PLASMON PLC

2005 INTERIM RESULTSAND

TRANSITION TO INTERNATIONAL FINANCIAL REPORTING STANDARDS

Plasmon PlcPart 1: Interim Results

Chairman’s Statement

Trading in the first half was in line with our expectations and continued at similar levels to the second half of 2004/5. First half revenues of £20.0m were some 19% below the £24.6m we achieved in the comparable period last year, but only slightly below the £20.3m recorded in the second half of 2004/5 as renewed growth in our core 5.25” business broadly offset the decline in our older product lines. Despite the cost reductions realised from our November 2004 reorganisation programme, the shortfall in sales resulted in the retained loss for the period increasing to £4.3m from £3.0m last year on a consistent IFRS basis.

Although trading in the first half remained difficult, the 9% growth in sales of our core 5.25” products over the previous half represents a turning point for the Group as revenues for new UDO based solutions finally start to overtake declining revenues from legacy products. The growth in our core business is being driven by the new UDO Archive Appliance which we started shipping to our major medical imaging customer in March 2005 and is now generating broad interest across our customer base. This product combines the benefits of UDO and near-line RAID, to create an archival solution that is highly competitive with other RAID and tape solutions that have entered the archival storage market over the past few years. We are now broadening the software capabilities of the Archive Appliance and expect to secure several new customers, particularly in medical imaging applications, in the second half.

The highlight of the first half was undoubtedly securing IBM as an OEM customer for a range of UDO library solutions. After an intensive nine month period of product development and qualification we successfully shipped the first production units to IBM in September 2005. Initial sales by IBM to their customers commenced in November and are expected to provide steady growth in the second half as their marketing efforts gather pace. However, based on our historical sales levels to IBM, we expect them to drive significant revenue increases in 2006/7 and beyond.

During the first half we successfully completed the transfer of UDO OMA production from Pentax to Konica Minolta and acquired the related intellectual property from Pentax for £1.1m in cash. The relationship with Konica Minolta is developing extremely well and they have recently delivered prototype second generation OMAs with the new 0.85NA lens. We are now writing and reading data at 60GB capacity and are on schedule for delivery in early 2007.

During this period we have continued to closely control our overhead costs but the Group has remained loss making as overall revenues are insufficient to cover our cost base. Any further overhead reductions would impact our ability to develop future UDO and Archive Appliance solutions which would be severely detrimental to the long-term outlook for the Group. We expect the success of the Archive Appliance and our growing list of OEM customers to drive our future profitability, but we will inevitably incur significant losses in the medium term. In June 2005 we therefore completed an £11m net fund-raising by way of a Placing and Open Offer at 107p to finance the short-term losses and fund the Group through to profitability.

During the first half of 2005/6 we finally secured IBM as an OEM customer for UDO and successfully delivered the UDO Archive Appliance after nearly three years of intensive system development. Although later than anticipated, these achievements provide the foundations for the Group to return to revenue growth and achieve future profitability. J Barrie MorgansChairman 1st December 2005

Plasmon PlcConsolidated income statement For the six months ended 30th September 2005

Six months Six months Yearended ended ended

30th September 30th September 31st March 2005 2004 2005

(Unaudited) (Unaudited) (Unaudited)£'000's £'000's £'000's

Continuing operationsRevenue 20,005 24,598 44,939Cost of sales (14,179) (16,887) (31,007)

Gross profit 5,826 7,711 13,932

Sales and marketing expenses (4,207) (4,053) (7,676)Research and development expenses (3,870) (3,882) (7,530)Administrative expenses (1,680) (1,947) (4,395)Rationalisation costs - (327) (1,593)Operating loss from continuing operations (3,931) (2,498) (7,262)

Interest payable and other similar charges (445) (438) (869)Interest receivable 49 - 10

Loss on continuing activities before taxation (4,327) (2,936) (8,121)

Tax on loss on ordinary activities (13) (29) (67)

Loss for the period attributable to shareholders (4,340) (2,965) (8,188)

Losses per share expressed in pence per share:From continuing operations - basic and diluted (Note 2) (6.36) (5.13) (13.84)

