Mello Monday featuring Sprue Aegis & Inland Plc

Just four days to go and another Mello at SeaSalt (www.seasaltbeckenham.com) our regular third Monday of the month company presentation and dinner evening. This month we have two companies coming to Mello and our first ever Plus listed company.

Sprue Aegis (SPR.P) are a very successful home safety products supplier and you will almost certainly have seen or used one of their smoke or carbon monoxide detectors in your home. They are based in Coventry and are Europe’s leading home safety products supplier and have developed one of the world’s smallest carbon monoxide sensors for use in CO detectors. Sprue designs and distributes smoke and carbon monoxide detectors including other safety related products throughout Europe under the FireAngel, First Alert, BRK and Dicon brands.

I am pleased to be able to introduce Sprue as I have been a shareholder in the company for nearly four years and there are a number of other people who share my enthusiasm for the company even though its Plus listing may not attract as many investors nor provide the liquidity in its shares that some require. Sprue are not your average Plus company though and display many characteristics and perform far better than your average Aim listed or similar sized small cap company. They even pay a dividend and their growth is highlighted by this paragraph on their website... 

In December 2010, Sprue Aegis was again listed on ‘The Sunday Times Virgin Fast Track 100.’ This award in any year is a fantastic achievement, but to gain qualification for three years running demonstrates how strongly the company continues to perform. Fast Track 100 ranks Britain's hundred private companies with the fastest growing sales over the last three years. Sprue Aegis is at number 68 on the 2010 list, up 11 places from the previous year. This has been achieved through exceptional organic growth of 61.9% per annum. 

http://www.sprueaegis.com/Investors.aspx

If you want a look at the most recent annual results just released they are very impressive indeed...

Final Results for the year ended 31 December 2010

http://www.investegate.co.uk/Article.aspx?id=20100921103954P...

Financial highlights:

* Turnover increased by 108% to £29.9m (2009: £14.4m)
* Operating profit up 53% to £3.1m (2009: £2.0m)
* Underlying gross margin* of 42.1% (2009: 37.5%)
* Profit before tax up 56% to £3.0m (2009: £1.9m)
* Basic EPS increased by 34% to 6.25p (2009: 4.67p)
* Net cash of £4.5m (2009: £1.7m)
* Final dividend proposed of 1.0p per share (2009: 0.5p)

The company are providing three directors (Graham Whitworth the CEO/Chairman, Nick Rutter the MD and Finance Director John Gahan) to present to us and they will have the early slot in the upstairs boardroom from 6.15pm so do come early to see a company that I think will continue to grow earnings at an exceptional rate over the next few years. It is interesting to note that Sprue were flagged up quite early in their three year 'fast track' growth phase back in 2008 here in the Pub....

http://boards.fool.co.uk/spruced-up-sprue-an-investment-ange...

The share price then was below 20p and they are now 65p but you could argue that the growth and strong balance sheet over that time is worth much more than just a trebling of the share price and probably more to the point now .... Can it treble again ? The forecast eps growth for this year is another 30% and their products are very much in demand and required in every home. Come early and see the products and understand more about the company and its potential then you decide ? 

The second presentation is from a company in the property sector and an Aim listed small cap by the name of Inland(INL). Inland plc is a leading brownfield regeneration specialist. We specialise in buying brownfield sites and enhancing their value through obtaining planning permissions for residential and mixed-use developments. Inland's highly experienced land team has extensive knowledge of the complexities of the planning system which in turn enables it to unlock added value in property that others cannot. 

There has been quite a fair amount of discussion on the company in the last few months so this is a great opportunity to question the management and I am pleased to say that both Steve Wicks the CEO and Nish Malde the FD accepted my invitation to do the main presentation at 7.30pm for this May Mello event. I posted in detail about my thoughts on Inland just five months ago so I will link to that as a starter for those who do not know the company....

http://boards.fool.co.uk/inland-inlland-does-not-grow-on-tre...

The share price then was 17p and it is barely 10% higher now even though the company has made significant land sales since then and paid off ALL its bank debt which was a target that the directors set themselves and explained their reasons at last years AGM. Basically they did not like effectively being held to ransom in negotiations with them so the company is now in a very healthy position and still has significant land and property assets. There have been many posts trying to value those assets.... 

http://boards.fool.co.uk/valuing-inland-inl-12126272.aspx?so...

The latest interim results were released last month and these are the financial highlights...

· Revenue increased 90% to £10.06m (2009: £5.29m)

· Operating profit increased 192% to £1.14m (2009: £0.39m)

· Pre-tax profit increased substantially to £0.90m (2009: £0.11m)

· Net borrowings substantially reduced to £3.74m (2009: £8.79m) resulting in net gearing of 8.2%

· Stocks and investment property £39.08m (2009: £50.73m)

· Net assets £45.47m (2009: £41.87m)

http://www.investegate.co.uk/Article.aspx?id=201103310700139...

Most of those invested in Inland feel the true NAV is well in excess of double the current share price but the company has a complex profit sharing agreement on its main sites which I am sure the directors will explain in detail at the presentation. The very low level of gearing for a property company and the directors excellent track record from managing previous listed investments suggests that Inland may be a very good opportunity for those starting to look at property related plays that are not weighed down by debt.

As ever you know where we meet...SeaSalt is directly opposite Beckenham Junction station and it is just 17 minutes on the train from Victoria and there are always new attendees coming for the first time so the regulars will introduce themselves and do not worry about formalities as there are none ! Dress code is however you want to look and you can drop in straight from work as we have a drink and introductions first from 6pm and the the three course dinner is after the two presentations at around 8.30pm.. Just message me or comment below to let me know you are joining us. It helps the restaurant to know in advance how many are coming along. We rarely have less than forty and so these are excellent events for catching up with online friends and learning about two companies at the same time. 

As a final note the next Mello Central is not far away so do let me know by email as well if you wish to join us for that Central london event that starts at 5pm on Thursday 2nd June when I have FOUR companies presenting. There will also be a Mello Central in September (probably Thursday 8th September) when you all get back from those Summer breaks. The June Mello is on Monday 20th June so put the dates in your diaries.

See you all on Monday.

David