Notes to the financial statements - Plasmon

Plasmon Plc 

Annual Report 

2003

Contents 

01 Overview and Highlights 

02 Chairman’s Statement 

06 Chief Executive’s Review 

14 Finance Director’s Review 

17 Board of Directors and Senior 

Management 

18 Corporate governance 

20 Remuneration report 

23 Directors’ report 

24 Auditors’ report 

25 Consolidated profit and loss account 

26 Statement of total recognised gains and losses 

27 Consolidated balance sheet 

28 Company balance sheet 

29 Consolidated cash flow statement 

30 Notes to the financial statements 

Directors and advisers

Plasmon Overview 

Plasmon manufactures automated data 

storage systems for the professional data 

storage market. Plasmon’s systems are 

predominantly based on optical storage 

technology and are used for large-scale 

data archive applications.Typical end users 

include banks, insurance companies, 

hospitals and government agencies. 

Plasmon operates on a global basis and 

over 60% of revenues are derived in the 

USA and less than 5% in the UK home 

market. Manufacturing is located in 

Colorado Springs in the USA, Caen in 

Northern France and Cambridge, which 

is also the Group’s UK headquarters. 

Plasmon employs over 400 people 

worldwide and has been Listed on the 

London Stock Exchange since 1996. 


Annual Report 2003 

Introduction 

1 

2003 Highlights 

Turnover declined 2% to £60.1m 

(2002: £61.6m) 

Pre-tax profit before goodwill amortisation, 

UDO development costs and exceptional 

costs increased 29% to £4.7m (2002: 

£3.7m). Pre-tax loss £3.4m (2002: £6.3m) 

Basic losses per share reduced to 6.41p 

(2002: 12.28p) 

Earnings per share excluding goodwill 

amortisation, UDO development costs and 

exceptional costs flat at 8.86p (2002: 8.96p) 

The 2nd half retained loss fell to £1.0m 

(1st half: £2.4m) as post reorganisation cost 

savings were realised 

Excellent OEM response to successful 

demonstration of functional UDO drives at 

Comdex in November 2002. Programme on 

schedule for initial product shipments in 

September 2003 

UDO development expenditure £6.5m 

(2002: £5.2m) – raised £1.7m net in June 

2002 to support purchase of UDO 

manufacturing equipment 

Year end gearing 34% (31 March 2002: 24%)

Chairman’s Statement 

J. Barrie Morgans 

Chairman 




2 

Following the upheaval of our 

major US reorganisation last year, 

2002/3 has been a period of 

consolidation and steady progress 

for the Plasmon Group. Despite 

poor economic conditions in the 

US and uncertainty created by the 

war in Iraq, our full year revenues 

fell by only 2% to £60.1m compared 

to £61.6m the previous year.



Pre-tax profit before goodwill amortisation, 

UDO development costs and exceptional 

costs increased 29% to £4.7m and the 

retained loss for the full year reduced 41% 

to £3.4m. Having incurred a loss of £2.4m 

in the first half, the retained loss in the 

second half fell to £1.0m as post 

reorganisation cost savings were realised. 

Despite the poor trading conditions our 

channel sales in the US increased by 4% 

in dollar terms. As expected, sales to IBM 

decreased a further 35% in 2002/3 

resulting in an overall US revenue decline 

of 3% in local currency terms, translating 

into a fall of 10% after unfavourable foreign 

exchange movements. Our US business 

represented 66% of Group sales in 2002/3 

and the level of activity in the US market 

therefore remains a critical driver of our 

overall business performance. 

Having achieved 6% revenue growth last 

year, our European channel sales grew a 

further 15% in 2002/3 as we continue to 

increase market share in our core 5.25" 

library business. In August we secured 

Siemens as a major new DVD library 

customer and we expect this relationship 

to drive further growth in the coming year. 

European economic conditions were 

more favourable than the US last year 

and we also benefited from a stronger 

European regional presence than many 

of our US competitors. 

Our UDO development programme 

continues to make excellent progress and 

we successfully demonstrated working 

UDO drives at the Comdex trade show in 

Las Vegas in November. The overall cost of 

the UDO development programme 

remains broadly in line with our plans and 

we are on schedule to begin initial 

shipments in September this year. 


3 

We are receiving an excellent response from 

potential OEM customers and expect UDO 

technology to establish a leading position in 

professional optical storage solutions. 

Recent changes in financial compliance 

regulations are also driving the market 

requirements for secure data archival 

solutions like UDO and we look forward to 

commencing deliveries of this exciting new 

product in the coming financial year. 

In June 2002 we raised a further £1.7m net 

of expenses, by way of a 5% Placing, to 

support the purchase of capital equipment 

for UDO at a time when equipment leasing 

was proving difficult to secure. In February 

2003 we further improved our available 

financial resources with a £7m structured 

finance facility that provides us with ample 

liquidity to complete our UDO 

development and launch plans. Our 

financial position remains comfortable with 

gearing of 34% at year end. 

Although trading in the past year was 

difficult, we start the new financial year 

well positioned to complete the UDO 

development and capitalise on its 

significant potential. Our UDO launch 

plans are well advanced and we believe 

the timing is excellent to deliver a 

performance leading data archival solution 

at a time of growing compliance 

regulation. After a period of significant 

contraction the IT market is also forecast 

to return to modest growth, which we 

expect to drive increased revenue and 

profitability in our core business in the 

coming year. 

On behalf of the Board, I would like to thank 

all our employees for their dedication and 

hard work over the past year. 

J. Barrie Morgans 

Chairman

The UDO production line employs 

the latest high capacity optical disk 

manufacturing equipment and will 

have an output of some 80,000 

disk’s per month when operating 

at maximum capacity 


Annual Report 2003 4


Annual Report 2003 5

Chief Executive’s Review 

Nigel Street 

Chief Executive 




6 

2002/3 has been another challenging 

year for Plasmon with difficult economic 

conditions and the continuing decline 

in our business with IBM depressing 

overall revenues from £61.6m to £60.1m. 

In contrast to the disappointing trading 

performance, our UDO development 

programme made excellent progress in 

2002/3 and we completed successfully 

the transfer of our library business from 

Minneapolis to Colorado Springs.

In the first half of 2002/3, the Group 

returned to modest growth with revenues 

3% ahead at £30.1m. As we experienced 

last year, our European operations 

performed better than our business in the 

US where economic conditions remained 

difficult. In the final quarter of 2002/3 our 

US business was further impacted by 

events in the Middle East, and coupled 

with a 10% movement in the average £:$ 

exchange rate our overall second half 

revenues declined 7% from the previous 

year. Since the cessation of hostilities we 

are seeing increasing signs of activity in 

the US, but we remain cautious about the 

timing of any upturn in business. In 

contrast, our European business grew 

17% in 2002/3 and we expect to make 

further progress in the coming year. 

In light of the difficult trading conditions 

our US reorganisation has proved both 

timely and extremely necessary. The 

reorganisation was finally completed in 

September 2002 when the last library 

engineers left our Minneapolis engineering 

operation. These engineers were retained 

for six months longer than the 

manufacturing group to complete the new 

Enterprise DVD library range that we 

developed specifically for our major 

medical imaging customers such as 

Siemens Medical. From a peak of some 

314 US employees in 2001, the US 

reorganisation programme reduced the 

headcount to 225 by April 2003. In 

addition, we reduced our European 

headcount by some 20 employees as part 

of our overall cost control programme. 

In 2002/3 our overall product mix remained 

broadly constant and, in line with the sales 

shortfall, our gross margins declined 

slightly to 36.3% from 36.7% the previous 

year. Following our reorganisation, 



operating expenses before UDO 

development expenditure, goodwill 

amortisation and exceptional costs fell by 

£2.0m to £16.4m. At the adjusted pre-tax 

level we achieved a profit of £4.7m 

compared to the £3.7m we achieved the 

previous year. At the pre-tax level we 

significantly reduced our full year loss to 

£3.4m from £6.3m, after goodwill 

amortisation of £1.1m and the final £0.5m 

of US reorganisation costs. 

UDO development expenditure increased 

by 24% to £6.5m in 2002/3 as we entered 

the final development phase of the drive 

and media. The increased expenditure 

was slightly ahead of our original 

expectations and reflected additional 

costs in reworking ASIC parts and the 

consequent increase in quick-turn 

prototype costs to keep the project on 

schedule. In addition to fully expensed 

development costs of £6.5m, we invested 

a further £3.9m in capital equipment in 

2002/3 as the UDO media production 

facility in Melbourn neared completion. 

Despite maintaining significant levels of 

investment in 2002/3, our year-end gearing 

remained comfortable at 34% compared 

to 24% the previous year. 

In March 2003 we secured new £7m 

banking facilities with Venture Finance Plc, 

the UK structured finance subsidiary of 

ABN Amro. These new financing 

arrangements have increased our 

immediate liquidity by some £3.4m and 

will provide sufficient funding to 

complete UDO development and enter 

volume production. 


7 

Turnover £ million 

70 

60 

50 

40 

30 

20 

10 

0 

49.9 

70.3 69.1 

61.6 

60.1 

1999 2000 2001 2002 2003 

(Loss)/profit before tax £ million 

4 

2 

0 

-2 

-4 

-6 

-8 

-10 

0.3 

4.1 4.2 

6.3 

3.4 

1999 2000 2001 2002 2003

UDO optical media will be 

manufactured in Cambridge and 

will be available in both write-once 

and rewritable formats 




8 

UDO Development 

Ultra Density Optical (‘UDO’) is the next 

generation of 5.25" drives and media that we 

are developing to succeed the existing 

9.1GB MO products we source from Sony. 

UDO employs the latest blue laser 

technology that provides an increased 30GB 

capacity and a five-fold decrease in 

incremental storage cost over existing MO 

systems. Since commencing development 

in 1999 we have worked closely with HP on 

the project and expect them to become the 

major OEM customer for UDO technology. 

Since the successful demonstration of 

working drives at Comdex last November, 

we have continued to make good progress 

with our UDO development programme and 

are now reading and writing data reliably in 

form-factor drives. The final phases of the 

development are now underway and involve 

manufacturing increasingly large batches of 

prototype drives and media to de-bug the 

system fully and maximise performance 

and reliability. 

The UDO drive employs four ASIC chips that 

have been specifically designed by Plasmon 

and our development partners. Successful 

development of these ASICs represented 

one of the major risks in the UDO 

programme but three of them are now 

complete and fully tested. The final Optical 

Disc Controller (ODC) chip has exhibited 

some speed limitations during testing but a 

revised design has now been released to 

fabrication which should solve the 

outstanding issues. Our total capital 

investment in the ASICs will be some £3m 

but they are critical to achieving the low 

volume production costs that will allow UDO 

to compete effectively in the market. 

Another area of significant risk in the UDO 

programme was the availability of blue lasers

from Nichia, our Japanese supplier. In 

December 2002 Nichia announced a new 

agreement to collaborate with Sony on blue 

laser development for use in Sony’s ‘Blu-ray’ 

consumer video products. Nichia also 

informed Plasmon that due to yield problems 

with their existing laser, they were moving to 

a revised laser design employing elements of 

Sony technology. We have now successfully 

integrated the new lasers into our UDO 

drives and we are confident that their 

performance and reliability will comfortably 

exceed our requirements. 

The opto-mechanical assembly (‘OMA’) for 

the UDO drive is being developed by Pentax, 

the leading Japanese optical technology 

company. The hard tooling for the OMA is 

now complete and we are currently 

integrating production quality units into our 

prototype drives. Our working relationship 

with Pentax continues to be excellent and we 

have recently despatched one of our 

Japanese speaking engineers to Japan for 

18 months to help transition the OMA to a 

low cost volume production facility. 

UDO media development is also making 

good progress and we now have the majority 

of the disk manufacturing equipment 

installed at our facility in Melbourn. The new 

cleanroom is fully commissioned and when 

complete the production line will have a total 

capacity of some 80,000 write-once and 

rewritable UDO disks per month. 

Development of the phase change recording 

layers for UDO media is proceeding well and 

the specification of the write-once disk is 

now finalised for volume production. This will 

employ a four layer structure based on phase 

change technology licenced from Kodak that 

we also use on our existing 12-inch optical 

disk products. We are therefore very familiar 

with the manufacturing process for this 

material and are confident a high yield 

process will be achieved. 

The rewritable phase change disk is in its final 

testing phase and will employ an eight layer 

structure to optimise rewrite cycle 

performance, environmental longevity and 

manufacturability. In January 2003 we signed 

a licence agreement with Mitsubishi 

Chemical Media (‘MCM’) for their patents 

and technologies for improving rewrite cycle 



and cross erase performance in phase 

change rewritable media. Using MCM’s 

technology we have already exceeded the 

UDO specification of 10,000 rewrite cycles 

and with further optimisation, believe that 

25,000 cycles may be achievable. 

MCM are the world’s largest optical disk 

manufacturer and as well as first class 

technical know-how, they have an excellent 

quality reputation with the major OEM 

customers such as HP and IBM. We 

continue to work closely with HP on their 

UDO plans and as they move towards UDO 

endorsement they are pressing MCM to be 

the second source media manufacturer. 

