LTC.L Regulatory News (LTC)

10 February 2014

Latchways plc

Interim Management Statement

In accordance with the UK Listing Authority's Disclosure and Transparency rules, Latchways plc presents its interim management statement in respect of the period 1 October 2013 to 7 February 2014 inclusive.

During the period, we have continued to invest in the long term future of the business. Our new, £3 million production facility in Devizes is now complete and all key UK production operations have been consolidated. This unit will generate considerable operational efficiencies as well as providing growth capacity for the foreseeable future.

Our new North American subsidiary will be operational from April 1st. This is a sales organisation with the aim of providing in-country sales support to the largest fall protection market in the world. Whilst the investments we are making are for the long term, we are excited about the prospects for this initiative.

Our newest product lines, the Self Retracting Lifeline (SRL) and Personal Rescue Device (PRD) are continuing to generate revenue growth in North America.

Less positively, our traditional commercial construction-facing business has been subdued over the winter in the UK and Europe. As mentioned in our interim results, we are seeing increased activity amongst UK architects and specifiers which gives us cause for optimism in the mid term, but short term orders have been slower than we expected.

Our Wingrip and Wind energy businesses both have robust pipelines of business. However, these are taking longer than we had expected to convert into orders. None have been lost to competition, but project delays are likely to mean that some of the expected revenues will now fall into next financial year.

As a result of these revenue shortfalls, combined with the operational gearing of the company, the strengthening pound and the effects of continued investment in sales and new product development, both revenues and profits for the year to 31 March 2014 are now expected to be materially short of current market expectations. Profit before tax is expected to be in a range from £6.5 million to £7.5 million.

Although these setbacks are disappointing, we are confident that our strategy of investing in the sales team and infrastructure of the business is the right course. The benefits of our recent investments will take time to reach their full potential but we expect these to be significant. In the meantime cash generation and our balance sheet remain strong, with the new building expenditure largely complete and £10 million of net cash as at 31 January 2014.

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