PACE MICRO TECHNOLOGY PLC
report & accounts 2007
MKT-R&A2007
PACE MICRO TECHNOLOGY PLC
Victoria Road Saltaire
BD18 3LF England
Tel +44 (0)1274 532000
Fax +44 (0)1274 532010
www.pacemicro.com
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TECHNOLOGY HOME
Pace and               are trademarks and/or registered trademarks of Pace Micro Technology plc.
Registered in England No 1672847
PACE MICRO TECHNOLOGY PLC REPORT & ACCOUNTS 2007
3111_Pace Outer&Spine.indd   1 8/8/07   12:54:31 01 Pace Micro Technology plc Report & Accounts 2007
Operating Highlights
• Signiﬁ cant success in North America with ongoing 
solid performance from EMEA and APAC regions
• Volume shipments increased by 77% to 3.9m set-top 
boxes (2006: 2.2m)
• Growing operator demand for specialist high deﬁ nition 
technology across all main payTV markets
• Increased consumer demand for digital TV, high deﬁ nition 
and PVR products 
• Company restructure and new management team are 
delivering results 
Financial Highlights
• Revenues more than doubled to £386.5m (2006: 
£178.1m)
• Full year gross margin of 15.9% (2006: 18.0%), 
with uplift in H2 to 16.6% (H12006/2007: 15.3%)
• Proﬁ t before tax and exceptional items £6.1m 
(2006: loss £15.6m)
• Earnings per share of 3.0p (2006: loss per share 13.0p)
• Net cash position £11.9m (2006: net borrowings £6.1m)
• On track to deliver against expectations for shortened 
ﬁ nancial year ending 31 December 2007
62 Pace Micro Technology plc Report & Accounts 2007
3111_Pace Outer&Spine.indd   2 8/8/07   12:54:53 01 Highlights
03 Letter from the Chairman
04 Chief Executive Ofﬁ cer’s Review
10 Chief Financial Ofﬁ cer’s Review
13 Report of the Directors
21 Remuneration Report
27 Statement of Directors’ Responsibilities
28 Independent Auditors’ Report
31 Financial Statements
37 Notes to the Financial Statements
59 Directors, Secretary and Advisors
60 Five Year Record and Shareholder Information
Contents
02 Pace Micro Technology plc Report & Accounts 2007
3111_PACE_AnnualReport_V10.indd   4 8/8/07   13:29:08  
Dear Shareholder
I am pleased to reﬂ ect on a good year for Pace, during which the foundations laid in 2006 began to make 
a real difference to the business and we also celebrated the Company’s Silver Jubilee. The Board set 
management a number of clear, measurable objectives in 2006 and they have achieved the majority of 
them through the careful and thorough restructuring of the business, and a focus on Pace’s core expertise 
of designing and delivering feature rich innovative products for the payTV market.
Your Company is committed to improving margins and has begun this work. During the year margins 
improved from 15.3% in the ﬁ rst half to 16.6% in the second. Overall revenues rose to £386.5m, more 
than doubling the results of the previous year. The goal we set of sustainable 20% margins remains a key 
target for 2008. During the year Pace also made a major breakthrough in achieving its goals for North 
America: over 50% of the revenues reported for 2007 come from North American customers. Pace made 
excellent progress in this region and in the rest of the world, enhancing its reputation as the leading UK 
supplier to global markets.
Pace is a highly specialised technology innovator, and it is the Company’s continuous focus on its 
customers that allows it to anticipate product requirements. In turn this positions Pace to capture early 
market opportunities, before its competition, to transform technology trends into ﬁ nished products. 
The approach Pace continues to take is to institutionalise the improvements that have been made 
to date, to ensure the business is highly professional, organised to take advantage of technology 
change, and to be ultra focused on quality execution.
Management has also worked hard to inspire the company’s key resource, its people, and I am happy 
to report that we have an extremely committed workforce. I would like to thank Neil Gaydon, his 
executive team and all of our employees for their skill, effort, dedication, and teamwork. One of the 
fascinating things about this business is its ability to attract high-quality world-class engineers to its 
sites around the world.
The Board welcomed Stuart Hall as the new Chief Financial Ofﬁ cer. Stuart joined us in April 2007 
from IQE plc where he was Finance Director. We were also delighted that David McKinney, Chief 
Operating Ofﬁ cer who has been with Pace for over one and a half years, was appointed to the Board 
last October.
There still remains a great deal of work to do to build a strong and resilient long-term business within an 
ever challenging and changing marketplace. The Board is very encouraged by the progress to date and we 
expect the improvements Neil and his team are making to continue to deliver positive results. The Board 
has decided that strengthening the balance sheet is a priority and will therefore not be recommending a 
dividend at this time. We will keep the policy under review. 
I look forward to reporting back to you at the end of Pace’s new shortened ﬁ nancial year, which will 
complete on December 31st 2007. If you have comments on any aspect of this letter or indeed, any part 
of the Annual Report, I would be delighted to hear from you either by writing to me at Pace or by email at 
mike.mctighe@pacemicro.com.
Yours sincerely
Mike McTighe
Chairman
24 July 2007
Letter from the Chairman 
Mike McTighe CHAIRMAN
I am pleased to reﬂ ect on a 
good year for Pace, during 
which the foundations laid in 
2006 began to make a real 
difference to the business and 
we celebrated the Company’s 
Silver Jubilee. 
03 Pace Micro Technology plc Report & Accounts 2007
3111_PACE_AnnualReport_V10.indd   5 8/8/07   13:29:19  
This has been an exciting and challenging year, as we took the Company back into proﬁ t and grew the North American 
contribution to our business: today our North American presence drives over half our revenues. Most importantly, we have 
made fundamental operational improvements to our business, and we have begun to see tangible beneﬁ ts across the Group. 
Over the last year we have developed our global position to count more major leading operators as customers than our 
competition, making us the leading force in digital TV technology. In fact by revenue and market capitalisation we are the UK’s 
largest consumer electronics company. 
Putting Customers First
The Customer Account Team structure and methodology we put in place in 2006, placing customers at the heart of 
our business, is delivering improvements. From sales to engineering, service and support, each customer has a team 
focused on their business and technology requirements. This new highly targeted philosophy is now stabilising and 
delivering results as well as creating a scalable platform for future growth and development.
The Pace Vision, introduced earlier this year - Great products to our customers every time - encapsulates our focus. 
We are measuring progress against our Vision through three critical success factors: On Margin, On Time and On 
Quality. These targets have acted as a catalyst, inspiring and empowering our people to improve how we create 
products and deliver them to our customers. Already our ofﬁ cial independent measure of customer satisfaction has 
shown some of the best results in our history, and we expect further improvement.
Current Trading
Over the last year the balance of our global shipments has shifted, with over 50% of the Group’s revenues now coming 
from the North American market, the result of our strategy to target the world’s largest payTV operators and our early 
investment in new technology platforms. 
This year we have returned to proﬁ t, with proﬁ t before tax and exceptional items of £6.1m (2006: loss £15.6m) 
on revenues that more than doubled to £386.5m (2006: £178.1m). Product execution is getting better, quality is 
increasing and margins are improving. We expect to see the full beneﬁ ts over the next 12 months as improvements 
pass through the typical set-top box development cycle. 
Regional Performance
During the ﬁ rst half of the year we successfully worked through some challenges faced by the entire industry in the 
transition to MPEG-4-based high deﬁ nition (HD) platforms, which had impacted deliveries of some of our new and 
highly complex set-top box products. The resolution of these issues, combined with changes put in place by the new 
management team, is enabling the business to move forward. 
Americas
The US is the world’s largest market for digital television technology and we saw a six-fold increase in our shipments 
to 1.2m units from 200,000 in 2006, as we commenced new product shipments to DirecTV and Comcast, two of 
the world’s largest payTV operators. For DirecTV we are delivering an MPEG-4 HD personal video recorder (PVR) 
and have order visibility through to mid-2008. We are also delivering standard deﬁ nition (SD) PVR to Comcast and 
have committed orders in place for the rest of 2007. At the same time our North American cable customer base has 
expanded to over 30, selling a broad range of SD and HD products. 