Major partners such as HP and MCM will be 

critical in establishing UDO as the de-facto 

standard in professional optical storage and 

we continue to use every effort to secure 

their endorsement of UDO. 

Having established the UDO media 

production facility and commenced trial 

production runs, we are now working on 

improvements to the 0.1mm cover layer 

process to reduce volume production costs. 

We have recently approved a European 

supplier of optical grade 0.1mm film that has 

reduced our material costs by some 75% 

over Far East suppliers. In addition, we are 

also working on a new liquid spin coating 

technique that is now providing excellent 

uniformity and will dramatically reduce future 

production costs. 

The media cartridge is an important 

component in the overall robustness and 

reliability of UDO technology and has been 

an area of intense focus over the last year. 

We have recently taken delivery of initial 

samples from the final production tooling and 

are now working with Dai-Nippon, our 

Japanese supplier, to move volume 

production to China to minimise long term 

cartridge manufacturing costs. 

Overall, the UDO development programme 

is progressing well and we are on schedule 

to make initial product deliveries in 

September 2003. As expected, UDO’s 

common technology base with consumer 

Blu-ray products continues to provide 

technology leverage opportunities and will 

ensure our long-term manufacturing costs 

remain competitive. 


9 

Plasmon product mix 2003 

5.25" 42% 

12" 33% 

CD/DVD 11% 

Consultancy 7% 

LTO tape 2% 

Other 5% 

Plasmon product mix 2002 

5.25" 43% 

12" 38% 

CD/DVD 5% 

Consultancy 6% 

LTO tape 2% 

Other 6%

UDO drives will be manufactured 

in our Colorado Springs facility and 

will have an initial capacity of 

30GB. Future generations of UDO 

products will have capacities of 60 

and 120GB 




10 

UDO launch plans 

In addition to the drive and media 

development programme, during the past 

year we have invested considerable time 

and resources on our UDO launch plans. 

We successfully recruited new marketing 

leadership in both the US and Europe and 

are now adding business development 

resources specifically focused on UDO to 

our sales and marketing teams. 

The launch programme for UDO initially 

focused on trade shows and started with 

the first demonstration of working UDO 

drives at Comdex in November 2002. We 

also demonstrated the products at the 

AIIM show in New York and Cebit in 

Hanover, which is the largest IT trade show 

in Europe. In addition to the product 

demonstrations, we also presented a 

series of seminars that explained UDO 

technology and its positioning in the 

overall storage market. We received a 

considerable level of interest from these 

initial activities and UDO is now well 

known in the storage industry. 

We are now commencing the second 

phase of our launch activities with a 

technical conference for third party 

software vendors to enable them to 

understand the technology and integrate it 

into their software applications. We are 

also planning a series of press and media 

tours later in the year to generate general 

awareness of UDO and increase its 

exposure as we move into initial 

production shipments. 

The final element of our UDO launch plan 

has focused on potential OEM customers 

and our efforts to educate them and 

support their integration activities. The 

overall response to UDO has been 

excellent and we believe the superior cost-

performance benefits of the technology 

should attract significant OEM 

endorsement over the coming months. 

Storage market overview 

The storage market continues to be a 

significant portion of the overall IT market 

and the revenue declines of the last few 

years stabilised in 2002/3. Storage 

technology is now entering a period of 

significant change that will provide a 

number of opportunities and challenges 

for Plasmon in the near future. 

The drive towards networked storage 

continues to gather momentum with the 

goal of eradicating ‘islands of information’ 

and making all data available across the 

enterprise. Networked storage is therefore 

driving the requirements for storage area 

networks (‘SAN’) and network attached 

storage (‘NAS’) solutions and the 

consequent need for Plasmon’s optical 

library solutions to integrate seamlessly 

into these environments. 

Another important development in the 

storage market last year was the arrival of 

cheap, high performance Serial-ATA hard 

disk drives. Due to their low cost, these 

products are now being promoted in 

disk-to-disk back-up solutions that are 

challenging the traditional market for 

back-up using tape libraries. In addition, the 

low-end tape library market largely moved 

to a commodity model last year with the 

large PC brands beginning to promote 

products directly to the end user, bypassing 

traditional storage hardware channels. 

From Plasmon’s perspective, the most 

important development in the storage 

market has been the recognition of the 

importance of secure archival storage 

following the high profile corporate and 

securities fraud cases in the US last year. 

There are now growing compliance 

regulations in most industry sectors to 

mandate how electronic records must be 

archived. These regulations are driving 

strong interest in data archival products 

such as UDO. These developments have 

also attracted the attention of traditional 

hard disk vendors such as EMC and 

Network Appliance, who are offering 

Serial-ATA disk based solutions with 



enhanced software to prevent data 

deletion as an alternative to traditional 

write-once optical archive solutions. 

These changes and developments in the 

storage market are generally very 

beneficial for Plasmon as we launch our 

UDO archive solutions in the coming year. 

However, the downside is in our tape 

business where we expect revenue growth 

to remain difficult in a market under severe 

margin pressure. In addition, the trend 

towards networked storage solutions will 

require updating of Plasmon’s NAS 

connectivity offerings to improve the ease 

of deployment of our UDO products. 

5.25" Technology 

Over the past few years, our sales of 5.25" 

optical libraries to IBM have declined by 

some 60% as they continue to sell last 

generation 5.2GB write-once solutions 

and have not adopted the latest 9.1GB 

technology. In December 2002 we signed 

a new contract with IBM to provide native 

support for Plasmon libraries on their 

iSeries (AS400) server platforms. In the 

future, this new agreement will enable 

Plasmon to sell UDO libraries directly to 

the IBM customer base to replace sales of 

the previous generation products we 

currently supply to IBM on an OEM basis. 

Plasmon brand channel sales of 5.25" 

products continued to grow last year but 

failed to make up the IBM shortfall. Overall 

sales of 5.25" technology declined some 

6% to £24.9m as cheaper DVD solutions 

increased their market penetration but we 

also increased our market share in 5.25" 

libraries at the expense of Hewlett 

Packard. Our strengthening position 

will serve as an ideal launch point for 

UDO solutions in 2003 when we expect 

the increased capacity and fivefold 

decrease in incremental cost of UDO 

will drive renewed growth in our core 

5.25" business. 

During the past year we continued to migrate 

customers to our new G-Series range of 

5.25" libraries and away from the older 

M-Series products. We now plan to end of 

life the M-Series at the end of 2003 which 

is also planned to be the last shipment date 

for the IBM 3995 variant of the product. 


11 

In late 2002 our automation engineering 

team in Colorado Springs commenced 

development of a new range of entry level 

G-Series libraries. These products will 

have capacities from 24 to 180 cartridges 

and provide market leading features at a 

lower cost than our existing products. 

First shipments are scheduled to coincide 

with initial UDO shipments in September 

2003 and we are already seeing strong 

OEM interest in the cost/performance 

attributes of the new range. The new 

products have also been designed to 

accommodate our next generation NAS 

hardware internally to provide integrated 

network storage solutions. 

The market for 5.25" products has been 

in slow decline in recent years as lower 

cost DVD solutions have emerged. 

However, UDO will redress this cost 

disadvantage and we expect some major 

OEM’s to endorse the technology in 2003, 

which will lead to renewed growth for 

5.25" products and the establishment of 

UDO as the de-facto professional optical 

storage standard.

12" Technology 

The 12" business continues to be a major 

part of Plasmon’s total revenue mix but 

overall sales declined some 17% to 

£19.6m. The majority of the reduction 

was in sales of new drives that declined 

58% to £1.4m as 12" solutions become 

prohibitively expensive and customers 

wait for UDO technology. Sales of 12" 

media and service declined a more 

modest 12% in total to £7.5m and 

£10.1m, respectively. 

The change in our 12" business was in line 

with our expectations and the rate of 

decline should slow as new drive sales 

cease and the business becomes a media 

and service annuity. The 12" customer 

base is firmly wedded to write-once optical 

storage solutions and is showing strong 

interest in the significant cost advantages 

of UDO technology. We are now working 

on upgrade and conversion programmes 

to migrate these customers to UDO but 

still expect to enjoy significant revenues 

from 12" media and service for several 

more years. 

CD/DVD 

In response to demand from our major 

medical imaging customers such as 

Siemens Medical and GE Medical, we 

introduced the Enterprise D-Series library 

last year with a capacity of up to 2,175 

discs. The library is derived from our G- 

Series 5.25" platform and its development 

was completed ahead of schedule in late 

2002 by the outgoing Minneapolis 

engineering team. 



The response to the Enterprise D has been 

excellent and helped CD/DVD sales grow 

139% to £6.5m last year. In mid-year we 

secured Siemens Medical as a major new 

customer for this product and the medical 

imaging market in general is adopting DVD 

technology because of its low cost. The low 

performance of DVD solutions also 

matches the infrequent access 

requirements of the medical imaging 

market, but the reduced reliability and ease 

of use of DVD remains a major concern. 

However, we expect UDO to regain market 

share in this area as it offers higher 

performance and reliability at the same 

price point as DVD based solutions. 

Consultancy 

Our optical media consultancy business 

had another excellent year in 2002/3 with 

revenue growth of 9% to £3.9m compared 

to £3.6m the previous year. During the year 

we signed significant new agreements 

with Intel Research to develop highdensity 

phase change storage technology 

and with Unaxis AG, to develop 0.1mm 

cover layer technology for volume Blu-ray 

disc production. 

Our CD-R and DVD-R consultancy 

business with Ciba Specialty Chemicals 

also performed well in 2002/3 and we 

estimate the Plasmon-Ciba Ultragreen CD- 

R dye has a 65% share of the world-wide 

market for CD-R dyes. After a considerable 

delay due to technical issues, Ciba will 

finally launch a new DVD-R dye in mid 2003 

and we expect this to drive significant future 

royalty growth as recording video to DVD’s 

becomes a mainstream application. 

LTO Tape 

Our LTO tape library business was a major 

disappointment in 2002/3 with revenues flat 

at £1.4m. Although we successfully 

completed our product range with the 

Exabyte autoloader acquisition and 

secured the necessary software support, 

the market has since commodotised with 

the entry of major PC brands such as Dell 

with very aggressive pricing. In light of these 

changes, we are reviewing our overall tape 

strategy to position our products as part of 

higher value added solutions and 

consequently expect to achieve only 

modest growth for this part of our business. 


12 

Software and Connectivity 

Sales of our connectivity solutions, which 

are included in the relevant major product 

category, returned to growth last year with 

revenues increasing 60% to £0.8m. During 

the year we secured Siemens Medical as a 

major new customer for our integrated 

NAS connectivity solution to integrate with 

the Enterprise DVD libraries they also 

purchase from Plasmon. We expect this 

trend for major customers to purchase 

integrated connectivity and library 

solutions from one vendor to increase in 

the future and are already discussing 

another major opportunity in the medical 

imaging market. 

We believe the move to networked storage 

solutions will continue to be a major trend 

within the storage market. Late in 2002 we 

commenced development of a new range 

of NAS-RAID products that will integrate 

internally in our new G-Series libraries and 

will provide industry standard connectivity 

and performance to optical archive 

solutions. The new solutions will be based 

on Serial-ATA RAID and Linux software 

and will significantly reduce the cost and 

complexity of deploying UDO technology. 

Other 

The majority of this business sector 

relates to our optical mastering business 

in Caen which had an excellent year in 

2002/3 and grew revenues by 31% to 

£2.9m. The majority of production is now 

CD-R and DVD video masters which we 

supply to most of the major disc 

manufacturers in the Far East. We are 

now entering volume production of DVD- 

R masters and expect this to drive further 

growth in the coming year. 

Longer term we plan to manufacture 

masters for Blu-ray video discs and during 

the past year we commenced 

development of these products. Our 

experience with UDO is proving highly 

beneficial in this area and should enable 

Plasmon to become a leading supplier of 

masters and stampers for consumer disc 

formats based on blue laser technology.

Outlook 

2002/3 has been a year of consolidation 

for Plasmon in which we maintained stable 

revenues and significantly reduced our 

cost base at a time of industry and 

economic downturn. We also made 

excellent progress with our UDO 

development programme and we are 

confident of delivering a world-class 

product and securing major OEM support 

for our technology in the coming year. 

Due to the high profile corporate fraud 

cases of the past few years, the market for 

secure archival storage products that 

provide unalterable records of business 

transactions and agreements is very 

strong. We are therefore launching UDO at 

an ideal time and we believe the inherent 

cost and performance features of UDO will 

ensure it is highly competitive in the 

archival storage market. On this basis we 

look forward to the future with confidence 

and expect UDO technology to deliver 

long-term growth in revenues and 

profitability for the Plasmon Group. 




13 

Sales of integrated storage solutions 

comprising libraries, servers and 

Plasmon storage management 

software are expected to increase 

in the future

Finance Director’s Review 

Timothy Arthur 

Finance Director 




14 

In the year ended 31 March 2003 

overall Group turnover declined 

by 2% but the retained loss 

reduced by 41% as the benefits 

of the US reorganisation began to 

come through and the level of 

exceptional costs fell significantly.