Plasmon PlcInterim balance sheet As at 30th September 2005

As at As at As at 30th September 30th September 31st March

2005 2004 2005(Unaudited) (Unaudited) (Unaudited)

£'000's £'000's £'000'sAssetsNon current assetsGoodwill 8,284 8,247 7,995Intangible assets 5,491 4,385 4,366Property, plant and equipment 23,168 26,087 24,693

36,943 38,719 37,054Current assetsInventories 15,093 15,208 16,342Trade and other receivables 9,177 11,096 9,675Cash and cash equivalents 2,372 399 791

26,642 26,703 26,808

Non current asset classified as held for sale (Note 3) 818 - -27,460 26,703 26,808

LiabilitiesCurrent liabilitiesTrade and other payables (10,120) (11,457) (13,994)Current tax liabilities (120) (71) (112)Obligations under finance leases (1,262) (1,376) (1,410)Bank overdraft and loans (4,070) (8,510) (6,192)

(15,572) (21,414) (21,708)

Net current assets 11,888 5,289 5,100Non-current liabilitiesBank loans (2,775) (3,997) (3,325)Obligations under finance leases (1,223) (1,935) (1,780)Deferred tax (404) (452) (428)

(4,402) (6,384) (5,533)

Liabilities directly associated with non-current assetclassified as held for sale (Note 3) (475) - -

(4,877) (6,384) (5,533)Net assets 43,954 37,624 36,621

Equity Share capital 3,649 2,912 3,084Share premium account 64,546 49,509 53,998Foreign exchange reserves 290 261 (201)Retained earnings (24,531) (15,058) (20,260)Equity attributable to equity holders of the parent 43,954 37,624 36,621

Plasmon PlcConsolidated statement of changes in equityFor the six months ended 30th September 2005

ForeignShare Share exchange Retained

capital premium reserves earnings Total(Unaudited) (Unaudited) (Unaudited) (Unaudited) (Unaudited)

£'000 £'000 £'000 £'000 £'000

At 1st April 2004 2,737 42,945 - (12,115) 33,567

Issue of shares, net of costs 175 6,564 - - 6,739Net loss for the period - - - (2,965) (2,965)Reversal of share-based charge - - - 22 22Currency translation differences - - 261 - 261

At 30th September 2004 2,912 49,509 261 (15,058) 37,624

Issue of shares, net of costs 172 4,489 - - 4,661Net loss for the period - - - (5,223) (5,223)Reversal of share-based charge - - - 21 21Currency translation differences - - (462) - (462)

At 31st March 2005 3,084 53,998 (201) (20,260) 36,621

Issue of shares, net of costs 565 10,548 - - 11,113Net loss for the period - - - (4,340) (4,340)Reversal of share-based charge - - - 69 69Currency translation differences - - 491 - 491

At 30th September 2005 3,649 64,546 290 (24,531) 43,954

Plasmon PlcConsolidated cash flow statementFor the six months ended 30th September 2005

Six months Six months Yearended ended ended

30th September 30th September 31st March 2005 2004 2005

(Unaudited) (Unaudited) (Unaudited)£'000's £'000's £'000's

Continuing operations Operating loss (3,931) (2,498) (7,262)Adjustments for:Depreciation - tangible fixed assets 1,875 2,051 4,060Amortisation of intangible fixed assets 320 275 550Loss on disposal of plant and equipment 8 - 129Share options - value of employee services 69 22 43Changes in working capital:Decrease/(increase) in inventories 1,944 (1,144) (2,692)Decrease in trade and other receivables 859 388 1,675(Decrease)/increase in payables (4,659) (2,383) 778Cash absorbed from operations (3,515) (3,289) (2,719)Cash generated from/(absorbed by) operating activitiesInterest received 49 - 10Interest paid - bank loans and overdrafts (347) (197) (639)Interest paid - finance leases (99) (130) (240)Taxation paid (37) (16) (62)Net cash absorbed by operating activities (3,949) (3,632) (3,650)Proceeds from the sale of plant and equipment 14 - 14Purchase of intangible fixed assets (1,340) (182) (490)Purchase of property, plant and equipment (1,064) (1,295) (1,594)Acquisition of a subsidiary - (105) (258)Net cash used in investing activities (2,390) (1,582) (2,328)Financing activitiesIssue of ordinary shares, net 11,113 3,492 8,096Repayment of borrowings (825) (638) (1,138)Repayment of obligations under finance leases (704) (765) (1,562)New bank loans issued - - 188Net cash from financing activities 9,584 2,089 5,584Effect of foreign exchange rate changes (222) (87) 67Net increase/(decrease) in cash and cash equivalents 3,023 (3,212) (327)Cash and cash equivalents at the beginning of the period (3,899) (3,572) (3,572)Cash and cash equivalents at end of period (876) (6,784) (3,899)