04 Pace Micro Technology plc Report & Accounts 2007
Chief Executive Ofﬁ cer’s Review
Neil Gaydon CHIEF EXECUTIVE OFFICER
In my ﬁ rst full year as Pace’s CEO 
I am pleased to report that the 
important changes we have 
made to the business are making 
a signiﬁ cant difference to our 
performance. 
3111_PACE_AnnualReport_V10.indd   6 8/8/07   13:29:26 05 Pace Micro Technology plc Report & Accounts 2007
As of 1 July 2007 US cable set-top boxes must, under Federal Communications Commission (FCC) regulations, 
incorporate ‘separable security’, similar to the card-based conditional access systems used by many European 
payTV operators. To meet the new market requirements we have developed a full range of CableCARD
TM
 
products (it includes SD, SD PVR, HD, HD PVR and analogue options). The CableCARD
 
boxes are also fully 
OpenCable
TM
 Application Platform (OCAP
TM
) compatible. 
OCAP is a software layer many operators intend to introduce over the next few years to improve software 
compatibility among various set-top box vendors. Unlike other potential new entrants into the US cable market, 
we have the necessary licenses and software assets to sell boxes running today’s applications and OCAP 
applications in the future.
The CableCARD
 
range was launched in June 2007 and all products are now commercially available and 
shipping to multiple customers. Our ability to launch CableCARD
 
products so quickly to multiple operators 
with varying software requirements, was enabled by a core asset that took over three years to develop, a Pace 
middleware called Engineware
TM
. The switch to CableCARD
 
has infuenced operator buying patterns across the 
market. This was anticipated and factored into our forecasts as there will be a lower level of box orders during 
the third calendar quarter of 2007. 
Overall I am very pleased with the progress that has been made in the Americas given the particularly high 
barriers to market entry. Progress has been both in terms of the breadth and depth of customer relationships 
and the product range, which addresses a wide range of customer needs. 
EMEA and APAC
Pace has achieved long-term strong performance in these markets and this year we enjoyed solid revenue 
and volume growth as additional business was secured with new and existing customers. Shipments into 
the EMEA region increased by over 37% from 1.6m in 2006 to 2.2m set-top boxes, with APAC shipments 
increasing slightly from 401,000 to 432,000 units.
In EMEA our customers comprise a large number of the major payTV operators, including BSkyB, Sky Italia, 
Viasat and UPC. In Australia and New Zealand we work with the majority of signiﬁ cant players, Foxtel, Optus 
and Sky New Zealand. We are Foxtel’s lead supplier and recently celebrated our one millionth box shipment. 
During the year we won new business with the majority of our customers for both basic boxes and SD PVRs, with 
an increasing number also ordering HD PVR designs for 2007 and 2008. Of the new HD PVR business that has 
been signed, Digiturk, a major T urkish operator, will be the ﬁ rst to market toward the end of 2007. The product 
range for Digiturk introduced a new technical integration challenge through its use of the Irdeto conditional access 
platform and OpenTV middleware. We expect that a number of other payTV operators will want to utilise a similar 
combined solution.
We have a proud history of leading new technology developments in these markets and have created a strong 
product range. In addition to the growing demand for HD and HD PVR, there is a new trend for integrated 
satellite and IP enabled hybrid products and we have showcased our product capability at European trade 
shows during the year. The market dynamics remain attractive with the prospect of analogue switch-off in 
some countries and increasing competition between operators in some key markets for subscribers. 
Chief Executive Ofﬁ cer’s Review
continued
3111_PACE_AnnualReport_V10.indd   7 8/8/07   13:29:41 Market trends & technology evolution
Our strategy is to build long term relationships with the world’s leading payTV operators 
and to identify and make early investments in technologies that will support and drive 
their long-term success. Consequently we are well placed to serve our markets and deliver 
returns for shareholders.
Change within our business has positioned us to take full advantage of change within our 
markets. We are in the midst of a signiﬁ cant phase of technology evolution, with global 
consumer demand for HD and PVR products and services, one of the most important market 
drivers. HD ﬂ at panel TVs have captured the eye of consumers keen for enhanced picture 
quality and have become a ‘must have’ product. 
Flat panels are evolving into high quality display devices, as it becomes clearer that there is 
little economic or technological logic building advanced set-top box functionality into the TV 
due to the different rates of change between TV and set-top box technologies. According to 
Screen Digest there will be over 228m homes by 2010 with HD-ready ﬂ at panel TVs and 
over 200 HD channels. HD demand is driving a complete replacement chain from TV camera 
through to encoder and production technology and of course set-top boxes. 
There is also strong competition between payTV operators and new market entrants such as 
telephone operators providing video services over broadband. This adds to the demand for 
HD and PVR services and other new advanced and specialist products as operators use the 
technology to differentiate their product offers to win and retain subscribers. 
HD would not be commercially viable in many markets without MPEG-4 compression; a 
highly complex technology that enables more information to be transmitted in the same 
broadcast space than MPEG-2 compression. MPEG-2, used for the last 12 years, can deliver 
two HD channels against four or ﬁ ve using MPEG-4. We understand how to turn this into 
easy-to-use consumer products. 
Next generation
Our early technology investment has enabled some of the world’s largest payTV operators to 
launch and develop new HD services. Television is evolving into a new world and we are 
constantly working on next generation set-top boxes: as part of our programme of ‘managed 
innovation’ we have identiﬁ ed several key trends requiring solutions we are now working on.
For many of our payTV customers, PVR is a core element of their service offering as it helps 
retain customers by improving the consumer TV experience, allowing them to watch what 
they want, when they want. The logical conclusion of digital recording capability is the 
desire to move content around the home, known as Multiroom technology. Developing this 
concept has not been easy and we have been working with operators for a number of years 
to devise a solution that works not only technologically but also economically with the right 
business model. Many of our customers believe wireless will provide the ultimate solution 
and while a robust secure technology is yet to be established, we are investing in research 
that will put us in a leading position.
06 Pace Micro Technology plc Report & Accounts 2007
3111_PACE_AnnualReport_V10.indd   8 8/8/07   13:29:44 Chief Executive Ofﬁ cer’s Review 
continued
Another signiﬁ cant gap in the market is the ability to provide interactive digital services in apartment blocks and 
other ‘gated’ communities. Again Pace has invested in the trend ahead of the market and later this year we will 
move into ﬁ eld trials for our multi-dwelling technology. 
Wherever possible we seek to register our intellectual property and today have over 100 granted patents, with another 
200 applications pending. 
Operational improvements
Some important operational improvements have been made to ensure our customers beneﬁ t from a world-class 
manufacturing and operating strategy. 
We have consolidated our global manufacturing locations, with the major facilities now being centres of excellence 
in Asia Paciﬁ c and have made operating efﬁ ciencies and improvements in delivery performance. At the same time 
we have maintained ﬂ exibility and options within our operating model to ensure we mitigate and manage business 
risk. We have excellent relationships with our manufacturing partners and will continue to develop our operating 
model to satisfy customer needs.
Working with our strategic commodity partners we have implemented signiﬁ cant improvements to sourcing, 
qualiﬁ cation, availability and supply of critical components. Where appropriate, we have qualiﬁ ed multiple sources 
for critical commodities and implemented speciﬁ c commercial strategies to ensure we do not run unnecessary 
shortage risks in the supply chain.
Through greater collaboration between our engineering and supply chain teams we have taken a more focused 
approach and developed a proven methodology to address all elements of product cost. This is enabling us to 
provide customers with world class, competitively priced products. 
We have also continued to work closely with selected design partners in collaborative design manufacture (CDM) 
projects. The CDM partners we have selected complement our own expertise and give us greater ﬂ exibility in 
meeting customer requirements. In addition we have developed our offshore design capability at the Pace ofﬁ ce in 
Bangalore, India. 
These strategies are providing beneﬁ ts in ﬂ exibility, responsiveness and efﬁ ciencies, allowing a rapid response to 
our customers’ needs. 
Investing in our people
Alongside organisational and process improvements, we have also invested in the performance of our people. 