The US reorganisation was finally 

completed in September 2002 when the 

Minneapolis library development 

operations were relocated to Colorado 

Springs at an exceptional cost of £0.5m, 

principally comprising employment related 

severance costs. 

The UDO drive and media development 

programmes continue to make good 

progress with working prototypes being 

demonstrated at trade shows in both the 

US and Europe. During the year ended 31 

March 2003, £6.5m of UDO development 

costs were fully expensed and a further 

£3.9m was spent on related capital 

purchases. To assist in the funding of the 

UDO capital expenditure, £1.7m of cash 

was raised through a successful 5% 

placing completed in June 2002. 

In March 2003 we completed a new £7m 

debt and working capital facility with 

Venture Finance PLC that is committed for 

three years. We also renewed the $10m 

facility with Silicon Valley Bank for a further 

year in May 2003 and we now have 

sufficient funds to complete the UDO 

development project and marketing 

launch initiatives. 

Turnover 

Turnover fell by 2% to £60.1m from 

£61.6m in the previous year, after a 

£1.6m adverse foreign exchange 

movement on US sales. Sales to IBM 

also declined a further £4m as 

anticipated, however, this was largely 

offset by increased channel sales. 

In geographical terms, US origin revenues 

decreased by 11% to £39.6m due to the 

adverse foreign exchange impact 

compounded by the decline in IBM sales. 

In contrast, European origin sales rose by 


15 

17% to £20.5m due to strong channel 

sales, particularly in the UK and Germany, 

and increased sales by our mastering 

business in Caen, Northern France. 

Operating profit 

Operating profits excluding UDO 

development costs, goodwill amortisation 

and exceptional costs rose by 30% to 

£5.5m with a £0.7m reduction in gross 

profits being more than offset by a £2.0m 

decrease in operating expenses. In 

percentage terms, gross margin fell slightly 

to 36.3% in 2002/3 from the 36.7% 

achieved in the previous year, primarily due 

to the reduced revenue. The 11% 

reduction in overheads was primarily due 

to the savings from the US reorganisation 

combined with the weaker dollar. 

First half operating profits excluding UDO 

development costs, goodwill amortisation 

and exceptional costs of £2m were 

followed by a second half adjusted profit of 

£3.5m with the benefits of the US 

reorganisation accounting for the majority 

of the improvement. 

Losses before tax and interest in North 

America totalled £5.2m compared to the 

prior year loss of £6.4m with the reduced 

reorganisation costs more than offsetting 

the increased UDO expenditure. In Europe 

profits before tax and interest rose by 

269% to £2.5m due to a strong 

contribution by our mastering business, a 

return to profitability in the European sales 

business as a result of the sales growth 

and the non-reoccurrence of the prior year 

£0.6m exceptional bad debts. 

Interest 

Net interest payable of £0.7m in the 

current year compared to £0.5m incurred 

during the previous year, largely as a result 

of the increased debt levels arising from 

the UDO expenditure.

Tax 

The tax charge for the year mainly related 

to the overseas European subsidiaries with 

the UDO costs significantly reducing the 

tax charge at the principal operating 

entities. During the year a £0.5m cash 

refund was received in the US from the 

prior year tax credit that arose under the 

Job Creation and Worker Assistance Act 

of 2002. 

Full details of potential deferred tax 

assets, which all arise in the US, are 

given in Note 18, although these have 

not been recognised in the financial 

statements as they will not be utilised in 

the short-term. The deferred tax liabilities 

arising from accelerated capital 

allowances in the UK have been 

recognised in full during the year. 

Earnings per share 

For the year ended 31 March 2003, 

basic losses per share totalled 6.41p, 

significantly better then the 12.28p 

recorded during the previous year even 

though the weighted average number of 

shares in issue rose by 6.2m to 53.1m. 

Excluding UDO development costs, 

exceptional costs and goodwill 

amortisation, earnings per share fell 

slightly to 8.86p from 8.96p the 

previous year. 

Dividends 

The dividend policy of the Group 

continues to be monitored by the Board 

with no dividend being proposed in the 

short-term given the funding requirements 

of the Group’s UDO development plans. 



Financial instruments 

Although kept under consideration during 

the past year the Group did not use any 

derivative financial instruments with the 

principal financial risks being addressed 

as follows: 

Interest rate risk 

The Group’s objective is to minimise 

exposure to interest rate fluctuations by 

maximising the amount of fixed rate 

borrowings whilst retaining sufficient 

overdraft facilities to match short-term 

debt fluctuations. Anticipated interest rate 

movements are taken into consideration 

before fixed rate transactions are 

concluded. At 31 March 2003, 13% of 

financial liabilities were of a fixed nature. 

Foreign currency exposures 

The Group’s objective is to minimise 

exposure to translational losses arising 

on the net assets of overseas subsidiaries 

by borrowing in local currencies at the 

subsidiary level where possible. At the 

year-end, 28% of the net operating 

assets of the Group’s US operations were 

hedged by US dollar denominated 

financial liabilities. 

With respect to transactional risks, the 

Group continues to monitor its foreign 

currency exposures in its major trading 

currencies. Matching trading relationships 

and debt with the currency cash flows 

largely covers transactional exposures 

within acceptable levels, thereby reducing 

the need for additional hedging. 

Liquidity risk 

The Group’s policy is to ensure sufficient 

headroom is maintained in its debt 

facilities to enable the achievement of 

strategic objectives, whilst taking into 

account the impact of short-term business 

cycle fluctuations on liquidity. Facilities are 

reviewed on at least an annual basis or as 

changes in business circumstances 

require. At 31 March 2003, £6.2m of 

headroom was available under the Group’s 

banking agreements. 

The Group also aims to ensure that 

reasonable proportions of its financial 

liabilities are of a long-term nature. At 31 

March 2003, 55% of financial liabilities 


16 

mature in more than one year, compared 

to 44% the previous year, and 20% mature 

in more than five years broadly in line with 

the previous year. 

Cash flow and net debt 

Net debt increased during the year ended 

31 March 2003 by £3.1m to £13m. Group 

gearing rose from 24% to 34% with the 

equity issued following the 5% placing 

partially offsetting the losses incurred 

during the year. The major currency 

movements during the year resulted in a 

£1.6m loss being recorded on the 

translation of the foreign currency net 

investments and net assets decreased to 

£38.2m at 31 March 2003 from £41.2m at 

the end of the previous year. 

Excluding currency movements, stock 

decreased by £1.2m as the transition 

stock held at 31 March 2002 as part of the 

US reorganisation was sold. This reduction 

was also the main reason why trade 

creditors fell by £2.3m. The £1.2m 

reduction in provisions for liabilities and 

charges resulted from the payment of 

transitional costs, mainly relating to 

employee severance. Excluding UDO 

related expenditure, fixed assets additions 

totalled £2.6m, which included the 

purchase of the adjacent site to our UK 

facilities for £0.8m. This facility 

unexpectedly became available and will 

ensure we have adequate space once 

UDO is in full production. In the short-term 

we have sub-let the building to cover the 

related costs. 

Employees 

The average number of employees 

during the year ended 31 March 2003 fell 

to 458 from 496 during the previous year. 

The decrease mainly resulted from the 

reductions that followed the US 

reorganisation that was completed by 

the end of September 2002. The full 

impact of the restructuring is more 

accurately reflected in the 422 

headcount in April 2003.

Board of Directors 

& Senior Management 


Senior Management 



Nigel Street 

BSc, MBA 

Chief Executive 

Aged 45 

Appointed Chief Executive in 

September 1997 having joined the 

Company as a Non-Executive 

Director in 1987 before becoming 

Commercial Director in 1990. 

Previously six years at Rothschild 

Ventures Limited. 

Henri Zinsli 

Dr. oec. 

Non-Executive 

Aged 62 

Left Ciba Specialty Chemicals, 

Inc. after 33 years in March 1999. 

Chairman of Discovery Partners 

International AG, Non-Executive 

Director of Paradigm Genetics Inc 

and Chairman of Covalys 

Bioscience AG. 

Robert Longman 

Group Technical Director 

Aged 55 


17 

John Barrie Morgans 

Chairman 

Aged 61 

Appointed in 1990. He was 

Chairman and Chief Executive 

of IBM United Kingdom until 

March 1997. Chairman of 

Telemedic Holdings plc and 

Non-Executive Director of Legal 

& General Group plc. 

Christopher McFadden 

MIEE, BSc, PhD 

Non-Executive 

Aged 43 

Appointed in 2001. Telecoms and 

technology research analyst for 

the last 17 years. Holds a PhD in 

SemiConductor Physics from 

Cambridge University. 

Christopher Harris 

President – Plasmon USA 

Aged 41 


BSc, FCA 

Finance Director 

Aged 40 

Appointed Finance Director in 

September 1994. Previously three 

years as Finance Director of a high 

technology manufacturer, then a 

subsidiary of Carlton 

Communication plc and seven 

years at Price Waterhouse. 

Robert Clark 

Senior Vice President of US 

sales and marketing 

Aged 57

Corporate governance 

The Directors recognise the importance of adopting good governance 

practices in the best interests of the shareholders. 

Throughout the year the Company has been in compliance with the 

provisions set out in the Combined Code for Corporate Governance 

appended to the Listing Rules of the UK Listing Authority, with the 

exception that a Senior Non-Executive Director, Henri Zinsli, was only 

appointed on 19 September 2002. The Board continues to monitor 

the latest corporate governance guidance to ensure that the Group 

maintains the appropriate standards. 

As outlined below, the Board has considered the independence of the 

non-executive directors and believes that all the non-executive 

Directors are currently independent of management and free from any 

business or other relationship which could materially interfere with the 

exercise of their independent judgement. 

The following narrative statement explains how the Group has applied 

the Principles of Good Corporate Governance contained in the 

Combined Code. 

The Board 

The Board comprises two executive Directors and three non-executive 

Directors. It is headed by a non-executive Chairman and is responsible 

to shareholders for leading and controlling the Group. It meets at least 

six times a year, reviewing trading performance, ensuring adequate 

funding facilities are in place, setting and monitoring strategy, 

reviewing risk management processes, examining business expansion 

opportunities and shareholder reporting. 

When appointing new directors, the Board principally considers their 

experience and knowledge of the technology sector together with 

their ability to contribute to a specific area of importance to the 

Company. Due to the infrequent changes to the Board there is no 

formal induction policy for new directors, with appropriate 

arrangements being made as required. 

To enable it to carry out its responsibilities, the Chief Executive and 

Finance Director supply detailed information on the Group’s 

operations to the Board on a monthly basis. 

It is the Company’s policy that all directors should submit themselves 

for re-election at regular intervals and at least every three years. The 

Director submitting himself for re-election this year is shown on 

page 23. 

The Board has both an audit committee and a remuneration 

committee, details of which are outlined below, but does not consider 

a nomination committee to be necessary due to the small size of the 

Board. 




18 

The Audit Committee 

The Audit Committee, which is chaired by John Barrie Morgans, 

comprises all the non-executive Directors and meets not less than 

twice annually. The Audit Committee provides a forum for reporting by 

the Group’s Auditors and, by invitation, meetings are attended by the 

Chief Executive and the Finance Director. It is responsible for reviewing 

a wide range of financial matters, including the Interim and Annual 

Report prior to their submission to the Board, and monitoring the 

controls that are in force to ensure the integrity of the financial 

information reported to the shareholders. The Audit Committee 

advises the Board on the appointment of external Auditors and on 

their remuneration for audit and non-audit work, and discusses the 

nature and scope of the audit with the external Auditors. 

The members of the Audit Committee are: 

John Barrie Morgans (Chairman) 

Henri Zinsli 


The Remuneration Committee 

The Remuneration Committee is responsible for determining the 

contract terms, remuneration and other benefits of the executive 

Directors, including their performance-related pay. The Remuneration 

report, which includes details of Directors’ remuneration and beneficial 

interests in the Company’s share capital, together with information on 

their service contracts, is set out on pages 18 to 22 

The members of the Remuneration Committee are: 

Christopher McFadden (appointed Chairman 19 September 2002) 

John Barrie Morgans (resigned as Chairman 19 September 2002) 

Henri Zinsli 

Relations with shareholders 

As part of the Company’s communication activities, detailed 

presentations are made to major institutional investors on a regular 

basis, including whenever a major event occurs. The Board takes 

feedback received from these presentations and other 

communications for shareholders, into consideration wherever 

appropriate. 

The Annual General Meeting is the occasion when the Directors are 

routinely available to answer questions from shareholders, and the 

Directors view this public accountability for their actions as being the 

main purpose of the meeting.

Accountability and Audit 

Following the publication in September 1999 of the guidance for 

Directors on internal control reviews and disclosures prepared by the 

Internal Control Working Party of the Institute of Chartered 

Accountants in England and Wales (the Turnbull Guidance), the 

Directors confirm that processes have operated throughout the year, 

and continue to operate, to identify, evaluate, monitor and manage the 

significant risks to the Group’s strategic objectives. 

These processes are reviewed at each Audit Committee meeting with 

the Executive Directors who present a report detailing the significant 

Group risks identified by senior management during the day-to-day 

running of the business. The senior management review the risks and 

related control procedures at their regular meetings. 

