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Share Name | Share Symbol | Market | Type | Share ISIN | Share Description |
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Plasmon | LSE:PLM | London | Ordinary Share | GB0006906381 | ORD 5P |
Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
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0.00 | 0.00% | 0.33 | 0.00 | 01:00:00 |
Industry Sector | Turnover | Profit | EPS - Basic | PE Ratio | Market Cap |
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0 | 0 | N/A | 0 |
RNS Number : 1209W Plasmon PLC 06 June 2008 PLASMON PLC 2008 PRELIMINARY RESULTS Plasmon Plc, (LSE: PLM) ("Plasmon", the "Company" or the "Group"), a leader in data archiving solutions, today announces its results for the year ended 31 March 2008. Highlights: * Group revenues fell 13% at constant exchange rates to £29.4 million (2007: £35.9 million) following further decline in legacy products. * Revenue declined in the first half and flattened out in the second, as newer archive solution product growth (45% year on year in constant currencies) compensated for a continuing fall in legacy sales. * Operating losses before rationalisation costs reduced by £1.2 million to £9.6 million (2007: £10.8 million). * £8 million gross capital raised in May 2007 to complete and launch a new range of enterprise archive solutions. * £10 million gross capital raised in April 2008 to fund a new sales strategy and enhancement of the archive management software layer. * New CEO appointed with proven data storage and turnaround track record. * Sales re-organisation substantially completed, 18 new sales staff now recruited. * Expecting to extend our industry partnerships in the near term. * Expecting to reach positive cash flow during second half of current year. Steven Murphy, Chief Executive of Plasmon, commented: *The data archiving market is growing strongly. Plasmon has always had great technology; but we now have a business model that can sell and deliver superior archiving solutions for enterprise customer needs. This is a turning point for the Company, and it is beginning to deliver results.* Rod Powell, Chairman of Plasmon, commented: "Our transformation of Plasmon aims to create a profitable and fast-growing solutions business. The Board and I are delighted with the progress Steven Murphy and his team have already made in executing the new sales strategy, and we expect to reach the key milestone of positive cash flow in the second half." Enquiries: Plasmon Plc (01763 261466) Steven Murphy (Chief Executive) Tim Arthur (Finance Director) Citigate Dewe Rogerson (020 7638 9571) Martin Jackson / Ged Brumby CHAIRMAN'S STATEMENT For the financial year ended 31 March 2008, Group revenue fell by 13% (at constant exchange rates) to £29.4 million as the decline in legacy systems sales outweighed the nascent growth in archive solution revenues. The decline in sales revenues was halted during the year, with second half sales of £14.6 million (2007: £17.2 million) being only slightly below the £14.8 million (£18.7 million) achieved in the first half. Operating losses before rationalisation costs reduced from £10.8 million to £9.6 million. Our main focus as a business during the financial year was a series of major changes to transform Plasmon from a specialist manufacturer of optical hardware into a provider of enterprise archiving solutions. In April 2007, we successfully launched a broad range of Archive Appliance products with the new UDO2 media and drive technology. In May 2007, as interim Chief Executive, I introduced a major programme of outsourcing and cost reduction, which is now complete and gives us the right operating structure after the previous three years in which our focus was investing in technology development. Our previous Chairman, Jeffrey Hewitt, stepped down in November 2007 having brought Steven Murphy on board as Chief Executive, and I took over as your Chairman. We are both based in the USA, which is our largest market by far. Steven, as well as being a 20 year veteran of the storage industry, has a successful track record as an entrepreneurial CEO, leading growth and sales in solutions businesses. His priority, supported by shareholders in the April 2008 fundraising, is solution sales execution to deliver faster growth in higher value customer segments. This next stage of our transformation is designed to exploit three exciting opportunities: 1. Growth in the archiving market is accelerating at record levels: whatever the economic climate, businesses continue to create new data and increasingly require this data to be securely archived for long periods; 2. Enterprise customers are addressing escalating storage management