Our initial focus has been on building leadership skills, developing individuals who have the capability to make a 
direct and signiﬁ cant difference to our progress. This work has involved the Executive Team and a new grouping 
within Pace, the Leadership Group. This group comprises senior managers from across the business, empowered 
to drive performance against our strategic goals with the support of a tailored development programme.
07 Pace Micro Technology plc Report & Accounts 2007
3111_PACE_AnnualReport_V10.indd   9 8/8/07   13:29:50 08 Pace Micro Technology plc Report & Accounts 2007
At Pace, all of our employees, including the Leadership Group, are incentivised through reward schemes that are both 
meaningful and attainable. At the heart of how we reward people is a new performance management scheme that assesses 
individuals both in terms of their success against agreed deliverables and how they work within our behaviours framework. 
Behaviours were introduced during our restructure to help establish a new framework and philosophy around working 
with each other on a day-to-day basis at Pace. We have six behaviour themes, including Customer Focus and Teamwork 
and they have been embedded into our performance management scheme.
We have also developed our communications programme. I believe it is vitally important our people are well informed 
and have the information and understanding they need to be effective in their roles. The latest development is my 
monthly Chief Executive Update where employees from across the Group’s ofﬁ ces worldwide come together for a regular 
update on performance against our On Margin, On Time and On Quality critical success factors. 
Community and the environment
At Pace we have chosen to support local community groups based around our global ofﬁ ces through the work of our 
charitable donations committee and employees. In this way we can support a wide range of smaller organisations that 
are making a difference around where we work and the majority of our employees live. We intend to develop our activity 
in this area.
Over the last year we have supported Adopt a Family, a charity based close to our US ofﬁ ce, which helps impoverished 
local children and their families. The Pace Americas team raised funds, which were matched by the Company, through 
recycling their ofﬁ ce waste and re-selling used test disk drives, to support several projects including an after school project 
for homeless children. Elsewhere I personally supported the ﬁ rst ever Bradford Rotary Club Technology Tournament, 
which brought together schoolchildren to promote just how much fun engineering and technology can be. Meanwhile 
our people in France became involved in the Restos du Coeur organisation, which distributes food packages and hot 
meals to the needy.
3111_PACE_AnnualReport_V10.indd   10 8/8/07   13:30:02 09 Pace Micro Technology plc Report & Accounts 2007
Chief Executive Ofﬁ cer’s Review 
continued
Looking to the environment, the focus on the high technology sector has never been so great. Building on the 
introduction and implementation of the RoHs directive on hazardous materials, Pace is well prepared and fully 
compliant with the WEEE directive regulating the environmentally sound disposal of electrical goods. Not only is 
the sector facing regulatory pressure but there is an increasing global spotlight on climate change and energy use. 
We welcome these challenges and recognise our responsibility goes beyond just compliance with regulations. 
As leaders in our sector, we have continued to engage with government and trade bodies to ensure we remain 
at the forefront of new environmental developments. Although we can be pleased with our performance to 
date, we should not become complacent. The sector must respond positively to forthcoming regulation and our 
customers’ demands for energy efﬁ cient and environmentally sustainable products. Pace will continue to be an 
industry leader on these issues.
The Pace difference
Digital television is a growing market and we are working with some of the world’s largest and most successful 
operators to capitalise on it. Our products and technological skills enable our customers to deliver new and 
exciting television services at a price and quality that make payTV attractive to consumers. 
The complexity of the products we develop, the long-term customer relationships, the deep understanding of 
their networks and business models create high barriers to market entry. As we continue to drive innovation 
and focus on world-class execution, I believe we can retain our leadership position and deliver great products 
to our customer every time. 
Outlook 
I am pleased that this year we have already shown signiﬁ cant improvements against our key metrics and achieved 
our short-term goals for the business in North America. Going forward, senior management is working with a highly 
motivated and accountable organisation, one that is focused on delivering and innovating leading products for our 
customers. Through this focus on our strategy and structure, we are better placed to address our key Company 
targets of margin performance, product execution, technology innovation and operational excellence. 
While signiﬁ cant progress has been made, we are not complacent as there remains much to do, given that this 
is a highly competitive and difﬁ cult market for all suppliers to predict. Pace is working hard to deliver against our 
critical success factors in an effort to try and deliver a more predictable business within this market. 
I am pleased with the progress we have made over the last year, and I am conﬁ dent that Pace is on track to meet 
expectations for the shortened ﬁ nancial year ending 31 December 2007. 
Neil Gaydon
Chief Executive Ofﬁ cer
24 July 2007
3111_PACE_AnnualReport_V10.indd   11 9/8/07   10:46:29 10 Pace Micro Technology plc Report & Accounts 2007
Central to growth is our ongoing ability to invest in research and development to create the new products and 
services that meet the needs of our payTV customers and keep us ahead of our competitors. We are working to 
ensure that we have strong ﬁ nancial controls in place and are particularly focused on delivering working capital 
and cash ﬂ ow improvements.
Trading in the period
Our concentration on delivery and customers has started to show improved results. Shipments increased by 77% 
to 3.9m set-top boxes (2006: 2.2m) and revenues more than doubled to £386.5m (2006: £178.1m). Average 
selling prices have risen from £81 to £100, reﬂ ecting the growing demand for higher speciﬁ cation products such as 
HD PVR, a demand Pace has been able to meet due to our ongoing early investment in new technology.
While gross margin improved from 15.3% in the ﬁ rst half to 16.6% in the second half, the full year outcome was 
15.9% (2006: 18.0%). As expected, this was a feature of some high volume products, in particular for the US 
market, with lower margins. In addition, the full beneﬁ t of the improvements we have made to product design and 
operations have not impacted some of the older and less cost-efﬁ cient designs still in production. 
Overheads
Overheads, excluding restructuring costs and the impact of IAS38, were £55.7m (2006: £55.6m). R&D spend, 
before capitalisation of development expenditure in line with IAS38, was £31.3m (2006: £28.7m) as Pace 
continued to invest in higher speciﬁ cation products such as HD PVR. The IAS38 adjustment was a net credit of 
£2.4m (2006: net credit £7.3m) as the delays in launching certain products in 2006 have been resolved during 
2007. 
At the year-end our total headcount was 599 (2006: 631), which includes 390 people in engineering (2006: 371), 
but excludes the 118 outsourced engineers working in our Pace India ofﬁ ce in Bangalore that are subcontracted 
from Tata Elxsi (2006: 101).
Proﬁ t before tax and retained proﬁ t
Proﬁ t before tax and exceptional charges was £6.1m (2006: loss of £15.6m). Exceptional costs were £1.2m 
(2006: £11.9m) representing the remaining costs of the 2006 restructuring and organisational changes. 
The interest charge was £2.2m (2006: credit £0.6m) due to the increased borrowing position during the year and 
the tax credit was £1.8m (2006: charge £1.3m), reﬂ ecting an increased recognition of deferred tax asset relating 
to brought forward tax losses
Retained proﬁ t for the year was £6.8m (2006: loss £28.8m). 
Chief Financial Ofﬁ cer’s Review
Stuart Hall CHIEF FINANCIAL OFFICER
I joined the Company in April 2007 and am very pleased to be 
part of Pace as we continue in our development as a world-class 
technology company. 
3111_PACE_AnnualReport_V10.indd   12 9/8/07   10:46:35 11 Pace Micro Technology plc Report & Accounts 2007
Taxation
The Group has accumulated UK tax losses of approximately £42m, of which 
£6.4m (i.e. £21m at a 30% tax rate) are recognised as deferred tax assets and 
£5.9m remains unrecognised (i.e. £21m at a 28% tax rate).
We will start to incur a normal UK tax charge, and will start to pay UK tax again, once 
available tax losses are utilised. In addition to the UK, where all of the commercial 
risk in our product strategy is taken, we have an exposure to US, French and other 
overseas jurisdictions (total tax charge in both years of £0.2m).
Cash ﬂ ow and banking facilities
The net working capital position improved in the year by £13.3m (2006: worsened 
£1.3m) due to a combination of inventory reduction £9.5m (2006: increase 
£24.7m), debtor increase £10.2m (2006: decrease £9.5m) and creditor increase 
£14.0m (2006: increase £13.8m). Inventory reduced principally as products 
developed in the previous ﬁ nancial year were delivered to customers. Debtors 
increased due to turnover more than doubling however debtor days improved slightly 
to 46 days (2006: 48 days). 
