 
Share options – exercised in the year 
 
                  79                  490 
 Deferred tax    
 
Share-based payments 
 
                   63                (201) 
 Total income tax                  142                  289 
 
  !
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  12. Earnings per share 
  The calculation of the basic and diluted earnings per share post exceptional items and before share- 
based payments charge is based on the following data: 
 
   
Earnings from continuing operations 
 2015 
£000 
2014 
£000 
  Earnings for the purposes of basic and diluted earnings per 
share (profit for the year attributable to owners of the 
parent) 
 
6,009 7,719 
      
  Number of shares  ‘000 ‘000 
  Weighted average number of ordinary shares for the purposes 
of basic earnings per share 
 
45,613 43,824 
  Effect of dilutive potential ordinary shares:    
  Deemed issue of potentially dilutive shares  322 302 
  Weighted average number of ordinary shares for the purposes 
of diluted earnings per share 
 
45,935 44,126 
    
 
 
   2015 
pence 
2014 
pence 
  Basic earnings per share (pence)  13.2 17.6 
  Diluted earnings per share (pence)  13.1 17.5 
 
The calculation of the adjusted basic and diluted earnings per share pre-exceptional items and share-
based payments charge is based on the following data: 
 
   
Earnings from continuing operations 
 2015 
£000 
2014 
£000 
  Earnings for the purposes of basic earnings per share (profit 
for the year attributable to owners of the parent) 
 
6,009 7,719 
  Exceptional items  5,500 525 
  Share-based payments charge  527 205 
  Less: tax on exceptional items and share-based payments 
charge 
 
(941) 
                  
(41) 
  Earnings for the purposes of adjusted basic and diluted 
earnings per share  
 
11,095 8,408 
      
  Number of shares  ‘000 ‘000 
  Weighted average number of ordinary shares for the purposes 
of basic earnings per share 
 
45,613 43,824 
  Effect of dilutive potential ordinary shares:    
  Deemed issue of potentially dilutive shares  322 302 
  Weighted average number of ordinary shares for the purposes 
of adjusted diluted earnings per share 
 
45,935 44,126 
    
 
 
   2015 
pence 
2014 
pence 
  Adjusted basic earnings per share pre-exceptional items 
and share-based payments charge (pence) 
 
24.3 19.2 
  Adjusted diluted earnings per share pre-exceptional 
items and share-based payments charge (pence) 
 
24.2 19.1 
 
 
 
 
 
  !
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  13. Financial instruments  
 
 
Assets at fair 
value through 
profit and loss 
Loans and 
receivables Total 
 2015 £000 £000 £000 
 Financial assets    
   Trade receivables and other debtors - 11,410 11,410 
 Cash and cash equivalents 22,403 - 22,403 
 Derivative financial assets 91 - 91 
 Total 22,494 11,410 33,904 
     
 2014    
 Financial assets    
 Trade receivables and other debtors - 19,169 19,169 
 Cash and cash equivalents 15,887 - 15,887 
 Derivative financial assets 369 - 369 
 Total 16,256 19,169 35,425 
 
 
Liabilities at fair 
value through 
profit and loss 
Financial 
liabilities held at 
amortised cost 
 
 
 
   Total 
 2015 
 
£000 £000 £000 
 Financial liabilities    
 Trade payables  - 15,282 15,282 
 Derivative financial liabilities 187 - 187 
 Total 187 15,282 15,469 
     
 2014    
 Financial liabilities    
 Trade payables  - 15,631 15,631 
 Derivative financial liabilities 1 - 1 
 Total 1 15,631 15,632 
  
 
 
 
 
Credit quality of financial assets 
The credit quality of financial assets that are neither past due nor impaired can be assessed by 
reference to the following: 
 
Financial instruments contain an element of risk that the counterparties are unable to meet their 
obligations. This financial credit risk is monitored and minimised per type of financial instrument by 
limiting the Group’s counterparties to a sufficient number of major financial institutions.  Sprue Aegis 
plc does not expect the counterparties to default given their high credit quality.  The maximum 
exposure to credit risk at the reporting date is the fair value of the financial assets in the statement of 
financial position. 
The Group’s customers include a number of key distributors located in Continental Europe.  The Group 
performs credit evaluations of potential customers' financial status before approving credit limits. The 
Group regularly reviews if an allowance for doubtful debts is needed by considering factors such as 
historical payment experience, credit quality, and age of the accounts receivable balances, and current 
economic conditions that may affect a customer's ability to pay.  In response to the increased volatility 
of the financial markets, the Group has taken additional measures to mitigate credit risk when 
considered appropriate, including down payments, letters of credit, and retention of ownership.  
Retention of ownership may enable the Group to recover the inventory in the event a customer defaults 
on payment. 
  !
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14. Goodwill 
   £000 
  Cost  
  Deemed cost of goodwill and carrying value at 31 December 2015 and 2014 169 
    
  The recoverable amount of each cash generating unit (“CGU”) has been determined at each year end, 
based on value in use calculations.  These calculations use pre-tax cash flow projections from the 
Group’s 5 year strategy plan.  
 