The Board has overall responsibility for the Group’s systems of internal 

control and for monitoring their effectiveness. The Audit Committee 

reports to the Board on the results of their review of the risk 

management processes with the Board implementing additional 

controls and monitoring processes as considered necessary. Such 

processes can only provide reasonable assurance of the management 

of risk and cannot eliminate the risk of failure to achieve the Group’s 

business objectives. The key elements of the Group’s internal controls 

are outlined below. 

Control environment – the existence of a clear organisational structure 

and well-defined lines of responsibility and delegation of appropriate 

authority. The integrity and competence of personnel are ensured 

through high recruitment standards, training and development 

programmes. 

Risk management – business strategy and plans are reviewed by the 

Board. Detailed appraisals and evaluations of financial implications are 

undertaken prior to commitments on major projects. In addition to the 

Audit Committee presentations, the monthly report to the Board 

includes commentary on the key risk areas. 

Financial reporting – comprehensive systems of budgeting and 

forecasting including monthly reporting of actual results against 

budgets. 

Control procedures and monitoring systems – ensuring authorisation 

levels, procedures and other systems of internal financial control are 

documented, applied and regularly reviewed. Many of the processes 

are documented in the Group’s quality manuals and are subject to 

audit by external compliance agencies on a regular basis. In addition, 

the Audit Committee meets with the Group’s external Auditors to 

discuss the results of their audit work. The Group does not currently 

have an internal audit function but as the Group continues to grow this 

is kept under review. 

Going concern 

After making appropriate enquiries, the Directors have a reasonable 

expectation that the Company has adequate resources to continue in 

operational existence for the foreseeable future. For this reason they 

continue to adopt the going concern basis in preparing the accounts. 




19

Remuneration report 

This report has been prepared in accordance with the provisions of 

Schedule B of the Combined Code and only the details of Directors’ 

emoluments, pension entitlements and share options have been 

subject to audit. 

The Remuneration Committee (“the Committee”) is composed entirely 

of the non-executive Directors identified on page 17. On 

19 September 2002, Christopher McFadden was appointed Chairman 

of the Committee, replacing John Barrie Morgans who remains a 

member of the Committee. In determining its remuneration policy, 

service contracts and compensation for Directors, full consideration 

has been given to the provisions of the Combined Code. 

The Committee meets as required during the year and its terms of 

reference are to determine the Company’s policy on executive 

remuneration and to consider and approve the individual terms and 

conditions of employment for the executive Directors. The Committee 

takes advice where appropriate from the Chief Executive of the 

Company on matters other than his personal remuneration. No 

external advice was sought during the year ended 31 March 2003. 

Remuneration policy 

Basis of the remuneration policy 

In forming the remuneration policy and the remuneration packages of 

the executive Directors, the Committee balances the requirement to 

align the interest of the Directors with those of the shareholders, with 

the creation of a culture of linking reward to the Company’s 

performance and with the need to recruit and retain management of 

the highest calibre. 

The executive Directors’ remuneration consists of four components – 

basic salary, performance-related bonus, share options and pension 

provisions. The performance related components comprising the 

annual bonus and share option schemes are designed to incentivise 

the executive Directors to perform at the highest level, and to align 

executive rewards with enhanced shareholder value in both the short 

and long-term. 

Basic salary is reviewed annually by the Committee after a review of 

the individual executive Director’s performance and the overall 

performance of the business. Where appropriate, the Committee has 

regard to published remuneration information and to specific advice 

from independent remuneration consultants. Inflation is also taken into 

consideration. 

The Committee determines a bonus for each executive Director based 

on criteria agreed with that executive Director at the beginning of the 

financial year. These criteria include the achievement of budgeted 

profits and earnings per share. Bonuses are uncapped. The 

Committee also awards one-off bonuses for any major activities, such 

as acquisitions, not taken into consideration in the budget. 




20 

Performance chart 

The chart below compares the growth in value of £100 invested in 

ordinary shares in Plasmon Plc on 1 April 1998 with the performance 

of a similar investment in the shares of the constituents of the FTSE 

Small Cap index. The Directors are of the view that this constitutes a 

relevant broad equity market. 

600 

500 

400 

300 

200 

100 

0 

April 

1998 

April 

1999 

April 

2000 

April 

2001 

Plasmon Plc Ordinary Shares FTSE Small Cap Index 

April 

2002 

April 

2003 

Pension provisions 

The executive Directors receive pension contributions equal to 15 per 

cent of basic salary which are paid into their personal money purchase 

pension plans. Details of the schemes are given in Note 26. 

Service contracts 

The executive Directors are employed under the terms of service 

agreements dated 19 July 1996 which may be terminated by 

12 months’ notice from either party. None of the Directors’ service 

contracts provides for predetermined amounts of compensation in the 

event of early termination. 

Policy on outside appointments 

It is the policy of the Committee that executive Directors should not 

take more than one outside appointment, which it is believed can 

provide valuable experience. Nigel Street is a non-executive Director of 

Streason Limited, the holding company of his family’s business 

interest. 

Non executive fees 

The Board determines remuneration of the non-executive Directors. 

The Company has a contract with MAHE-Morgans Limited, dated 

1 July 1997, which provides the services of John Barrie Morgans as a 

non-executive Director and which can be terminated by 6 months’ 

notice from either party. Henri Zinsli and Christopher McFadden have 

contracts with the Company, dated 1 April 1999 and 19 July 2001, 

respectively, terminable by three months’ notice from either party.

Directors’ emoluments 

The remuneration of the Directors, excluding pension contributions, was as follows: 




21 

Total Total 

Salary Benefits (i) 2003 2002 

£ £ £ 

Executive Directors 

Nigel Street (Chief Executive) 215,000 21,239 236,239 240,154 

Timothy Arthur (Finance Director) 

Non-executive Directors 

141,094 16,326 157,420 163,580 

John Barrie Morgans (Chairman) (ii) 20,004 – 20,004 20,004 

Henri Zinsli (Switzerland) 15,000 – 15,000 15,000 

Christopher McFadden (appointed 19 July 2001) 15,000 – 15,000 10,519 

Paul Robert Nailor (resigned 19 July 2001) – – – 4,558 

406,098 37,565 443,663 453,815 

(i) Benefits comprise disability and medical insurance, life insurance cover and fully expensed cars or equivalent allowance. 

(ii) Fees payable in respect of John Barrie Morgans are paid to MAHE-Morgans Limited. 

Directors’ pension entitlements 

Pension contributions to money purchase pension schemes for the year ended 31 March 2003 were as follows: 

Total Total 

2003 2002 

£ £ 

Nigel Street 32,250 32,250 

Timothy Arthur 21,164 21,164 

Interest in shares 

The interest of the Directors in the shares of the company at 31 March 2003 were as follows: 

53,414 53,414 

Number of Number of 

shares shares 

31 March 31 March 

2003 2002 

Nigel Street 91,885 91,885 

Timothy Arthur 131,092 131,092 

John Barrie Morgans 111,885 101,885 

Henri Zinsli (Switzerland) 7,500 7,500 

There have been no movements in the Directors’ interest as shown above since 31 March 2003.

Remuneration report continued 

Interest in share options 

Details of options held by Directors at 31 March 2003 are set out below: 



Subscription Number Number 

price per of shares of shares 

share 1 April 2002 Granted Lapsed 31 March 2003 Periods within which exercisable 

Nigel Street £1.25 100,000 100,000 – 14 April 1995 and 13 April 2002 

£2.50 50,000 50,000 – 14 April 1995 and 13 April 2002 

£1.25 126,000 126,000 21 May 1996 and 20 May 2003 

£2.50 60,000 60,000 21 May 1996 and 20 May 2003 

£0.77 600,000 600,000 13 January 2002 and 12 January 2009 

£1.37 70,000 70,000 5 August 2002 and 4 August 2010 

£0.875 – 500,000 500,000 18 June 2005 and 17 June 2012 

Timothy Arthur £1.25 40,000 40,000 5 September 1997 and 4 September 2004 

£2.50 20,000 20,000 5 September 1997 and 4 September 2004 

£1.25 20,000 20,000 9 April 1999 and 8 April 2006 

£2.50 30,000 30,000 9 April 1999 and 8 April 2006 

£1.25 20,000 20,000 20 June 1999 and 19 June 2006 

£0.77 400,000 400,000 13 January 2002 and 12 January 2009 

£1.37 35,000 35,000 5 August 2002 and 4 August 2010 

£0.875 – 300,000 300,000 18 June 2005 and 17 June 2012 

The performance criteria attached to the options with a subscription price of £0.77, £1.37 and £0.875 are outlined in Note 20 to the financial 

statements. 

The other options shown above have no performance criteria attached to them. No initial consideration was required for the options. 

The only change in the interests set out above between 31 March 2003 and 28 May 2003 is with repect to Nigel Street’s £1.25 and £2.50 options 

which lapsed on 20 May 2003. 

The market price of the Company’s shares at the end of the financial year was 100.0p and the range of market prices during the year was between 

57.0p and 107.0p. 


22

Directors’ report 

for the year ended 31 March 2003 

The Directors present their report together with the audited financial 

statements for the year ended 31 March 2003. 

Activities, business review and product development 

Plasmon Plc is the holding company of a group of companies involved 

in professional data storage solutions. The Group is active in the 

development, manufacture and selling of both optical disk and 

magnetic tape data storage systems. The Group operates principally 

in the UK and USA but also has operations in Belgium, France, 

Germany and Italy. 

A review of the Group’s activities and its future development is 

contained on pages 1 to 16. During the year, £10,139,000 

(2002: £11,408,000) was spent on development of which £6,495,000 

(2002: £5,246,000) related to the UDO drive and media programme. 

Results for the year 

The Group made a loss of £3,406,000 (2002 loss: £5,757,000) after 

taxation and no dividends have been declared. 

Annual General Meeting 

Notice of the Annual General Meeting is enclosed together with a form 

of proxy. 

Share capital 

Changes in the share capital of the Company are detailed on page 41. 

Directors and their interests 

The present Directors are listed on page 17 and their beneficial 

interests in the shares of the Company are given on pages 21 and 22. 

Re-election 

John Barrie Morgans is due to retire by rotation at the forthcoming 

Annual General Meeting and, being eligible, offers himself for reelection. 

Charitable and political contributions 

The Group has made no charitable or political contributions during the 

year. 

Substantial shareholdings 

As at 27 May 2003, the following had notified the Company of interest 

in 3% or more of the ordinary share capital of the Company: 

Ordinary shares 

Number % 

Amvescap Plc and subsidiary companies 8,370,628 15.46 

Global Asset Management Ltd 5,195,000 9.60 

Herald Investment Trust plc 3,350,000 6.19 

BriTel Fund Nominees Ltd 

The Trustees of the BT Pension Scheme 2,760,321 5.10 

Possfund Nominees Ltd 

Post Office Pension Trustees 2,088,755 3.86 

The family interests of JP Lobbenberg 1,893,852 3.50 

Royal Bank of Scotland Group plc 1,675,290 3.09 

Legal & General Group Plc 1,637,000 3.02 

Employees 

The Group’s policy is to consult and discuss with employees those 

matters likely to affect employees’ interests. These meetings also seek 

to achieve a common awareness on the part of all employees of the 

financial and economic factors affecting the Group’s performance. The 

employee share scheme encourages the involvement of employees in 

the Group’s performance. 



Directors’ report 

23 

It is the policy of the Group that disabled people, whether registered or 

not, should receive full and fair consideration for all job vacancies for 

which they are suitable applicants. Employees who become disabled 

during their working life will be retained in employment wherever 

possible and will be given help with any necessary rehabilitation and 

retraining. The Group is prepared to modify procedures and 

equipment, wherever this is practicable, so that full use can be made 

of an individual’s abilities. Training, career development and promotion 

are, as far as practicable, identical for all employees according to their 

skills and abilities. 

Creditor payment policy 

The Group’s current policy concerning the payment of creditors for 

revenue and capital suppliers for goods and services is as follows: 

• to pay in accordance with its contractual and legal obligations; 

• wherever it is reasonable to do so, to settle the terms of payments 

with those suppliers when agreeing terms for each transaction and 

to ensure that those suppliers are made aware of the terms of 

payments by their inclusion in the relevant contracts. 

Creditor days for the Company and Group at 31 March 2003 were 43 

and 49, respectively (2002: 14 and 54) as calculated in accordance 

with the Companies Act 1985. 

Statement of Directors’ responsibilities 

The Directors are required by UK company law to prepare financial 

statements for each financial year that give a true and fair view of the 

state of affairs of the Company and the Group as at the end of the 

financial year and of the profit or loss of the Group for that period. 

The Directors confirm that suitable accounting policies have been 

applied consistently, and reasonable and prudent judgements and 

estimates have been made in the preparation of the financial 

statements for the year ended 31 March 2003. The Directors also 

confirm that applicable accounting standards have been followed and 

that the financial statements have been prepared on the going 

concern basis. 

The Directors are responsible for keeping proper accounting records, 

for taking reasonable steps to safeguard the assets of the Company 

and the Group, and to prevent and detect fraud and other irregular 

activities. 