During the year the Group negotiated a new asset based lending facility of £35m 
secured principally against debtors. The Group ﬁ nished the period with a signiﬁ cant 
improvement in its net cash position at £11.9m (2006: net borrowings £6.1m), due 
mainly to the return to proﬁ tability within the period and the reduction in inventory 
levels following the resolution of delayed product approval in the prior year.
BALANCE SHEET
Non current assets
Property, plant and equipment levels show a decrease from £7.7m to £6.5m 
principally from a reduction in requirements given further extensions of the 
outsourcing model with our manufacturing partners.
Intangible assets represent capitalised development expenditure as required under 
IAS38 and represent 44% of our annual spend on research and development 
(2006: 41%).
Current assets and current liabilities
As noted above the net working capital position has changed in the period following 
the increased level of trading and proﬁ tability together with the reduction in inventory 
levels following the approvals of products in the period.
Provisions within one year relate entirely to the appropriate element of warranty 
provisions held.
Chief Financial Ofﬁ cer’s Review
continued
3111_PACE_AnnualReport_V10.indd   13 8/8/07   13:30:43 Non-current liabilities
Non-current liabilities represent royalties, where the position 
is essentially unchanged, and warranty provisions in respect 
of product warranties where the remaining warranty period 
exceeds 12 months.
Foreign exchange
While an increasing proportion of income has been received 
in the period in US dollars from sales into the US, a signiﬁ cant 
proportion of our income is still received in Sterling or Euros. 
The majority of our production costs are designated in US 
dollars. We have a policy of hedging progressively against 
movements in the value of foreign currencies, in respect of 
speciﬁ c cash receipts and payments expected over the next 
6 months. 
Year-end rates used in the accounts are $1.98:£1 (2006: 
$1.86:£1) and €1.46:£1 (2006: €1.46:£1). 
Business environment
Note 1 to the Financial Statements contains a review of 
the business environment in which Pace operates and the 
signiﬁ cant accounting judgements, key assumptions and 
estimation uncertainties.
Next year we will report on our shortened ﬁ nancial year, 
which will close on 31 December 2007. The change will 
enable us to more closely align our business reporting cycle 
with those of our principal customers and suppliers, which 
will beneﬁ t us in the future.
Stuart Hall
Chief Financial Ofﬁ cer
24 July 2007
12 Pace Micro Technology plc Report & Accounts 2007
3111_PACE_AnnualReport_V10.indd   14 9/8/07   10:46:47 13 Pace Micro Technology plc Report & Accounts 2007
Report of the Directors
REPORT OF THE DIRECTORS 
The directors present their report to shareholders on pages 13 to 20 together with the audited financial statements for the 52 week
period ended 2 June 2007 (prior year 52 weeks ended 3 June 2006).
PRINCIPAL ACTIVITIES 
The Group’s principal activities are the development, design and distribution of digital receivers and receiver decoders for the reception
of digital television and the reception/transmission of interactive services, telephony and high-speed data. The Group also provides
engineering design, support services and software applications to its set-top box customers. Each of these services may be delivered
over satellite, cable, terrestrial and IP network transmission systems.
BUSINESS REVIEW AND FINANCIAL RESULTS 
The information that fulfils the requirements of the Business Review, including a review of the Group’s activities, developments and
the financial results for the year, including the key financial performance indicators relevant to the business of the Company (principally
revenue, gross margin %, profit before tax and cash), can be found in the Chief Executive Officer’s Review and the Chief Financial
Officer’s Review on pages 4 to 12. Furthermore, an overview of the Group’s strategy and the key risks and uncertainties, together with
their management, is set out in the “Business Environment” section in note 1 to the financial statements. The aforementioned
information is incorporated in this report by reference.
The consolidated income statement for the 52 weeks ended 2 June 2007 is set out on page 31. The profit before tax was £4.9 million
(2006: loss £27.5 million). 
DIVIDEND 
No interim dividend was paid during the year. The directors do not recommend the payment of a final dividend (2006: nil).
SHARE CAPITAL 
Changes in the Company’s share capital during the year ended 2 June 2007 are set out in note 19 to the financial statements.
SIGNIFICANT SHAREHOLDINGS 
The Company has been notified of the following significant shareholdings as at 23 July 2007.
Number % of issued
of shares share capital
David Hood and related family trusts 44,486,957 19.08
Gartmore Investment Management 31,817,332 13.64
Robert Fleming and related family trusts 8,880,178 3.81
Legal & General Investment Management Limited 8,315,156 3.56
DIRECTORS 
The names of the current directors of the Company are shown below. Other than as described below in respect of David McKinney
and Stuart Hall, all those listed held office throughout the year.
Mike McTighe 
Mike, aged 53, was appointed a Non-executive Director in June 2001 and became Chairman on 1 May 2006. He is currently
Chairman of a number of private equity-backed companies and, in addition, is a Director of London Metal Exchange Holdings Ltd and
a non-executive Director of Alliance & Leicester plc. Mike also advises a number of private equity partnerships. Previously he was
Chairman & CEO of Carrier1 International SA, and before that Executive Director & Chief Executive, Global Operations of Cable &
Wireless plc. Prior to these experiences, Mike spent 5 years with Philips of the Netherlands, 5 years with Motorola, and 10 years
with GE.
$ 63107 Pace R&A 13-61 Qk7:R&A 13-61_  8/8/07  14:33  Page 13 Pace Micro Technology plc Report & Accounts 2007 14
Neil Gaydon
Neil, aged 47, was appointed Chief Executive Officer in April 2006. He was appointed to the Board in June 2002 as Worldwide Sales
and Marketing Director. He has been with the Company since 1995 and as President, Pace Americas spearheaded the development
of the Company’s US business between 1999 and December 2003. Prior to this he was Regional Sales Director EMEA and head of
New Business Development and Product Marketing for the Company. He is a board member of Bradford City of Film.
Pat Chapman-Pincher 
Pat, aged 60, was appointed a Non-executive Director in February 2005 and became Senior Independent Director in May 2006. She
has over 30 years’ experience in the communications industry from senior roles in multinational Internet and telecoms companies to
participating in technology company start-ups. A founding partner of the Cavell Group, which specialises in operational consultancy
IP and wireless technologies, she is also Chairman of Rapid Mobile Ltd, a non-executive director of Stepstone ASA and a non-executive
director of Friends of the Earth. 
Rob Fleming 
Rob, aged 51, joined the Company in 1983 and became Operations Director in 1984, with responsibility for production and
distribution. With effect from February 1999 he assumed responsibility for the Engineering function within the Group and became a
Non-executive Director of the Company in May 2001. He is Chief Executive of The Franklyn Group Limited, a care property group,
and a board member of Bradford U.R.C.
Marten Fraser 
Marten, aged 61, was appointed a Non-executive Director in February 2005. A Chartered Accountant, he was previously senior partner
at PricewaterhouseCoopers, Nottingham, where he worked in the Audit and Business Advisory Services Department, and prior to this
he was the partner in charge of the East Midlands practice of Price Waterhouse.
Stuart Hall
Stuart, aged 40, was appointed Chief Financial Officer and joined the Board on 2 April 2007. Before joining the Company he was
Group Finance Director of IQE plc and prior to that Finance Director of Energis Squared Limited and Director of Performance
Management for Energis Goup plc. He has also been Finance Director at WBF Ltd, part of the Adare Printing Group plc, Carnography
plc and Race Electronics. He qualified as a Chartered Accountant with BDO Binder Hamlyn.
David McKinney
David, aged 46, was appointed Chief Operating Officer in April 2006 and joined the Board on 24 October 2006. He has been with
the Company since November 2005, joining as Director of Engineering and Operations with responsibility for operations, engineering,
test and quality strategy. Previously David held a number of senior management and operational roles in technology and telecoms
companies including Motorola and Philips.
During the year David Brocksom also held office as a director, retiring from the Board on 2 February 2007.