costs, data centre power consumption, and the environmental impact of ever-expanding RAID disk server farms that are unsuited to long-term data archiving; and 3. Plasmon has a purpose-built archive solution; which is cheaper and much more energy efficient than production RAID disk, provides faster recovery than traditional tape solutions and, with our patented UDO media technology, greatly reduces the risk of data loss compared to traditional magnetic media . Since the beginning of 2008, Steven has successfully implemented Plasmon's new sales operation: - A customer-facing channel has been created to complement our resellers. - 18 experienced storage industry sales staff have been recruited. - Best practice sales management processes and automation tools have been put in place. - We are now selling packaged, repeatable go-to-market solutions which address specific industry needs. - Field system engineers have been trained to provide specialised support for large customer implementations and to enhance our industry partner sales. In addition, we have enhanced the data archiving software layer and made the production quality and installation process changes needed to successfully address a broad archive solutions market. After these last 12 months of major change in our strategy, leadership, organisation, product development and capital structure, the Board believes Plasmon is now positioned strongly to deliver on its growth potential. OUTLOOK The overall archive storage market is forecast to grow rapidly from $9 billion in 2007 to $23 billion by 2010. Our Archive Appliance solution sales grew 45% in constant currency terms compared to the comparable period last year, despite the disruptions of major organisational change. We now have all of our sales "enablers" in place, and are actively focused on a series of specific market segments where our archive solutions are either most compelling for new customers or where we have the best opportunity to "refresh" Plasmon legacy products. Additionally, we hope to expand our market opportunities by extending our industry partnerships in the near term. The Board believes that the new solution sales and marketing strategy should lead to significant revenue growth and anticipates a return to positive cash flow in the second half of the current financial year to 31 March 2009. I would like to thank my predecessor, Jeffrey Hewitt, for his service on the Board, and all of our employees and partners for helping the Company reach this exciting point in its development. Rod Powell Chairman 6 June 2008 BUSINESS REVIEW Following the successful placing of new shares on 18 May 2007, which raised £7.4 million net of expenses, Rod Powell was appointed Interim Chief Executive and Matthew Peacock, a founding partner of Hanover, a major shareholder in the Company, joined the Board as a non-executive Director. On 21 June 2007, Nigel Street, who had led the development of UDO optical technology, resigned from the Board. The Group was restructured around a global sales, marketing and delivery organisation to better capture the significant sales growth potential of our archive solutions product range. The Outsourcing and Cost Alignment programme, "OSCA", was initiated to further reduce the Group's fixed cost base and inventories, as well as our high dependency on internal manufacturing. A recruitment exercise commenced to find a permanent Chief Executive to lead the Group through this transition from a technology component led supplier to a customer and market led solutions provider. In November 2007, Steven Murphy was appointed Chief Executive and Rod Powell assumed the role of non-executive Chairman, succeeding Jeffrey Hewitt who stepped down from the Board. Steven is a seasoned American executive with more than 20 years experience in the storage and systems management industry and he has a proven track record in successfully repositioning companies for growth. Growth Strategy As announced on 7 February 2008, the $45 billion global storage market continues to grow and, within this, the archive storage revenues will be the fastest growing major segment, with sales forecast to increase from $9 billion in 2007 to $23 billion by 2010. Business and public sector organisations recognise that most of their rapidly growing storage of data is rarely accessed after 90 days. However, they are faced with a need to have their data readily available to meet business recovery, legal and regulatory requirements. There is, therefore, an increasing opportunity to move rarely-accessed data archives from expensive hard disk (RAID) servers to a lower cost, more permanent storage infrastructure tier ideally suited to Plasmon's Archive Appliance, embedded