The maintenance and integrity of the Group’s websites are the 

responsibility of the Directors. Legislation in the United Kingdom 

governing the preparation and dissemination of financial statements 

may differ from legislation in other jurisdictions. 

Auditors 

Following the conversion of our auditors PricewaterhouseCoopers to a 

Limited Liability Partnership (LLP) from 1 January 2003, 

PricewaterhouseCoopers resigned on 30 January 2003 and the 

Directors appointed its successor, PricewaterhouseCoopers LLP, as 

auditors. 

A resolution to reappoint PricewaterhouseCoopers LLP as auditors to 

the Company will be proposed at the Annual General Meeting. 

By order of the board 

T Arthur 

Company Secretary 

28 May 2003

Independent auditors’ report to the members of Plasmon Plc 

We have audited the financial statements which comprise the profit 

and loss account, the balance sheet, the cash flow statement, the 

statement of recognised gains and losses and the related notes and 

the accounting policies set out in the statement of accounting policies. 

We have also audited the disclosures required by Part 3 of Schedule 

7A to the Companies Act 1985 contained in the Remuneration report 

(“the auditable part”). 

Respective responsibilities of directors and auditors 

The directors’ responsibilities for preparing the annual report and the 

financial statements in accordance with applicable United Kingdom 

law and accounting standards are set out in the statement of 

directors’ responsibilities. The directors are also responsible for 

preparing the Remuneration report. 

Our responsibility is to audit the financial statements and the auditable 

part of the directors’ remuneration report in accordance with relevant 

legal and regulatory requirements and United Kingdom Auditing 

Standards issued by the Auditing Practices Board. This report, 

including the opinion, has been prepared for and only for the 

Company’s members as a body in accordance with Section 235 of the 

Companies Act 1985 and for no other purpose. We do not, in giving 

this opinion, accept or assume responsibility for any other purpose or 

to any other person to whom this report is shown or into whose hands 

it may come save where expressly agreed by our prior consent in 

writing. 

We report to you our opinion as to whether the financial statements 

give a true and fair view and whether the financial statements and the 

auditable part of the Remuneration report have been properly 

prepared in accordance with the Companies Act 1985. We also report 

to you if, in our opinion, the Directors’ report is not consistent with the 

financial statements, if the Company has not kept proper accounting 

records, if we have not received all the information and explanations 

we require for our audit, or if information specified by law regarding 

Directors’ remuneration and transactions is not disclosed. 

We read the other information contained in the annual report and 

consider the implications for our report if we become aware of any 

apparent misstatements or material inconsistencies with the financial 

statements. The other information comprises only the Directors’ 

report, the unaudited part of the Remuneration report, the Chairman’s 

Statement, the Chief Executive’s review, Finance Director’s review and 

the Corporate Governance statement. 

We review whether the Corporate Governance statement reflects the 

Company’s compliance with the seven provisions of the Combined 

Code specified for our review by the Listing Rules of the Financial 

Services Authority, and we report if it does not. We are not required to 

consider whether the board’s statements on internal control cover all 

risks and controls, or to form an opinion on the effectiveness of the 

Group’s corporate governance procedures or its risk and control 

procedures. 



Basis of audit opinion 

We conducted our audit in accordance with auditing standards issued 

by the Auditing Practices Board. An audit includes examination, on a 

test basis, of evidence relevant to the amounts and disclosures in the 

financial statements and the auditable part of the Remuneration 

report. It also includes an assessment of the significant estimates and 

judgements made by the directors in the preparation of the financial 

statements, and of whether the accounting policies are appropriate to 

the company’s circumstances, consistently applied and adequately 

disclosed. 

We planned and performed our audit so as to obtain all the information 

and explanations which we considered necessary in order to provide 

us with sufficient evidence to give reasonable assurance that the 

financial statements and the auditable part of the Remuneration report 

are free from material misstatement, whether caused by fraud or other 

irregularity or error. In forming our opinion we also evaluated the overall 

adequacy of the presentation of information in the financial 

statements. 

Opinion 

In our opinion: 

• the financial statements give a true and fair view of the state of affairs 

of the Company and the Group at 31 March 2003 and of the loss 

and cash flows of the group for the year then ended; 

• the financial statements have been properly prepared in accordance 

with the Companies Act 1985; and 

• those parts of the Remuneration report required by Part 3 of 

Schedule 7A to the Companies Act 1985 have been properly 

prepared in accordance with the Companies Act 1985. 

PricewaterhouseCoopers LLP 

Chartered Accountants and Registered Auditors 

London 

28 May 2003 

Independent auditors’ report to the members of Plasmon Plc 

24

Consolidated profit and loss account 


Before Before 

goodwill Goodwill goodwill Goodwill 

amortisation amortisation amortisation amortisation 

and and and and 

exceptional exceptional exceptional exceptional 

costs costs Total costs costs Total 

2003 2003 2003 2002 2002 2002 

Notes £’000 £’000 £’000 £’000 £’000 £’000 

Turnover 2 60,083 – 60,083 61,554 – 61,554 

Cost of sales (38,258) – (38,258) (38,985) – (38,985) 

Gross profit 21,825 – 21,825 22,569 – 22,569 

Operating expenses 

Existing 3,4 (16,360) (1,619) (17,979) (18,368) (4,713) (23,081) 

UDO development 3 (6,495) – (6,495) (5,246) – (5,246) 

Net operating expenses (22,855) (1,619) (24,474) (23,614) (4,713) (28,327) 

Operating profit/(loss) 

Existing 5,465 (1,619) 3,846 4,201 (4,713) (512) 

UDO (6,495) – (6,495) (5,246) – (5,246) 

Operating loss (1,030) (1,619) (2,649) (1,045) (4,713) (5,758) 

Interest receivable 7 – 36 

Interest payable 8 (737) (577) 

Loss on ordinary activities 

before taxation 2,6 (3,386) (6,299) 

Tax on ordinary activities 9 (20) 542 

Retained loss for the year 21 (3,406) (5,757) 

Basic and diluted losses 

per Ordinary share (p) 10 (6.41) (12.28) 

Basic earnings per Ordinary share (p) 

excluding UDO development costs, 

exceptional costs and goodwill 

amortisation 10 8.86 8.96 

There is no difference between the loss on ordinary activities before taxation and the retained loss for the year stated above and their historical 

cost equivalents. All the Group’s operations are continuing. 

The Company has taken advantage of Section 230 of the Companies Act 1985 not to present its own profit and loss account. 

The amount of loss dealt with in the financial statements of the holding company was £247,000 (2002 loss: £3,365,000). 



Consolidated profit and loss account 

25

Statement of total recognised gains and losses 


2003 2002 

£’000 £’000 

Loss for the year (3,406) (5,757) 

Currency translation differences on foreign currency net investments (1,563) (288) 

Total recognised losses relating to the year (4,969) (6,045) 

Reconciliation of movements in shareholders’ funds 


2003 2002 

£’000 £’000 

Loss for the year (3,406) (5,757) 

Currency translation differences (1,563) (288) 

Nominal value of new share capital placed 128 660 

Premium on share placing 1,634 10,296 

Expenses on share placing (84) (673) 

Nominal value of stock options 26 – 

Premium on exercise of stock options 347 4 

Net (reductions)/additions to shareholders’ funds (2,918) 4,242 

Opening shareholders’ funds 41,157 36,915 

Closing shareholders’ funds 38,239 41,157 



Statement of total recognised gains and losses 

26

Consolidated balance sheet 

at 31 March 2003 

2003 2002 

Notes £’000 £’000 

Fixed assets 

Intangible assets 11 7,204 9,209 

Tangible assets 12 26,117 24,421 

33,321 33,630 

Current assets 

Stocks 14 16,455 18,854 

Debtors 15 14,955 15,861 

Cash at bank and in hand 1,171 1,668 

32,581 36,383 

Creditors: amounts falling due within one year 16 (19,843) (21,883) 

Net current assets 12,738 14,500 

Total assets less current liabilities 46,059 48,130 

Creditors: amounts falling due after more than one year 17 (7,741) (5,620) 

Provisions for liabilities and charges 18 (79) (1,353) 

Net assets 38,239 41,157 

Capital and reserves 

Called-up share capital 20 2,707 2,553 

Share premium account 21 42,069 40,172 

Profit and loss account 21 (6,537) (1,568) 

Equity shareholders’ funds 38,239 41,157 

The financial statements on pages 25 to 48 were approved by the Board of Directors on 28 May 2003 and are signed on its behalf by: 

J B Morgans 

N Street } 

Directors 



Consolidated balance sheet 

27

Company balance sheet 

at 31 March 2003 

2003 2002 


Fixed assets 

Investments 13 29,203 17,548 

Current assets 

Debtors 15 13,359 22,872 

Cash at bank and in hand 283 586 

13,642 23,458 

Creditors: amounts falling due within one year 16 (139) (104) 

Net current assets 13,503 23,354 

Net assets 42,706 40,902 

Capital and reserves 

Called-up share capital 20 2,707 2,553 

Share premium account 21 42,069 40,172 

Other reserves 21 1,116 1,116 

Profit and loss account 21 (3,186) (2,939) 

Equity shareholders’ funds 42,706 40,902 

The financial statements on pages 25 to 48 were approved by the Board of Directors on 28 May 2003 and are signed on its behalf by: 

J B Morgans 

N Street 

} 




Company balance sheet 

28

Consolidated cash flow statement 


2003 2002 


Net cash inflow/(outflow) from operating activities 22 924 (399) 

Returns on investments and servicing of finance 

Interest received – 41 

Interest paid on bank loans and overdrafts (569) (476) 

Interest paid on finance leases (183) (165) 

Net cash outflow from returns on investments and servicing of finance (752) (600) 

Taxation 

UK corporation tax received/(paid) 60 (306) 

Overseas tax received/(paid) 479 (195) 

Tax received/(paid) 539 (501) 

Capital expenditure 

Purchase of intangible fixed assets (24) (967) 

Purchase of tangible fixed assets (5,081) (7,352) 

Proceeds from sale of fixed assets 120 68 

Net cash outflow from investing activities (4,985) (8,251) 

Net cash outflow before financing (4,274) (9,751) 

Financing 

Issue of Ordinary shares 2,135 10,960 

Expenses on issue of Ordinary shares (84) (673) 

New bank loans 3,550 1,910 

Payment of principal under bank loans (145) (508) 

Payment of principal under finance leases (1,371) (1,324) 

Net cash inflow from financing 4,085 10,365 

(Decrease)/increase in cash (189) 614 

Reconciliation of net cash flow to movement in net debt: 

(Decrease)/increase in cash (189) 614 

Cash outflow from decrease in debt and lease financing (2,034) (78) 

Changes in net debt resulting from cash flows (2,223) 536 

Inception of finance leases (1,439) (973) 

Foreign exchange differences 598 66 

Movement in net debt in period (3,064) (371) 

Opening net debt (9,897) (9,526) 

Closing net debt 23 (12,961) (9,897) 



Consolidated cash flow statement 

29

Notes to the financial statements 


1 Principal accounting policies 

The financial statements have been prepared in accordance with applicable Accounting Standards in the United Kingdom. A summary of the more 

important Group accounting policies, which have been consistently applied, is set out below. 

Basis of accounting 

The financial statements have been prepared under the historic cost basis of accounting. 

Basis of consolidation 

The consolidated financial statements include the financial statements of Plasmon Plc and all of its subsidiaries, made up to 31 March 2003. The 

results of subsidiaries and businesses acquired are included in the consolidated profit and loss account from the date control passes to the 

Group. Intra-Group sales and profits are eliminated fully on consolidation. 

Turnover 

Turnover, which excludes sales between Group companies and trade discounts, represents the invoiced value of goods and services net of value 

added tax. Turnover in respect of the sale of goods is recognised when the goods are dispatched to the customer, whilst turnover in respect of the 

sale of services is recognised over the period the related work is performed. Turnover from longer-term development work is recognised in 

proportion to the costs of the development work undertaken. Turnover in respect of royalties receivable is recognised on an accruals basis as 

earned. 

Development expenditure 

Expenditure on research or development is written off as incurred. 

Tangible fixed assets 

Fixed assets are stated at cost less accumulated depreciation. 

Depreciation is provided on fixed assets when placed into effective use, on a straight-line basis, at rates calculated to reduce each asset at the 

end of its effective useful life to its estimated net realisable value. The rates used are as follows: 

Land Not depreciated 

Buildings 2% 

Building improvements 4%–15% 

Short leasehold improvements 20%–33% 

Office equipment 20%–33% 

Research and development, manufacturing and test plant and machinery 10%–25% 

Motor vehicles 25%–33% 

Leased assets 

Assets acquired under finance leases and hire purchase agreements are capitalised and depreciated over the shorter of the lease term and the 

useful life of the asset. The capital element of the leasing commitment is shown as obligations under finance leases. The lease rentals are treated 

as consisting of capital and interest elements. The capital element is applied to reduce the outstanding obligations and the interest element is 

charged against profit so as to give a constant periodic charge on the remaining balance outstanding for each accounting period. 

Rental payments under operating leases are charged to the profit and loss account on a straight-line basis. 

