plasmon plc 
annual report 
2003
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 plc 
annual report 2003
introduction
1
2003 highlights
t urnover declined 2 to £60 1m 
2002 £61 6m
pretax profit before goodwill amortisation
udo development costs and exceptional
costs increased 29 to £47m 2002
£37m pretax loss £34m 2002 £63m
basic losses per share reduced to 641p
2002 1228p
earnings per share excluding goodwill
amortisation udo development costs and
exceptional costs flat at 886p 2002 896p
the 2nd half retained loss fell to £1 0m 
1st half £24m 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 £65m
2002 £52m – raised £1 7m net in june
2002 to support purchase of udo
manufacturing equipment
y ear end gearing 34 31 march 2002 24
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 largescale
data archive applicationst ypical 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 plasmon plc
annual report 2003
chairman’s statement
2
following the upheaval of our
major us reorganisation last year 
20023 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  
j barrie morgans
chairman
chairman’s statement plasmon plc 
annual report 2003
chairman’s statement
3
pretax profit before goodwill amortisation
udo development costs and exceptional
costs increased 29 to £47m and the
retained loss for the full year reduced 41
to £34m having incurred a loss of £24m
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 20023
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 20023
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 20023 as we continue to
increase market share in our core 525
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  
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 £17m 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 plasmon plc
annual report 2003 4
the udo production line employs
the latest high capacity optical disk
manufacturing equipment and will
have an output of some 80000
disk’s per month when operating 
at maximum capacity plasmon plc 
annual report 2003 5 plasmon plc
annual report 2003
chief executive’s review
6
20023 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 1 m
in contrast to the disappointing trading
performance our udo development
programme made excellent progress in
20023 and we completed successfully
the transfer of our library business from
minneapolis to colorado springs
chief executive’s review
nigel street
chief executive plasmon plc 
annual report 2003
chief executive’s review
7
1 999 2000 2002
499
703
691
70
60
50
40
30
20
10
0
616
2003
601
03
41 42
63
34
lossprofit before tax £ million
4
2
0
2
4
6
8
10
2001
1 999 2000 2002 2003 2001
t urnover £ million in the first half of 20023 the group
returned to modest growth with revenues
3 ahead at £301m 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 20023 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 20023 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 20023 our overall product mix remained
broadly constant and in line with the sales
shortfall our gross margins declined
slightly to 363 from 367 the previous
year  following our reorganisation
operating expenses before udo
development expenditure goodwill
amortisation and exceptional costs fell by
£20m to £164m at the adjusted pretax
level we achieved a profit of £47m
compared to the £37m we achieved the
previous year  at the pretax level we
significantly reduced our full year loss to
£34m from £63m after goodwill
amortisation of £11m and the final £05m
of us reorganisation costs
udo development expenditure increased
by 24 to £65m in 20023 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 quickturn
prototype costs to keep the project on
schedule in addition to fully expensed
development costs of £65m we invested
a further £39m in capital equipment in
20023 as the udo media production
facility in melbourn neared completion
despite maintaining significant levels of
investment in 20023 our yearend 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 £34m and
will provide sufficient funding to
complete udo development and enter
volume production plasmon plc
annual report 2003
chief executive’s review
8
udo development
ultra density optical ‘udo’ is the next
generation of 525 drives and media that we
are developing to succeed the existing
91gb mo products we source from sony 
udo employs the latest blue laser
technology that provides an increased 30gb
capacity and a fivefold 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
formfactor drives the final phases of the
development are now underway and involve
manufacturing increasingly large batches of
prototype drives and media to debug 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
udo optical media will be
manufactured in cambridge and
will be available in both writeonce
and rewritable formats  plasmon plc 
annual report 2003
chief executive’s review
9
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 ‘bluray’
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  w e 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 optomechanical 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 80000 writeonce and
rewritable udo disks per month
development of the phase change recording
layers for udo media is proceeding well and
the specification of the writeonce 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 12inch optical
disk products w e 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 10000 rewrite cycles
and with further optimisation believe that
25000 cycles may be achievable
mcm are the world’ s largest optical disk
manufacturer and as well as first class
technical knowhow  they have an excellent
quality reputation with the major oem
customers such as hp and ibm w e
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 defacto
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 01mm cover layer
process to reduce volume production costs
w e have recently approved a european
supplier of optical grade 01mm 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 
w e have recently taken delivery of initial
samples from the final production tooling and
are now working with dainippon 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
bluray products continues to provide
technology leverage opportunities and will
ensure our longterm manufacturing costs
remain competitive
525 42
12 33
cddvd 11
consultancy 7
l to tape 2
other 5
plasmon product mix 2003
525 43
12 38
cddvd 5
consultancy 6
l to tape 2
other 6
plasmon product mix 2002 plasmon plc
annual report 2003
chief executive’s review
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 y ork 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
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 plasmon plc 
annual report 2003
chief executive’s review
11
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 20023 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 seriala t a hard
disk drives due to their low cost these
products are now being promoted in 
disktodisk backup solutions that are
challenging the traditional market for 
backup using tape libraries in addition the
lowend 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
seriala t a disk based solutions with
enhanced software to prevent data
