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13 March, 2006 - 11:14 By Staff Reporter

Plasmon seeks £6 million placing to counter sales shortfall

Plasmon plc, the optical archive specialist, has announced its intention to raise £6 million after the Royston firm revealed it was unlikely to achieve profitability until the 2007/8 financial year.Plasmon plc, the optical archive specialist, has announced its intention to raise £6 million after the Royston firm revealed it was unlikely to achieve profitability until the 2007/8 financial year.

On 1 December 2005, Plasmon showed that trading in the six month period to 30 September 2005 was in line with expectations and showed a retained loss of £4.3m on sales of £20.0m.

Though trading in the second half began encouragingly with a strong run at the end of 2005, sales in January and February 2006 proved to be materially behind expectations, resulting in increased losses for the firm.

The shortfall in sales is expected to result in a pre-tax loss for the year ending 31 March 2006 increasing to approximately £9.5m. The shortfall in sales was due to a variety of short-term factors, including overstocking and product line transition issues in the itss OEM channels.

Plasmon said it has seen a significant improvement in its March order outlook as OEM sales have recovered from the unusually low levels seen at the start of the year. The firm continues to expect that its current OEM customers will generate significantly increased revenues in the coming years and is also in discussions with several major new customers for its UDO technology.

The low level of sales in January and February 2006 coupled with the increased losses has resulted in reduced liquidity for the group. Plamon’s recovery plans have considered various options to improve profitability and liquidity and following discussions with its largest shareholders, the firm proposes to raise £6.0m (before expenses) by way of the placing.

Plasmon has entered into a Placing Agreement with Investec under which Investec has agreed to use its reasonable endeavours to procure placees for the Ordinary Shares to be issued pursuant to the Placing. Plasmon’s principal institutional shareholders have conditionally agreed to subscribe for 7,340,000 New Ordinary Shares at 81.5p per share.

The Placing is conditional, inter alia, on shareholder approval and admission becoming effective by not later than 30 April 2006 (or such later date, being no later than 31 May 2006, as the Company and Investec may agree).

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