Companies: LTC   

Safety products and services star Latchways, which designs, makes and sells fall protection systems for individuals working on buildings, bridges and telecoms towers, has completed another astute, complementary product acquisition.

The company has paid an initial €1.6m (£1.3m) in cash for Slovenia-based Sigma 6, a provider of aluminium guardrail systems which are marketed across Europe under the aptly named ‘Vertigo’ brand. With a further deferred sum of between €400,000 and €800,000 linked to future guardrail sales, the acquisition complements the existing group product range.

Alongside the acquisition, management assured trading in the last two months of the financial year to March met management expectations and investors can look to analysts’ forecasts with confidence aplenty. Latchways has traded strongly in both the UK and Europe despite recent economic uncertainty, with enquiry and quotation levels never higher and sales in the UK, Europe and North America all ahead of last year despite the effect of volatile raw material costs and currency movements.

When the March 2008 numbers are announced in early June, house broker Brewin Dolphin will be looking for improved pre-tax profits of £8.8m (£7.8m), from sales of £36m (£31.9m), earnings of 54.8p (50.6p) and a 21p dividend.

At 853p, Latchways, originally backed by Growth Company Investor at 315p and then peaking at £13.20 in 2006, trades on a prospective p/e of less than 16 times after recent heavy falls. Offering a decent 2.5 per cent yield, underpinned by strong cash generation, the shares offer compelling fare for existing investors and newcomers alike. Buy/hold.

Growth Company Investor subscribers have full access to all our AIM and small-cap share recommendations. To subscribe today with a half-price offer, and gain immediate access to all the recommendations, click here.

Latchways	LSE	£71.23m	640.00p	6.00p
Click here for interactive charting
Other company articles:
Latchways			11/11/2008
Latchways			18/06/2008
Latchways			16/04/2008
How to profit from red tape			09/08/2007
Stockpicking with the experts			01/06/2007