Pat Chapman-Pincher and Marten Fraser will retire by rotation at the Annual General Meeting of the Company and offer themselves
for re-election. Stuart Hall and David McKinney, having been appointed by the Board subsequent to the last Annual General Meeting,
will hold office until the forthcoming Annual General Meeting and will then offer themselves for election at that meeting. Details of the
executive directors’ service contracts and the non-executive directors’ letters of appointment are disclosed on page 23.
PAYMENT TO SUPPLIERS 
It is the policy of the Group to agree terms and conditions for its business transactions with suppliers, which are varied from time to
time. Payment is made in accordance with those terms, subject to the other terms and conditions being met by the supplier. The Group
does not follow any code or standard on payment practice. Creditor days at the end of the year for the Group were 65 days (2006:
69 days) and for the Company were 65 days (2006: 68 days).
Report of the Directors continued
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RESEARCH AND DEVELOPMENT
The directors regard it as fundamental to the future success of the Group to engage in a substantial ongoing programme of research
and development of new products, spending £31.3 million in the year (2006: £28.7m) and charging £28.9 million (2006: £21.4m
before exceptional items) to the income statement during the year following the treatment under IAS38.
DONATIONS 
During the year the Group donated £40,800 (2006: £40,000) to charitable causes. No political donations were made. Further details
of the charitable and community-related activities of the Group are given on page 19. 
CORPORATE GOVERNANCE 
The directors believe that the Company has complied throughout the year with the Combined Code on Corporate Governance dated
June 2003, as revised and adopted by the Financial Reporting Council. The Board confirms that it has established the necessary
procedures designed to maintain a sound system of internal control and that there is an ongoing process for identifying, evaluating and
managing the significant risks faced by the Company.
BOARD OF DIRECTORS 
The Group is controlled through the Board of Directors, which comprises three executive and four non-executive directors who bring
a wide range of skills and experience to the Board. Biographical details of all directors are to be found on pages 13 and 14. The
Chairman, Mike McTighe, is mainly responsible for the running of the Board ensuring, together with the Company Secretary, that it
receives timely and clear information appropriate to enable it to discharge its duties. The responsibilities of the Chief Executive Officer,
Neil Gaydon, focus on running the Group’s business and implementing Group strategy. The Chief Executive Officer is assisted in
managing the business on a day-to-day basis by the Executive Committee as further described below. All the non-executive directors
are deemed by the Board to be independent apart from Rob Fleming who was previously an executive director of the Company. In
addition, the Board has designated Pat Chapman-Pincher as the Senior Independent Director. All directors have access to the advice
and services of the Company Secretary and are able to take independent professional advice at the Company’s expense in the
furtherance of their duties, if necessary. All directors, in accordance with the Combined Code, submit themselves for re-election at least
once every three years. New directors receive a programme of tailored induction on joining the Board and all directors are offered the
opportunity to continually update their skills and knowledge by attending external training events. 
The Board has a formal schedule of matters specifically reserved to it and normally meets monthly. It is responsible for overall Group
strategy, acquisition and divestment policy, approval of major capital expenditure projects and consideration of significant financing
matters. It reviews the strategic direction of the Group and conducts formal strategy reviews together with other senior executives
within the Group at least once a year. The Chairman holds meetings with the non-executive directors without the executive directors
being present at least twice during the year. 
Each year the Board undertakes a formal review and evaluation of its performance including the performance of its committees and
individual directors. This is conducted by written feedback in standardised form from each director to the Chairman or the Senior
Independent Director in the case of appraisal of the Chairman.
The Board has established the following committees, each of which has written terms of reference specifying its authority and duties
and copies of which are publicly available on the Company’s website: www.pacemicro.com. 
 The Audit Committee is comprised of independent designated non-executive directors, Pat Chapman-Pincher and Marten Fraser,
who is the Chairman of the Committee. The Committee has primary responsibility for making recommendations on the
appointment, reappointment or removal of the auditors and receives and reviews reports from management and from the auditors
relating to the interim and annual accounts and the control systems in use throughout the Group. Meetings are held by the
Committee with the auditors without executive management being present at least once a year and the Committee reviews
arrangements by which staff may, in confidence, raise concerns about possible improprieties, including review of the Group
whistleblowing policy. 
 The Executive Committee is chaired by Neil Gaydon as Chief Executive Officer. The Committee generally meets once a month
and ensures that the strategy, plans and policies previously agreed or delegated by the Board are implemented.
Report of the Directors continued
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The Executive Committee comprises the three executive directors together with the following senior executives:
Anthony Dixon General Counsel 
Jill Ezard Director of Human Resources 
David Gillies Director of Technology 
Helen Kettleborough Director of Corporate Communications 
Michael Pulli President, Pace Americas 
 The Remuneration Committee is comprised of independent designated non-executive directors Marten Fraser and Pat Chapman-
Pincher, who is the Chairman of the Committee. The Committee is responsible for setting the remuneration of the executive
directors and other members of the Executive Committee including making recommendations regarding the grant of share
options. The members of the Committee have no personal interest, other than as shareholders, in the matters to be decided, no
potential conflicts of interest arising from cross-directorships and no day-to-day involvement in the running of the business. 
 The Nominations Committee is comprised of non-executive directors Pat Chapman-Pincher, Marten Fraser and Rob Fleming,
together with Chief Executive Officer, Neil Gaydon, and is chaired by Mike McTighe. Its purpose is to consider and make
recommendations to the Board regarding the appointment of new directors.
BOARD AND COMMITTEE MEETINGS ATTENDANCE
Audit Remuneration Nominations
Board Committee Committee Committee
Total Meetings 12 4 3 1
David Brocksom 9 n/a n/a n/a
Pat Chapman-Pincher 12 4 3 1
Robert Fleming 12 n/a n/a 1
Marten Fraser 12 4 3 1
Neil Gaydon 12 n/a n/a 1
Stuart Hall* 2 n/a n/a n/a
David McKinney* 9 n/a n/a n/a
Mike McTighe 12 n/a n/a 1
*Director appointed during the year but has attended all meetings since appointment
DIRECTORS’ REMUNERATION 
The Remuneration Committee reviews the performance of the executive directors and other members of the Executive Committee as
a prelude to recommending their annual remuneration, bonus awards and award of share options to the Board for final determination.
The final determinations are made by the Board as a whole but no director plays a part in any discussions concerning their own
remuneration.
The Remuneration Report of the Directors to shareholders is set out on pages 21 to 26 and includes the remuneration policy of the
Company and details of directors’ incentive payments and the related performance criteria.
AUTHORITY TO PURCHASE OWN SHARES 
At the Annual General Meeting in 2006 the Company was authorised by shareholders to purchase up to 23,165,191 of its own
ordinary shares, representing 10 per cent of its issued share capital as at 25 September 2006. The Company did not utilise this
authority during the year. The authority for the Company to purchase its own shares expires at the conclusion of the Annual General
Meeting in 2007 and a resolution to renew it will be proposed at that meeting.
Report of the Directors continued
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ACCOUNTABILITY AND AUDIT 
A detailed review of the performance of the Group’s business is contained in the Chief Executive Officer’s Review and the Chief
Financial Officer’s Review. These statements, together with the Letter from the Chairman and the Report of the Directors, are intended
to present a balanced assessment of the Group’s position and prospects. The directors’ responsibility for the financial statements is
described on page 27 and the responsibilities of the auditors are described on pages 28 to 29.
INTERNAL CONTROLS 
Overall responsibility for the Group’s system of internal control rests with the Board of Directors. The Board has delegated certain of
its powers to the Audit Committee to review the effectiveness of the systems of control and to receive reports from the auditors and
from the management relating to the interim and annual accounts and the control systems in use throughout the Group. 
During the year and up to the date of this report, the Board carried out a review of the effectiveness of the Group’s internal controls.
The reviews were undertaken in accordance with the Financial Reporting Council’s guidance under the following headings and were
aimed at clearly identifying the systems already in place and the action plans necessary to improve areas of control weakness. 
 The control environment. Subject to those powers and limits of authority reserved by the Board, and to the Group policies and
guidelines they have established, the conduct of the business of the Group is delegated within a clearly defined organisational
structure and approved level of authority. The Board has also adopted a Code of Business Ethics, which has been incorporated
into the Employee Handbook issued to all employees. 