Purchased goodwill 

Goodwill arising on acquisitions represents the excess of the fair market value of the consideration over the fair value of the identifiable assets and 

liabilities acquired. 

FRS 10 “Goodwill and intangible assets” has been adopted from 1 April 1998 and purchased goodwill arising from acquisitions after this date has 

been capitalised as intangible assets and is amortised over its useful economic life. 

The useful economic life of goodwill arising on acquisitions after 1 April 1998 is estimated to be between eight and ten years from the date of 

acquisition which is primarily based on the number of future generations of products expected to be based on the acquired technologies. 

Purchased goodwill arising on acquisitions prior to the adoption of FRS10 remains eliminated against reserves. This goodwill will be charged in the 

profit and loss account on any subsequent disposal of the related business. 

Licences 

Licences acquired for use in proprietary software or manufacturing processes are capitalised at cost. Amortisation commences when the related 

product is commercially launched with the cost being amortised on a straight-line basis over the expected life cycle of the product. Current 

licences are being amortised over five years. 

Fixed asset investments 

Fixed asset investments are stated at cost less any amount written-off to reflect a permanent impairment. 




30

Notes to the financial statements continued 


Stocks 

Stocks are valued at the lower of cost and net realisable value. Cost comprises expenditure incurred in bringing stocks and work in progress to 

their present location and condition. Net realisable value represents the estimated selling price less further production costs to completion and 

appropriate selling and distribution costs. Provision is made where necessary for obsolete, slow-moving and defective stocks. 

Deferred taxation 

Deferred tax is recognised in respect of all timing differences that have originated but not reversed at the balance sheet date where transactions or 

events that result in an obligation to pay more, or a right to pay less, tax in the future have occurred at the balance sheet date. Deferred tax assets 

are recognised to the extent that the Directors consider that it is more likely than not that there will be suitable taxable profits from which the future 

reversal of the underlying timing differences can be deducted. Provision is made for the tax that would arise on the remittance of the retained 

earnings of overseas subsidiaries only to the extent that, at the balance sheet date, dividends have been accrued as receivable. Deferred tax is 

measured on a non-discounted basis at the tax rates that are expected to apply in the periods in which the timing differences reverse, based on 

the tax rates and laws enacted or substantively enacted at the balance sheet date. 

Foreign currency translation 

Assets and liabilities are translated into sterling at the rate of exchange ruling at the balance sheet date and the results of foreign subsidiaries are 

translated at the average rate of exchange for the year. Foreign currency trading transactions are translated at the rate ruling at the time of the 

transaction. All foreign currency exchange differences are dealt with in the profit and loss account for the period with the exception of those arising 

on consolidation which are shown as movements on reserves. 

Patent fees 

Costs of acquiring patents are written off as incurred. 

Pension costs 

Pension costs in respect of the defined benefit pension scheme are accounted for on the basis of charging the expected cost of providing 

pensions over the period during which the Group expects to benefit from the employees’ services. This treatment follows the requirements of 

SSAP 24 “Accounting for pension costs”. In addition, the notes to the financial statements provide the transitional disclosures prepared under the 

accounting standard FRS 17 “Retirement benefits”. As permitted by this standard, the Group has decided to defer full implementation until the 

financial year ending 31 March 2005. 

Pension costs in respect of defined contribution schemes and employees’ personal pension plans are charged on an accrual basis in line with 

amounts payable in respect of the accounting period. 

National Insurance and Share Options 

Provision is made for future employer’s National Insurance liabilities in respect of certain outstanding unapproved employee share options. The 

provision is calculated at the current National Insurance rate applied to the difference between the market value of the underlying shares at the 

balance sheet date and the option exercise prices. 




31



2 Turnover, profit/(loss) before taxation and net assets 

The analysis by geographical area of the Group’s turnover, (loss)/profit before taxation and net assets is set out below: 

Total Total 

2003 2002 

£’000 £’000 

Turnover by destination 

Europe 18,736 15,773 

United States of America 37,106 42,712 

Rest of World 4,241 3,069 

60,083 61,554 

Turnover by origin 

Europe 20,517 17,599 


60,083 61,554 

Profit/(loss) before taxation 

Europe 2,528 686 

United States of America (5,177) (6,444) 

Loss before interest (2,649) (5,758) 

Net interest payable (737) (541) 

(3,386) (6,299) 

Net assets by origin 

Europe 29,763 27,878 


Net operating assets 49,725 49,780 

Bank loans and overdrafts (11,388) (8,961) 

Current tax (payable)/receivable (67) 485 

Deferred tax position (31) (147) 

38,239 41,157 

The Group operates in one business segment, professional data storage solutions. The Group derives income of a consultancy nature from the 

sale of “know-how” as a result of and incidental to its normal production activities and therefore, this is not considered to be a separate business 

segment. Consultancy income in the year amounted to £3,935,000 (2002: £3,607,000). Intra segment turnover for year ended 31 March 2003 

was £5,325,000 (2002: £7,487,000) from Europe to the United States of America and £4,033,000 (2002: £5,072,000) from the United States of 

America to Europe. 

3 Net operating expenses 

Total Total 

2003 2002 

£’000 £’000 

Administrative expenses 3,747 4,264 

Selling and distribution costs 8,993 7,816 

UDO product development costs 6,495 5,246 

Other product development costs 3,644 6,162 

Total product development costs 10,139 11,408 

Other operating (income) / expenses (24) 126 

Net operating expenses 22,855 23,614 

The costs of the UDO development programme have been separately disclosed due to their significance to the Group. This programme is 

developing next generation 5 1 ⁄4" drive and media technology that will supercede existing products currently sourced from third party suppliers. 




32



4 Goodwill amortisation and exceptional operating costs 

2003 2002 

£’000 £’000 

US Reorganisations 520 2,888 

Toolex International bad debt – 629 

Exceptional operating costs 520 3,517 

Goodwill amortisation 1,099 1,196 

Goodwill amortisation and exceptional operating costs 1,619 4,713 

The exceptional operating costs during the year ended 31 March 2003 arose from the transfer of US library development from Minneapolis to 

Colorado Springs, principally comprising employment related severance costs. 

The exceptional operating costs during the year ended 31 March 2002 arose from the transfer of US library manufacturing from Minneapolis to 

Colorado Springs, principally comprising employment related transition and relocation costs. The bad debt charge arose from the bankruptcy of 

Toolex International NV. 

5 Directors and employees 

The average monthly number of employees (including Directors) employed by the Group during the year was: 

2003 2002 

Number Number 

Sales and marketing 90 75 

Office and management 51 57 

Manufacturing, research and development 317 364 

Staff costs for the above employees: 

458 496 

2003 2002 

£’000 £’000 

Wages and salaries 16,850 18,481 

Social security costs 2,938 2,588 

Other pension costs 424 881 

Included in staff costs is remuneration paid to the Directors of Plasmon Plc as follows: 

20,212 21,950 

2003 2002 

£’000 £’000 

Executive directors 

– aggregate emoluments 394 404 

– pension contributions 53 53 

Non-Executive directors 

– aggregate fees 50 50 

For further information on Directors’ emoluments see the Remuneration report on pages 20 to 22. 




33 

497 507



6 Loss on ordinary activities before taxation 

Loss on ordinary activities before taxation is stated after charging/(crediting): 

2003 2002 

£’000 £’000 

Research and development expenditure 10,139 11,408 

Depreciation 

– leased assets 1,094 828 

– owned assets 3,606 3,749 

Amortisation 

– goodwill 1,099 1,196 

– intangibles 208 70 

Fees paid to Auditors for: 

– audit (Company: 2003: £29,000, 2002 £29,000) 158 189 

– other services (Company: 2003: £37,000, 2002: £40,000) 68 131 

Operating lease payments 

– plant and machinery 203 219 

– other 1,034 1,238 

(Profit)/loss on sale of fixed assets (24) 32 

Foreign exchange gains (441) (121) 

Exceptional operating costs (see Note 4) 520 3,517 

7 Interest receivable 

2003 2002 

£’000 £’000 

Bank deposits – 36 

8 Interest payable 

2003 2002 

£’000 £’000 

Bank loans and overdrafts 564 417 

Finance leases and hire purchase contracts 173 160 




34 

737 577



9 Taxation 

a) Analysis of tax charge/(credit) in the year 

2003 2002 

£’000 £’000 

UK Corporation tax at 30% (2002: 30%) 

Current 7 – 

Deferred (116) 147 

Under/(over) provision in respect of prior years 

Current 14 (107) 

(95) 40 

Overseas taxation 


Under/(over) provision in respect of prior years 


115 (582) 

Tax on ordinary activities 20 (542) 

The overseas tax credit in the year ended 31 March 2002 arose in the US where under the Job Creation and Worker Assistance Act of 2002, the 

US subsidiaries were able to carry back net operating losses for the preceding five years. 

b) Factors affecting the tax charge/(credit) in the year 

The tax credit for the period is lower than the standard rate of corporation tax in the UK (30%). The differences are explained below: 

2003 2002 

£’000 £’000 

Loss on ordinary activities before tax (3,386) (6,299) 

Loss on ordinary activities multiplied by the standard rate of (1,016) (1,890) 

corporation tax in the UK of 30% (2002: 30%) 

Effects of: 

Adjustments to tax in respect of the prior period 14 (107) 

Enhanced deduction for research and development (134) – 

Expenses not deductible for tax purposes 104 25 

Losses (utilised)/carried forward (56) 43 

Difference between capital allowance and depreciation (309) (177) 

Overseas differences 1,533 1,417 

Current tax charge/(credit) for period 136 (689) 

c) Factors that may affect future tax charge 

At present it is envisaged that any future tax charge will be reduced by the losses carried forward in the US. 




35



10 Earnings per share 

Basic earnings per share are calculated by dividing earnings (loss on ordinary activities after tax) by the weighted average number of Ordinary 

shares in issue during the year. 

Given the losses incurred during the year, there is no dilution of earnings per share in the year ended 31 March 2003 or in the previous year. 

Adjusted earnings per share figures are presented which exclude the effect of goodwill amortisation, UDO development costs and exceptional 

operating costs. The Directors consider that the adjusted earnings per share figures provide a useful additional indication of performance. 

Weighted Weighted 

average (Losses)/ average (Losses)/ 

(Losses)/ number earnings (Losses)/ number earnings 

earnings of shares per share earnings of shares per share 

2003 2003 2003 2002 2002 2002 

£’000 ‘000 pence £’000 ‘000 pence 

Basic losses per share (3,406) 53,140 (6.41) (5,757) 46,900 (12.28) 

Adjusted earnings per share 

Basic losses per share (3,406) 53,140 (6.41) (5,757) 46,900 (12.28) 

Effect of: 

goodwill amortisation 1,099 2.07 1,196 2.55 

UDO development costs 6,495 12.22 5,246 11.19 

exceptional operating costs 520 0.98 3,517 7.50 

Adjusted earnings per share 4,708 53,140 8.86 4,202 46,900 8.96 

11 Intangible fixed assets 

The Company has no intangible fixed assets. Details of those relating to the Group are as follows: 

Purchased Development Software Manufacturing 

goodwill costs code licences licences Total 

£’000 £’000 £’000 £’000 £’000 

Cost 

At 1 April 2002 11,328 1,949 349 967 14,593 

Acquisitions – – – 24 24 

Currency changes (937) – – (91) (1,028) 

At 31 March 2003 10,391 1,949 349 900 13,589 

Amortisation 

At 1 April 2002 3,346 1,949 89 – 5,384 

Charge for the year 1,099 – 71 137 1,307 

Currency changes (304) – – (2) (306) 

At 31 March 2003 4,141 1,949 160 135 6,385 

Net book value 

At 31 March 2003 6,250 – 189 765 7,204 

At 31 March 2002 7,982 – 260 967 9,209 




36



12 Tangible fixed assets 

The Company has no tangible fixed assets. Details of those relating to the Group are as follows: 

Freehold Leasehold Plant & Plant & 

land and improve- Office Motor machinery Construction machinery 

buildings ments equipment vehicles owned in progress leased Total 

£’000 £’000 £’000 £’000 £’000 £’000 £’000 £’000 

Group 

Cost 

At 1 April 2002 8,029 719 5,582 318 19,429 2,360 9,624 46,061 

Additions – 73 317 39 566 5,525 – 6,520 

Disposals – (171) (567) (96) (687) – – (1,521) 

Transfer of assets 1,347 – (471) – 462 (1,338) – – 

Currency changes 78 (64) (249) – (88) (17) (7) (347) 

At 31 March 2003 9,454 557 4,612 261 19,682 6,530 9,617 50,713 

Depreciation 

At 1 April 2002 628 540 3,893 106 10,978 – 5,495 21,640 

Charge for the year 154 115 600 59 2,721 – 1,051 4,700 

Disposals – (169) (531) (43) (682) – – (1,425) 

Transfer of assets – – (226) – 226 – – – 

Currency changes 4 (48) (174) – (99) – (2) (319) 

At 31 March 2003 786 438 3,562 122 13,144 – 6,544 24,596 


At 31 March 2003 8,668 119 1,050 139 6,538 6,530 3,073 26,117 

At 31 March 2002 7,401 179 1,689 212 8,451 2,360 4,129 24,421 

Tangible fixed assets include leased assets with a cost of £11,405,000 (2002: £9,919,000) and net book value of £4,432,000 (2002: £4,325,000). 