Plasmon PlcNotes to the Interim Financial StatementsFor the six months ended 30th September 2005

1. Basis of preparation

These interim financial statements are the first interim financial statements following the adoption of International Financial Reporting Standards (“IFRS”). As the Group has not previously published a full set of financial statements under IFRS, Part 2 of this announcement contains reconciliations of net assets and equity from previously reported amounts under UK Generally Accepted Accounting Principles (“UK GAAP”) for the six months ended 30th September 2004 and the year ended 31st March 2005 along with explanations of the changes. These restated financial figures will be the principal comparative figures in the 2006 financial statements and have been released to provide a more detailed analysis of the impact of adopting IFRS on the Group. Also included as Appendix 1 of this announcement are the restated Group accounting policies that the Directors anticipate will be complied with in the annual financial statements. These are based on the assumption that all existing standards in issue from the IASB will be fully endorsed by the European Union (“EU”).

The financial information has been prepared in accordance with all IFRS and International Financial Reporting Interpretations Committee (“IFRIC”) interpretations that had been published by 30th September 2005 and which apply to accounting periods beginning on or after 1st January 2005. The standards used are those endorsed by the EU together with those standards and interpretations that have been issued by the International Accounting Standards Board (“IASB”) but had not been endorsed by the EU by 30th September 2005.

Further standards and interpretations may be issued that will be applicable for financial years beginning on or after 1st January 2005 or that are applicable to later accounting periods but may be adopted early. The Group’s first full IFRS Annual Report to 31 st

March 2006 may, therefore, be prepared in accordance with some different accounting policies from the information presented here.

This interim report, which comprises the consolidated interim balance sheet as at 30 th

September 2005 and the related consolidated interim statements of income, cash flows and changes in shareholders' equity for the six months then ended and related notes, is unaudited and does not constitute audited accounts within the meaning of the Companies Act 1985. The accounts for the year ended 31st March 2005, on which the auditors gave an unqualified audit opinion, were prepared in accordance with UK GAAP and not in accordance with IFRS and IFRIC interpretations and have been filed with the Registrar of Companies.

2. Losses per Ordinary share

Basic losses per share have been calculated on the basis of loss for the period attributable to shareholders and 68,211,505 Ordinary Shares (30th September 2004: 57,742,657 – 31st

March 2005: 59,175,850), being the weighted average number of Ordinary Shares deemed to have been in issue in the period.

There is no dilution of losses per share in the six months ended 30 th September 2005 or in the previous periods.

3. Non current asset classified as held for sale and directly associated liabilities

The non-current asset classified as held for sale is the freehold property that the Group owned adjacent to its UK headquarters. The property was surplus to Group requirements and therefore sold on 25th November 2005. The directly associated liabilities primarily comprised the related property mortgage that was repaid in full on the same date.

4. Equity fund raising

On 16th June 2005 Plasmon raised £12m gross, by way of a Placing and Open Offer of 11,214,953 Plasmon Ordinary shares of 5p at 107p per Ordinary Share to strengthen the Company’s working capital position and support the growth of the UDO business.

5. Copies of the interim financial statements

The interim report will be mailed to shareholders and copies will be available at the registered office: Plasmon Plc, Whiting Way, Melbourn, Hertfordshire SG8 6EN.

Independent review report to Plasmon Plc

Introduction

We have been instructed by the Company to review the financial information (Part 1) for the six months ended 30th September 2005 which comprises the consolidated interim balance sheet as at 30th September 2005 and the related consolidated interim statements of income, cash flows and changes in shareholders' equity for the six months then ended and related notes. We have read the other information contained in the interim report and considered whether it contains any apparent misstatements or material inconsistencies with the financial information.