 Risk assessment. The directors and senior managers are responsible for identifying and monitoring sources of potential business
risk and financial risk, and for taking such preventative and protective actions as they consider necessary to manage such risks
effectively. During the year a risk assessment review of the Group’s business has been conducted in conjunction with the
Executive Committee. The Board has received and considered this review as part of an annual risk and control assessment. 
The Group’s systems are designed to identify and manage rather than eliminate significant business risks, including the risk of failure
to achieve business objectives and can only provide reasonable not absolute assurance against material misstatement or loss. Business
risks are identified, evaluated and managed through functional line management reporting to divisional meetings, Executive Committee
meetings and Board meetings as appropriate. Each member of the Executive Committee is required to highlight and report on any
significant business risks identified within their sphere of responsibility. 
The key business risks associated with the timely completion of long-term development projects and on-going business risks, including
alleged infringement of third party intellectual property rights, are managed by cross-functional teams of senior employees. Business
continuity plans addressing physical risks to the Group’s development sites are reviewed and updated at least annually. 
The Group structure has been changed during the year to create Customer Account Teams so as to focus the business on customer
needs. At the same time a review of systems and procedures was undertaken to simplify the way the business operates whilst
maintaining and enhancing controls with a view to attaining the highest standards in quality and reliability. 
 Financial control and information systems. The Group’s strategic direction is reviewed regularly by the Board and plans, budgets
and performance targets are reviewed and approved at least annually. Directors receive monthly summaries of financial results
which compare actual performance with targets, together with detailed management reports that identify the reasons for
variances and the progress achieved. Business planning documents are revised on a regular basis in line with actual and expected
performance.
 Control procedures. Financial control procedures have been developed for all of the main business functions and have been
documented in a procedures manual. Authorisation limits for purchases and capital expenditure are specified and procedures are
in place for minimising exposure to potential weaknesses in the receipt, handling and despatch of goods. The Group’s main
premises have received accreditation for BSI ISO 9001: 2000. 
Report of the Directors continued
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 Monitoring systems. Monitoring of the internal control systems is carried out by the centralised Group Finance Function.
 The Audit Committee considers annually whether there is a need to appoint a dedicated internal auditor and has determined that,
having regard to the size of the Group and the control and monitoring systems referred to above, there is no current business
requirement for such an appointment. 
Although no system of internal financial control can provide absolute assurance against material misstatement or loss, the Group’s
systems are designed to provide the directors with reasonable assurance that transactions are authorised and completely and
accurately recorded, that assets are safeguarded and that material errors, irregularities and actions contrary to Group policies and
directions are either prevented or promptly discovered. 
GOING CONCERN 
The directors, having taken account of the Group’s available bank facilities and the factors referred to in note 1 to the financial
statements and having reviewed the Group’s budget and forecasts for the period to 31 July 2008, consider that the Group has
adequate resources to continue in operational existence for the foreseeable future. Accordingly, they continue to adopt the going
concern basis in preparing the financial statements.
CORPORATE SOCIAL RESPONSIBILITY 
EMPLOYMENT POLICIES 
The directors recognise the importance of the Group’s employees to its success and future development and are committed to providing
an environment that will attract, motivate and reward high quality employees. The Group continues to invest in a range of internal and
external initiatives to promote employee development. This commitment has been acknowledged by Investors in People (IIP)
recognition. 
Employees are kept informed of matters affecting them as employees and factors affecting the performance of the Group through
monthly employee meetings/briefings and a Company newsletter, “Pacesetter”. In the UK, meetings of the Employee Partnership, an
elected forum for the discussion of work related issues, are held with members of the Executive Committee at least four times per year. 
The Group welcomes applications for employment from all sectors of the community and is striving to promote equality of opportunity
in employment regardless of age, sex, sexual orientation, disability or ethnic origin. It is the Group’s policy that training, career
development and promotion opportunities should be available to all employees. In the event that an employee becomes disabled, the
Group makes reasonable adjustments where any aspect of premises or working practices puts such a disabled employee at a
substantial disadvantage compared with a non-disabled employee. 
HEALTH AND SAFETY 
The Group has an established Health and Safety Committee made up of health and safety representatives, the health and safety officer
and other persons with expert knowledge who review health and safety issues relevant to the Group’s business. Other safety-related
committees also conduct periodic reviews of specific work practices. These actions complement the Health and Safety Executive’s
“Working Well Together” initiatives adopted and implemented by the Company. 
In the UK the health and safety officer continues to carry on ergonomic risk assessments and developing ergonomic strategies whilst
safety representatives conduct site inspections. These activities along with others contribute to the further advancement of local
workplace health and safety awareness and improvement. Generic and detailed risk assessments, chemical assessments and safe
systems of work guidance are maintained for the benefit of employees on the Company’s Intranet site. 
The importance of ongoing health and safety awareness training for managers and safety representatives is recognised. As part of this
process a number of health and safety “tool-box talks” have been designed to replace the IOSH Managing Safely courses previously
provided.
Report of the Directors continued
$ 63107 Pace R&A 13-61 Qk7:R&A 13-61_  8/8/07  14:32  Page 18 The number of UK workplace accidents during the year in 2007 was 18 and, as in previous years, none of these were reportable under
RIDDOR. A report concerning health and safety aspects of the Group’s business and copies of specific Group safety policy documents
can be obtained from the Company Secretary. 
CHARITABLE AND COMMUNITY SUPPORT 
The Group has an established Charitable Donations Committee comprising employees based at the Group’s premises in the UK, the
USA and France. The committee, which meets once a month, considers all requests for charitable and community project assistance
within a financial budget and criteria approved by the Board on an annual basis. 
The Group’s support through the committee is focused on the local geographical area of Pace’s premises in Saltaire, Grenoble and
Boca Raton in Florida, as well as the charitable and community initiatives of Group employees. The corporate charity policy focus is
to support local charities of benefit to the local area and people living close to each Group site. 
During the year 115 requests for support were considered by the committee, 89 of these satisfying the criteria and receiving financial
support amounting to £40,800. The participation of employees of the Group in community and charitable activities outside work hours
has been encouraged by the provision of funds to match individual sponsorship raised.
Further details of the charitable and community donations made during the year and criteria for awards made by the Charitable
Donations Committee can be obtained from the Company Secretary.
ENVIRONMENTAL MANAGEMENT 
The Company has maintained certification to the international management standard ISO 14001 at its Saltaire, Grenoble and Florida
sites and the Group Environmental Policy has been applied to all Pace sites worldwide. The Company is a signatory to the European
Code of Conduct on Energy Efficiency of Digital TV Service Systems and is committed to ensure that products are designed to minimise
energy consumption. 
The Company continues to monitor the proportion (by weight) of its products that is recyclable and procedures to ensure that each
product is checked for certain hazardous materials, in each case in anticipation of expected requirements of EU regulations. In addition,
procedures have been implemented to require that the packaging the Company specifies in the design process is recyclable. The
Company has adopted procedures for compliance with new environmental legislation including regulations implemented pursuant to
the Waste from Electrical and Electronic Equipment (WEEE) directive which became effective law in the UK in January 2007. The
Company’s business became compliant with the Restriction of Hazardous Substances (RoHS) directive in time for implementation of
the new requirements in July 2006. 
The Company has developed supplier assessment and approval procedures to evaluate the environmental performance of its suppliers
and sub-contractors. Using the supplier assessment and approval process, the Company intends to influence environmental awareness
of its subcontractors and component vendors. During the year the Company set environmental targets and achieved the following
outcomes in respect of its chosen measures of environmental impact:
Objective 2003 2004 2005 2006 2007
CO2 emission (tonnes) 3,000 2,371 2,115 3,200 3,430
Electricity (kWh) 3.5 million 3.1 million 3.7 million 3.8 million 3.6 million
Gas (kWh) 2.1 million 1.8 million 1.4 million 2.2 million 2.7 million
Water (m3/employee) 24.7 22.1 21.0 19.3 17.9
The Company comissioned its sixth independent Environmental Report prepared by consultants, Trucost plc. A copy of the Group’s
Environmental Policy Statement and the Environmental Report for the year can be obtained from the Company Secretary, or the
Company’s website: www.pacemicro.com. 