Depreciation of £1,094,000 (2002: £828,000) has been charged against these assets in the year. 




37



13 Fixed asset investments 

Investment in 

subsidiaries 

£’000 

Company 

Cost 

At 1 April 2002 23,052 

Additions 17,216 

At 31 March 2003 40,268 

Provisions for permanent diminution in value 

At 1 April 2002 5,504 

Provisions created during year 5,561 

At 31 March 2003 11,065 


At 31 March 2003 29,203 

At 31 March 2002 17,548 

The movement in investments during the year resulted from an increase in the investment in Plasmon Inc of $8,500,500 (£5,716,000), in Plasmon 

Data Systems Limited of £10,000,000 and in Plasmon Data Limited of £1,500,000. 

The principal subsidiaries of the Group at 31 March 2003 were: 

Company Country of incorporation Main activity 

Plasmon Inc. USA Holding company 

Plasmon Data Systems Limited England & Wales Media manufacturing and development 

Plamson OMS Sarl France Mastering manufacturing and development 

Plasmon Data Limited England & Wales Sales and marketing 

Allstor Software Limited England & Wales Software development 

Plasmon IDE Inc. USA Jukebox manufacturing and development 

Plasmon LMS Inc. USA Drive manufacturing and development 

Plasmon Data Srl Italy Sales and marketing 

Plasmon Data NV Belgium Sales and marketing 

Plasmon Data Sarl France Sales and marketing 

All the principal subsidiaries of the Group only have ordinary share capital, are 100% owned, including voting rights, within the Group and have 

been included in the consolidated financial statements. 

With the exception of Plasmon IDE Inc., Plasmon LMS Inc., Plasmon OMS, Plasmon Data Sarl and 25% of Plasmon Data Srl all the interests in the 

principal subsidiaries are held directly by Plasmon Plc. 

14 Stocks 

2003 2002 

£’000 £’000 

Group 

Raw materials and consumables 4,143 5,096 

Work in progress 2,509 1,889 

Finished goods and goods for resale 9,803 11,869 




38 

16,455 18,854



15 Debtors: amounts falling due within one year 

2003 2002 

£’000 £’000 

Group 

Trade debtors 9,912 10,898 

Corporation tax 14 538 

Other debtors 948 1,303 

Prepayments and accrued income 4,081 3,122 

14,955 15,861 

2003 2002 

£’000 £’000 

Company 

Amounts owed by Group undertakings 13,287 22,759 

Other debtors 72 113 

16 Creditors: amounts falling due within one year 

13,359 22,872 

2003 2002 

£’000 £’000 

Group 

Bank overdraft 4,088 4,901 

Bank loans 1,294 262 

Obligations under finance leases 1,009 782 

Trade creditors 5,708 8,545 

Corporation tax 81 53 

Other taxation and social security 182 141 

Accruals and deferred income 7,481 7,199 

19,843 21,883 

2003 2002 

£’000 £’000 

Company 

Bank overdraft 3 – 

Trade creditors 66 21 

Corporation tax 7 – 

Other taxation and social security 18 19 

Accruals and deferred income 45 64 

Bank borrowings are secured by fixed and floating charges over the Group’s assets. 

17 Creditors: amounts falling due after more than one year 

139 104 

2003 2002 

£’000 £’000 

Group 

Bank loans 6,006 3,798 

Obligations under finance leases 1,735 1,822 

Bank loans are secured by fixed and floating charges over the Group’s assets. 




39 

7,741 5,620



18 Provisions for liabilities and charges 

US 

Deferred tax restructuring Total 

£’000 £’000 £’000 

Group 

At 1 April 2002 147 1,206 1,353 

Provided in year – 520 520 

Utilised in year (116) (1,598) (1,714) 

Currency changes – (80) (80) 

At 31 March 2003 31 48 79 

Deferred tax 

All potential deferred tax liabilities have been recognised in the financial statements. These liabilities relate wholly to accelerated capital allowances. 

Potential deferred tax assets have not been recognised but are set out below: 

2003 2002 

£’000 £’000 

Group 

Research and development tax credits 1,149 987 

Trading losses 3,623 1,597 

Accelerated capital allowances 416 232 

Other short term timing differences 569 1,653 

The Company had no deferred tax balances at 31 March 2003 and 31 March 2002. 

5,757 4,469 

US restructuring provision 

The US restructing provision was set up during the year ended 31 March 2002 as an exceptional cost relating to the transfer of the library 

manufacturing facilities previously located in Minneapolis to the Group’s other US location in Colorado Springs. During the year ended 31 March 

2003, additional provisions were made relating to the transfer of the library development facility also originally located in Minneapolis to Colorado 

Springs. The cash impact of the remaining provision is expected to be a cash outflow of £48,000 in 2003/4 (2002/3: £1,206,000). Further details 

of the US restructuring costs are given in Note 4. 

19 Lease commitments 

Obligations under finance leases are repayable as follows: 

2003 2002 

£’000 £’000 

Group 

Within one year 1,009 782 

One to two years 840 754 

Two to five years 895 1,068 

Obligations under operating leases payable in the next year where the commitment expires as follows: 

2,744 2,604 

2003 2002 

£’000 £’000 

Group 

Within one year 253 163 

One to two years 24 71 

Two to five years 903 1,110 




40 

1,180 1,344



Included in the above is the following amount for the lease of land and buildings: 

2003 2002 

£’000 £’000 

Group 

Within one year 72 137 

One to two years – 71 

Two to five years 902 917 

20 Called-up share capital 

974 1,125 

2003 2002 

£’000 £’000 

Authorised 

80,000,000 Ordinary shares of 5p each (2002: 75,000,000) 4,000 3,750 

Allotted, called-up and fully paid 

54,142,704 Ordinary shares of 5p each (2002: 51,064,957) 2,707 2,553 

During the year the Company issued 2,553,247 5p Ordinary shares following a 5% placing to fund the UDO drive and media development 

programme. A further 524,500 5p Ordinary shares were issued upon the exercise of employee share options. Net of expenses the £2,051,000 of 

cash received in total represented £154,000 of nominal value and £1,897,000 of share premium. 

The Company operates share option schemes for Directors and employees. Options to purchase the Company’s 5p Ordinary shares in issue at 

31 March 2003 were as follows: 

Subscription Number Number 

price per of shares of shares 

share 1 April 2002 Granted Exercised Cancelled 31 March 2003 Periods within which exercisable 

£1.25 132,000 – – 132,000 – 14 April 1995 and 13 April 2002 

£2.50 90,000 – – 90,000 – 14 April 1995 and 13 April 2002 

£1.25 187,000 – – – 187,000 21 May 1996 and 20 May 2003 

£2.50 80,000 – – – 80,000 21 May 1996 and 20 May 2003 

£1.25 40,000 – – – 40,000 5 September 1997 and 4 September 2004 

£2.50 20,000 – – – 20,000 5 September 1997 and 4 September 2004 

£1.25 47,500 – – 27,500 20,000 9 April 1999 and 8 April 2006 

£2.50 121,914 – – 59,000 62,914 9 April 1999 and 8 April 2006 

£1.25 30,000 – – 5,000 25,000 20 June 1999 and 19 June 2006 

£2.50 20,000 – – 10,000 10,000 20 June 1999 and 19 June 2006 

£0.465 227,000 – 99,500 44,000 83,500 15 November 2000 and 14 November 2007 

£0.465 57,000 – – – 57,000 15 November 2000 and 14 November 2004 

£0.77 1,995,000 425,000 123,000 1,447,000 13 January 2002 and 12 January 2009 

£1.37 360,000 – – 150,000 210,000 5 August 2002 and 4 August 2009 

£2.74 25,000 – – 25,000 – 15 February 2003 and 14 February 2010 

£1.14 805,250 – – 169,000 636,250 21 December 2003 and 20 December 2010 

£0.765 1,470,000 36,000 1,434,000 22 December 2004 and 21 December 2011 

£0.875 927,500 – – 927,500 18 June 2005 and 17 June 2012 

£0.765 542,000 – – 542,000 29 July 2005 and 28 July 2012 



5,707,664 1,469,500 524,500 870,500 5,782,164 


41



1,469,500 share options were granted during the year under the 1998 Employee Share Option Scheme (the "1998 Scheme"). The 1998 

Scheme allows for the granting of share options up to 15% of the issued ordinary share capital, normally within 42 days following the 

preliminary announcement of the final or interim results of the Company. No payment is required for the grant of the share options and 

subscription price per share is set at prevailing market rates. These options, as with those issued during the previous year, require the launch of 

UDO drives and media before the options can be exercised. 

The share options granted in the four years ended 31 March 2001 (at subscription prices per share of £0.465, £0.77, £1.37, £2.74 and £1.14) 

also have performance criteria attached to them. Exercise of these share options is conditional on earnings per share for the Group over any 

three consecutive years following grant having grown by an average of at least 6 percentage points above inflation. The earnings per share 

criteria will be adjusted to remove the impact of the UDO programme. In addition group profits for any financial year have to exceed the levels 

shown in the table below: 

Granted during Subscription price 

the year ended per share Measure of group profits Level of group profits 

31 March 1998 £0.465 Before interest and tax £1 million 

31 March 1999 £0.77 Before goodwill amortisation, 

interest, tax and exceptional items £2.5 million 

31 March 2000 £1.37 Before goodwill amortisation, £2.5 million 

£2.74 interest, tax and exceptional items £4.0 million 

31 March 2001 £1.14 Before goodwill amortisation, £7.0 million 

interest, tax and exceptional items 

The performance criteria attached to the share options granted during the year ended 31 March 1998 and 1999 have been met. The share 

options granted at £1.25 and £2.50 do not have performance conditions attached to them. 

21 Reserves 

Share premium Profit and loss 

account account 

£’000 £’000 

Group 

At 1 April 2002 40,172 (1,568) 

Premium on share placing 1,634 – 

Issue costs of share placing (84) – 

Premium on exercise of share options 347 – 

Currency translation differences – (1,563) 

Retained loss for the year – (3,406) 

At 31 March 2003 42,069 (6,537) 

Cumulative goodwill arising on consolidation which has been written off to reserves amounted to £1,301,500 at 31 March 2003 and 31 March 

2002. 

Share Profit 

premium Other and loss 

account reserves account 

£’000 £’000 £’000 

Company 

At 1 April 2002 40,172 1,116 (2,939) 

Premium on share placing 1,634 – – 

Issue costs of share placing (84) – – 

Premium on exercise of share options 347 – – 

Retained loss for the year – – (247) 

At 31 March 2003 42,069 1,116 (3,186) 

There were no distributable reserves at 31 March 2003 and 2002. 




42



22 Reconciliation of operating loss to net cash inflow from operating activities 

2003 2002 

£’000 £’000 

Operating loss (2,649) (5,758) 

Amortisation of intangible fixed assets 1,307 1,266 

Depreciation of tangible fixed assets 4,700 4,577 

(Profit)/loss on sale of fixed assets (24) 32 

Decrease/(increase) in stocks 1,214 (4,085) 

Decrease/(increase) in trade debtors 575 (34) 

Increase in prepayments and other debtors (1,011) (2,527) 

(Decrease)/increase in trade creditors (2,252) 1,417 

Increase/(decrease) in other taxation and social security 41 (7) 

Increase in accruals and deferred income 845 3,557 

(Decrease)/increase in provisions for liabilities and charges (1,194) 1,223 

Other non-cash items (628) (60) 

Net cash inflow/(outflow) from operating activities 924 (399) 

23 Analysis of net debt 

Inception Foreign 

At 1 April Cash of finance exchange At 31 March 

2002 flow leases gain/(loss) 2003 

£’000 £’000 £’000 £’000 £’000 

Cash at bank and in hand 1,668 (562) – 65 1,171 

Overdrafts (4,901) 373 – 440 (4,088) 

(3,233) (189) – 505 (2,917) 

Debt due within one year (262) (1,045) – 13 (1,294) 

Debt due after one year (3,798) (2,360) – 152 (6,006) 

Finance leases due within one year (782) 494 (706) (15) (1,009) 

Finance leases due after one year (1,822) 877 (733) (57) (1,735) 

Net debt (9,897) (2,223) (1,439) 598 (12,961) 

24 Financial instruments 

The following information, with the exception of that concerning currency exposures, excludes short term debtors and creditors. Narrative 

disclosures explaining the role that the financial instruments play in creating and changing the risks faced by the group in its activities together with 

an explanation of the directors’ approach to managing these risks, are given in paragraphs 5 to 10 on page 16 within the Finance Director’s review 

under the heading of Financial Instruments. No derivatives have been utilised to hedge either foreign exchange or interest rate movements and 

therefore there are no unrecognised gains or losses. 