deletion as an alternative to traditional
writeonce 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
525 t echnology
over the past few years our sales of 525
optical libraries to ibm have declined by
some 60 as they continue to sell last
generation 52gb writeonce solutions
and have not adopted the latest 91gb
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 525
products continued to grow last year but
failed to make up the ibm shortfall overall
sales of 525 technology declined some
6 to £249m as cheaper dvd solutions
increased their market penetration but we
also increased our market share in 525
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 
525 business
during the past year we continued to migrate
customers to our new gseries range of
525 libraries and away from the older 
mseries products we now plan to end of
life the mseries at the end of 2003 which
is also planned to be the last shipment date
for the ibm 3995 variant of the product
in late 2002 our automation engineering
team in colorado springs commenced
development of a new range of entry level
gseries 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 costperformance
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 525 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 
525 products and the establishment of
udo as the defacto professional optical
storage standard plasmon plc
annual report 2003
chief executive’s review
12
12 t echnology
the 12 business continues to be a major
part of plasmon’s total revenue mix but
overall sales declined some 17 to
£196m the majority of the reduction
was in sales of new drives that declined
58 to £14m 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 £75m and
£101m 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 writeonce 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
cddvd
in response to demand from our major
medical imaging customers such as
siemens medical and ge medical we
introduced the enterprise dseries library
last year with a capacity of up to 2175
discs the library is derived from our g
series 525 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 cddvd sales grow
139 to £65m last year  in midyear 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 20023 with
revenue growth of 9 to £39m compared
to £36m the previous year  during the year
we signed significant new agreements
with intel research to develop high
density phase change storage technology
and with unaxis ag to develop 01mm
cover layer technology for volume bluray
disc production
our cdr and dvdr consultancy
business with ciba specialty chemicals
also performed well in 20023 and we
estimate the plasmonciba ultragreen cd
r dye has a 65 share of the worldwide
market for cdr dyes after a considerable
delay due to technical issues ciba will
finally launch a new dvdr dye in mid 2003
and we expect this to drive significant future
royalty growth as recording video to dvd’ s
becomes a mainstream application
l to t ape
our l to tape library business was a major
disappointment in 20023 with revenues flat
at £14m 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
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 £08m 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 nasraid products that will integrate
internally in our new gseries libraries and
will provide industry standard connectivity
and performance to optical archive
solutions the new solutions will be based
on seriala t a 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
20023 and grew revenues by 31 to
£29m the majority of production is now
cdr 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 bluray 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 plasmon plc 
annual report 2003
chief executive’s review
13
outlook
20023 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 worldclass
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
longterm growth in revenues and
profitability for the plasmon group
sales of integrated storage solutions
comprising libraries servers and
plasmon storage management
software are expected to increase
in the future plasmon plc
annual report 2003
finance director’s review
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 
timothy arthur
finance director
finance director’s review plasmon plc 
annual report 2003
finance director’s review
15
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 £05m
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 £65m of udo development
costs were fully expensed and a further
£39m was spent on related capital
purchases t o assist in the funding of the
udo capital expenditure £17m 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 £601m from
£616m in the previous year after a
£16m 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 £396m due to the
adverse foreign exchange impact
compounded by the decline in ibm sales
in contrast european origin sales rose by
17 to £205m 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
£55m with a £07m reduction in gross
profits being more than offset by a £20m
decrease in operating expenses in
percentage terms gross margin fell slightly
to 363 in 20023 from the 367
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
£35m with the benefits of the us
reorganisation accounting for the majority
of the improvement
losses before tax and interest in north
america totalled £52m compared to the
prior year loss of £64m with the reduced
reorganisation costs more than offsetting
the increased udo expenditure in europe
profits before tax and interest rose by
269 to £25m 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 nonreoccurrence of the prior year
£06m exceptional bad debts 
interest
net interest payable of £07m in the
current year compared to £05m incurred
during the previous year  largely as a result
of the increased debt levels arising from
the udo expenditure  plasmon plc
annual report 2003
finance director’s review
16
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 £05m 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 shortterm 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 641p
significantly better then the 1228p
recorded during the previous year even
though the weighted average number of
shares in issue rose by 62m to 531m
excluding udo development costs
exceptional costs and goodwill
amortisation earnings per share fell
slightly to 886p from 896p the 
previous year
dividends
the dividend policy of the group
continues to be monitored by the board
with no dividend being proposed in the
shortterm 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 shortterm
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
yearend 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 shortterm 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 £62m 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 longterm nature at 31
march 2003 55 of financial liabilities
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 £31m 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
£16m loss being recorded on the
translation of the foreign currency net
investments and net assets decreased to
£382m at 31 march 2003 from £412m at
the end of the previous year  
excluding currency movements stock