Report of the Directors continued
19 Pace Micro Technology plc Report & Accounts 2007
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AUDITORS 
KPMG Audit Plc held office as auditors during the year. A resolution for the re-appointment of KPMG Audit Plc will be proposed at the
forthcoming Annual General Meeting. 
The Audit Committee reviews the independence and objectivity of the auditors, considering whether, taken as a whole, the various
relationships (if any) between the Group and the auditors impairs, or appears to impair, the auditors’ judgement or independence.
Each of the directors who held office at the date of approval of this Report of the Directors confirms that, so far as they are aware,
there is no relevant audit information of which the Company’s auditors are unaware; and the directors have each taken all the steps
that they ought to have taken as a director to make themselves aware of any relevant audit information and to establish that the
Company’s auditors are aware of that information. 
RELATIONS WITH SHAREHOLDERS 
The Board has continued to establish and maintain relationships with institutional shareholders and communicates with investors
through the Group’s web site (www.pacemicro.com). A programme of meetings with institutional shareholders is in place (at which
institutional shareholders are offered the opportunity to meet with non-executive directors) and analyst presentations are made
following announcement of the interim and annual results. Shareholders are welcome to participate at the Annual General Meeting at
which the Board will be available for questions. 
ANNUAL GENERAL MEETING 
The Annual General Meeting of the Company will be held on Friday 19 October 2007 at the offices of the Company at Salts Mill,
Victoria Road, Saltaire, West Yorkshire, BD18 3LF. Full details of the business to be transacted at the meeting will be set out in the
Notice of Annual General Meeting. 
By order of the Board 
Anthony J Dixon 
Company Secretary
24 July 2007
Report of the Directors continued
$ 63107 Pace R&A 13-61 Qk7:R&A 13-61_  8/8/07  14:32  Page 20 The directors present their report to shareholders on pages 21 to 26 regarding remuneration matters in respect of the 52-week period
ended 2 June 2007. 
REMUNERATION COMMITTEE 
The Remuneration Committee (the Committee) is responsible for setting the individual remuneration of the executive directors and
other members of the Executive Committee within the framework of the remuneration policy described below, which is set by the
Board. 
The Directors who were members of the Committee at any time during the period ending 2 June 2007 were Pat Chapman-Pincher
and Marten Fraser. For guidance, the Committee makes use of surveys of executive pay and knowledge of market rates. The Committee
was assisted in its consideration of remuneration matters by New Bridge Street Consultants, who gave advice regarding directors’ and
senior executive remuneration during the year. New Bridge Street Consultants provided no other services to the Group in the year.
Pinsent Masons, legal advisers to the Company, also advised the Committee regarding certain share option related issues. 
REMUNERATION POLICY 
The Board believes that it is necessary to ensure that the remuneration packages of the executive directors remain competitive in order
to attract, retain and motivate executive directors and senior managers of a high calibre and to reward them for performance. The
policy is for a significant proportion of executive directors’ total remuneration to be capable of being earned from variable, performance-
based incentives, through annual bonuses and share options. The objective of this policy is to provide rewards and incentives that
reflect corporate and individual performance and align management’s objectives directly with those of the Group. 
The Board’s policy in relation to non-executive directors continues to be to pay fees that are competitive with the fees paid by
comparable quoted companies. Non-executive directors’ fees are determined by the Board as a whole within the limits set out in the
Company’s Articles of Association. Non-executive directors are not eligible for performance bonuses or pension contributions and do
not participate in the share option schemes. 
SALARY 
Basic salary for each executive director is determined by the Committee, taking into account the performance of the individual and
information from independent sources on the rates of salary for comparable jobs. In setting senior executives’ salaries, the Committee
also takes into account pay and employment conditions in the Group as a whole. Salary is generally reviewed immediately prior to
commencement of each financial year and such a review took place in June 2007. 
PERFORMANCE BONUS 
The Company established a non-pensionable performance-related bonus scheme for the executive directors and other key members of
management for the year ended 2 June 2007, which was based on the successful achievement of corporate and individual objectives.
The corporate objectives were linked to the interests of shareholders and the key measure therefore was the profitability of the Group
for the full financial year. Achievement of the bonus was dependent on the Group’s pre-tax profits (before certain exceptional items)
exceeding break-even with the capacity to earn additional bonus increments upon achievement of higher profit targets up to a ceiling
of £8.0 million. In addition, a number of individual personal objectives were set for each director and manager, which were aligned
with the objectives of the Group for the year. A similarly-structured performance-related bonus scheme for the executive directors and
other key senior executives is in effect in respect of the current financial year but with new pre-tax profit targets set in June 2007. In
each year the maximum bonus achievable by the executive directors in the event that all corporate and individual targets are met is
100% of basic annual salary.
The bonus payments made to David Brocksom during the year were linked to successful delivery of specific individual performance
targets. Stuart Hall did not participate in the 2006 Group bonus scheme, but was awarded a signing-on bonus on commencement of
his employment.
BENEFITS IN KIND 
Each executive director is entitled to benefits such as the provision of a fully expensed company car plus fuel (or cash alternative),
private medical insurance, permanent health insurance and life insurance. 
Directors’ Remuneration Report
21 Pace Micro Technology plc Report & Accounts 2007
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PENSION CONTRIBUTIONS 
In the year ending 2 June 2007, contributions were paid into the executive directors’ pension schemes at rates determined by the
Board. Contributions have continued to be paid during the current year at the rate of 15% of each director’s basic salary. The Group
does not operate any defined benefit schemes. 
SHARE OPTION SCHEMES 
The Board believes that share ownership encourages employees to contribute further towards improvements in the Group’s
performance. To this end, the following share option schemes have been established by the Company. 
 A regular savings scheme (the “Sharesave Scheme”), which is open to executive directors and employees of the Group and under
which options, granted at an initial discount of up to 20% against the quoted market price, are normally exercisable on
completion of a three-year SAYE contract. 
 An HMRC Approved Discretionary Scheme (the “Approved Scheme”) under which all employees, including full-time directors of
the Company or any subsidiary, who do not have and have not had within the previous twelve months a material interest in the
Company, are eligible to participate. Participation is at the discretion of the Board, acting in accordance with the
recommendations of the Committee. Under the Approved Scheme, options are granted at the prevailing quoted market price and
may usually be exercised between three and ten years from the date of the grant. The Company adopted its first Approved
Scheme in 1996 and a new Approved Scheme at the AGM in September 2005. 
 An Unapproved Discretionary Scheme (“Unapproved Scheme”), which is similar to the Approved Scheme, although certain rules
of the Approved Scheme are not included e.g. the exclusion of employees who have a material interest in the Company. The
Company adopted its first Unapproved Scheme in 1996 and a new Unapproved Scheme at the AGM in September 2005. 
 A Discretionary Unapproved Scheme 2000 (“2000 Unapproved Scheme”). Under the 2000 Unapproved Scheme options have
been granted at the prevailing quoted market price and become exercisable (“vest”) as to 25% each anniversary after the grant
over a four-year period. Under this scheme Basic Options may be granted up to a limit such that unvested options may not exceed
four times annual remuneration. For a category of up to 55 key employees there was the ability to award options (“Super
Options”) above the limit for Basic Options. The 2000 Unapproved Scheme was discontinued in August 2005, but outstanding
options previously granted survive until exercise or lapse.
In granting options under the Approved Schemes and the Unapproved Schemes, the Board may include objective performance targets
or other conditions as it thinks fit and has included such performance conditions based on growth in earnings per share (EPS) of 15-
18% above the Retail Prices Index (“RPI”) over a three-year period in all grants under the 1996 Approved Scheme and 1996
Unapproved Scheme prior to 2005. Under the 2000 Unapproved Scheme performance conditions of 6% per annum and 20% per
annum compound above RPI were applied to the grant of Basic Options and Super Options respectively thereunder. Initial performance
targets for the 2005 Approved and 2005 Unapproved Schemes required a minimum growth in EPS of a compound 3% per annum
above growth in inflation over a three year period at which level there is 25% vesting. Compound growth of 6% per annum above
inflation is required for 100% vesting, with vesting on a sliding scale between these two target thresholds.