Financial assets 

The interest rate and currency profiles of the Group’s financial assets, excluding short term debtors were: 

Floating Non-interest Floating Non-interest 

rate bearing Total rate bearing Total 

2003 2003 2003 2002 2002 2002 

£’000 £’000 £’000 £’000 £’000 £’000 

Currency 

Sterling 283 25 308 543 41 584 

US dollar 241 77 318 189 229 418 

Other – 545 545 – 666 666 

524 647 1,171 732 936 1,668 

The financial assets shown in the table above consist solely of cash at bank and in hand. The US dollar denominated floating rate deposits earn 

interest based on US prime rates. 




43



Financial liabilities 

The Group’s financial liabilities, excluding short term creditors were: 

2003 2002 

£’000 £’000 

Bank overdraft 4,088 4,901 

Bank loans 7,300 4,060 

Obligations under finance leases 2,744 2,604 

US restructuring provision 48 1,206 

14,180 12,771 

The interest rate and currency profiles of these financial liabilities were: 

Floating Non-interest Fixed Floating Non-interest Fixed 

rate bearing rate Total rate bearing rate Total 

2003 2003 2003 2003 2002 2002 2002 2002 

£’000 £’000 £’000 £’000 £’000 £’000 £’000 £’000 

Currency 

Sterling 6,797 – 1,069 7,866 2,540 – 1,593 4,133 

US dollar 5,546 48 68 5,662 6,721 1,206 – 7,927 

Euro – – 652 652 – – 711 711 

12,343 48 1,789 14,180 9,261 1,206 2,304 12,771 

The sterling and US dollar denominated floating rate liabilities consist principally of bank overdrafts and loans that bear interest based on UK Base 

and US Prime rates respectively. 

The sterling denominated fixed rate liabilities are obligations under finance leases that have a weighted average interest rate of 7.3% (2002: 7.3%) 

and a weighted average period of 2.4 years (2002: 3.4 years) until the end of the leases. The Euro denominated fixed rate liabilities are obligations 

under a finance lease that has a weighted average interest rate of 6.5% (2002: 6.5%) and a weighted average period of 3.8 years (2002: 4.8 years) 

until the end of the lease. 

The US restructuring provision consists principally of building rental costs that will be paid within one year. 

Maturity of financial liabilities 

The maturity profile of the Group’s financial liabilities was as follows: 

2003 2002 

£’000 £’000 

In one year or less, or on demand 6,439 7,151 

In more than one year but not more than two years 2,136 1,041 

In more than two years but not more than five years 2,809 1,926 

In more than five years 2,796 2,653 

14,180 12,771 

The UK bank loans denominated in sterling and US dollars total £7,300,000 (2002: £4,060,000) and have a weighted average repayment period 

of 9.4 years (14.3 years). 




44



Currency exposures 

The table below shows the extent to which Group companies have monetary assets and liabilities in currencies other than their local currency. 

Foreign exchange differences on the translation of these assets and liabilities are taken to the profit and loss account. 

Foreign currency monetary assets/(liabilities) at 31 March 2003 


Sterling US dollars Euro zone currencies Total 

£’000 £’000 £’000 £’000 £’000 

Functional currency of Group company 

Sterling – (1,623) 3,476 (5) 1,848 

US dollar – – – – – 

Foreign currency monetary assets/(liabilities) at 31 March 2002 

– (1,623) 3,476 (5) 1,848 


Sterling US dollars Euro zone currencies Total 

£’000 £’000 £’000 £’000 £’000 

Functional currency of Group company 

Sterling – (887) 696 (2) (193) 

US dollar – – – – – 

– (887) 696 (2) (193) 

Borrowings facilities 

To manage the liquidity risk the Group has arranged various borrowing facilities. These facilities have various asset related covenants and therefore 

the available facilities may be limited. 

Maximum Maximum 

potential Available Undrawn potential Available Undrawn 

facility facility facility facility facility facility 

2003 2003 2003 2002 2002 2002 

£’000 £’000 £’000 £’000 £’000 £’000 

Sterling facilities 7,000 5,867 2,867 2,500 2,500 2,460 

US dollar facilities 6,325 5,843 2,189 6,954 6,609 1,748 

Total 13,325 11,710 5,056 9,454 9,109 4,208 

In March 2003 the £2,500,000 HSBC overdraft facility was replaced with a £7,000,000 debt and working capital facility with Venture Finance PLC 

that is committed for three years. 

The sterling and US dollar overdrafts are renewable on 13 April 2006 and 8 May 2004 respectively (2002: 3 April 2003 and 30 September 2003). 

Fair values of financial assets and financial liabilities 

Due to the floating rate and short term nature of the majority of the Group’s financial assets and liabilities there are no material differences between 

their book and fair values. 

25 Capital commitments and contingent liabilities 

At 31 March 2003 the Group had contracted but not provided for capital commitments of £1,956,000 (2002: £1,553,000). 

Guarantees have been given by the Company to finance companies, where amounts owned by Plasmon Data Systems Limited under sale and 

lease-back transactions are payable on demand. Total amounts outstanding at 31 March 2003 were £2,599,000 (2002: £2,376,000). 

The Company guarantees a working capital facility provided by Silicon Valley Bank on behalf of Plasmon Data Inc and subsidiaries for a total value 

of US$10,000,000. 

The Company has given a guarantee to Sony Electronics Inc in favour of Plasmon Data Inc to cover all amounts outstanding. At 31 March 2003 

US$579,440 was outstanding (2002: US$1,029,850). 

The Company has given an unlimited Deed of Guarantee and Indemnity to Venture Finance PLC covering the Company, Plasmon Data Systems 

Limited and Plasmon Data Limited to secure all loans and facilities of each other. At 31 March 2003, £3,000,000 was outstanding. 




45



The Company has given an unlimited Multilateral Guarantee to HSBC Bank plc covering Plasmon Data Systems Limited, Allstor Software Limited 

and Plasmon Data Limited to secure all bank loans and overdrafts of each other. At 31 March 2003, £3,765,000 was outstanding 

(2002: £2,903,000). 

The Company guarantees a mortgage provided by the Cambridge Building Society to Plasmon Data Systems Limited. The total amount 

outstanding at 31 March 2003 was £535,000 (2002: nil) 

The Company has a contingent liability in respect of employer’s National Insurance contributions on certain Unapproved Share Options Schemes. 

At 31 March 2003 no amount was accrued (2002: £nil). A 10% rise in the Company’s share price above the option price of £1.36 would require a 

provision of £3,000. 

26 Pension Commitments 

The Group operates three pension schemes of a defined contribution nature (including two 401K plans in the United States) and also makes 

contributions to the private pension plans of a small number of employees (including the two executive Directors). The total pension cost charge 

relating to these arrangements was £515,000 (2002: £596,000). There were no material outstanding or prepaid contributions in respect of these 

arrangements at either 31 March 2003 or 31 March 2002. 

The Group also operates a pension scheme of a defined benefit nature for the US employees who transferred from Philips as part of the 

acquisition of Philips LMS. In May 2002, the Group announced the freezing of benefits in this scheme, before on 31 December 2002, announcing 

the termination of the scheme, which should be completed by 31 March 2004. As a result of the termination, a net pension credit was recorded in 

the year ended 31 March 2003 of £91,000 (2002 cost: £285,000). In setting the funding policy of the scheme, the actuarial method used was the 

projected unit cost method and the main actuarial assumptions used were that the investment return will be 8.00% (2002: 8.75%) and that the 

pensionable salaries would increase by a weighted average of 4.69% (2002: 4.69%). As part of the termination planning, a formal actuarial 

valuation has been performed that shows there is no material difference between the fund’s assets and its accrued liabilities. There were 

outstanding contributions of £167,000 in respect of this scheme at 31 March 2003 (2002: £460,000). 

The assets of all the Group’s pension schemes are held separately from those of the Group. 

The Company has continued to account for pensions in accordance with SSAP 24 “Accounting for Pension Costs”. The new standard for pension 

accounting, FRS 17 “Retirement Benefits”, is not yet mandatory, however, the Company is following the extended transitional arrangements under 

which additional disclosures on retirement benefits are required. These disclosures are as follows: 

The Group operates a defined benefit scheme in the US. A full actuarial valuation was carried out at 31 March 2003 by qualified independent 

actuaries. The main financial assumptions used in the valuation of the liabilities of the company’s pension schemes under FRS 17 are: 


2003 2002 

Rate of increase in salaries 4.69% pa 4.69% pa 

Rate of increase in pensions in payment 0% pa 0% pa 

Discount rate 5.5% pa 7% pa 

Inflation assumption 3.0% pa 3% pa 

The assets in the scheme and the expected rate of return were: 

Long term Long term 

rate of return Value at rate of return Value at 

expected 31 March expected 31 March 

at 31 March 2003 at 31 March 2002 

2003 £’000 2002 £’000 

Contributions due 0% pa 167 0% pa 460 

Equities 8.5% pa 448 9.5% pa 444 

Bonds 5.5% pa 156 6.5% pa 162 

Other (mainly property) 7.8% pa 55 8.8% pa 55 

Total 826 1,121 




46



The following amounts at 31 March 2003 were measured in accordance with the requirements of FRS 17: 


2003 2002 

£’000 £’000 

Total market value of assets 826 1,221 

Present value of scheme liabilities (710) (1,402) 

Surplus/(deficit) in the scheme 116 (281) 

Related deferred tax (liability)/asset (46) 112 

Net pension surplus/(deficit) 70 (169) 

Analysis of amounts (credited)/charged to operating profit in respect of defined benefit schemes 

Current service 65 

Past service cost – 

Curtailment gain (728) 

Total operating credit (663) 

Analysis of the amount credited to other finance income 

Expected return on pension scheme assets 60 

Interest on pension scheme liabilities (50) 

Net return 10 

Analysis of amount recognised in statement of total recognised gains and losses 

Actual return less expected return on pension scheme assets (153) 

Experience gains and losses arising on the scheme liabilities (115) 

Changes in the assumptions underlying the present value of the scheme liabilities (195) 

Actuarial loss recognised in statement of total recognised gains and losses (463) 

Movement in surplus/(deficit) during the year 

Deficit in scheme at the beginning of year (281) 

Movement: 

Current service cost (65) 

Contributions 165 

Past service cost – 

Other finance income 10 

Actuarial loss (463) 

Curtailment gain 728 

Foreign exchange gain 22 

Surplus in scheme at end of year 116 




47 

2003 

£’000 

2003 

£’000 

2003 

£’000 

2003 

£’000



History of experience losses 

Difference between the expected and actual return on scheme assets: 

Amount (£’000) (153) 

Percentage of scheme assets at 31 March 2003 (18.2%) 

Experience losses of scheme liabilities: 

Amount (£’000) (115) 


Total amount recognised in statement of total recognised gains and losses: 

Amount (£’000) (463) 


If the above amounts had been recognised in the financial statements, the group’s net assets and profit and loss reserve at 31 March 2003 would 

be as follows: 


2003 2002 

£’000 £’000 

Net assets 

Net assets excluding net pension surplus/(deficit) under SSAP 24 38,239 41,157 

Pension surplus/(deficit) under FRS 17 70 (169) 

Net assets including net pension surplus/(deficit) under FRS 17 39,309 40,988 

Reserves 

Profit and loss account recognised in the financial statements (6,537) (1,568) 

Pension surplus/(deficit) under FRS 17 70 (169) 

Profit and loss account including net pension surplus/(deficit) under FRS 17 (6,467) (1,737) 




48


John Barrie Morgans 

(Chairman) 

Nigel Street 


Henri Zinsli (Switzerland) 


Secretary 


Registered No 2100291 

Registered Office 

Whiting Way 

Melbourn 

Nr Royston 

Hertfordshire 

SG8 6EN 

Auditors 

PricewaterhouseCoopers LLP 

1 Embankment Place 

London 

WC2N 6RH 

Principal Bankers 

Venture Finance Plc 

Sussex House 

Perrymount Road 

Haywards Heath 

West Sussex 

RH16 1DN 

HSBC Bank Plc 

City Office 

Cambridge 

CB2 3HZ 

Silicon Valley Bank 

4410 Araphoe Avenue 

Suite 200 

Boulder 

CO 80303 

United States of America 

Solicitors 

SJ Berwin 

222 Grays Inn Road 

London 

WC1X 8HB 

Financial Advisers 

Investec Investment Banking 

Corporate Finance Department 

2 Gresham Street 

London 

EC2V 7QP 

Stockbrokers 

Investec Securities 

2 Gresham Street 

London 

EC2V 7QP 

Registrars 

Capita Registrars 

34 Beckenham Road 

Beckenham 

Kent 

BR3 4TU 

Shareholder helpline: 0870 162 3100 

www.capitaregistrars.com


Whiting Way 

Melbourn 

Hertfordshire 

SG8 6EN 

Telephone 01763 261466 

Facsimile 01763 260336 

Internet: www.plasmon.co.uk 

Email: sales@plasmon.co.uk 

Plasmon Inc 

4425 Arrowswest Drive 

Colorado Springs 

CO 80907-3489 

USA 

Telephone 001 719 593 7900 

Facsimile 001 719 593 4597 

Internet: www.plasmon.com 

Email: sales@plasmon.com 

P asmon P c Annua Report 2003

Notes to the financial statements - Plasmon

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