with our proprietary ultra density optical disk media "UDO". Plasmon's Archive Appliance* solutions offer the benefits of immediate recall of archive data, like RAID based solutions, but with high levels of data authenticity and longevity at a significantly lower cost. Plasmon's Archive Appliance also consumes less power than RAID, at a time when the environmental impact of increased power, air-conditioning and telecom infrastructures in data centres is a concern or not available. By combining the performance of RAID with the easy to use and lower cost of UDO media, but with the added benefits of increased data integrity, authenticity, and permanence of UDO's non-magnetic media, Plasmon is in the unique position to provide the best fit archive solution for enterprise and public sector customers. Plasmon is now in the position to leverage its 20 years of leadership in providing professional archive and optical storage technology, with our objective to become the archive solution provider of choice. 2008 Fundraising In order to achieve the Group's long-term growth objectives, in February 2008 a £10 million fund raising was announced to fund: * the recruitment and investment in a customer-facing sales and service channel and marketing strategy, focused on stimulating awareness and demand within major enterprise customers in support of the current third party reseller channel; * the strengthening of the Group's intellectual property in the archive management software layer; and * the working capital requirements of the Group and provide customers and employees with confidence in the Group's long-term growth prospects. The fundraising was successfully completed with the Company receiving the net proceeds of £9.3 million in April 2008. The Group has already filled the majority of marketing and development positions in the USA identified as being required and is now focusing on the other global growth market requirements. PRODUCT DEVELOPMENT AND STRATEGY During the past year we re-organised the business to align fully all resources, development programmes and go-to-market strategies around our 2008/2009 enterprise archive solutions strategy. With this top-to-bottom strategy alignment, we have been able to accelerate the planned reduction in our longer term investments without impacting our competitive advantage in the market short term. Further opportunities for reductions followed the successful launch of UDO2 products in April 2007 and the cessation of the Irish RAID business in March 2007. UDO2 products were formally launched on 26 April 2007 and, at 60GB, doubled the capacity of the previous UDO1 product range. The new drives read and write 50% faster than the previous products and are backwards read compatible with UDO1 to provide investment protection and an easy upgrade path for our customers. Total research and development expenditure, excluding rationalisation costs, fell by 24% to £5.8 million in 2007/8 (2007: £7.7 million). The archive solutions strategy will continue to trend development expenditure from hardware toward data capture and management software as the Archive Appliance develops its presence as a standard in the IT archive platform. Archive Appliance development and marketing efforts are now focused on increasing its competitive advantage by expanding data retention and disposition software functionality, thereby accelerating the speed of full deployment of the solution into a broader range of mainstream IT archive and disaster recovery applications, adding more routes to market and improving market share. FINANCIAL RESULTS Turnover Turnover fell by 13% (at constant exchange rates) to £29.4 million in the financial year ended 31 March 2008 (2007: £35.9 million) as the decline in legacy system sales outweighed the growth in archive solution revenues. The rate of decline in sales revenues slowed during the year with second half sales of £14.6 million (2007: £17.2 million) being only slightly below the £14.8 million (£18.7 million) achieved in the first half. In geographical terms, the ratio of US origin revenues to European origin revenues remained at 62%:38%. Operating loss Operating losses before rationalisation costs decreased by £1.2 million to £9.6 million in 2007/8. The £1.9 million reduction in gross profits that resulted from the reduced turnover was more than offset by a £3.1 million decrease in net operating expenses that resulted from the initial benefits of the rationalisation programmes and favourable foreign exchange movements. In percentage terms, gross margins decreased slightly from 28.0% in 2006/7 to 27.8% in the current year with material margins falling from 56.5% in the previous year to 55.3%. Manufacturing overheads were