Latchways delivered a solid enough first-half performance, and strong cash flow generated funds in excess of the company's working requirements. This prompted management to propose a special dividend of 40p a share, the record date for which is not until next January.
Around three quarters of group revenue and 93 per cent of operating profit comes from the safety products division, which manufactures and sells fall protection systems, and operating profits here rose by 15 per cent on a 13 per cent rise in turnover. This was underpinned by a 15 per cent rise in UK turnover - this would have been flat without strong sales in newer products such as the self-retracting lifeline designed for offshore use - and strong gains in mainland Europe, where turnover rose by 26 per cent. This more than offset a 34 per cent drop in US sales, as substantial business won last year to the US military was not repeated.
Safety Services, the small division that installs and services a range of fall protection equipment in the UK, fell foul of the tough trading climate and stronger competition. Its sales were down 6 per cent and operating profits fell 36 per cent to £400,000.
Brewin Dolphin is forecasting full-year pre-tax profits of £10.4m and EPS of 65.9p (2011: £9.3m/61.1p).
| LATCHWAYS (LTC) | ||||
|---|---|---|---|---|
| ORD PRICE: | 1,235p | MARKET VALUE: | £138m | |
| TOUCH: | 1,190-1,240p | 12-MONTH HIGH: | 1,380p | LOW: 945p |
| DIVIDEND YIELD: | 2.5% | PE RATIO: | 19 | |
| NET ASSET VALUE: | 274p** | NET CASH: | £11.5m | |
| Half-year to 30 Sep | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2010 | 19.1 | 4.60 | 29.3 | 8.98 |
| 2011 | 20.6 | 4.99 | 32.7 | 10.0* |
| % change | +8 | +8 | +11 | +11 |
Ex-div: 1 Feb Payment: 2 Mar *Excludes a special dividend of 40p a share **Includes intangible assets of £6.2m or 56p a share | ||||
