Interim Results

LATCHWAYS PLC

INTERIM RESULTS FOR THE SIX MONTHS ENDED 30 SEPTEMBER 2011

Latchways plc designs, manufactures and sells a complete range of fall protection systems offering continuous protection to individuals working at height. The systems are sold worldwide through a network of trained installers and are used to provide worker safety on applications as diverse as buildings, bridges, aircraft, telecommunications towers, wind turbines, manufacturing plants, entertainment arenas and offshore platforms. Latchways' equipment may be fitted either to new structures or retrofitted to existing ones.

Highlights

·; Latchways product revenues increased by 13% to £16.8 million (2010: £15.0 million)

·; Safety Services revenues declined by 6% to £5.1 million (2010: £5.4 million)

·; Group revenues up 8% to £20.6 million (2010: £19.1 million)

·; Group profit before tax up 8% to £5.0 million (2010: £4.6 million)

·; Basic earnings per share up by 11% to 32.67 pence (2010: 29.34 pence)

·; Strong cash generation. Cash balance £11.5 million (2010: £9.0 million)

·; Interim dividend increased by 11% to 10.00 pence per share (2010: 8.98 pence)

·; Special dividend declared of 40 pence per share (2010: nil)

·; Personal Rescue Device product launched

Commenting on the results, Chairman, Paul Hearson said:

"This has been an encouraging period for Latchways, with revenues and profits in our main division, Safety Products, showing continued strong growth.

We remain focused on our proven strategy of generating long term superior shareholder returns through product innovation and customer service. We are excited by the prospects for our new products and I am confident that we will continue to deliver further progress both this year and beyond."

Enquiries: Latchways plc Tel: 01380 732700

David Hearson, Chief Executive

Rex Orton, Financial Director

Threadneedle Communications Tel: 020 7653 9858

Graham Herring/Terry Garrett

Chairman's Statement

This has been an encouraging period for Latchways, with revenues and profits in our main division, Safety Products, showing continued strong growth.

Our UK based installation and services business, Safety Services, has been affected by conditions in the construction sector, and this has had a dilutive effect on the group result. It is a mark of the strength of our business that, despite this impact, at the group level we are still showing good growth for the half year at both the revenue and operating profit levels. We expect to see an improved second half for the Safety Services business based on recent contract wins.

Results

Group revenue increased by 8% to £20.6 million (2010: £19.1 million).

Safety Products revenues increased by 13% to £16.8 million. 67% of these revenues were exports. Growth was achieved across most product lines, with the Self Retracting Lifeline in particular continuing to perform well.

Gross margins were 1.8% lower than last year at 53.2%. This was largely due to mix effects, as the first half of last year saw a particularly strong product mix. Compared to the second half of last year, gross margins were 0.5% higher.

The group operating margin was unchanged at 24.1%. This was achieved through careful control of operating costs, which were just 1% higher at £6.0 million (2010: £5.9 million) whilst maintaining our efforts to strengthen the sales and new product development teams.

Group profit before tax was £5.0 million, 8% ahead of last year (2010: £4.6 million). Basic earnings per share were up 11% to 32.67 pence (2010: 29.34 pence), whilst diluted earnings per share were 8% higher at 31.52 pence (2010: 29.27 pence).

Receivables increased by £1.0 million to £10.0 million (2010: £9.0 million). This is due to the increase in revenues. Receivables have reduced by £1.7 million since 31 March 2011. Despite difficult economic conditions in both the UK and some overseas markets, cash collection remains strong. Inventory levels have increased by £0.7 million to £4.6 million (2010: £3.9 million), reflecting the increasing diversity of our product range.

Cash balances of £11.5 million are up £2.5 million on last year (2010: £9.0 million) and £0.7 million on year end. Cash generated from operations was strong at 95% of operating profit.

Dividends

The board remains committed to the progressive dividend policy which it has followed for many years. With the business continuing to grow, and cash flow remaining strong, the board is declaring an interim dividend of 10.00 pence per share (2010: 8.98 pence), an 11% increase on last year. This dividend will be paid on 2 March 2012 to shareholders on the register as at 3 February 2012.