reduced in line with the declining revenues. The reduced net operating expenses included the recording of a £0.3 million foreign exchange gain in administrative expenses compared to a £0.3 million loss in the previous year. Second half operating losses before rationalisation costs of £4.8 million were in line with the first half losses of £4.8 million with costs being reduced in line with the slightly lower revenues. Total operating losses of £12.2 million (2007: £14.6 million) in 2007/8 include £2.5 million of rationalisation costs (2007: £3.7 million). Full details of these rationalisation costs are given in later sections of this report. Operating losses before tax and interest in North America totalled £5.8 million compared to the prior year loss of £6.6 million, largely due to reduced overhead costs resulting from the rationalisation programmes. In Europe, operating losses before tax and interest were £6.3 million compared to a loss of £8.0 million during the previous year mainly due to a reduction in the rationalisation costs incurred in this territory. Taxation The small tax credit for the year related to a deferred tax movement partially offset by tax incurred by our European subsidiaries. Operating losses eliminate any significant tax charge at the principal operating entities. Full details of potential deferred tax assets are given in the notes to the financial statements. As a result of these assets, the Group will not pay significant amounts of corporation tax for the following few years. Loss per share The 11.24p loss per share compares with 19.11p for the previous year. The rationalisation costs account for 2.20p of the loss per share (2007: 4.63p). The impact of the decreased losses was compounded by the increased weighted average number of shares in issue, which rose from 80,354,084 in 2006/7 to 115,510,374 in 2007/8 as a result of the fundraisings completed during the period. Cash flow and net debt Net debt decreased during the year ended 31 March 2008 by £0.7 million to £10.3 million with Group gearing increasing from 39% to 44% during the course of the year. Net assets decreased from £28.6 million at 31 March 2007 to £23.2 million at the end of the year with the £7.4 million increase in share capital that resulted from the May 2007 fundraising partially offsetting the loss for the period of £13.0 million. Inventories fell by a further £1.3 million before currency movements as the amount of legacy inventories held continued to be reduced and receivables fell by £0.7 million net of currency movements, primarily due to the lower turnover. With the major UDO capital investment completed in previous years, expenditure on property, plant and equipment remained flat at £1.5 million in the current year and mainly related to the replacement of old computer and production equipment. This level of expenditure remains significantly below the total depreciation and amortisation costs of £2.8 million, a trend that is expected to continue over the next few years. RATIONALISATION PROGRAMME In light of the continuing decline in our legacy businesses, during 2006/7 we began to implement a restructuring programme to reduce our cost base and improve our focus on our archival storage business. This programme was expanded by project OSCA during 2007/8 to cover the outsourcing of US library manufacturing, which is already at an advanced stage with our chosen partner now manufacturing the full range of libraries. The final stage of this part of the programme will be completed in July 2008 when the remaining Colorado Springs based employees relocate to a smaller facility. In February 2008, we also took the decision to exit the French mastering business which is no longer considered core to our focus on archival storage and had begun to lose money. The rationalisation programmes have resulted in a charge for the year of £2.5 million (2007: £3.7 million). Once completed in July 2008, these reorganisation programmes will have reduced our total staff numbers to below 300 employees from the average 340 for 2007/8 and 415 for 2006/7. Explanation of terms: In order to reflect underlying business performance, comparisons of financial measures between periods have been adjusted for exchange rates. Changes in profit, cash flow, debt and share related measures such as loss per share are at reported exchange rates. Safe Harbour: The Chairman's Statement and Business Review contain certain statements, statistics and projections that are or may be forward-looking. The accuracy and completeness of all such statements, including, without limitation, statements regarding the future financial position, strategy, projected costs, plans and objectives for the management of future