decreased by £12m 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 £23m the £12m
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 £26m which included the
purchase of the adjacent site to our uk
facilities for £08m this facility
unexpectedly became available and will
ensure we have adequate space once
udo is in full production in the shortterm
we have sublet 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 plasmon plc 
annual report 2003
board of directors
17
robert longman
group technical director
aged 55
christopher harris
president – plasmon usa
aged 41
robert clark
senior vice president of us
sales and marketing
aged 57
senior management
john barrie morgans
chairman
aged 61
appointed in 1990 he was
chairman and chief executive 
of ibm united kingdom until
march 1997 chairman of
t elemedic holdings plc and 
nonexecutive director of legal 
 general group plc
timothy arthur 
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
henri zinsli 
dr  oec
nonexecutive
aged 62
left ciba specialty chemicals
inc after 33 years in march 1999
chairman of discovery partners
international ag nonexecutive
director of paradigm genetics inc
and chairman of covalys
bioscience ag
christopher mcfadden
miee bsc phd
nonexecutive
aged 43
appointed in 2001 t elecoms and
technology research analyst for
the last 17 years holds a phd in
semiconductor physics from
cambridge university
nigel street 
bsc mba
chief executive 
aged 45
appointed chief executive in
september 1997 having joined the
company as a nonexecutive
director in 1987 before becoming
commercial director in 1990
previously six years at rothschild
ventures limited
board of directors
board of directors
 senior management 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 nonexecutive 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
nonexecutive directors and believes that all the nonexecutive
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 nonexecutive
directors it is headed by a nonexecutive 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 reelection at regular intervals and at least every three years the
director submitting himself for reelection 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
the audit committee
the audit committee which is chaired by john barrie morgans
comprises all the nonexecutive 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 nonaudit 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
christopher mcfadden
the remuneration committee
the remuneration committee is responsible for determining the
contract terms remuneration and other benefits of the executive
directors including their performancerelated 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
plasmon plc
annual report 2003
corporate governance
18 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 daytoday
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 welldefined 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
plasmon plc
annual report 2003
corporate governance
19 plasmon plc
annual report 2003
remuneration report
20
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 nonexecutive 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 performancerelated 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 longterm
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 oneoff bonuses for any major activities such
as acquisitions not taken into consideration in the budget
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 
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 nonexecutive director of
streason limited the holding company of his family’s business
interest
non executive fees 
the board determines remuneration of the nonexecutive directors
the company has a contract with mahemorgans limited dated
1 july 1997 which provides the services of john barrie morgans as a
nonexecutive 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 
remuneration report
0
100
200
300
400
500
600
april
2003
april
2002
april
2001
april
2000
april
1999
april
1998
plasmon plc ordinary shares ftse small cap index plasmon plc
annual report 2003
remuneration report
21
directors’ emoluments
the remuneration of the directors excluding pension contributions was as follows
total total
salary benefits
i
2003 2002
£ £ £ 
executive directors
nigel street chief executive 215000 21239 236239 240154 
timothy arthur finance director 141094 16326 157420 163580 
nonexecutive directors
john barrie morgans chairman
ii
20004 – 20004 20004 
henri zinsli switzerland 15000 – 15000 15000 
christopher mcfadden appointed 19 july 2001 15000 – 15000 10519 
paul robert nailor resigned 19 july 2001 – – – 4558 
406098 37565 443663 453815 
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 mahemorgans 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 32250 32250 
timothy arthur 21164 21164 
53414 53414 
interest in shares
the interest of the directors in the shares of the company at 31 march 2003 were as follows
number of number of
shares shares
31 march 31 march
2003 2002
nigel street 91885 91885 
timothy arthur 131092 131092 
john barrie morgans 111885 101885 
henri zinsli switzerland 7500 7500 
there have been no movements in the directors’ interest as shown above since 31 march 2003 plasmon plc
annual report 2003
remuneration report
22
remuneration report continued
interest in share options
details of options held by directors at 31 march 2003 are set out below
subscriptionnumber number 
price per of shares of shares 
share 1 april 2002 granted lapsed 31 march 2003 periods within which exercisable
nigel street £125 100000 100000 – 14 april 1995 and 13 april 2002
£250 50000 50000 – 14 april 1995 and 13 april 2002
£125 126000 126000 21 may 1996 and 20 may 2003
£250 60000 60000 21 may 1996 and 20 may 2003
£077 600000 600000 13 january 2002 and 12 january 2009
£137 70000 70000 5 august 2002 and 4 august 2010
£0875 – 500000 500000 18 june 2005 and 17 june 2012
timothy arthur £125 40000 40000 5 september 1997 and 4 september 2004
£250 20000 20000 5 september 1997 and 4 september 2004
£125 20000 20000 9 april 1999 and 8 april 2006
£250 30000 30000 9 april 1999 and 8 april 2006
£125 20000 20000 20 june 1999 and 19 june 2006
£077 400000 400000 13 january 2002 and 12 january 2009
£137 35000 35000 5 august 2002 and 4 august 2010
£0875 – 300000 300000 18 june 2005 and 17 june 2012
the performance criteria attached to the options with a subscription price of £077 £137 and £0875 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 £125 and £250 options
which lapsed on 20 may 2003
the market price of the company’s shares at the end of the financial year was 1000p and the range of market prices during the year was between
570p and 1070p plasmon plc
annual report 2003
directors’ report
23
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 £10139000
2002 £11408000 was spent on development of which £6495000
2002 £5246000 related to the udo drive and media programme
results for the year
the group made a loss of £3406000 2002 loss £5757000 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
reelection
john barrie morgans is due to retire by rotation at the forthcoming
annual general meeting and being eligible offers himself for re
election
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 8370628 1546