As part of our commitment to maximising shareholder returns, whilst ensuring that operational flexibility is protected, the board has also considered the ongoing cash requirements for the group. Preparatory work for an additional production facility at Devizes is underway. It is expected that this development will be largely covered by operating cash flows over the coming year. The board has determined that, whilst a prudent retention of cash is appropriate to enable the business to take advantage of investment opportunities that may present themselves, the current level of cash exceeds forecast requirements. The board has therefore decided to declare a special dividend of 40.00 pence per share, thereby returning £4.5 million to shareholders. The special dividend will be payable on 6 January 2012 to shareholders on the register as at 9 December 2011.

Review

The extraordinary economic turmoil which has played out across the Western world in particular over recent months has naturally had an impact on business confidence. This has not prevented us from making further significant progress. We have seen growth from many of our traditional geographies as well as new territories, whilst our newer product lines continue to create completely new opportunities.

Latchways' business is divided into two segments; Safety Products, which sells fall protection equipment to global markets from our base in Devizes, Wiltshire; and Safety Services, which installs and services a range of fall protection equipment in the UK.

Safety Products

Safety Products is the largest division of the group, accounting for 75% of group revenues and 93% of operating profits in the period. Our products are sold through a flexible distribution base comprising a network of primarily independent installers, distributing agents and also direct sales to key end customers in specific industries. The sales performance for the division is monitored on a geographic and product line basis.

Overall, the Safety Products business grew revenues by 13% in the period, and operating profits by 15%.

In the UK, the sharp fall in commercial construction has resulted in a fiercely competitive market for our traditional installer-based business. Revenues in this sector were largely flat against the prior year. However, our newer products, including the Self Retracting Lifeline ("SRL") and Versirail guardrail systems, have performed well, resulting in total UK product sales 15% ahead of the same period last year. The Sealed SRL, designed for offshore applications, has continued to perform well in the wind energy market. We expect to see further business from this sector in the second half.

Mainland Europe has been our strongest region in the period, with revenues up 26% on last year. This has been achieved through a combination of good performances from our traditional markets, together with increasing business from new countries.

North America has been a disappointment this year, with revenues down 34% on last year. This was partly due to the strength of Wingrip sales last year, which saw substantial deliveries to the US military which have not yet been repeated this year, but the underlying installer business has also been affected by budget cuts and a reluctance to commit amongst end customers. We are encouraged by a number of prospects for the second half which should lead to improved revenues.

The Rest of the World has performed well, with revenues up 60%. This is largely due to the success of our vertical systems, providing fall protection to the electricity transmission industry. We have continued to build upon the successes highlighted last year, with further customer wins in this period. Whilst business volumes vary with maintenance schedules, these represent long term relationships which should generate revenues for years to come.

Safety Services

This has been a challenging period for the Safety Services business. With the significant contraction of UK construction, the installation market has become even more competitive, putting pressure on both revenues and gross margins. As a result, Safety Services revenues fell 6%, and operating profits were down 36% at £0.4 million.

Although we expect the market conditions to stay depressed, we are cautiously optimistic about the second half. Given the lack of construction activity, we have for some time been concentrating on retrofit business for key customers, and as a result of recent successes we expect to see significant business in the coming months.

New Products

At Latchways, we are committed to retaining and enhancing our position at the forefront of innovation in our industry. Over the years we have developed a number of "Best in Class" products such as the Constant Force Post, our vertical systems, Wingrip, and the Self Retracting Lifeline range. The past year has seen the introduction of further SRL variants and the All-in-One Wingrip product, which are increasing revenues in both military and commercial applications.

In September 2011 we launched the Personal Rescue Device. This is a truly revolutionary, patented self-rescue system for workers should they experience a fall whilst working at height. Initial trials with major customers over recent months have been positive, and we have already received preliminary orders. Production is now underway, and we expect this product to make a significant contribution to revenues in 2012 and beyond.

Our new product development team has been strengthened in recent months to ensure timely delivery of a pipeline of exciting new products.

People

We are continuing to strengthen our operational support to make the most of the opportunities that are presenting themselves. In addition to the strengthening of the new product development team, we are recruiting salesmen to drive the success of both new and existing products.

We are, as ever, indebted to the excellent team that we have assembled here at Latchways, and whose efforts are responsible for our continuing success.