If necessary, cash flows beyond the budgeted five year period are extrapolated using the estimated 
growth rates per the table below.  In accordance with IAS 36, the growth rates beyond the budgeted 
three year period do not exceed the long-term average growth rate for the industry.  
    
     Pace Sensors 
  Carrying value of goodwill (£000)   169 
  The key assumptions applied in the calculations were:   
  Gross margin (%)   32 
  Growth rate (%)   5 
  Discount rate (%)   10 
    
  Gross margin over the next 5 years has been estimated based on past performance of each product 
line taking into account the anticipated changes in sales mix and future trading conditions.  The sales 
mix takes into account estimated future revenue from current customers.  It has been assumed that 
overhead costs and asset replacement will continue at the same levels as in the current year as there 
are no expansion or restructuring projects in the Board’s plans in the short term.  Cash flow has been 
derived from future earnings based on assumptions that key suppliers will be paid within agreed credit 
periods and that customers will continue to take pay on time.  Stock holding levels will continue to be 
monitored to ensure that sufficient levels are retained to meet demand. 
 
  15. Other intangible assets 
   Product 
development 
costs 
£000 
Computer 
software 
£000 
 
Total 
£000 
  Cost    
  At 1 January 2014 4,232 233 4,465 
  Additions  1,592 7 1,599 
  At 31 December 2014 5,824 240 6,064 
  Additions  2,271 50 2,321 
  At 31 December 2015 8,095 290 8,385 
  Amortisation    
  At 1 January 2014 1,295 142 1,437 
  Amortisation for the year 236 58 294 
  At 31 December 2014 1,531 200 1,731 
  Amortisation for the year  231 27 258 
  At 31 December 2015 1,762 227 1,989 
  Carrying amount   
  At 31 December 2014 4,293 40 4,333 
  At 31 December 2015 6,333 63 6,396 
 
The total amortisation charge of £258,000 (2014: £294,000) has been recognised within 
administrative expenses. 
 
The remaining amortisation period on product development costs is in the range 4 to 9.5 years.  The 
carrying value of development intangibles includes £3.3m which is still in the development stage 
and consequently not yet been amortised in the year. 
  !
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  16. Plant and equipment 
   
 
Office 
equipment 
£000 
 
Motor  
vehicles 
£000 
 
Fixtures & 
fittings 
£000 
 
 
Total 
£000 
 6.! 7.! Cost      
  At 1 January 2014  591 5 89 685 
  Additions  181 - 53 234 
  Effect of exchange rates  - - (2) (2) 
  At 31 December 2014  772 5 140 917 
  Additions  228 - 183 411 
  Disposals  (21) - - (21) 
  At 31 December 2015  979 5 323 1,307 
  Accumulated Depreciation       
  At 1 January 2014  213 3 33 249 
  Depreciation charge for the year  124 1 6 131 
  Effect of exchange rates  - - 1 1 
  At 31 December 2014  337 4 40 381 
  Depreciation charge for the year  158 - 45 203 
  Disposals  (21) - - (21) 
  Effect of exchange rates  4 - - 4 
  At 31 December 2015   478 4 85 567 
  Net book value      
  At 31 December 2014  435 1 100 536 
  At 31 December 2015  501 1 238 740 
  
The total depreciation expense of £203,000 (2014: £131,000) has been charged to administrative 
expenses. 
 
  There are no material capital commitments at the balance sheet date. 
 
  17. Shares in subsidiaries 
 
  Company 
      
   Shares 
£000 
 
Total 
£000 
 Cost     
 At 1 January 2015 and 31 December 2015   149 149 
 Accumulated impairment     
 At 1 January 2015 and 31 December 2015   - - 
 At 31 December 2015 and 31 December 2014   149 149 
 
Details of the Company’s subsidiaries as at 31 December 2015 are as follows: 
 
 
Name of subsidiary 
Place of 
incorporation (or 
registration) and 
operation 
Proportion of 
ownership 
interest 
% 
Proportion of 
voting power 
held 
% 
Principal activity 
 
 Sprue Safety Products Limited UK 100 100 Distribution of 
smoke and CO 
alarms 
 
 Pace Sensors Limited Canada 100 100 Manufacture of 
CO sensors 
 
 AngelEye Corporation Canada 100 100 Non-trading 
      
 AngelEye Incorporation USA 100 100 Non-trading 
  !
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   The results of all subsidiary undertakings are included in the consolidated accounts.   
    
