Lot of Work for Steven Murphy, New CEO of Plasmon That Records Poor Sales

Plasmon continues its transition from a specialized vendor of optical hardware to an Archive
Solution Provider, meeting key Enterprise customer priorities for archiving integrity, longevity and
legal compliance. The environmental friendliness of our solutions (90-95% lower energy
requirements than rival hard disk systems) is also increasingly attracting business and public sector
customers.

Key Highlights for the Six Months ended 30 September 2007
Despite sales weakness experienced since the summer, the business continues to develop in line
with the Board’s expectations for the transition underway and the goal of reaching cash flow
breakeven in the 4th quarter.
* Archive Appliance sales grew by more than 50% in constant currency and are gaining
momentum. Over the first half, our new Channel sales achieved:
– A doubling of average sales order size for Archive Appliance
– A doubling of active Order Registrations
* However, overall sales declined by 20% to £14.8m (2006: £18.6m) as older, non-Solutions
products were impacted by cyclical declines and a weak US IT market since the summer.On
a constant currency basis, sales declined by 14%.
* Operating losses declined to £4.8m (2006: £5.7m) before rationalization costs of £0.5m (2006:
£nil).
* The Outsourcing and Cost Alignment program (OSCA) is ahead of schedule and reduced
overheads in the period by 17%.
* Raised £8m gross capital in May 2007.
* Steven Murphy appointed as Chief Executive Officer on 13 November 2007.
Rod Powell (Chairman of Plasmon Plc) said “The past 6 months have seen a successful
restructuring of our cost and manufacturing base, and a successful launch of our UDO2 and
Archive Appliance solutions. Steven Murphy is a proven CEO in the Storage sector, and his
experience in Enterprise Solutions sales will accelerate the promising growth our next generation
products are demonstrating.”
Steven Murphy (Chief Executive of Plasmon Plc) said “The Enterprise archiving market wants
something better than magnetic tapes or power-hungry RAID server farms. Plasmon has an
unchallenged leadership position with Archive Appliance; our optical solution offers low cost of
ownership, fast retrieval and a physically permanent storage media. In the second half, a direct
sales focus on the corporate, financial and government sectors, where these attributes are critical,
will build a major opportunity for future sales growth.”

Strategy
During the first half of the 2008 financial year, Plasmon continued to execute its transition from
a specialized vendor of optical hardware to an Archive Solution Provider.We focused product
management, development, and sales and marketing efforts to build our Solution Provider
position in this growing market, whilst maintaining our legacy document management
components business. We continued investing in sales and marketing to create awareness of the archive solution strategy and to stimulate demand through a new enterprise-class set of
distributors and certified archive consultant resellers. The previously announced Outsourcing and
Cost Alignment program (“OSCA”) successfully reduced costs in our legacy businesses, and
this work will continue to restructure our internal operations and costs in line with the archive
solution strategy.

Channel development
We will continue to invest in developing the enterprise-class indirect solutions channel and in
programs to stimulate end-customer demand in the enterprise archive market. The process of
recruiting this new tier of resellers has progressed ahead of plan; in the first half, 16 of our
22 priority targets were signed up to formal contracts and had staff qualify as Plasmon-certified
archive consultants.
The key metrics we use to gauge progress during this channel development are:
(1) the percentage of tier one reseller targets under contract;
(2) the number of opportunities or leads turned over to certified archive resellers;
(3) the conversion of leads to registered qualified opportunities by each channel partner;
(4) the rate and quality of new quotes;
(5) the average deal sizes;
(6) the mean time to convert the opportunities to shipped business;
(7) the revenue after initial contract.
The registered opportunity pipeline has grown steadily during the first half of the year and the
average configuration and sale price has doubled, as the new channels have succeeded in engaging
with larger enterprise customers.However, the faster rate of decline of our legacy components
business, compounded by the longer time needed to close “large ticket” solutions sales has
impacted our revenue expectations.Overall, revenues declined 20% to £14.8m (2006: £18.6m) or
14% on a constant currency basis.We reported softness in the US market, with an apparent slow
down in IT spend in key financial and medical markets, at our AGM in September and we
continue to see that effect.
Plasmon has now established a top tier reseller foundation as planned, and our next phase is to
develop a complementary direct customer sales capability for our key vertical segments, to allow us
to stimulate demand, design the best-fit enterprise archive solution closer to the end customer, and
support our resellers with specialised compliance and solutions expertise.In parallel to this
initiative, we are creating a long-term archive solutions roadmap with our technology partners.This
will increase our software-based storage management capabilities and grow the capacity of our
unique UDO technology to allow Plasmon to serve the very largest and most demanding Enterprise
customers. This segment is particularly attracted to our solutions’ archiving integrity and lower life
cycle and power costs, as an alternative to ever-expanding disk server farms.

Project OSCA and rationalization costs
Project OSCA and other cost reduction programs have reduced the overhead cost base, including
manufacturing costs, by 17% this year and offset the impact of lower sales.The operating losses for
the six months ended 30 September 2007 totalled £4.8m (2006: £5.7m) before rationalization costs
of £0.5m (2006: £nil).
Plasmon has entered contract negotiations with our chosen library outsourcing partner and are on
target to have completed the project by June of 2008 when we will move into a smaller facility in
Colorado Springs.The rationalization costs incurred in the first half related to the resignation of
Nigel Street as Chief Executive in May 2007 and redundancies, principally in the North American
operations.

Fund raising
In May 2007 Plasmon completed a £8m placing at 20p per Ordinary Share to fund the next stage
of growth plans and to strengthen the Group’s finances. At 30 September 2007, net debt totalled
£8.8m (2006: £7.9m), a gearing of 29% (2006: 21%) of net assets.

Outlook
Despite the ongoing softness in US IT capital spend and reduced revenue visibility, the Board
believes that we can still meet the cash break even goal in the 4th quarter. This is due to the
following factors: the strengthening of our senior leadership, the demand for our new Archive
Solutions to meet the compliance and environmental priorities of enterprise customers, the
increasing maturity of our new channel partners and our continued cost control.
The Board is extremely pleased that Steven Murphy has joined Plasmon as CEO. His experience
and track record in the storage management market is exactly the right fit for the next stage of
Plasmon’s development, as we grow our archiving solutions business to its full market potential.
The Board would also like to thank Jeff Hewitt for his work as Chairman over the past 18 months
in completing a major fund raising and introducing new leadership to Plasmon.

Principal risk factors
The directors believe that the following major risks face the business over the next six months
through to March 2008.
* UDO
UDO is proving to be reliable in the field and it has already passed the stringent testing
requirements of major OEM customers. As a result the directors believe that the technological risk
associated with the original UDO development programme is now minimal. However, there
remain a number of specific risks associated with the widespread deployment of UDO technology
that will impact the ultimate success of UDO technology. The most significant of these risks relate
to the adoption of the UDO Archive Appliance, the development of future generations of UDO
products and the support of major OEM customers.
* Competition
The mass data storage market is highly competitive and the Group faces competition from
companies who have much greater capital resources than the Group.
* Technological change
The technology upon which the Group’s products are based may become obsolete or may not
achieve sufficient market acceptance to create adequate demand for the Group to return to
profitability.
* Alliance partnerships
Part of the Group’s strategy is to leverage its alliances with strategic partners. The Group’s failure
to establish further strategic alliances, or the loss of existing partners, could have a materially
adverse impact on the Group.
*Short order book and quarter-end weighting
In line with industry norms, the Company operates with an order book less than one month and
with significant quarter-end weighting. This position provides the Company with limited guidance
on the outlook for future revenues, which could vary significantly from historical trends.

Plasmon Plc