global asset management ltd 5195000 960
herald investment trust plc 3350000 619
britel fund nominees ltd
the trustees of the bt pension scheme 2760321 510
possfund nominees ltd
post office pension trustees 2088755 386
the family interests of jp lobbenberg 1893852 350
royal bank of scotland group plc 1675290 309
legal  general group plc 1637000 302
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
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
directors’ report
for the year ended 31 march 2003 plasmon plc
annual report 2003
independent auditors’ report to the members of plasmon plc
24
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 consolidated profit and loss account
for the year ended 31 march 2003
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 60083 – 60083 61554 – 61554 
cost of sales 38258 – 38258 38985 – 38985
gross profit 21825 – 21825 22569 – 22569 
operating expenses
existing 34 16360 1619 17979 18368 4713 23081
udo development 3 6495 – 6495 5246 – 5246
net operating expenses 22855 1619 24474 23614 4713 28327
operating profitloss
existing 5465 1619 3846 4201 4713 512
udo 6495 – 6495 5246 – 5246
operating loss 1030 1619 2649 1045 4713 5758
interest receivable 7 – 36 
interest payable 8 737 577
loss on ordinary activities 
before taxation 26 3386 6299
tax on ordinary activities 9 20 542 
retained loss for the year 21 3406 5757
basic and diluted losses
per ordinary share p 10 641 1228
basic earnings per ordinary share p 
excluding udo development costs
exceptional costs and goodwill 
amortisation 10 886 896 
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 £247000 2002 loss £3365000
plasmon plc
annual report 2003
consolidated profit and loss account
25 statement of total recognised gains and losses
for the year ended 31 march 2003
2003 2002
£’000 £’000
loss for the year 3406 5757
currency translation differences on foreign currency net investments 1563 288
total recognised losses relating to the year 4969 6045
reconciliation of movements in shareholders’ funds
for the year ended 31 march 2003
2003 2002
£’000 £’000
loss for the year 3406 5757
currency translation differences 1563 288
nominal value of new share capital placed 128 660
premium on share placing 1634 10296 
expenses on share placing 84 673
nominal value of stock options 26 –
premium on exercise of stock options 347 4
net reductionsadditions to shareholders’ funds 2918 4242
opening shareholders’ funds 41157 36915
closing shareholders’ funds 38239 41157
plasmon plc
annual report 2003
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 7204 9209
tangible assets 12 26117 24421
33321 33630
current assets
stocks 14 16455 18854
debtors 15 14955 15861
cash at bank and in hand 1171 1668
32581 36383
creditors amounts falling due within one year 16 19843 21883
net current assets 12738 14500
total assets less current liabilities 46059 48130
creditors amounts falling due after more than one year 17 7741 5620
provisions for liabilities and charges 18 79 1353
net assets 38239 41157
capital and reserves
calledup share capital 20 2707 2553
share premium account 21 42069 40172
profit and loss account 21 6537 1568
equity shareholders’ funds 38239 41157
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
directors
n street
plasmon plc
annual report 2003
consolidated balance sheet
27
 company balance sheet
at 31 march 2003
2003 2002
notes £’000 £’000
fixed assets
investments 13 29203 17548
current assets
debtors 15 13359 22872
cash at bank and in hand 283 586
13642 23458
creditors amounts falling due within one year 16 139 104
net current assets 13503 23354
net assets 42706 40902
capital and reserves
calledup share capital 20 2707 2553
share premium account 21 42069 40172
other reserves 21 1116 1116
profit and loss account 21 3186 2939
equity shareholders’ funds 42706 40902
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
directors
n street
plasmon plc
annual report 2003
company balance sheet
28
 consolidated cash flow statement
for the year ended 31 march 2003
2003 2002
notes £’000 £’000
net cash inflowoutflow 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 receivedpaid 60 306
overseas tax receivedpaid 479 195
tax receivedpaid 539 501
capital expenditure
purchase of intangible fixed assets 24 967
purchase of tangible fixed assets 5081 7352
proceeds from sale of fixed assets 120 68
net cash outflow from investing activities 4985 8251
net cash outflow before financing 4274 9751
financing
issue of ordinary shares 2135 10960
expenses on issue of ordinary shares 84 673
new bank loans 3550 1910
payment of principal under bank loans 145 508
payment of principal under finance leases 1371 1324
net cash inflow from financing 4085 10365
decreaseincrease in cash 189 614
reconciliation of net cash flow to movement in net debt
decreaseincrease in cash 189 614
cash outflow from decrease in debt and lease financing 2034 78
changes in net debt resulting from cash flows 2223 536
inception of finance leases 1439 973
foreign exchange differences 598 66
movement in net debt in period 3064 371
opening net debt 9897 9526
closing net debt 23 12961 9897
plasmon plc
annual report 2003
consolidated cash flow statement
29 notes to the financial statements
for the year ended 31 march 2003
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 intragroup 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 longerterm 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 straightline 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 straightline 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 straightline 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 writtenoff to reflect a permanent impairment
plasmon plc
annual report 2003
notes to the financial statements
30 notes to the financial statements continued
for the year ended 31 march 2003
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 slowmoving 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 nondiscounted 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
plasmon plc
annual report 2003
notes to the financial statements
31 notes to the financial statements continued
for the year ended 31 march 2003
2 turnover profitloss before taxation and net assets
the analysis by geographical area of the group’s turnover lossprofit before taxation and net assets is set out below
total total
2003 2002
£’000 £’000
turnover by destination
europe 18736 15773
united states of america 37106 42712
rest of world 4241 3069
60083 61554
turnover by origin
europe 20517 17599
united states of america 39566 43955
60083 61554
profitloss before taxation
europe 2528 686
united states of america 5177 6444
loss before interest 2649 5758
net interest payable 737 541
3386 6299
net assets by origin
europe 29763 27878
united states of america 19962 21902
net operating assets 49725 49780
bank loans and overdrafts 11388 8961
current tax payablereceivable 67 485
deferred tax position 31 147
38239 41157
the group operates in one business segment professional data storage solutions the group derives income of a consultancy nature from the
sale of “knowhow” 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 £3935000 2002 £3607000 intra segment turnover for year ended 31 march 2003