Sprue Aegis plc has a direct holding in Sprue Safety Products Limited, AngelEye Corporation and 
AngelEye Incorporated.  It has an indirect holding in Pace Sensors Limited, via AngelEye Incorporated. 
 
  18. Inventories 
   Group 
2015 
£000 
Group 
2014 
£000 
Company 
2015 
£000 
Company 
2014 
£000 
  Raw materials               142 260 - - 
  Work-in-progress               170 250 - - 
  Finished products 15,523 8,081 - - 
  Total gross inventories 15,835 8,591 -  
  Write-down of inventory to net realisable 
value (278) (282) - - 
  Total net inventories 15,557 8,309 - - 
      
 
  19. Financial assets 
   Group 
2015 
£000 
Group 
2014 
£000 
Company 
2015 
£000 
Company 
2014 
£000 
  Trade receivables and other debtors 11,410 19,169 28,751 22,626 
  Cash and cash equivalents 22,403 15,887 857 142 
  Derivative financial assets 91 369 - - 
  Maximum exposure to credit risk 33,904 35,425 29,608 22,768 
   
The directors are of the opinion that whilst there are significant concentrations of credit risk, customer 
payments are closely scrutinised to ensure debts are paid on time and credit limits are reasonably 
adhered to. 
 
The fair value of the financial assets is not considered to be materially different from their carrying 
value. 
 
Within trade and other receivables for the company, this is solely balances owed to the parent from 
Group undertakings. 
   
Trade and other receivables are as follows: 
 
  
Group 
2015 
£000 
Group 
2014 
£000 
Company 
2015 
£000 
Company 
2014 
£000 
 
 
Trade receivables 11,297 18,939 - - 
 
 
Amounts due from fellow group companies - - 28,751 22,626 
 
 
Other debtors 113 230 - - 
 
 
Prepayments 307 1,044 - - 
 
 
Trade and other receivables 11,717 20,213 28,751 22,626 
 
 The average credit period taken on sale of goods is 67 days (2014: 54 days). 
 
 An impairment review has been undertaken at the year end to assess whether the carrying amount of 
financial assets is deemed recoverable.  Following the review, there are no financial assets that are 
impaired and all debts past due are recoverable. 
 
 The primary credit risk relates to customers which potentially may be unable to settle their debts with 
the Group.  
  !
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 Domestic trade debtors are pledged as security to the Group's bankers as part of the Group's banking 
facilities.  The domestic trade debtor balance at the year end 2015 was £7.7m (2014: £4.8m). 
 
 The Group believes that all major debtor balances will ultimately be recoverable based on a review of 
past payment history and the current financial status of customers and the ongoing relationship with 
the Company.  Credit limits are kept under review to ensure customers are not exceeding agreed 
terms.  The Group has made no doubtful debt provision. 
      
 At 31 December 2015, £7.7m (2014: £4.8m) of trade receivables were denominated in Sterling, 
£1.2m (2014: £0.4m) in US Dollars and £2.4m (2014: £13.7m) in Euros. 
 
 
 
At 31 December 2015, £20.5m (2014: £10.5m) of cash was denominated in Sterling, overdraft of 
£(0.5)m (2014: Cash of £0.5m) in US Dollars and £2.4m (2014: £4.8m) in Euros. 
 
At the year end, all other financial assets held were denominated in Sterling.  
 
  20. Derivative financial instruments 
    2015 2014 
    £000 £000 
  Assets    
  Foreign currency forward contracts  91 369 
    91 369 
  Liabilities    
  Foreign currency forward contracts   (187) (1) 
    (187) (1) 
    
 Derivative financial instruments are classified between current and non-current based on the maturity 
of the item and are all measured at their fair value.  The maturity of all forward contracts at each year 
end reported was less than 12 months, and therefore all contracts are classified as current. 
 
The notional principal amounts of the outstanding foreign currency forward contracts was US $1.4m 
at 31 December 2015 (2014: US $5.7m) and Euro 10.2m (2014: Euro nil).  The level of US$ rate 
exposure as at 31 December 2015 is less than the previous year as from April 2015 as the Group 
commenced the purchase of products from DTL, its key smoke supplier, in Sterling rather than USD 
however increased its forward contracts to sell Euros to Sterling.   
 
Gains and losses on foreign currency forward contracts are recognised within cost of sales each month, 
as the forward contract are utilised to mitigate foreign currency risk associated with product sales and 
product purchases in currencies other than the Company’s functional currency. 
 
  21. Fair value disclosures 
 The total net loss on forward contracts recognised in the profit for the year ended 31 December 2015 
was £(0.5)m (2014: £0.2m gain) and is included within “Cost of Sales”.  
 
