18 February 2008
Interim Management Statement
Plasmon Plc, a leader in professional archival solutions, has today issued its
second interim management statement for the year ending 31 March 2008.
As previously announced on 7 February 2008, the Company is proposing to issue
100,000,000 new ordinary shares by way of a Placing at 10p each to raise £10
million before expenses. The Placing is subject to shareholder approval. A
circular setting out further details of the Placing and including a notice
convening a general meeting of the Company, is expected to be dispatched to
shareholders in early March 2008.
Despite softness in US IT markets which, as previously reported, has had some
impact on legacy and hardware product sales, the overall archive storage market
is forecast to grow rapidly from $9bn in 2007 to $23bn by 2010. Our Archive
Appliance sales growth remains in excess of 50% in constant currency terms after
the first nine months of the current year, compared to the comparable period
last year. This is the focus of the Company's growth plans.
Plasmon has best-in-class solutions for customers in this fast growing archive
market, particularly those seeking to move essential, but rarely-accessed, data
archives from expensive hard disk (RAID) servers to a lower cost, more permanent
storage infrastructure tier. In order to fully capture this market opportunity,
Steven Murphy, the new CEO, is extending and accelerating the Company's growth
strategy. With the support of investors in the recent Placing, Murphy is now
building a customer-facing marketing, sales and service channel in order to win
major account business and support our Resellers. The Board believes this will
enable the Group to deliver significant future sales growth, and complete its
transformation from a 'technology-led' to a 'sales-led' business.
Recruitment of new senior sales executives (predominantly US-based) has been
underway since late 2007, and most have now been identified and are ready to
join the business. 9 of 14 of these senior executives have signed offer letters
and have had successful careers with industry storage leaders.
Primarily as a result of this investment in a faster growth strategy, the
Company has deferred its cash break-even target to second half of financial year
2009. The growth strategy builds on two successes achieved in 2007. Firstly,
the signing of 18 new reseller channel partners and secondly, a major programme
of operational restructuring, which has already reduced the overhead cost base
by 20 per cent when comparing the nine months ended 31 December 2007 with the
comparable prior year period. The Company expects to reduce headcount by 25 per
cent when the outsourcing of hardware manufacturing is concluded in June 2008.
Contribution margin on sales is now approaching management's target of 60 per
Steven FX Murphy: Chief Executive 01763 261 466/+1 703 628 3871
Timothy Arthur: Finance Director 01763 264 466
Citigate Dewe Rogerson 020 7638 9571
Martin Jackson / Ged Brumby
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