was £5325000 2002 £7487000 from europe to the united states of america and £4033000 2002 £5072000 from the united states of
america to europe
3 net operating expenses
total total
2003 2002
£’000 £’000
administrative expenses 3747 4264
selling and distribution costs 8993 7816
udo product development costs 6495 5246
other product development costs 3644 6162
total product development costs 10139 11408
other operating income  expenses 24 126
net operating expenses 22855 23614
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
plasmon plc
annual report 2003
notes to the financial statements
32 notes to the financial statements continued
for the year ended 31 march 2003
4 goodwill amortisation and exceptional operating costs
2003 2002
£’000 £’000
us reorganisations 520 2888
toolex international bad debt – 629
exceptional operating costs 520 3517
goodwill amortisation 1099 1196
goodwill amortisation and exceptional operating costs 1619 4713
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
458 496
staff costs for the above employees
2003 2002
£’000 £’000
wages and salaries 16850 18481
social security costs 2938 2588
other pension costs 424 881
20212 21950
included in staff costs is remuneration paid to the directors of plasmon plc as follows
2003 2002
£’000 £’000
executive directors
– aggregate emoluments 394 404
– pension contributions 53 53
nonexecutive directors
– aggregate fees 50 50
497 507
for further information on directors’ emoluments see the remuneration report on pages 20 to 22
plasmon plc
annual report 2003
notes to the financial statements
33 notes to the financial statements continued
for the year ended 31 march 2003
6 loss on ordinary activities before taxation
2003 2002
£’000 £’000
loss on ordinary activities before taxation is stated after chargingcrediting
research and development expenditure 10139 11408
depreciation
– leased assets 1094 828
– owned assets 3606 3749
amortisation
– goodwill 1099 1196
– intangibles 208 70
fees paid to auditors for
– audit company 2003 £29000 2002 £29000 158 189
– other services company 2003 £37000 2002 £40000 68 131
operating lease payments
– plant and machinery 203 219
– other 1034 1238
profitloss on sale of fixed assets 24 32
foreign exchange gains 441 121
exceptional operating costs see note 4 520 3517
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
737 577
plasmon plc
annual report 2003
notes to the financial statements
34 notes to the financial statements continued
for the year ended 31 march 2003
9 taxation
a analysis of tax chargecredit in the year
2003 2002
£’000 £’000
uk corporation tax at 30 2002 30
current 7 –
deferred 116 147
underover provision in respect of prior years
current 14 107
95 40
overseas taxation
current 81 432
underover provision in respect of prior years
current 34 150
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 chargecredit 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 3386 6299
loss on ordinary activities multiplied by the standard rate of 1016 1890
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 utilisedcarried forward 56 43
difference between capital allowance and depreciation 309 177
overseas differences 1533 1417
current tax chargecredit 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
plasmon plc
annual report 2003
notes to the financial statements
35 notes to the financial statements continued
for the year ended 31 march 2003
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 3406 53140 641 5757 46900 1228
adjusted earnings per share
basic losses per share 3406 53140 641 5757 46900 1228
effect of
goodwill amortisation 1099 207 1196 255
udo development costs 6495 1222 5246 1119
exceptional operating costs 520 0983517 750
adjusted earnings per share 4708 53140 886 4202 46900 896
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 11328 1949 349 967 14593
acquisitions – – – 24 24
currency changes 937 – – 91 1028
at 31 march 2003 10391 1949 349 900 13589
amortisation
at 1 april 2002 3346 1949 89 – 5384
charge for the year 1099 – 71 137 1307
currency changes 304 – – 2 306
at 31 march 2003 4141 1949 160 135 6385
net book value
at 31 march 2003 6250 – 189 765 7204
at 31 march 2002 7982 – 260 967 9209
plasmon plc
annual report 2003
notes to the financial statements
36 notes to the financial statements continued
for the year ended 31 march 2003
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 8029 719 5582 318 19429 2360 9624 46061
additions – 73 317 39 566 5525 – 6520
disposals – 171 567 96 687 – – 1521
transfer of assets 1347 – 471 – 462 1338 – – 
currency changes 78 64 249 – 88 17 7 347
at 31 march 2003 9454 557 4612 261 19682 6530 9617 50713
depreciation
at 1 april 2002 628 540 3893 106 10978 – 5495 21640
charge for the year 154 115 600 59 2721 – 1051 4700
disposals – 169 531 43 682 – – 1425
transfer of assets – – 226 – 226––– 
currency changes 4 48 174 – 99 – 2 319
at 31 march 2003 786 438 3562 122 13144 – 6544 24596
net book value
at 31 march 2003 8668 119 1050 139 6538 6530 3073 26117
at 31 march 2002 7401 179 1689 212 8451 2360 4129 24421
tangible fixed assets include leased assets with a cost of £11405000 2002 £9919000 and net book value of £4432000 2002 £4325000
depreciation of £1094000 2002 £828000 has been charged against these assets in the year
plasmon plc
annual report 2003
notes to the financial statements
37 notes to the financial statements continued
for the year ended 31 march 2003
13 fixed asset investments
investment in
subsidiaries
£’000
company
cost
at 1 april 2002 23052
additions 17216
at 31 march 2003 40268
provisions for permanent diminution in value
at 1 april 2002 5504
provisions created during year 5561
at 31 march 2003 11065
net book value
at 31 march 2003 29203
at 31 march 2002 17548
the movement in investments during the year resulted from an increase in the investment in plasmon inc of 8500500 £5716000 in plasmon
data systems limited of £10000000 and in plasmon data limited of £1500000
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 4143 5096
work in progress 2509 1889
finished goods and goods for resale 9803 11869
16455 18854
plasmon plc
annual report 2003
notes to the financial statements
38 notes to the financial statements continued
for the year ended 31 march 2003
15 debtors amounts falling due within one year
2003 2002
£’000 £’000
group
trade debtors 9912 10898
corporation tax 14 538
other debtors 948 1303
prepayments and accrued income 4081 3122
14955 15861
2003 2002
£’000 £’000
company
amounts owed by group undertakings 13287 22759
other debtors 72 113
13359 22872
16 creditors amounts falling due within one year
2003 2002
£’000 £’000
group
bank overdraft 4088 4901
bank loans 1294 262
obligations under finance leases 1009 782
trade creditors 5708 8545
corporation tax 81 53
other taxation and social security 182 141
accruals and deferred income 7481 7199
19843 21883
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
139 104
bank borrowings are secured by fixed and floating charges over the group’s assets
17 creditors amounts falling due after more than one year
2003 2002
£’000 £’000
group
bank loans 6006 3798
obligations under finance leases 1735 1822
7741 5620
bank loans are secured by fixed and floating charges over the group’s assets
plasmon plc