operations of Plasmon Plc and its subsidiaries is not warranted or guaranteed. These statements typically contain words such as "intends", "expects", "anticipates", "estimates" and words of similar import. By their nature, forward-looking statements involve risk and uncertainty because they relate to events and depend on circumstances that will occur in the future. Although Plasmon Plc believes that the expectations reflected in such statements are reasonable, no assurance can be given that such expectations will prove to be correct. There are a number of factors, which may be beyond the control of Plasmon Plc, which could cause actual results and developments to differ materially from those expressed or implied by such forward-looking statements. Other than as required by applicable law or the applicable rules of any exchange on which our securities may be listed, Plasmon Plc has no intention or obligation to update forward-looking statements contained herein. Plasmon Plc Consolidated income statement For the year ended 31 March 2008 Before Rationalisation costs After rationalisation costs rationalisation costs 2008 2008 2008 £'000 £'000 £'000 Continuing operations Revenue 29,433 - 29,433 Cost of sales (21,254) (1,705) (22,959) Gross profit 8,179 (1,705) 6,474 Sales and marketing expenses (8,907) (38) (8,945) Research and development (5,843) 4 (5,839) expenses Administrative expenses (3,069) (798) (3,867) Operating loss from continuing (9,640) (2,537) (12,177) operations Interest payable and other (858) - (858) similar charges Interest receivable 26 - 26 Loss on continuing activities (10,472) (2,537) (13,009) before taxation Tax on loss on ordinary 29 - 29 activities Loss for financial year (10,443) (2,537) (12,980) Loss per share expressed in pence per share: Basic and diluted (9.04) (2.20) (11.24) Plasmon Plc Consolidated income statement For the year ended 31 March 2007 Before Rationalisation costs After rationalisation costs rationalisation costs 2007 2007 2007 £'000 £'000 £'000 Continuing operations Revenue 35,884 - 35,884 Cost of sales (25,838) (1,791) (27,629) Gross profit 10,046 (1,791) 8,255 Sales and marketing expenses (8,946) (99) (9,045) Research and development (7,684) (882) (8,566) expenses Administrative expenses (4,253) (946) (5,199) Operating loss from continuing (10,837) (3,718) (14,555) operations Interest payable and other (685) - (685) similar charges Interest receivable 13 - 13 Loss on continuing activities (11,509) (3,718) (15,227) before taxation Tax on loss on ordinary (126) - (126) activities Loss for financial year (11,635) (3,718) (15,353) Loss per share expressed in pence per share: Basic and diluted (14.48) (4.63) (19.11) Plasmon Plc Consolidated balance sheet As at 31 March 2008 2008 2007 £'000 £'000 Assets Non current assets Goodwill 7,874 7,966 Intangible assets 3,320 4,152 Property, plant and equipment 18,191 19,964 29,385 32,082 Current assets Inventories 9,889 11,343 Trade and other receivables 6,632 7,504 Current tax assets - 2 Cash and cash equivalents 810 347 17,331 19,196 Liabilities Current liabilities Trade and other payables (10,940) (9,580) Current tax liabilities (37) (83) Obligations under finance leases (250) (406) Bank overdraft and loans (7,244) (6,579) Provisions (1,148) (1,319) (19,619) (17,967) Net current (liabilities) / assets (2,288) 1,229 Non-current liabilities Bank loans (3,451) (3,935) Obligations under finance leases (163) (461) Deferred tax (266) (332) (3,880) (4,728) Net assets 23,217 28,583 Equity Share capital 6,038 4,037 Share premium account 75,731 70,336 Foreign exchange reserves (991) (973) Profit and loss account (57,561) (44,817) Total shareholders' equity 23,217 28,583 Plasmon Plc Consolidated statement of changes in shareholders' equity For the year ended 31 March 2008 Attributable to equity holders of the Company Share Foreign Profit and Share premium exchange loss capital account reserves account Total £'000 £'000 £'000 £'000 £'000 At 1 April 2006 3,670 64,861 106 (29,671) 38,966 Share options - value of - - - 207 207 employee services Currency translation - - (1,079) - (1,079) differences Total (expense) / income - - (1,079) 207 (872) recognised directly in equity Issue of shares net of fees 367 5,475 - - 5,842 Net loss for the period - - - (15,353) (15,353) At 31 March 2007 4,037 70,336 (973) (44,817) 28,583 Share options - value of - - - 236 236 employee services Currency translation - - (18) - (18) differences Total (expense)/income - - (18) 236 218 recognised directly in equity Issue of shares net of fees 2,001 5,395 - - 7,396 Net loss for the period - - - (12,980) (12,980) At 31 March 2008 6,038 75,731 (991) (57,561) 23,217 Plasmon Plc Consolidated cash flow statement For