The table below analyses financial instruments carried at fair value, by valuation method. The different 
levels have been defined as follows: 
 
•! Quoted prices (unadjusted) in active markets for identical assets or liabilities  (level 1) 
•! Inputs other than quoted prices included within level 1 that are observable for the asset or 
liability, either directly (that is, as prices) or indirectly (that is, derived from prices) (level 2) 
•! Inputs for the asset or liability that are not based on observable market data (that is, 
unobservable inputs) (level 3) 
 
The following table presents the Group’s financial assets and liabilities that are measured at fair value 
for the two years ended 31 December 2015.  All assets and liabilities measured are valued at level 2. 
 
  
 
  
 
 
  !
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 LEVEL 2  2015 2014 
    £000 £000 
 Assets    
 Foreign currency forward contracts  91 369 
      
 Liabilities    
 Other foreign currency forward contracts  (187) (1) 
 
 
 
   
  22. Provisions  
     Warranty 
provision 
£000 
  
At  1 January 2014 
 
 734 
  
Additional provision in year 
 
 1,305 
  
Utilisation of provision 
 
 (1,166) 
  
At 31 December 2014 
 
 873 
  Additional provision in year (including exceptional 
charge of £5.5m as per note 7)                                   
 
 6,450 
  
Utilisation of provision 
 
 (530) 
  
At 31 December 2015 
 
 6,793 
      
  The warranty provision is stated as the following: 
    2015 
£000 
2014 
£000 
  Non-current provision  4,593 - 
      
  Current provision  2,200 873 
  
Exceptional £5.5m warranty charge for battery related issues 
As at 31 December 2015, the Group carried a warranty provision of £6.8m (2014: £0.9m) against the 
cost of replacing products where there were known specific product issues resulting in an expectation 
that the level of returned products will exceed the Group’s maximum long term product returns rate 
of 1.0% (2014: 1.0%). 
 
Determining the amount of the provision, which reflects the Board’s best estimate of resolving these 
issues, requires the exercise of significant judgement.  It is necessary, therefore, to form a view on 
matters which are inherently uncertain, such as the returns profile over time, the final return rate, 
whether the return rate of each year of production will be similar, whether the return rates from 
different sales channels will vary and the average cost of redress.  
 
There is a greater degree of uncertainty in assessing these factors when an issue is first identified, as 
in the case of the battery issue which resulted in a £5.5m exceptional warranty charge in 2015 where 
the failure typically occurs around three years from the date of the battery manufacture.   
Consequently, the continued appropriateness of the underlying assumptions will be reviewed on an 
ongoing basis against actual experience and other relevant evidence and adjustment made to the 
provision as required. 
 
The key drivers relating to the battery warranty provision, which equates to £6.1m of the total £6.8m 
provision as at 31 December 2015, and the work the Board has undertaken to assess them, is set out 
below: 
 
• Final return percentage rate.  The Board has used past experience of the Group’s product returns 
with battery related issues to develop a model of the expected returns profile in order to estimate 
the final return percentage rate, using the best available data in respect of batteries manufactured 
in 2012. 
• The return rate for each year affected.  Whilst the Board consider that it is likely that process 
improvements at the battery manufacturer are expected to reduce product returns rates in respect  !
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of later years’ production, in the absence of any data to definitively confirm this, only a marginal 
improvement has been factored into the provision. 
• Different product return rates from different sales channels.  The Board has estimated the expected 
product return rates for different sales channels based on the Group’s past experience. 
• Cost of redress.  The cost of issuing free of charge returns is relatively straight forward to determine 
and as such, this is the lowest risk assumption in the model. 
 
The provision estimate of £6.1m relates solely to the battery issue and is most sensitive to the 
assumption regarding the final return percentage rate.   For reference, a 10% increase in the 
estimated final return rate, with no further improvement for each subsequent year of affected 
production, would result in an increase in the provision of approximately £0.5m. 
 
Review of warranty policy 
On all of its products, the Group provides a warranty on the whole product, including the battery,  which 
is typically between one to ten years in duration; Sprue’s product warranty policies are thought by the 
Board to be generally in line with UK and European smoke/CO industry “norms”. 
 
However, in light of the battery warranty issues recently identified, the Group is reviewing its policies 
around product warranty.   More extensive testing of product returns is to be introduced to reduce the 
number of free of charge replacement products issued to customers.  Where products are found to 
have “no fault found”, the Group may decide not to provide free of charge replacements.   In addition, 
as the battery is typically less than 10% of the cost of replacing a smoke alarm, the Group may restrict 
its product warranty for shorter periods or seek to not provide a warranty on the battery at all.   The 
Group is also reviewing its “sealed for life” products which are designed to prevent the batteries being 
removed as requested by our UK F&RS customers.  If there is an issue with the battery, the sealed for 
life design exacerbates the warranty cost as the whole product is replaced, rather than just one 
replacement battery.        
 