At the beginning of this financial year, Ian Pickering joined the board as a non-executive director. Since then he has taken over as chairman of the audit committee, and his input has been much valued.

Principal Risks

As a provider of fall protection solutions to a global marketplace, the group is subject to a number of external factors which affect its risk profile. The board reviews its risk profile regularly throughout the year, and the key business risks are analysed in our Annual Report. The most important risks and uncertainties for the remaining six months of this financial year are discussed below.

As is the case for most businesses, the ongoing problems of the Eurozone, together with the general lack of economic growth throughout the Western world, represent a key risk to the Latchways business. The uncertainty created by the lack of a long term resolution to the Eurozone debt problem creates a risk-averse spending culture, whereby decision makers are inclined to delay projects and expenditure, whilst the lack of growth results in budget cuts. Our response to these issues has been to focus efforts on those geographies and customers who are least affected by such measures, for example certain military, utilities and major retrofit prospects, whilst continuing to provide the best possible service to existing customers.

Latchways' products are predominantly made of either marine grade stainless steel or aluminium. As such, fluctuations in the world market price of these commodities can have a substantial impact on our costs. After rising steadily since last autumn, commodity prices generally have stabilised in recent months, and this appears to be the trend for stainless steel and aluminium. Whilst the higher costs have had some impact on gross margins, we have been able to mitigate this through ongoing cost control and hence operating margins have been maintained.

Currencies, particularly the Euro and the US, Australian and New Zealand Dollars, remain an important risk factor for Latchways. All sales to mainland Europe are invoiced in Euros. Part of this exposure is subject to a natural hedge in that we now make a proportion of material purchases in Euros, but the remainder, along with our Dollar exposures, is subject to exchange risk. This is mitigated where practicable using forward exchange contracts.

Future Prospects

We remain focused on our proven strategy of generating long term superior shareholder returns through product innovation and customer service. We are excited by the prospects for our new products, and I am confident that we will continue to deliver further progress both this year and beyond.

Paul Hearson

14 November 2011

Statement of directors' responsibilities

The directors confirm that this condensed set of financial statements has been prepared in accordance with IAS 34 as adopted by the European Union, and that the interim management report herein includes a fair review of the information required by DTR 4.2.7 and DTR 4.2.8, namely:

·; An indication of important events that have occurred during the first six months and their impact on the condensed set of financial statements, and a description of the principal risks and uncertainties for the remaining six months of the financial year; and

·; Material related party transactions in the first six months and any material changes in the related party transactions described in the last Annual Report.

The directors of Latchways plc are listed in the Annual Report.

By order of the Board

DN Hearson

Chief Executive

14 November 2011

RA Orton

Financial Director

14 November 2011Latchways plc

Statement of Comprehensive Income

The results for the periods arose wholly from continuing operations.

Latchways plc

Consolidated Balance Sheet

Latchways plc

Consolidated Statement of changes in shareholders' equity

Notes to the consolidated interim financial statements

1. General information

Latchways plc is domiciled in England.

This condensed consolidated half-yearly financial information was approved for issue on 11 November 2011.

These interim financial results, which have been neither reviewed nor audited, do not comprise statutory accounts within the meaning of Section 434 of the Companies Act 2006. Statutory accounts for the year ended 31 March 2011 were approved by the Board of directors on 10 June 2011 and have been delivered to the Registrar of Companies. The report of the auditors on those accounts was unqualified, did not contain an emphasis of matter paragraph and did not contain any statement under Section 498 of the Companies Act 2006.

2. Forward-looking statements

Certain statements in this half-yearly report are forward-looking. Although the group believes that the expectations reflected in these forward-looking statements are reasonable, we can give no assurance that these expectations will prove to have been correct. Because these statements involve risks and uncertainties, actual results may differ materially from those expressed or implied by these forward-looking statements.

We undertake no obligation to update any forward-looking statements whether as a result of new information, future events or otherwise.

3. Basis of preparation

This condensed consolidated half-yearly information for the half-year ended 30 September 2011 has been prepared in accordance with the Disclosure and Transparency Rules of the Financial Services Authority and with IAS 34, 'Interim financial reporting' as adopted by the European Union. The half-yearly condensed consolidated financial report should be read in conjunction with the annual financial statements for the year ended 31 March 2011, which have been prepared in accordance with IFRSs as adopted by the European Union.