Directors' responsibilities

The interim report, including the financial information contained therein, is the responsibility of, and has been approved by the Directors. The Directors are responsible for preparing the interim report in accordance with the Listing Rules of the Financial Services Authority.

As disclosed in Note 1 to the interim results, the next annual financial statements of the group will be prepared in accordance with accounting standards adopted for use in the European Union. This interim report has been prepared in accordance with the basis set out in Note 1.

The accounting policies are consistent with those that the Directors intend to use in the next annual financial statements. As explained in Note 1, there is, however, a possibility that the Directors may determine that some changes are necessary when preparing the full annual financial statements for the first time in accordance with accounting standards adopted for use in the European Union. The IFRS standards and IFRIC interpretations that will be applicable and adopted for use in the European Union at 31 st March 2006 are not known with certainty at the time of preparing this interim financial information.

Review work performed

We conducted our review in accordance with guidance contained in Bulletin 1999/4 issued by the Auditing Practices Board for use in the United Kingdom. A review consists principally of making enquiries of group management and applying analytical procedures to the financial information and underlying financial data and, based thereon, assessing whether the disclosed accounting policies have been applied. A review excludes audit procedures such as tests of controls and verification of assets, liabilities and transactions. It is substantially less in scope than an audit and therefore provides a lower level of assurance. Accordingly we do not express an audit opinion on the financial information. This report, including the conclusion, has been prepared for and only for the company for the purpose of the Listing Rules of the Financial Services Authority and for no other purpose. We do not, in producing this report, 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.

Review conclusion

On the basis of our review we are not aware of any material modifications that should be made to the financial information as presented for the six months ended 30th September 2005.

PricewaterhouseCoopers LLPChartered AccountantsCambridge1st December 2005

Notes:

(a) The maintenance and integrity of the Plasmon Plc web site is the responsibility of the Directors; the work carried out by the auditors does not involve consideration of these matters and, accordingly, the auditors accept no responsibility for any changes that may have occurred to the interim report since it was initially presented on the web site. (b) Legislation in the United Kingdom governing the preparation and dissemination of financial information may differ from legislation in other jurisdictions.

Plasmon PlcPart 2: Transition to International Financial Reporting Standards

Plasmon Plc (“the Group”) today announces its interim results for the six months ended 30th September 2005. These interim financial statements are the first financial statements following the adoption of International Financial Reporting Standards (“IFRS”).

As the Group has not previously published a full set of financial statements under IFRS, this release contains reconciliations of net assets and equity from previously reported amounts under UK Generally Accepted Accounting Principles (“UK GAAP”) for the six months ended 30th September 2004 and the year ended 31st March 2005. These restated financial figures will be the principal comparative figures in the 2006 financial statements and have been released to provide a more detailed analysis of the impact of adopting IFRS on the Group.

1. Introduction

For all periods up to and including 31st March 2005, Plasmon Plc has prepared its financial statements in accordance with UK GAAP. However, for accounting periods commencing after 1st January 2005, the Group and all other European Union (“EU”) companies listed on a regulated market are required by EU directive to prepare consolidated accounts in accordance with IFRS. Therefore, the Group’s first published Interim Financial Statements under IFRS are in respect of the six months ended 30 th

September 2005 and the first Annual Report and Accounts prepared on this basis will be for the year ended 31st March 2006.

This document presents previously published UK GAAP information for 2005 restated on an IFRS basis. It is important to recognise that the move from UK GAAP to IFRS does not change the cash flows of the Group nor does it impact Group strategy or commercial decisions.

2. Summary of changes

The most significant changes required to the financial statements of the Group arising from the adoption of IFRS are:

An increased charge to the income statement related to share based payments; The capitalisation of certain development expenditure; The restatement of the Raidtec Holdings Limited (“Raidtec”) acquisition; The cessation of goodwill amortisation; and The recording of a holiday pay accrual.