  23. Trade and other payables 
   Group 
2015 
£000 
Group 
2014 
£000 
Company 
2015 
£000 
Company 
2014 
£000 
  Trade payables 15,282 15,631 - - 
  Accruals and deferred income 2,310 4,015 - - 
  Other tax and social security 610 300 - - 
   18,202 19,946 - - 
  
At 31 December 2015, £3.3m (2014: £2.5m) of payables were denominated in Sterling, £11.9m of 
payables were dominated in Euros (2014: £0.1m) and £0.1m (2014: £13.0m) in US Dollars.  
 
Trade and other payables principally comprise amounts outstanding for trade purchases and ongoing 
costs. The average credit period taken for trade purchases is 82 days (2014: 57 days) and the increase 
is related to the extension in DTL creditor terms with effect from 1 April 2015. 
 
The directors consider that the carrying amount of trade and other payables approximates to their fair 
value. 
 
  24. Deferred tax 
    2015 
£000 
2014 
£000 
  Deferred tax liabilities  (1,386) (969) 
  Deferred tax assets  284 116 
  Net position at 31 December  (1,102) (853) 
  
The movement in the year in the Group’s net deferred tax position was as follows: 
  !
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    2015 
£000 
2014 
£000 
 
  At 1 January   (853) (443) 
  Charge to income for the year  (312) (209) 
  Credit / (charge) to equity for the year  63 (201) 
  At 31 December   (1,102) (853) 
 
 
The following are the major deferred tax liabilities and assets recognised by the Group and the 
movements thereon during the period: 
 
Deferred tax liabilities 
   
Derivative 
financial 
instruments 
£000 
Non-current 
asset timing 
differences 
£000 
 
 
Total 
£000 
 At 1 January 2015   74 895 969 
 (Credit) / charge to income for the year   (93) 510 417 
 At 31 December 2015   (19) 1,405 1,386 
   
  
 
Deferred tax assets 
 Derivative 
financial 
instruments 
£000 
 
Share-based 
payments 
£000 
 
 
Total 
£000 
 
At 1 January 2015 - 116 116 
 Credit to income for the year - 105 105 
 Credit to equity for the year - 63 63 
 At 31 December 2015 - 284 284 
   
25. Retirement benefits - Defined contribution plans 
  
 The Group operates a defined contribution retirement benefit plan and the assets of the scheme are 
held separately from those of the Group in an independently administered fund. The pension cost 
charge represents contributions payable by the Group to the fund for the year and amounted to £0.1m 
(2014: £0.1m).  Contributions amounting to £17,000 (2014: £14,000) were payable at the year end. 
 
  26. Share capital 
 
   Authorised: 
 Company 
2015 
Number 
 ‘000 
Company 
2014 
Number  
‘000 
 
  100,000,000 Ordinary shares of 2p each    
   
Ordinary shares in issue: 
 
  
  As at 1 January  45,496 40,075 
  Issue of shares in respect of admission to AIM  - 4,000 
  Issue of shares in respect of share options exercised  359 1,421 
  As at 31 December   45,855 45,496 
      
  Issued and Fully Paid Ordinary shares of 2p each:  £000 £000 
      
  As at 1 January  909 801 
  Issue of share capital in respect of admission to AIM  - 80 
  Issue of share capital in respect of share options exercised  8 28 
  As at 31 December   917 909  !
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 The Company has one class of ordinary shares which carry no right to fixed income. 
 
On 30 April 2014, the Company granted 1.46m employee share options at an exercise price of £2.00 
per share.  The share options vest evenly over 3 years and are exercisable for 10 years from the date 
of grant.   The share-based payment charge for the year of £0.3m (2014:  £0.2m) is attributable to 
these share options and is included within the Consolidated Income Statement. 
 
In June 2015, the Board approved the award of the 2015 LTIP and the initial grant of awards of nil 
cost options that vest following a performance period of three years and are subject to the 
achievement of total Sprue shareholder return targets as outlined below in note 28.  The share-based 
payment charge for the year of £0.2m (2014:  £nil) is attributable to these share options and is 
included within the Consolidated Income Statement. 
 
  27. Reserves 
 
 Share premium 
The share premium account represents the excess of consideration received for shares issued above 
their nominal value net of transaction costs.  During the year, a premium on issue of shares amounted 
to £0.7m (2014: £8.2m) with transaction costs of £nil (2014: £0.4m) as a result of the exercise of 
share options (2014: as a result of the float to AIM and exercise of share options). 
 
 
 
Foreign exchange reserve  
The foreign exchange reserve represents the exchange gains and losses that have arisen on the 
retranslation of overseas operations. 
 
Retained earnings  
Retained earnings represents the cumulative profit and loss net of distributions to owners 
 
The profit for the financial year dealt with in the Company was £10.0m (2014: £8.0m).  As allowed 
under Section 408 of the Companies Act 2006, a separate profit and loss account has not been 
presented for the Company.  
 