annual report 2003
notes to the financial statements
39 notes to the financial statements continued
for the year ended 31 march 2003
18 provisions for liabilities and charges
us
deferred tax restructuring total
£’000 £’000 £’000
group
at 1 april 2002 147 1206 1353
provided in year – 520 520
utilised in year 116 1598 1714
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 1149 987
trading losses 3623 1597
accelerated capital allowances 416 232
other short term timing differences 569 1653
5757 4469
the company had no deferred tax balances at 31 march 2003 and 31 march 2002
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 £48000 in 20034 20023 £1206000 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 1009 782
one to two years 840 754
two to five years 895 1068
2744 2604
obligations under operating leases payable in the next year where the commitment expires as follows
2003 2002
£’000 £’000
group
within one year 253 163
one to two years 24 71
two to five years 903 1110
1180 1344
plasmon plc
annual report 2003
notes to the financial statements
40 notes to the financial statements continued
for the year ended 31 march 2003
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
974 1125
20 calledup share capital
2003 2002
£’000 £’000
authorised
80000000 ordinary shares of 5p each 2002 75000000 4000 3750
allotted calledup and fully paid
54142704 ordinary shares of 5p each 2002 51064957 2707 2553
during the year the company issued 2553247 5p ordinary shares following a 5 placing to fund the udo drive and media development
programme a further 524500 5p ordinary shares were issued upon the exercise of employee share options net of expenses the £2051000 of
cash received in total represented £154000 of nominal value and £1897000 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
subscriptionnumber number 
price per of shares of shares 
share 1 april 2002 granted exercised cancelled 31 march 2003 periods within which exercisable
£125 132000 – – 132000 – 14 april 1995 and 13 april 2002
£250 90000 – – 90000 – 14 april 1995 and 13 april 2002
£125 187000 – – – 187000 21 may 1996 and 20 may 2003
£250 80000 – – – 80000 21 may 1996 and 20 may 2003
£125 40000 – – – 40000 5 september 1997 and 4 september 2004
£250 20000 – – – 20000 5 september 1997 and 4 september 2004
£125 47500 – – 27500 20000 9 april 1999 and 8 april 2006
£250 121914 – – 59000 62914 9 april 1999 and 8 april 2006
£125 30000 – – 5000 25000 20 june 1999 and 19 june 2006
£250 20000 – – 10000 10000 20 june 1999 and 19 june 2006
£0465 227000 – 99500 44000 83500 15 november 2000 and 14 november 2007
£0465 57000 – – – 57000 15 november 2000 and 14 november 2004
£077 1995000 425000 123000 1447000 13 january 2002 and 12 january 2009
£137 360000 – – 150000 210000 5 august 2002 and 4 august 2009
£274 25000 – – 25000 – 15 february 2003 and 14 february 2010
£114 805250 – – 169000 636250 21 december 2003 and 20 december 2010
£0765 1470000 36000 1434000 22 december 2004 and 21 december 2011
£0875 927500 – – 927500 18 june 2005 and 17 june 2012
£0765 542000 – – 542000 29 july 2005 and 28 july 2012
5707664 1469500 524500 870500 5782164 
plasmon plc
annual report 2003
notes to the financial statements
41 notes to the financial statements continued
for the year ended 31 march 2003
1469500 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 £0465 £077 £137 £274 and £114
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 £0465 before interest and tax £1 million
31 march 1999 £077 before goodwill amortisation
interest tax and exceptional items £25 million
31 march 2000 £137 before goodwill amortisation £25 million
£274 interest tax and exceptional items £40 million
31 march 2001 £114 before goodwill amortisation £70 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 £125 and £250 do not have performance conditions attached to them
21 reserves
share premium profit and loss
account account
£’000 £’000
group
at 1 april 2002 40172 1568
premium on share placing 1634 –
issue costs of share placing 84 –
premium on exercise of share options 347 –
currency translation differences – 1563
retained loss for the year – 3406
at 31 march 2003 42069 6537
cumulative goodwill arising on consolidation which has been written off to reserves amounted to £1301500 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 40172 1116 2939
premium on share placing 1634 – –
issue costs of share placing 84 – –
premium on exercise of share options 347 – –
retained loss for the year – – 247
at 31 march 2003 42069 1116 3186
there were no distributable reserves at 31 march 2003 and 2002
plasmon plc
annual report 2003
notes to the financial statements
42 notes to the financial statements continued
for the year ended 31 march 2003
22 reconciliation of operating loss to net cash inflow from operating activities
2003 2002
£’000 £’000
operating loss 2649 5758
amortisation of intangible fixed assets 1307 1266
depreciation of tangible fixed assets 4700 4577
profitloss on sale of fixed assets 24 32
decreaseincrease in stocks 1214 4085
decreaseincrease in trade debtors 575 34
increase in prepayments and other debtors 1011 2527
decreaseincrease in trade creditors 2252 1417
increasedecrease in other taxation and social security 41 7
increase in accruals and deferred income 845 3557
decreaseincrease in provisions for liabilities and charges 1194 1223
other noncash items 628 60
net cash inflowoutflow 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 gainloss 2003
£’000 £’000 £’000 £’000 £’000
cash at bank and in hand 1668 562 – 65 1171
overdrafts 4901 373 – 440 4088
3233 189 – 505 2917
debt due within one year 262 1045 – 13 1294
debt due after one year 3798 2360 – 152 6006
finance leases due within one year 782 494 706 15 1009
finance leases due after one year 1822 877 733 57 1735
net debt 9897 2223 1439 598 12961
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 noninterest floating noninterest
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 1171 732 936 1668
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
plasmon plc
annual report 2003
notes to the financial statements
43 notes to the financial statements continued
for the year ended 31 march 2003
financial liabilities
the group’s financial liabilities excluding short term creditors were
2003 2002
£’000 £’000
bank overdraft 4088 4901
bank loans 7300 4060
obligations under finance leases 2744 2604
us restructuring provision 48 1206
14180 12771
the interest rate and currency profiles of these financial liabilities were
floating noninterest fixed floating noninterest 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 6797 – 1069 7866 2540 – 1593 4133
us dollar 5546 48 68 5662 6721 1206 – 7927
euro – – 652 652 – – 711 711
12343 48 1789 14180 9261 1206 2304 12771
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 73 2002 73
and a weighted average period of 24 years 2002 34 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 65 2002 65 and a weighted average period of 38 years 2002 48 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 6439 7151
in more than one year but not more than two years 2136 1041
in more than two years but not more than five years 2809 1926
in more than five years 2796 2653
14180 12771