The restated accounting policies and reconciliations between financial statements previously presented under UK GAAP and the IFRS presentation are included in the following appendices:

Appendix 1: Restatement of Group accounting policiesAppendix 2: Restatement of the balance sheet as at 1st April 2004Appendix 3: Restatement of the income statement for the year ended 31st March 2005Appendix 4: Restatement of the balance sheet as at 31st March 2005Appendix 5: Restatement of the cash flow statement for the year ended 31st March 2005

3. Summary of Impacts to Financial Statements

3.1 Summary income statement impact for the year ended 31st March 2005

The table below shows the impact of IFRS adoption on the Group consolidated income statement for the year ended 31st March 2005:

Before Tax After Tax EPS£'000 £'000 Pence

Reported loss - UK GAAP (9,209) (9,322) (15.75)IFRS adjustments (with paragraph references):5.1: IFRS 2 “Share-based Payment” (43) (43) (0.07)5.2: IFRS 3 “Business Combinations” 1,247 1,293 2.175.3: IAS 19 “Employee Benefits” (14) (14) (0.02)5.4: IAS 38 “Intangible Assets” (102) (102) (0.17)Sub total of adjustments 1,088 1,134 1.91Restated loss – IFRS (8,121) (8,188) (13.84)

3.2 Net asset adjustments

The table below shows the impact of IFRS adoption on the Group consolidated net assets at 1st April 2004 and at 31st March 2005:

As at As at31st March 2005 1st April 2004

£'000 £'000Total shareholders’ equity - UK GAAP 34,535 32,658IFRS Adjustments (with paragraph references):5.2: IFRS 3 “Business Combinations” 1,293 -5.3: IAS 19 “Employee Benefits” (83) (69)5.4: IAS 38 “Intangible Assets” 876 978Sub total of adjustments 2,086 909Total shareholders' equity - IFRS 36,621 33,567

4. Transitional arrangements

Under the provisions of IFRS 1 “First time Adoption of IFRS” specific exemptions may be applied in certain areas as part of the transition of the financial statements to IFRS. The Group has elected to apply the following exemptions:

IFRS 2 “Share-based Payment”

IFRS 2 has been adopted from the transition date and is only being applied to share options granted on or after 7th November 2002 that had not vested on 1st

January 2005, the effective date of the standard.

IFRS 3 “Business Combinations”

IFRS 3 has been adopted from the transition date and is only being applied to acquisitions made on or after 1st April 2004.

IFRS 3 also requires goodwill to be carried at cost with impairment reviews carried out at least annually. The Group has applied the standard from the transition date and so the net carrying value of goodwill at 31st March 2004 has been brought forward as the cost at 1st April 2004, with no amortisation charge from that date.

IAS 21 “The Effects of Changes in Foreign Exchange Rates”

Under IAS 21 cumulative translation differences arising on the consolidation of overseas subsidiaries are being accumulated for each individual subsidiary from the date of transition to IFRS and not from the original acquisition date.

5. Details of changes

5.1 IFRS 2 “Share-based Payment”

Under UK GAAP share incentive schemes were accounted for under UITF 17 “Employee share schemes”, which was based on the intrinsic value of the awards. As all of the Group’s option schemes had a strike price equal to the market value at the time of the grant, the intrinsic value of these awards was calculated at zero and therefore no charge was made to the income statement.

Under IFRS 2 share awards must be measured at fair value at grant date with the related expense recognised over the vesting period. The Group undertook a review of methods for valuing share option awards and selected the Black-Scholes model. As required by IFRS 2, all options granted since 7th November 2002 that vest after 1st January 2005 have been valued using this model.

The impact of this standard on the financial statements of the Group is a charge to the income statement of £43,000 for the year ended 31st March 2005 offset by an equivalent credit to reserves.

5.2 IFRS 3 “Business Combinations”

IFRS 3 deals with accounting for business combinations including goodwill and intangible fixed assets.

Under UK GAAP, the Group adopted FRS 10 “Goodwill and intangible assets” from 1 st

April 1998 and goodwill arising on acquisitions after this date was capitalised and amortised over its useful economic life, which was presumed to be between eight and ten years. Goodwill arising before this date was eliminated against reserves. In addition, the Group tested for impairment when there was an indication that the carrying value of an asset might be impaired.

Under IFRS 3 this policy has been replaced by impairment tests performed annually or whenever there is an indication that the carrying value of an asset might be impaired. Goodwill amortisation has also ceased.