  28. Share-based payments 
  The share-based payment charge of £527,000 (2014: £205,000) included in the Consolidated Income 
Statement within administrative expenses includes: 
 
•! £308,000 attributable to 2014 share options  
•! £70,000 attributable to 30,000 share options awarded to one employee in June 2015 in Canada.  
These options fully vested immediately and will not be accrued over three years 
•! £149,000 attributable to 2015 long term incentive nominal cost options awarded on 3 June 2015 
 
A summary of the change in options is set out below: 
 
    2015 2014 
     Options 
000 
Weighted 
average 
exercise  
price  
Options 
000 
Weighted 
average 
exercise price  
  Outstanding at 1 January    1,479 200p 1,471 24p 
  Exercised during the year   (359) 200p (1,421) 24p 
  Granted during the year   975 2p 1,464 200p 
  Expired during the year   (70) 200p (35) 200p 
  Outstanding at 31 December   2,025 102p 1,479 200p 
         
  Exercisable at 31 December    2,025 102p 1,479 200p 
   
  Details of the share options outstanding at the end of the year are as follows: 
  !
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Grant date 
Outstanding 
at start of 
year 
Exercised   
during the year 
Granted 
during the 
year 
Forfeited 
during the 
year  
Outstanding 
at end of year Expiry date 
Exercise 
price 
  
Directors’ share options 
      
  
25/04/2014 375,000 (55,555) - - 319,445 28/04/2021 200p 
  
03/06/2015 - - 900,000 - 900,000 03/06/2025 2p 
   
       
  
Employee share options       
  
30/06/2010 50,000 - - - 50,000 29/06/2017 35p 
  
25/04/2014 1,054,000 (303,187) - (69,583) 681,230 28/04/2021 200p 
  
03/06/2015 - - 45,000 - 45,000 03/06/2025 2p 
  03/06/2015 
- - 30,000 - 30,000 03/06/2015 2p 
   
       
  
 
1,479,000 (358,742) 975,000 (69,583) 2,025,675   
   
  The weighted average share price at the date of exercise for share options exercised during the year 
was 315p.  As at 31 December 2015, a total of 2,025,675 options were outstanding which had an 
exercise price of 102p, and a weighted average remaining contractual life of 9.3 years. 
 
2014 share options award 
On 30 April 2014, the Company granted 1.46m employee share options at an exercise price of £2.00 
per share.  The share options vest evenly over three years and are exercisable for ten years from the 
date of grant.    
 
The Company has an approved EMI scheme for qualifying UK based employees which provided for an 
award of share options based on seniority.  Share options vest over three years.  If options remain 
unexercised after a period of 10 years from the date of grant, the options usually expire except in 
exceptional circumstances at the discretion of the Board.  Furthermore, options are typically forfeited 
if an employee leaves the Group before options have vested. 
  
Options under the 2014 share options award have been valued using the Black Scholes model  with 
the following assumptions:   
  7.1.1.a.1.! 7.1.1.a.2.!  
 
  
2014 
  Directors’ and Employee share options award 2014    
  Average share price when options issued (pence)   200 
  Average expected volatility   35.6% 
  Expected life   10 yrs 
  Risk free rate   1.8% 
  Expected dividends   2.4% 
      
  Expected volatility was determined by calculating the historical volatility of the Group’s share price 
over the previous 7 years.  The expected life used in the model has been adjusted, based on the Board’s 
best estimate, for the effects of non-transferability and exercise restrictions. 
 
2015 LTIP  
Executive directors included in the 2015 LTIP are as follows: 
 
  
Director Position 
Number of nil cost options 
awarded 
  
G Whitworth Executive Chairman 200,000 
  
N Rutter Managing Director 200,000 
  
N Smith Group Chief Executive 300,000 
  
J Gahan Group Finance Director 200,000  !
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  The key elements of the 2015 LTIP include: 
 
!! Measurement period is three years from the date of grant being 3 June 2015 to 3 June 2018 
!! Any 2015 LTIP award is subject to delivering a minimum total shareholder return ("TSR") of 
at least 25% over the measurement period  
!! If TSR is less than 25% over the measurement period, none of the share options vest 
!! For TSR of between 25% and 100%, 25% up to 100% of the options vest on a straight line 
basis 
!! For 100% TSR or more over the measurement period, only 100% of the share options vest  
!! Options are exercisable to the extent that the performance target is met as at 3 June 2018 
at any time up to the tenth anniversary of the date of grant (or earlier in the case or a 
corporate event) 
!! If the option holder leaves the Group by reason of death, injury, ill health or disability, 
redundancy, or because the business he works for is sold outside the Group, or otherwise at 
the discretion of the Remuneration Committee, then his 2015 LTIP award shall vest on a 
time prorated proportion subject to the performance criteria being met or having been 
deemed to have been met by the Remuneration Committee 
!! If the option holder leaves the Group for any other reason, his 2015 LTIP award will lapse 
 
