ERUMA PLC CHAIRMAN’S STATEMENT

Unaudited half-yearly report for the period ended 30 June 2011

Eruma plc, the AIM traded specialist provider of counter terrorism, bomb blast protection, intruder prevention and intelligent lighting solutions, is pleased to announce its half-yearly report for the six month period to 30 June 2011.

Highlights

Orders increased by 128% to just over £2 million from £908k compared to the equivalent period in 2010 - this represents 172% of total revenue of the Company for the year to 31 December 2010;
Revenue was 16% (£77k) lower for the equivalent period which reflected the larger scale of orders and the longer delivery times of bigger contracts;
Gross profit was 73% higher (£121k) in absolute terms for the equivalent period due to improvements in operational cost management and tracking of resource allocation;
Distribution expenses were reduced by 12% and administrative expenses were 17% higher compared to the equivalent period on 2010; and
The loss before tax was reduced by 15% compared to the equivalent period in 2010.

Review and Outlook

The Company has made an excellent start to the year with significant new contract wins both in the UK and internationally which exceed the whole of last financial year’s revenue. Once again, the size and scale of our contracts has increased which reflects, we believe, our growing reputation for a high quality and differentiated solution in the growing counter terrorism and blast protection market worldwide.

Our intelligent lighting and intruder prevention product lines have continued to attract new customers but the economic climate has slowed down purchasing decisions in some sectors, in particular the public sector. Even projects offering significant return on investment over multiple years are being reviewed in light of the comprehensive spending review and the concerns over challenging economic conditions for the foreseeable future.

We are pleased, however, to report an increase in repeat orders from existing clients who have now specified our solutions within their organisations. These longer term relationships allow us to plan work programmes more effectively as these clients seek to develop and upgrade their estates in terms of both protection and reduction in energy consumption and environmental impact.

Revenue, whilst lower, is underpinned by a strong order book of high quality contracts, which we anticipate will generate significant revenue and gross profit for the Company during the second half of the year.

Securing the working capital needed to fund large-scale contracts has been a constant challenge throughout the period. Whilst we have been fortunate to secure a range of trade finance and overdraft facilities, they are expensive and can reduce our flexibility in some areas. A knock on effect of this is a reduction in our ability to take run rate lighting supply contracts where rapid delivery is required from stock held in the UK as opposed to manufactured to order from overseas.

The Company is deriving the benefits from its consolidation programme completed in the first quarter of this year which has reduced operating costs and streamlined management procedures. The Board is pleased with the results and progress which is evidenced by the improvement in overall bottom line performance.

Trading update post period

The Company order book remains strong and its outlook in terms of future business potential encouraging, both in the UK, but in particular in our international markets, as we expand our network and customer base.

We will continue to face working capital challenges until we can release gross profit from large contracts, which will complete in the second half of the year. We do not underestimate this challenge but we will continue to look at the most innovative and cost effective ways to deliver the working capital needed to take full advantage of the market potential in counter terrorism, intelligent lighting and intruder prevention.

The ongoing support of staff, directors, suppliers and existing investors is much appreciated and I extend a vote of thanks to all on behalf of the Board.

Your Board is confident that its strategy of driving sales growth and expansion into international markets, larger scale contracts and increasing the volume of repeat orders from existing clients will deliver the sustainable operating model we have long fought for and with it the profit and return on investment to our shareholders which we believe draws ever closer.

David Alexander Chairman 20 September 2011

To download a full PDF version of the Unaudited half-yearly report for the period ended 30 June 2011 click hereckcl

Product focus

"We are delighted to be working with Mixpole, a leading and award winning supplier of security technology and solutions in South Korea" Wayne Money, Eruma CEO

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