At the transition date, the Group had goodwill assets with a net book value of £4,493,000, which under the transitional arrangements laid out in IFRS 1 was deemed to be the costs carried forward for these assets from that date.

During the year ended 31st March 2005, under UK GAAP, a goodwill amortisation charge of £1,399,000 was made, which has been credited back to the income statement under IFRS.

Although the Group has adopted IFRS 3 from the transition date, 1st April 2004, the Group completed the acquisition of Raidtec Holdings Limited just after this date on 24 th

May 2004. The accounting treatment of this acquisition has therefore been reviewed in accordance with the requirements of IFRS 3. As a result of this review, intangible assets totaling £1,580,000 have been separately identified, with an associated deferred tax liability of £474,000 also being recorded as required, and goodwill has been reduced by the corresponding net amount. The newly identified intangible assets are being amortised over ten years, resulting in a charge to the income statement of £152,000 for the year ended 31st March 2005 offset by a deferred tax credit of £46,000.

5.3 IAS 19 “Employee Benefits”

IAS 19 requires companies to make an accrual for holiday pay. At the date of transition a £69,000 holiday pay accrual was recognised with a corresponding adjustment being made to retained earnings. During the year ended 31st March 2005, the accrual increased by £14,000.

5.4 IAS 38 “Intangible Assets”

Under UK GAAP, the Group had elected to expense all research and development costs as incurred. IAS 38 requires that all development costs meeting certain specified criteria be capitalised as intangible assets. As part of the IFRS transition preparation, the Group has reviewed all of its development projects to determine whether the criteria in IAS 38 were met or not. The key eligibility criteria for capitalisation applicable to Plasmon relate to whether:

The technology required to produce saleable or usable products is readily available;

It is probable that future economic benefits attributable to the assets will flow to the entity; and

The cost of the asset can be reliably measured.

In general the Group’s research and development activities are closely interrelated and it is not until the technical feasibility of a product can be determined with reasonable certainty that development costs are separately identifiable. In addition, intangible assets are not recognised unless it is reasonably certain that the resultant products will generate future economic benefits in excess of the amounts capitalised.

As a result of the review performed, development costs associated with certain products met the criteria of IAS 38 and have therefore been capitalised and subsequently amortised over their estimated useful lives (ten years). The net book value brought forward at 1 st

April 2004 was £978,000 and amortisation of £102,000 was charged to the income statement during the year ended 31st March 2005. No further development costs were identified for capitalisation during the year ended 31st March 2005.

Plasmon PlcTransition to International Financial Reporting StandardsAppendix 1Restatement of Group accounting policies

IntroductionFollowing are the restated Group accounting policies that the Directors have established in order to produce the interim financial statements in accordance with IFRS and which the Directors anticipate will be complied with in the annual financial statements for the year ending 31st March 2006, the Group’s first IFRS financial statements. The date of transition to IFRS for the Group is 1st April 2004. These accounting policies are based on the assumption that all existing standards in issue from the IASB will be fully endorsed by the EU, however, these are subject to ongoing amendment by the IASB and subsequent endorsement by the EU, and are therefore subject to possible change.

The consolidated financial statements will be prepared on a historical cost basis except for certain items which will be measured at fair value, as discussed in the accounting policies below.

Some of the policies will only be applied from 1st January 2005 because of the transitional arrangements for first time adoption of IFRS as noted in the individual policies where applicable.

Basis of consolidationThe Group financial statements include the results of the Company and its subsidiary undertakings. The results of subsidiaries acquired during the year are included from the date of acquisition. The results of businesses disposed of are included to the date of disposal.

The financial statements of the Company and its subsidiary undertakings are prepared for the same reporting year as the Group, using consistent accounting policies but in accordance with local Generally Accepted Accounting Principles. Adjustments are made to bring into line any dissimilar accounting policies that may exist. All intercompany balances and transactions, including unrealised profits arising from inter-group transactions, have been eliminated in full.

Business combinations and goodwillGoodwill represents the excess of the fair value of the purchase consideration for the subsidiary undertakings over the fair value of the identifiable assets and liabilities of a subsidiary at the date of acquisition.