Options under the 2015 award have been valued using the Monte Carlo model (given the increased 
uncertainty around potential vesting)  with the following assumptions: 
   
 
 
2015 
  Directors’ and employee share options LTIP award 2015    
  30 day average share price before options were issued (pence)   289 
  Average expected volatility   30.7% 
  Expected life   5 yrs 
  Risk free rate   2.4% 
  Expected dividends   4.0% 
      
  Expected volatility was determined using the historical volatility of the Group’s share price since 
moving onto AIM.  The expected life of the option used in the model of 5 years has been adjusted, 
based on management’s best estimate, for the effects of non-transferability and the likelihood of the 
timing of potential exercise. 
   
The Group recognised total expenses of £0.5m (2014: £0.2m) relating to equity-settled share-based 
payment transactions. 
 
  29. Operating lease arrangements 
 The minimum lease payments under non-cancellable operating lease rentals are in aggregate as 
follows: 
  
 
  2015 
£000 
2014 
£000 
 
  Amounts due:    
  Within  one year  446 365 
  Between one and five years  877 1,126 
  After five years  - - 
  Total lease payments  1,323 1,491 
Operating lease payments represent rentals payable by the Group principally for its offices and 
warehouse.   
The operating lease expenditure charged to the income statement during the year is disclosed in note 
7. 
 
 
 
  !
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  30. Related party transactions 
Balances and transactions between the Company and its subsidiaries, which are related parties, have 
been eliminated on consolidation and are not disclosed in this note. 
 
 During the year, Group companies entered into the following transactions with Jarden which is not a 
member of the Group: 
                     Jarden Corporation 
    2015 2014 
    £000 £000 
 Sales of goods in year  3,168 2,792 
 Purchases of goods in year including engineering fees  49,581 28,956 
 Distribution agreement fee  3,460 4,164 
 Dividends payable  912 643 
 Amounts owed by related parties at year end  - 580 
 Amounts owed to related parties at year end  11,221 13,486 
  
Jarden, through its subsidiary BRK Brands Europe Limited holds a significant proportion of the 
Company’s ordinary shares (23.4% as at 31 December 2015) and has representation on the 
Company’s board of directors. Consequently the Directors consider that Jarden is a related party.  
Purchases between related parties are made under contractual arrangements.  
 
Jarden represents the single largest supplier to the Company supplying a significant proportion of the 
Group’s purchased products and charging the Company for its ongoing engineering support for its 
BRK, First Alert and Dicon brands.  Sales of goods in the year relate to Jarden’s wholly owned 
subsidiary, Mapa Spontex which is based in France. 
 
Relocation of CICAM’s manufacturing activities  
We are pleased to confirm that the facilities of CICAM were successfully transferred to a nearby 
alternative facility and that the relevant certification approvals for the new facility are in place.    
Products are now being produced at the new facility which was formally opened on 9 December 2015. 
  
Remuneration of key management personnel 
 The remuneration of the key management personnel of the Group together with the Non-Executive 
Directors, is set out below.    
  
 
 2015 
£000 
2014 
£000 
 
 Remuneration of key management personnel    
 Aggregate emoluments  1,045 1,416 
 Company pension contributions   98 43 
 Sums paid for Non-Executive Directors’ services  100 37 
 Share-based payment   313 107 
 Total remuneration   1,556 1,603 
  
The remuneration in respect of the highest paid Director was:   
    2015 
£000 
2014 
£000 
 Emoluments  210 285 
 Defined pension contributions  25 15 
    235 300 
 
 Included within aggregate emoluments set out above is a termination payment of £0.1m to Peter 
Brigham, Technical Director, who left the Company during the year.  
 
During 2014, three Executive Directors were granted a total of 375,000 share options under the 
equity-settled share option plan.  These options had an exercise price of 200.00 pence per share and 
had an expected life of ten years.  The share options vest evenly over a period of three years and the  !
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charge is taken to the income statement as the share-based payment charge.  The element of the 
share- based payment charge relating to the Directors is £0.1m. 
 
On 22 September 2015, John Gahan exercised 55,555 of his 125,000 share options awarded 24 April 
2014 at an option price of 200.00p per share. At the date of exercise the share price was 320.00p 
per share and the gain on these share options amounted to £0.1m.  
 
In June 2015, four Executive Directors were awarded 900,000 share options in total under the new 
LTIP share option plan. These options had an exercise price of the nominal cost of the shares at 2 
pence per share and had an expected life of ten years. The share options vest following a performance 
period of three years and are subject to the achievement of total Sprue shareholder return targets. 
The element of the share-based payment charge relating to this award is £0.2m. 
 
 Emoluments amounting to £26,000 (2014: £12,000) have been waived by one Director (2014: 1 
Director). 
 