the year ended 31 March 2008 2008 2007 £'000 £'000 Continuing operations Operating loss (12,177) (14,555) Adjustments for: Depreciation - property, plant and equipment 2,083 2,669 Impairment loss on property, plant and equipment 960 875 Amortisation of intangible assets 683 800 Impairment loss on intangible assets 127 217 Impairment loss on goodwill 65 - Profit on disposal of property, plant and equipment (24) (13) Share options - value of employee services 236 207 Changes in working capital: Decrease in inventories 1,326 1,982 Decrease in trade and other receivables 698 882 Increase in payables 1,350 623 Cash absorbed by operations (4,673) (6,313) Cash generated from/(absorbed by) operating activities Interest received 26 13 Interest paid - bank loans and overdrafts (811) (606) Interest paid - finance leases (55) (85) Taxation paid (50) (175) Net cash absorbed by operating activities (5,563) (7,166) Investing activities Proceeds from the sale of property, plant and equipment 188 39 Purchase of intangible assets - (274) Purchase of property, plant and equipment (1,447) (1,337) Net cash used in investing activities (1,259) (1,572) Financing activities Issue of ordinary shares, net 7,395 5,842 Repayment of borrowings (491) (3,192) Repayment of obligations under finance leases (450) (948) New bank loans issued - 4,600 Net cash raised through financing activities 6,454 6,302 Effect of foreign exchange rate changes 133 258 Net decrease in cash and cash equivalents (235) (2,178) Cash and cash equivalents at the beginning of the period (5,739) (3,561) Cash and cash equivalents at the end of the period (5,974) (5,739) Analysis of net debt Inception Foreign At 1 April Cash of finance exchange At 31 March 2007 flow leases gain/(loss) 2008 £'000 £'000 £'000 £'000 £'000 Cash at bank and in hand 347 366 - 97 810 Overdrafts (6,086) (734) - 36 (6,784) (5,739) (368) - 133 (5,974) Debt due within one year (493) 32 - 1 (460) Debt due after one year (3,935) 480 - 4 (3,451) Finance leases due within one (406) 167 (6) (5) (250) year Finance leases due after one (461) 311 (12) (1) (163) year Net debt (11,034) 622 (18) 132 (10,298) Notes to the Financial Information: 1. The financial information contained in this statement does not constitute statutory accounts as defined in Section 240 of the Companies Act 1985. The information has been extracted from financial statements approved by the Directors on 6 June 2008 which have received an unqualified auditor*s report from PricewaterhouseCoopers LLP, Chartered Accountants and Registered Auditors of Abacus House, Castle Park, Cambridge CB3 0AN. The financial statements will be delivered to the Registrar of Companies after the Annual General Meeting. The 2007 financial statements were given an unqualified opinion by the Company*s auditors. 2. The consolidated financial information of the Group has been prepared in accordance with International Financial Reporting Standards (*IFRS*) as endorsed by the European Union, International Financial Reporting Interpretations Committee (*IFRIC*) interpretations and those parts of the Companies Act 1985 applicable to companies reporting under IFRS. This is in accordance with the Listing Rules of the Financial Services Authority. The consolidated financial information has been prepared on a historical cost basis except for certain items that have been measured at fair value. Certain policies have only been applied from 1 April 2005 as permitted under the transitional arrangements for first time adoption of IFRS. The preparation of financial information in accordance with generally accepted accounting principles requires management to make judgements, estimates and assumptions that affect the application of policies and reported amounts of assets and liabilities, income and expenses. The estimates and associa 3. Basic losses per share have been calculated on the basis of loss on ordinary activities after tax and 115,510,374 Ordinary Shares (2007: 80,354,084), being the weighted average number of Ordinary Shares deemed to have been in issue in the period. 4. There is no dilution of losses per share in the year ended 31 March 2008 and 31 March 2007. 5. The Directors do not propose to declare a dividend in respect of the year ended 31 March 2008. 6. On 3 April 2008, the Company completed the placing of 100,000,000 Ordinary Shares for 10p each raising £9.3m net of expenses. 7. The Annual Report will be mailed to shareholders and copies will be available from the registered office * Plasmon Plc, Whiting Way, Melbourn, Hertfordshire, SG8 6EN. This information is provided by RNS The company news service from the London Stock Exchange END FR FAMPTMMBMBMP
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