Pace Micro Technology plc for the 26 weeks ended 3 December 2005
SALIENT POINTS
- Shipments of 1.1 million set-top boxes (2004: 2.1 million);
- Revenue of £78.9m (2004: £150.5m);
- Loss before tax and restructuring costs of £8.9m (2004: profit £4.7m);
- Diluted loss per share of 4.6p (2004: earnings per share of 4.3p);
- Net cash position £13.6m (4 June 2005: £26.4m).
All figures, including comparatives, are presented under IFRS.
Pace Micro Technology's Chairman, Sir Michael Bett, commented:
“Over the last six months Pace has won further new supply contracts with important digital TV operators around the world, continuing the momentum that is seeing Pace gain an increasing role in the payTV market in the developed world. Revenues are expected to improve significantly during the second half through shipments to the US as well as Premiere in Germany, UPC in The Netherlands, Foxtel in Australia and Sky New Zealand. This growth will be offset somewhat as in the UK we expect units and revenues to continue to decline in the short-term.
“The Board remains confident that Pace is well positioned for a solid performance in the next financial year due to its growing customer base, demand for new technologies such as high definition, MPEG-4 and multiroom and from shipments into the US that are expected to be flowing strongly by then. Although short-term issues may impact immediate expectations, the Board continues to be enthusiastic about the Group’s position and is confident in the ability of Pace’s employees to progress our business.”
Chairman’s Statement
Over the last six months Pace has won further new supply contracts with important digital TV operators around the world, continuing the momentum that is seeing Pace gain an increasing role in the payTV market in the developed world. Shipments on these contracts are expected to commence in the remainder of the financial year.
As announced on 16 December 2005, some short-term setbacks in new product introduction and some shipment delays due to industry-wide component shortages impacted the Group’s performance. Turnover for the half year to 3 December 2005 was substantially reduced at £78.9m (2004: £150.5m), with a loss before tax and restructuring costs of £8.9m (2004: profit £4.7m). Basic earnings per share amounted to loss per share of 4.6p (2004: earnings per share 4.4p). Diluted earnings per share amounted to a loss of 4.6p (2004: earnings per share 4.3p).
An interim dividend is not declared (2004:nil).
Trading review
UK and EMEA
In the UK, which is a maturing market, shipments decreased to 0.4 million boxes (2004: 0.5m). BSkyB remained an important customer as its Sky+ PVR service continues to grow and there were ongoing shipments into UK cable.
In continental Europe, Pace has worked with Premiere, Kabel Deutschland (KDG), Viasat and Sky Italia. Shipments were lower at 0.5m (2004: 1.5m), the reduction mainly due to the high level of boxes delivered to Sky Italia last year as part of its service launch. In Germany, Pace has continued to ship basic digital set-top boxes to KDG and Premiere.
Additionally for Premiere, Pace has recently launched a standard definition PVR and became the first supplier to deliver a certified set-top box for its high definition service. This set-top box is Europe’s first to utilise the latest MPEG-4 compression technology, which enables more high definition channels to be delivered within existing available bandwidth.
Pace has commenced PVR shipments to Sky Italia and to Viasat in Scandinavia. It is developing its first set-top box for delivery to UPC (part of Liberty Global Inc) in The Netherlands following a contract win in June 2005.
North America
In the US, Pace is now close to seeing a return on the investment made by the Group in this market over the last six years. This follows major contract wins with Comcast in May 2005 and DIRECTV in July 2005. Currently Pace is in the final development stages before delivery of the first products on both of these important contracts.
Pace’s shipments to North America during the period increased slightly to 99,000 units (2004: 75,000) and includes shipments to Rogers Cable and Videotron, Canadian cable operators.
Asia Pacific
In Asia Pacific, Pace continued to work with Foxtel in Australia and Sky New Zealand. Pace shipped PVRs for the Foxtel IQ service on both satellite and cable platforms and commenced shipments of the new Sky New Zealand PVR in December. New business was won with Galaxy Satellite Broadcasting in Hong Kong, Pace’s first move into the Chinese market.