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Domestic safety product supplier Sprue Aegis could benefit from new legislation in France and Germany.
October 29, 2014

Henry Lowson, manager of AXA Framlington UK Smaller Companies Fund (GB0030310857), believes home safety product producer Sprue Aegis (SPRP) should benefit from an increased focus on health and safety in France and Germany.

"With the stage set for small caps to flourish, investors will need to identify which companies are well placed to take advantage of improving conditions," he says. "The small-cap market remains under researched by the analyst community, which creates opportunities to identify companies that are yet to be properly valued by the market.

"Two themes where we continue to see opportunities are health and safety, and self-help. Companies with exciting prospects include Sprue Aegis, a supplier of domestic safety products.

Sprue Aegis is traded on the London Stock Exchange's Alternative Investment Market (Aim). Mr Lowson says: "The company moved from the ICAP Securities & Derivatives Exchange (ISDX) to Aim earlier this year and is benefiting from the theme of health and safety. Sprue Aegis is taking advantage of opportunities presented by new legislation in France and Germany on all houses having smoke detectors. The company will also grow market share in the UK trade market, an area where it has been underexposed, with the launch of a new AC powered product later this year."

"Sprue Aegis makes smoke detectors, carbon monoxide detectors and other home safety products which it sells under the FireAngel, First Alert, BRK and Dicon brands. Last month the company reported a record first-half performance with revenue up 11.2 per cent to £23.8m from £21.4m in the first half of 2013. The company's balance sheet remains strong with net cash of £11.7m, up from £3.9m in the first half of 2013, and no debt.

"Sprue Aegis has declared a maiden interim dividend of 2p per share payable on 30 October to shareholders who were on the register on 10 October. The company says that it is on track to deliver record results for the year and in line with market expectations."