 William Payne, a Non-Executive Director of the Company, is a partner of Wilkins Kennedy LLP, 
Chartered Accountants, which is the firm that provides his services.  During the period Wilkins Kennedy 
LLP were paid £39,500 (2014: £12,000) for the provision of William Payne's services as a Non-
Executive Director and £11,665 (2014: £33,000) for accounting and management services.  At the 
year end the Company owed Wilkins Kennedy LLP £nil (2014: £7,000). 
 
31. Post balance sheet events 
With effect from 1 January 2016, Sprue has agreed to amend supply terms with DTL.  The details of 
the amended supply terms are as follows: 
 
!! Working in partnership with, and at Sprue’s request, DTL has made significant investment in 
its new high technology manufacturing facility and is bearing increases 
in Chinese labour costs.  Sprue has agreed to accept modest product price increases to reflect 
a share of the incremental costs incurred by DTL.  The new CICAM manufacturing facility has 
significant capacity above current production levels which Sprue can utilise as product 
volumes increase over time.   
 
!! Sprue has agreed to share equally the impact of Sterling’s depreciation against the US Dollar 
from a previously fixed rate of GBP/US Dollar 1.62 exchange rate.   
 
Furthermore, the parties have agreed to an annual retrospective volume/12 month average 
foreign exchange rate rebate mechanism which effectively increased the Group’s foreign 
exchange rate risk on Sterling v US Dollar purchases with effect from 1 January 2016, despite 
the Group continuing to acquire products from DTL in Sterling. 
 
!! At the expected current volumes and the current GBP/US Dollar exchange rate, this results 
in significant product on cost on all DTL sourced product this year.  However, should purchase 
volumes increase and/or the average GBP/US Dollar exchange rate improve from the current 
level, Sprue will see its share of the benefit. 
 
!! Sprue continues to purchase all Sprue and BRK products from DTL on 90 day landed credit 
terms.  
 
In January 2016, the Group prepaid £450,000 in respect of software licences granted by Intamac 
Systems Limited (“Intamac”) in accordance with a Software Development Agreement to enable Sprue 
to connect and monitor its products over the internet. 
 
 
  !
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Board of Directors 
 
EXECUTIVE 
G Whitworth 
J Gahan 
N Rutter 
N Smith 
 
8.! NON-EXECUTIVE 
W Payne 
A Silverton 
T Russo 
J Shepherd 
 
 
 
Executive Chairman  
Group Finance Director 
Managing Director 
Chief Executive Director 
 
 
Senior Independent Director 
 
  
Corporate Directory 
 
REGISTERED NUMBER 
3991353 
 
SECRETARY 
W Payne  
REGISTERED OFFICE 
Bridge House  
4 Borough High Street 
London 
SE1 9QR 
 
  
 
  
 
 
AUDITOR 
RSM UK Audit LLP  
Chartered Accountants 
St Phillips Point 
Temple Row 
Birmingham B2 5AF 
 
REGISTRAR 
Neville Registrars Limited 
Neville House 
18 Laurel Lane 
Halesowen 
B63 3DA 
 
SOLICITORS 
Ashfords LLP 
1 New Fetter Lane 
London 
EC4A 1AN 
 
BANKER 
HSBC plc 
3 Rivergate 
Temple Quay 
Bristol 
BS1 6ER 
 
NOMINATED ADVISOR AND BROKER 
Stockdale Securities Limited                     
(formerly Westhouse Securities) 
Beaufort House 
15 St. Botolph Street 
London 
EC3A 7BB 
 
!
 
 
 
 
 
  !
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Shareholder information 
 
SHAREHOLDER ENQUIRIES 
Any shareholder with enquiries should, in the 
first instance, contact our registrar, Neville’s 
Registrar, using the address provided in the 
Corporate Directory. 
 
 
SHARE PRICE INFORMATION 
London Stock Exchange Alternative 
Investment Market (AIM) symbol:  SPRP 
 
 
Information on the Company’s share price is 
available on the Sprue Aegis investor relations 
website at www.sprueaegis.com 
 
 
 
 
INVESTOR RELATIONS  
Vanguard Centre, Sir William Lyons Road, 
Coventry, CV4 7EZ, UK 
 
Telephone: 024 7771 7700 
Fax: 024 7669 3610  
 
Email: info@sprueaegis.com 
 
Website: www.sprueaegis.com 
 
 
FINANCIAL CALENDAR 
 
Financial year end 31 December 2015 
Full year results announced 26 April 2015 
Annual General Meeting 30 June 2016 
Ex-dividend date for final dividend 7 July 2016 
Record date for final dividend 8 July 2016 
Final dividend payment 22 July 2016 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
  Thank you for your continued support.
For any further enquires please contact us:
www.sprueaegis.com 
info@sprue.com 
0800 171 2009