4. Accounting policies

Except as described below, the accounting policies applied are consistent with those of the annual financial statements for the year ended 31 March 2011, as described in those annual financial statements.New accounting standards and interpretations have been issued during the year. The group's approach to these is as follows:The following standards, amendments and interpretations are mandatory for the first time for the current accounting period:

·; Annual Improvements 2010;

·; Amendment to IAS 24, 'Related party disclosures';

The following standards, amendments and interpretations are mandatory for the first time for the current accounting period but are not relevant to the group's operations:

·; Amendment to IFRIC 14, 'Prepayments of a minimum funding requirement'.

The following interpretations to existing standards have been published that are mandatory for the group's future accounting periods but which the group has not early adopted:

·; Amendment to IFRS 7, 'Financial instruments: Disclosures';

·; IFRS 9, 'Financial instruments';

·; IFRS 10, 'Consolidated financial statements';

·; IFRS 13, 'Fair Value Measurement';

·; Amendments to IAS 1, 'Presentation of Items of Other Comprehensive Income';

·; Revised IAS 27, 'Separate Financial Statements';

·; Amendments to IAS 12, 'Income taxes' on deferred tax.

The following interpretations to existing standards have been published that are mandatory for the group's future accounting periods but which are not relevant to the group's operations:

·; IFRS 11, 'Joint arrangements';

·; IFRS 12, 'Disclosure of interest in other entities';

·; Amendments to IAS 19, 'Employee Benefits';

·; Revised IAS 28, 'Investment in Associates and Joint Ventures'.

5. Segment information

6. Income taxes

Income tax expense is recognised in these interim financial statements based on management's best estimates of the weighted average annual effective tax rate expected for the full year. The estimated average annual tax rate used for the year to 31 March 2012 is 27.0% (the estimated tax rate for the 6 months to 30 September 2010 was 29.0%).

7. Earnings per Share

Earnings per share attributable to equity holders of the company arise from continuing operations as follows:

The increase in the impact of dilutive share options in the period results from potential ordinary shares in relation to the Latchways plc 2010 Value Creation Plan.

8. Dividends

A dividend of £2,308,000 that related to the year ended 31 March 2011 was paid in September 2011 (2010: £2,001,000).

An interim dividend of 10.00 pence per share (2010: 8.98 pence), totalling £1,117,000 (2010: £1,000,000) has been declared and will be paid on 2 March 2012 to shareholders on the register as at 3 February 2012.

A special dividend of 40.00 pence per share (2010: nil), totalling £4,468,000 (2010: £nil) has been declared and will be paid on 6 January 2012 to shareholders on the register as at 9 December 2011.

In accordance with IAS 10 "Events after the balance sheet date", these interim financial statements do not reflect these dividends payable.

9. Reconciliation of operating profit to cash flow from operations

11. Share capital

12. Contingent liabilities

There were no contingent liabilities as at 30 September 2011, 31 March 2011 or at 30 September 2010.

13. Related party transactions

During the period, Latchways plc made sales of £1,414,000 (2010: £1,325,000) to HCL Safety Limited. At the period end the balance outstanding to Latchways plc from HCL Safety Limited was £854,000 (2010: £583,000).

During the period, Latchways plc made sales of £1,065,000 (2010: £nil) to Latchways Australia Pty Ltd. At the period end the balance outstanding to Latchways plc from Latchways Australia Pty Ltd was £366,000 (2010: £nil).

During the period, Latchways plc made sales of £79,000 (2010: £nil) to Sigma 6 d.o.o. Sigma 6 d.o.o made sales to Latchways plc of £544,000 (2010: £504,000). At the period end the net trading balance outstanding to Latchways plc from Sigma 6 d.o.o was £48,000 (2010: £88,000 from Latchways plc to Sigma 6 d.o.o). In addition, Latchways made loans to Sigma 6 amounting to £220,000 (2010: £275,000).

At the period end, Latchways plc owed HCL Group Plc £350,000 (2010: £350,000)

14. Interim Report

Copies of this interim report will be sent to all shareholders. Additional copies will be available from the group's registered office at Hopton Park, Devizes, Wiltshire SN10 2JP, or will be available for download from the group's website at www.latchways.com.