Goodwill arising on acquisitions is capitalised and subject to impairment review at least annually, but also when there are indications that the carrying value may not be recoverable. Any impairment is recognised immediately in the income statement and is not subsequently reversed.

Prior to 1st April 1998, goodwill was written off to reserves in the year of acquisition. Goodwill after this date until the adoption of IFRS on 1st April 2004 was capitalised and amortised over its useful economic life, which was presumed to be between eight and ten years. The Group has elected not to apply IFRS 3 “Business combinations”

retrospectively to business combinations that took place before 1st April 2004 and, as a result, all goodwill arising from prior business combinations has been frozen at the transition date. Any goodwill remaining on the balance sheet at transition is no longer being amortised but is subject to impairment review.

Acquired intangible assetsIntangible assets acquired separately and as part of a business combination are capitalised at cost and fair value as at the date of acquisition, respectively. Intangible assets are subsequently amortised on a straight-line basis over the expected period that benefits will accrue to the Group. Deferred tax liabilities are established at appropriate corporation tax rates with respect to intangible assets acquired as part of a business combination.

Research and development costsResearch costs are expensed as incurred. Development expenditure, including patent costs and manufacturing licences, incurred on an individual project is capitalised when it can be separately measured and its future recoverability can be reasonably regarded as assured. Following initial recognition, the related asset is amortised over the period of expected future sales of the related projects with impairment reviews being carried out at least annually. The asset is carried at cost less any accumulated amortisation and impairment losses.

Property, plant and equipmentProperty, plant and equipment is stated at historical cost less depreciation and any impairment in value. Historical cost includes all expenditure that is directly attributable to the acquisition of the assets. Subsequent costs are included in the asset’s carrying amount or recognised as a separate asset, as appropriate, only when the costs provide enhancement, it is probable that future economic benefits associated from the item will flow to the Group and the cost of the enhancement can be measured reliably. All other repair and maintenance costs are charged to the income statement during the financial period in which they are incurred.

With the exception of UDO media manufacturing equipment, depreciation is provided to write off the cost less the estimated residual value of property, plant and equipment over their estimated useful economic lives by equal annual installments using the following rates:

Land Not depreciatedBuildings 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%

Depreciation of the UDO manufacturing equipment is being calculated on a unit of production basis.

Leased assetsLeases are classified as finance leases whenever the terms of the lease transfer substantially all the risks and rewards of ownership to the lessee. All other leases are classified as operating leases.

Assets held under finance leases are capitalised and included in property, plant and equipment at fair value. Depreciation is calculated using expected useful lives on the same basis as owned assets or, where shorter, over the term of the relevant lease. The capital elements of obligations under finance leases are recorded as liabilities. The interest elements of the rental obligations are allocated to accounting periods over the lease term to give a constant periodic rate of interest on the outstanding liability.

Rental payments under operating leases are charged to the income statement on a straight-line basis. Benefits received as an incentive to enter into an operating lease are also spread on a straight-line basis over the lease term.

Inventory and work in progressInventory is stated at the lower of cost and net realisable value. Cost comprises direct materials and, where applicable, direct labour costs and those overheads that have been incurred in bringing the inventories to their present location and condition. Net realisable value represents the estimated selling price less further production costs to completion and appropriate selling and distribution costs. Provision is made where necessary for obsolete, slow-moving and defective stocks.

Trade and other receivablesTrade receivables are recognised and carried at original invoice amount less an allowance for any uncollectible amounts that is made when collection of the full amount is no longer considered probable. Actual bad debts are written off when identified.

Net cash and cash equivalentsNet cash and short-term deposits in the balance sheet comprise cash at bank and in hand and short-term deposits with an original maturity of less than three months, reduced by overdrafts to the extent that there is a right of offset against other cash balances.

For the purpose of the consolidated cash flow statement, cash and cash equivalents consist of cash and short-term deposits as defined above net of outstanding bank overdrafts.

Non-current assets held for saleNon-current assets classified as held for sale are measured at the lower of carrying amount and fair value costs to sell.

Non-current assets are classified as held for sale if their carrying amount will be recovered through a sale transaction rather than through continuing use. This condition is regarded as met only when the sale is highly probable and the asset is available for immediate sale in its present condition. Management must also be committed to the sale and the related disposal must be expected to complete within one year from the date of classification.

