Danka Reports Fiscal Year 2008 Third Quarter Operating Results

Market Wire, February, 2008

Danka Business Systems PLC (OTCBB: DANKY) today reported operating earnings from continuing operations of $0.6 million in the fiscal year 2008 third quarter ended December 31, 2007, compared with a loss of $1.0 million in the comparable fiscal year 2007 quarter. For the nine months ended December 31, 2007, the Company reported operating earnings from continuing operations of $3.2 million, compared with a loss of $4.1 million in the prior year period.

For the third quarter:

--  Total revenue was $108.2 million, 2.4% higher than the prior year
    quarter and up 2.8% sequentially.  Retail equipment, supplies and related
    sales was $51.3 million for the quarter, up 13.3% from the prior year, and
    up 8.0% sequentially.  Service revenue was $54.1 million, down 5.9% from
    the prior year, and down 1.0% sequentially.

--  Consolidated gross margin for the quarter was 32.8%, down 110 basis
    points from the prior year, and down 210 basis points from the prior
    quarter.

--  SG&A expenses were $33.2 million, down 13.8% from the prior year and
    down 10.8% sequentially.  Restructuring charges were $1.8 million.

--  For the quarter, the Company generated operating earnings from
    continuing operations of $0.6 million.

--  Net interest expense was $3.6 million, a tax benefit was recorded of
    $2.2 million and earnings from discontinued operations were $0.1 million.
    This resulted in a net loss of $0.8 million for the quarter as compared to
    net loss of $5.5 million in the prior year quarter, and a $14.4 million
    loss in the preceding quarter.
    

"Third quarter results again reflect some of the structural changes occurring in the marketplace. For example, we continue to see conversions from analog to digital that, at least initially, serve to reign in service revenue. However, we posted solid gains in hardware sales, and are beginning to realize the full benefits of our financial restructuring and related cost-reduction measures," said A.D. Frazier, Danka's Chairman and Chief Executive Officer.

"We have also achieved significant organizational enhancements as a result of realigning our business into one unified organization in late 2007. Our focus on training and customer satisfaction strategies continues unabated. Vendors, in particular, have been strong supporters of this effort. Additionally, our recently announced strategic relationship with Konica Minolta is progressing favorably," concluded Frazier.

For the first nine months:

--  Total revenue was $319.7 million, down 5.1% from the prior year.
    Retail equipment, supplies and related sales was $145.0 million, down 1.6%
    from the prior year while service revenue was $165.9 million, down 7.0%
    from the prior year.

--  Consolidated gross margin was 34.6%, down 60 basis points from the
    prior year.

--  SG&A expenses were $106.7 million, down $8.8 million or 7.7% from the
    prior year.

--  For the first nine months, the Company generated operating earnings
    from continuing operations of $3.2 million.

--  Net interest expense was $13.0 million, loss on early extinguishment
    of debt was $9.7 million, a tax benefit was recorded of $1.1 million, and
    loss from discontinued operations was $1.7 million.  These resulted in a
    net loss of $20.1 million as compared to a net loss of $12.1 million in the
    prior year.
    

Conference Call and Webcast

A conference call and Webcast to discuss Danka's second quarter results has been scheduled for today, February 5, 2008, at 10:00a.m. ET. To access the Webcast, please go to www.danka.com . To participate in the conference call, callers in the United States and Canada (and some United Kingdom callers) can dial 800-309-1555. Other international callers should dial 706-643-7754. Reference conference ID #32895389 when prompted. A recording of the call will be available approximately two hours after it's completed through 12:00a.m. ET on February 10, 2008. To access this recording, please call either 800-642-1687 or 706-645-9291 (conference ID #32895389), or visit Danka's website.

About Danka

Danka delivers value to clients by using its expert technical and professional services to implement effective document information solutions. As one of the largest independent providers of enterprise imaging systems and services, the Company enables choice, convenience, and continuity. Danka's vision is to empower customers to benefit fully from the convergence of image and document technologies in a connected environment. This approach will strengthen the Company's client relationships and expand its strategic value. For more information, visit Danka at www.danka.com .

Certain statements contained herein, or otherwise made by our officers, including statements related to our future performance and our outlook for our businesses and respective markets, projections, statements of our plans or objectives, forecasts of market trends and other matters, are forward-looking statements, and contain information relating to us that is based on our beliefs as well as assumptions, made by, and information currently available to us. The words "goal," "anticipate," "expect," "believe," "could," "should," "intend" and similar expressions as they relate to us are intended to identify forward-looking statements, although not all forward looking statements contain such identifying words. No assurance can be given that the results in any forward-looking statement will be achieved. For the forward-looking statements, we claim the protection of the safe harbor for forward-looking statements provided for in the Private Securities Litigation Reform Act of 1995, Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, or the Exchange Act. Such statements reflect our current views with respect to future events and are subject to certain risks, uncertainties and assumptions that could cause actual results to differ materially from those reflected in the forward-looking statements. Factors that might cause such actual results to differ materially from those reflected in any forward-looking statements include, but are not limited to, the following: (i) any inability to successfully implement our strategy; (ii) any inability to successfully implement our cost restructuring plans to achieve and maintain cost savings; (iii) any inability to comply with the Sarbanes-Oxley Act of 2002; (iv) any material adverse change in financial markets, the economy or in our financial position; (v) increased competition in our industry and the discounting of products by our competitors; (vi) new competition from non-traditional competitors as the result of evolving and converging technology; (vii) any inability by us to procure, or any inability by us to continue to gain access to and successfully distribute current and new products, including digital products, color products, multi-function products and high-volume copiers, or to continue to bring current products to the marketplace at competitive costs and prices; (viii) any inability to arrange financing for our customers' purchases of equipment from us; (ix) any inability to successfully enhance, unify and effectively utilize our management information systems; (x) any inability to access vendor or bank lines of credit, which could adversely affect our liquidity; (xi) any inability to record and process key data due to ineffective implementation of business processes and policies; (xii) any negative impact from the loss of a key vendor or customer; (xiii) any negative impact from the loss of any of our senior or key management personnel; (xiv) any change in economic conditions in markets where we operate or have material investments which may affect demand for our products or services; (xv) any incurrence of tax liabilities or tax payments beyond our current expectations, which could adversely affect our liquidity and profitability; (xvi) any inability to continue to comply with our new senior secured credit facility covenants or the financial or other representations, warranties, or maturities in our debt instruments; (xvii) any delayed or lost sales or other impacts related to the commercial and economic disruption caused by natural disasters, including hurricanes; (xviii) any delayed or lost sales and other impacts related to the commercial and economic disruption caused by terrorist attacks, the related war on terrorism, and the fear of additional terrorist attacks; and (xix) any negative impact of the accreted value of our outstanding preferred stock or its continued accretion; (xx) any negative impact of our continued organization as an England and Wales registered Company following the sale of our European businesses; and (xxi) other risks including those risks identified in any of our filings with the Securities and Exchange Commission. Readers are cautioned not to place undue reliance on these forward-looking statements, which reflect our analysis only as of the date they are made. Except as required by applicable law, we undertake no obligation, and do not intend, to update these forward-looking statements to reflect events or circumstances that arise after the date they are made. Furthermore, as a matter of policy, we do not generally make any specific projections as to future earnings, nor do we endorse any projections regarding future performance, which may be made by others outside our Company.