the uk bank loans denominated in sterling and us dollars total £7300000 2002 £4060000 and have a weighted average repayment period
of 94 years 143 years
plasmon plc
annual report 2003
notes to the financial statements
44 notes to the financial statements continued
for the year ended 31 march 2003
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 assetsliabilities at 31 march 2003
other
sterling us dollars euro zone currencies total
£’000 £’000 £’000 £’000 £’000
functional currency of group company
sterling – 1623 3476 5 1848
us dollar –––––
– 1623 3476 5 1848
foreign currency monetary assetsliabilities at 31 march 2002
other
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 7000 5867 2867 2500 2500 2460
us dollar facilities 6325 5843 2189 6954 6609 1748
total 13325 11710 5056 9454 9109 4208
in march 2003 the £2500000 hsbc overdraft facility was replaced with a £7000000 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 £1956000 2002 £1553000
guarantees have been given by the company to finance companies where amounts owned by plasmon data systems limited under sale and
leaseback transactions are payable on demand total amounts outstanding at 31 march 2003 were £2599000 2002 £2376000
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 us10000000
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
us579440 was outstanding 2002 us1029850
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 £3000000 was outstanding
plasmon plc
annual report 2003
notes to the financial statements
45 notes to the financial statements continued
for the year ended 31 march 2003
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 £3765000 was outstanding
2002 £2903000
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 £535000 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 £136 would require a
provision of £3000
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 £515000 2002 £596000 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 £91000 2002 cost £285000 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 800 2002 875 and that the
pensionable salaries would increase by a weighted average of 469 2002 469 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 £167000 in respect of this scheme at 31 march 2003 2002 £460000
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
31 march 31 march
2003 2002
rate of increase in salaries 469 pa 469 pa
rate of increase in pensions in payment 0 pa 0 pa
discount rate 55 pa 7 pa
inflation assumption 30 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 85 pa 448 95 pa 444
bonds 55 pa 156 65 pa 162
other mainly property 78 pa 55 88 pa 55
total 826 1121
plasmon plc
annual report 2003
notes to the financial statements
46 notes to the financial statements continued
for the year ended 31 march 2003
the following amounts at 31 march 2003 were measured in accordance with the requirements of frs 17
31 march 31 march
2003 2002
£’000 £’000
total market value of assets 826 1221
present value of scheme liabilities 710 1402
surplusdeficit in the scheme 116 281
related deferred tax liabilityasset 46 112
net pension surplusdeficit 70 169
analysis of amounts creditedcharged to operating profit in respect of defined benefit schemes
2003
£’000
current service 65
past service cost –
curtailment gain 728
total operating credit 663
analysis of the amount credited to other finance income
2003
£’000
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
2003
£’000
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 surplusdeficit during the year
2003
£’000
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
plasmon plc
annual report 2003
notes to the financial statements
47 notes to the financial statements continued
for the year ended 31 march 2003
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 182
experience losses of scheme liabilities
amount £’000 115
percentage of scheme assets at 31 march 2003 159
total amount recognised in statement of total recognised gains and losses
amount £’000 463
percentage of scheme assets at 31 march 2003 641
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
31 march 31 march
2003 2002
£’000 £’000
net assets 
net assets excluding net pension surplusdeficit under ssap 24 38239 41157
pension surplusdeficit under frs 17 70 169
net assets including net pension surplusdeficit under frs 17 39309 40988
reserves
profit and loss account recognised in the financial statements 6537 1568
pension surplusdeficit under frs 17 70 169
profit and loss account including net pension surplusdeficit under frs 17 6467 1737
plasmon plc
annual report 2003
notes to the financial statements
48 directors
john barrie morgans 
chairman
nigel street
timothy arthur
henri zinsli switzerland
christopher mcfadden
secretary
timothy arthur
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
wwwcapitaregistrarscom plasmon plc
whiting way
melbourn
hertfordshire
sg8 6en
t elephone 01763 261466
facsimile 01763 260336
internet wwwplasmoncouk
email salesplasmoncouk
plasmon inc
4425 arrowswest drive
colorado springs
co 809073489
usa
t elephone 001 719 593 7900
facsimile 001 719 593 4597
internet wwwplasmoncom
email salesplasmoncom
p asmon p c annua report 2003


Summary:
 plasmon plc
annual report 2003
chief executive’s review
6
20023 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 1 m
in contrast to the disappointing trading
performance our udo development
programme made excellent progress in
20023 and we completed successfully
the transfer of our library business from
minneapolis to colorado springs
chief executive’s review
nigel street
chief executive plasmon plc 
annual report 2003
chief executive’s review
7
1 999 2000 2002
499
703
691
70
60
50
40
30
20
10
0
616
2003
601
03
41 42
63
34
lossprofit before tax £ million
4
2
0
2
4
6
8
10
2001
1 999 2000 2002 2003 2001
t urnover £ million in the first half of 20023 the group
returned to modest growth with revenues
3 ahead at £301m 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 20023 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 20023 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 20023 our overall product mix remained
broadly constant and in line with the sales
shortfall our gross margins declined
slightly to 363 from 367 the previous
year  following our reorganisation
operating expenses before udo
development expenditure goodwill
amortisation and exceptional costs fell by
£20m to £164m at the adjusted pretax
level we achieved a profit of £47m
compared to the £37m we achieved the
previous year  at the pretax level we
significantly reduced our full year loss to
£34m from £63m after goodwill
amortisation of £11m and the final £05m
of us reorganisation costs
udo development expenditure increased
by 24 to £65m in 20023 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 quickturn
prototype costs to keep the project on
schedule in addition to fully expensed
development costs of £65m we invested
a further £39m in capital equipment in
20023 as the udo media production
facility in melbourn neared completion
despite maintaining significant levels of
investment in 20023 our yearend 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 £34m and
will provide sufficient funding to
complete udo development and enter
volume production plasmon plc
