PLM Plasmon

RNS Number:1803D
Plasmon PLC
03 September 2007


                                  Plasmon Plc

             AGM Statement: Cost Reduction and Project OSCA Update

At today's Annual General Meeting to be held at noon at the offices of SJ
Berwin, 10 Queen Street Place, London, EC4R 1BE, the Chairman will make the
following statement:

Cost reduction and Project OSCA

Consistent with the recently adopted strategy of moving Plasmon to being a
marketing-led organisation, we have continued to invest in sales and marketing
resources. At the same time, the cost reduction programme initiated at the start
of this calendar year has been expanded and accelerated. As a result, we
anticipate that our overhead base in our current financial year ("FY") ending 31
March 2008 ("FY2008) will reduce by a net 14% when compared to FY2007. In
addition, Project OSCA, our recently launched operations outsourcing programme,
will generate a further 6% reduction in overheads, increasing total savings in
FY2010 to 20% compared to FY2007. The total benefit from OSCA and other cost
initiatives referred to above will rise from just over #4m in FY2008, to over
#6m in FY2010. This will improve our operating margin in FY2010 (on a constant
sales basis) by in excess of 15 percentage points compared to FY2007. Further
improvements will be realised when we complete the full transfer of library
design and manufacture to an offshore supplier in FY2011. At this stage, the
restructuring cash costs over the period to FY2010 are estimated to be less than
#1.5m.

Effect on our outlook for the business

Sales growth of the UDO Archive Appliance, our fully integrated solution, has
been over 50% year on year, representing an encouraging start to the new
strategy. However, it appears that the US market as a whole has softened during
our second quarter and accordingly we have reduced our overall sales
expectations for the year. The acceleration of our cost reduction programmes,
and the build-up of the AVNET sales channel in the US and significant European
contracts in the second half, means that our trading loss outlook for the year
is unchanged. The Board remains confident that the Company will achieve the
important milestone of cash break-even in the fourth quarter of FY2008. Given
the reduced cost base, incremental sales growth will have a significant positive
impact on Group profitability.

We are increasingly positive about the strategic future of UDO as a growing
number of major enterprise customers recognise the regulatory, environmental and
economic benefits of our optical archiving solutions.

Management

Our search for a US-based CEO to succeed Rod Powell is at an advanced stage and
we expect to finalise the appointment during the second half.


Enquiries

Plasmon Plc                                        Tel:  01763 261 466
Rod Powell
Timothy Arthur

Citigate Dewe Rogerson                             Tel:  020 7638 9571
Martin Jackson



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