16th Dec 2005 17:35
Pace Micro Technology PLC16 December 2005 Pace Micro Technology Trading Update Following the statement issued by Pace Micro Technology plc earlier today, theBoard is now providing further information on Pace's current trading outlook. Over the last calendar year, Pace has won a number of important new contracts inthe US and Europe. As previously stated these contracts are for a substantialrange of new products, many of which involve complex engineering development. Full year forecast - year ending 3 June 2006 In Pace's update of 21 September the Board indicated that the Company's profitbefore tax on an IFRS basis for the full year was unlikely to exceed £9.1m. Asa result of recent product development reviews, it has become evident that thereare additional short-term delays to delivery on US contracts. The deferral of asubstantial number of product shipments will result in a loss of contribution ofapproximately £8m. Additionally, following the routine monthly review ofproduct margins and as a result of a number of other factors, including thestrengthening US dollar, the Board now expects margins outside of the US to beimpacted by approximately £2m. IFRS The Board has previously discussed the impact of International FinancialReporting Standards (IFRS) in the Preliminary statement for the year ending 4June 2005 and the Report and Accounts in respect of the same period. Theprincipal difference between IFRS and UK GAAP for Pace is the IAS38 requirementto capitalise development expenditure and amortise that development expenditureover the economic life of a product. As a result of the product delays outlinedabove, coupled with additional engineering resource required to bring theseproducts to market, the Board now expects that there will be a net increase ofapproximately £7m in the amount of capitalised development expenditure over theyear, of which approximately £5m will be in the first half. This is greaterthan initially anticipated. Under UK GAAP development expenditure wouldordinarily have been expensed. First Half - 6 months ending 3 December 2005 The expected results for the first half, subject to review, are for a lossbefore tax and exceptional items of approximately £9m as calculated under IFRS.Unexpected delays in shipments, caused by industry-wide component shortages forproduct deliveries due in November, account for approximately £3m of this loss.Pace expects to make up on these shipments during December and early January. Outlook As stated on 21 September there remains significant risk in both the volumes andtiming of the Company's new product introductions. However, although theseissues continue to impact short-term expectations, the Board remains confidentthat Pace is well positioned for a solid performance in the next financial yearas shipments in the US will by then be flowing strongly. Pace will publish its Interim Results on Tuesday 17th January 2006. Enquiries Pace Micro Technology 020 7638 9571 (until 6pm)John Dyson, Chief ExecutiveDavid Brocksom, Finance DirectorHelen Kettleborough, Head of Corporate Communications Citigate Dewe Rogerson 020 7282 2945Ginny Pulbrook This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
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