annual report 2003
chief executive’s review
8
udo development
ultra density optical ‘udo’ is the next
generation of 525 drives and media that we
are developing to succeed the existing
91gb mo products we source from sony 
udo employs the latest blue laser
technology that provides an increased 30gb
capacity and a fivefold 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
formfactor drives the final phases of the
development are now underway and involve
manufacturing increasingly large batches of
prototype drives and media to debug 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
udo optical media will be
manufactured in cambridge and
will be available in both writeonce
and rewritable formats  plasmon plc 
annual report 2003
chief executive’s review
9
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 ‘bluray’
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  w e 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 optomechanical 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 80000 writeonce and
rewritable udo disks per month
development of the phase change recording
layers for udo media is proceeding well and
the specification of the writeonce 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 12inch optical
disk products w e 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 10000 rewrite cycles
and with further optimisation believe that
25000 cycles may be achievable
mcm are the world’ s largest optical disk
manufacturer and as well as first class
technical knowhow  they have an excellent
quality reputation with the major oem
customers such as hp and ibm w e
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 defacto
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 01mm cover layer
process to reduce volume production costs
w e have recently approved a european
supplier of optical grade 01mm 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 
w e have recently taken delivery of initial
samples from the final production tooling and
are now working with dainippon 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
bluray products continues to provide
technology leverage opportunities and will
ensure our longterm manufacturing costs
remain competitive
525 42
12 33
cddvd 11
consultancy 7
l to tape 2
other 5
plasmon product mix 2003
525 43
12 38
cddvd 5
consultancy 6
l to tape 2
other 6
plasmon product mix 2002 plasmon plc
annual report 2003
chief executive’s review
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 y ork 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
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 plasmon plc 
annual report 2003
chief executive’s review
11
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 20023 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 seriala t a hard
disk drives due to their low cost these
products are now being promoted in 
disktodisk backup solutions that are
challenging the traditional market for 
backup using tape libraries in addition the
lowend 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
seriala t a disk based solutions with
enhanced software to prevent data
deletion as an alternative to traditional
writeonce 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
525 t echnology
over the past few years our sales of 525
optical libraries to ibm have declined by
some 60 as they continue to sell last
generation 52gb writeonce solutions
and have not adopted the latest 91gb
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 525
products continued to grow last year but
failed to make up the ibm shortfall overall
sales of 525 technology declined some
6 to £249m as cheaper dvd solutions
increased their market penetration but we
also increased our market share in 525
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 
525 business
during the past year we continued to migrate
customers to our new gseries range of
525 libraries and away from the older 
mseries products we now plan to end of
life the mseries at the end of 2003 which
is also planned to be the last shipment date
for the ibm 3995 variant of the product
in late 2002 our automation engineering
team in colorado springs commenced
development of a new range of entry level
gseries 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 costperformance
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 525 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 
525 products and the establishment of
udo as the defacto professional optical
storage standard plasmon plc
annual report 2003
chief executive’s review
12
12 t echnology
the 12 business continues to be a major
part of plasmon’s total revenue mix but
overall sales declined some 17 to
£196m the majority of the reduction
was in sales of new drives that declined
58 to £14m 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 £75m and
£101m 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 writeonce 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
cddvd
in response to demand from our major
medical imaging customers such as
siemens medical and ge medical we
introduced the enterprise dseries library
last year with a capacity of up to 2175
discs the library is derived from our g
series 525 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 cddvd sales grow
139 to £65m last year  in midyear 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 20023 with
revenue growth of 9 to £39m compared
to £36m the previous year  during the year
we signed significant new agreements
with intel research to develop high
density phase change storage technology
and with unaxis ag to develop 01mm
cover layer technology for volume bluray
disc production
our cdr and dvdr consultancy
business with ciba specialty chemicals
also performed well in 20023 and we
estimate the plasmonciba ultragreen cd
r dye has a 65 share of the worldwide
market for cdr dyes after a considerable
delay due to technical issues ciba will
finally launch a new dvdr dye in mid 2003
and we expect this to drive significant future
royalty growth as recording video to dvd’ s
becomes a mainstream application
l to t ape
our l to tape library business was a major
disappointment in 20023 with revenues flat
at £14m 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
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 £08m 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 nasraid products that will integrate
internally in our new gseries libraries and
will provide industry standard connectivity
and performance to optical archive
solutions the new solutions will be based
on seriala t a 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
20023 and grew revenues by 31 to
£29m the majority of production is now
cdr 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 bluray 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 plasmon plc 
annual report 2003
chief executive’s review
13
outlook
20023 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 worldclass
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
longterm growth in revenues and
profitability for the plasmon group
sales of integrated storage solutions
comprising libraries servers and
plasmon storage management
software are expected to increase
in the future