Revenue recognition Revenue, which excludes sales between Group companies and trade discounts, represents the invoiced value of goods and services net of value added tax. Revenue in respect of the sale of goods is recognised to the extent that it is probable that the economic benefits will flow to the Group and the revenue can be measured reliably. Revenue in respect of the sale of services is recognised over the period that the related work is performed. Revenue from longer-term development work is recognised in proportion to the costs of the development work undertaken. Revenue in respect of royalties receivable is recognised on an accruals basis as earned.

Foreign currenciesThe consolidated financial statements are presented in pounds sterling, which is the Company’s functional and presentational currency. The Group determines the functional currency of each entity and items included in the financial statements of each entity are measured using that functional currency.

Transactions in foreign currencies by individual entities are recorded using the rate of exchange ruling at the date of the transaction. Monetary assets and liabilities denominated in foreign currencies are translated using the rate of exchange ruling at the balance sheet date and the gains or losses on translation are included in the income statement.

The assets and liabilities of overseas subsidiaries are translated into the Group’s presentational currency at the closing rate of exchange ruling at the balance sheet date and the results of these subsidiaries are translated at the average rate of exchange for the year. Gains and losses arising on these transactions are shown as movements on reserves.

Goodwill and fair value adjustments arising on acquisitions of a foreign entity are treated as assets and liabilities of the foreign entity and translated at closing rates of exchange.

As permitted by IFRS 1 “First time adoption of IFRS”, the Group has elected to deem the cumulative amount of exchange differences arising on consolidation of the net investment in subsidiaries at 1st April 2004 to be nil.

Government grants Government grants towards staff costs are recognised as income over the periods necessary to match them with the related costs and are deducted in reporting the related expense.

Government grants relating to property, plant and equipment are treated as deferred income and released to the income statement over the expected useful lives of the assets concerned.

Pension costsPension costs in respect of defined contribution schemes and employees’ personal pension plans are charged on an accruals basis in line with amounts payable in respect of the accounting period.

TaxationThe tax expense represents the sum of the tax currently payable and deferred tax.

Deferred tax is recognised in respect of all timing differences that have originated but not reversed at the balance sheet date where transactions or events that result in an obligation to pay more, or a right to pay less, tax in the future have occurred at the balance sheet date. Deferred tax assets are recognised to the extent that the Directors consider that it is more likely than not that there will be suitable taxable profits from which the future reversal of the underlying timing differences can be deducted. Provision is made for the tax that would arise on the remittance of the retained earnings of overseas subsidiaries only to the extent that, at the balance sheet date, dividends have been accrued as receivable. Deferred tax is measured on a non-discounted basis at the tax rates that are expected to apply in the periods in which the timing differences reverse, based on the tax rates and laws enacted or substantively enacted at the balance sheet date.

ProvisionsProvisions for warranty costs are recognised at the date of sale of the relevant products, at the directors’ best estimate of the expenditure required to settle the Group’s liability.

Provisions for rationalisation costs are recognised when the Group has a detailed formal plan for the rationalisation that has been communicated to effected parties.

Share-based paymentThe fair value of employee share plans is calculated using a Black Scholes model. In accordance with IFRS 2 “Share-based payment” the resulting cost is charged to the income statement over the vesting periods of the plans. The value of the charge is adjusted to reflect the expected and actual levels of options vesting. IFRS 2 has been applied to all grants of equity instruments after 7 th November 2002 that were unvested as of 1st January 2005.

Plasmon PlcTransition to International Financial Reporting StandardsAppendix 2Restatement of the balance sheet as at 1st April 2004 from UK GAAP to IFRS

Plasmon PlcTransition to International Financial Reporting StandardsAppendix 3Restatement of the income statement for the year ended 31st March 2005 from UK GAAP to IFRS

Plasmon PlcTransition to International Financial Reporting StandardsAppendix 4Restatement of the balance sheet as at 31st March 2005 from UK GAAP to IFRS

Plasmon PlcTransition to International Financial Reporting StandardsAppendix 5Restatement of the cash flow statement for the year ended 31st March 2005 from UK GAAP to IFRS