In setting targets for option grants in the year, the Committee was mindful of the need for targets to reflect a return to profitability and
significant improvements in earnings. Accordingly, during the year all options granted were subject to performance conditions based
on growth in the pre-tax profits of the Group (“PBT”) over a period of three financial years with 25% of options vesting at £6.9 million
PBT in the third financial year and 100% of options vesting at £17.2 million PBT in the third financial year, with vesting on a sliding
scale between these two target thresholds. These target thresholds are stated after adjustment by decision of the Committee (having
taken external advice) to take account of the shortened financial year ending 31 December 2007. These options remain exercisable
only after 3 years from the date of grant. In order to assess whether the performance conditions have been met, the Committee will
utilise the earnings figures derived from the audited financial statements of the Group and in the event that there is alteration of the
financial years relevant to the options, the Committee has discretion to make appropriate adjustment to the performance conditions. 
In respect of any options to be granted during the current financial year, the Committee proposes to adopt a similar approach regarding
the setting of performance targets but will have regard to the target growth in pre-tax profits of the Group over the subsequent three
financial years in order to ensure that targets are sufficiently stretching.
Directors’ Remuneration Report continued
$ 63107 Pace R&A 13-61 Qk7:R&A 13-61_  8/8/07  14:32  Page 22 In addition, a separate share option plan has been established for the benefit of the Group’s US employees. Such plan operates within
the overall limit on issue of new shares of 10% of the Company’s issued share capital applicable to all the Group’s employee share
schemes. The Pace Americas Sharesave Plan is based on the Sharesave Scheme rules and is designed to satisfy the US Internal
Revenue Service requirements for such saving-for-shares plans. 
SERVICE CONTRACTS 
Company policy is that in normal circumstances executive directors’ notice periods should not exceed one year. Each of the executive
directors has a service contract with the Company. Each of these agreements is terminable by the Company on twelve months’ prior
written notice or by the relevant director on not less than six months’ prior written notice. In respect of executive directors’ service
agreements entered into prior to 2006, at the option of the Company, each agreement may be terminated forthwith subject to the
Company paying a sum equivalent to 12 months’ salary, benefits and pension contributions. The Remuneration Committee considers
that compensation payments on termination of employment should depend on individual circumstances. 
It is the Company’s policy to honour its obligations with regard to directors’ service agreements and where the employment of a director
is terminated in accordance with the aforementioned contractual process the Company will pay the sum specified in the relevant
service agreement as payable or otherwise pay fair and reasonable compensation. During the year the Company terminated David
Brocksom’s service agreement without contractual notice in accordance with its terms and a termination payment of £153,679 was
paid to him, representing 12 months’ basic salary, benefits and pension contributions. 
The service agreement of Neil Gaydon was entered into on 4 May 2006 and was amended on 16 April 2007. The service agreement
of David McKinney was entered into on 14 November 2005 and was subsequently amended on 7 December 2006 and 1 June 2007.
The service agreement of Stuart Hall became effective on 2 April 2007. Save for the notice periods referred to in the above paragraph,
these contracts have no unexpired term. 
Each of the non-executive directors is appointed under a letter of appointment which is terminable at any time by the Company without
contractual notice. Each of the directors has a letter of indemnity issued by the Company which provides an indemnity in respect of
liabilities incurred in the course of their office to the extent permitted by the Company’s Articles of Association and the provisions of
section 309B of the Companies Act 1985. 
Copies of the service contracts of the executive directors and the letters of appointment of the non-executive directors, together with
the letters of indemnity referred to above, are available for inspection during normal business hours (Saturdays, Sundays and Bank
Holidays excepted) at the registered office of the Company. 
The Company maintains directors’ and officers’ liability insurance in respect of senior employees including the directors. The consent
of the Board is required in the event that an executive director wishes to accept an external appointment. It has been the practice of
the Company to permit a director to retain non-executive fees arising from any such appointment but during the year none of the current
executive directors held such external appointments.
The auditors are required to report on the information disclosed below and on pages 24 to 25.
DIRECTORS’ REMUNERATION
Total directors’ remuneration in respect of qualifying services for the year ended 2 June 2007 was as follows:
2007 2006
£000 £000
Fees 203 183
Salaries, benefits in kind and termination payments 706 930
Performance-related bonuses 426 –
Pension contributions 76 77
1,411 1,190
Directors’ Remuneration Report continued
23 Pace Micro Technology plc Report & Accounts 2007
$ 63107 Pace R&A 13-61 Qk7:R&A 13-61_  8/8/07  14:32  Page 23 Pace Micro Technology plc Report & Accounts 2007 24
The remuneration of individual directors in respect of qualifying services for the year ended 2 June 2007 is set out in the table
below:
Salaries Performance Benefits Termination Total Pension
and fees bonus in kind payment remuneration contributions
2007 2006 2007 2006
Executive Directors £000 £000 £000 £000 £000 £000 £000 £000
Neil Gaydon 293 275 1 – 569 198 41 23
David Brocksom* 104 54 1 154 313 152 14 20
David McKinney* 117 72 – – 189 – 16 –
Stuart Hall* 36 25 – – 61 – 5 –
550 426 2 154 1,132 350 76 43
Non-executive Directors
Mike McTighe 100 – – – 100 33 – –
Pat Chapman-Pincher 33 – – – 33 27 – –
Robert Fleming 37 – – – 37 27 – –
Marten Fraser 33 – – – 33 29 – –
753 426 2 154 1,335 466 76 43
*Remuneration referable only to period of the financial year since date of appointment to the Board or up to date of retirement from
the Board.
**Figures for the financial year ended 3 June 2006 exclude remuneration of £580,000, £60,000 and £7,000 paid to former directors
John Dyson, Sir Michael Bett, and Bob Lambourne respectively and pension contributions of £34,000 for Mr Dyson.
A termination payment of £153,679 was paid to David Brocksom by way of compensation for termination of employment and, of such
compensation, £20,802 was paid by way of pension contribution.
The fees paid to Robert Fleming included £7,000 in respect of additional services provided to the Company during 2006.
A summary of the benefits in kind provided to the executive directors is contained on page 21.
DIRECTORS’ INTERESTS IN SHARES AND SHARE OPTIONS
The interests of directors holding office at the year-end, and those of their immediate families, in the ordinary share capital of the
Company at 2 June 2007 and at the beginning of the year are set out below:
2 June 2007 4 June 2006
Shares Shares
Non Under Non Under
Beneficial Beneficial option Beneficial Beneficial option
Pat Chapman-Pincher – – – – – –
Robert Fleming 8,850,990 29,188 – 8,850,990 29,188 – 
Marten Fraser 20,000 – – 3,000 – –
Neil Gaydon 41,684 – 2,424,638 28,910 – 1,526,499
Stuart Hall 12,739 – 546,075 – – –
David McKinney 15,000 – 773,159 – – –
Mike McTighe 75,000 – – 20,000 – –
There were no changes in the directors’ interests in the ordinary share capital of the Company between 2 June 2007 and 24 July
2007.
Directors’ Remuneration Report continued
** **
$ 63107 Pace R&A 13-61 Qk7:R&A 13-61_  8/8/07  14:32  Page 24 SHARE OPTIONS
Details of the options over the ordinary shares of 5p each in the Company held by the directors who held office during the year were
as follows:
At At 
4 June Number of options 2 June* Exercise Exercise Period
2006 Granted Exercised Lapsed 2007 Price From To
Neil Gaydon
Approved Scheme         3,498 – – – 3,498 857.5p 17.07.03 16.07.10
1996 Unapproved Scheme 75,000 – – – 75,000 64.0p 24.09.01 23.09.08
1996 Unapproved Scheme 75,000 – – – 75,000 200.0p 07.07.02 06.07.09
1996 Unapproved Scheme 250,000 – – – 250,000 74.25p 02.08.08 01.08.15
2000 Unapproved Scheme 93,252 – – 93,252 – 375.0p 24.07.02 23.07.11
2000 Unapproved Scheme     7,023 – – – 7,023 20.0p 21.01.04 20.01.13
2000 Unapproved Scheme      80,000 – – – 80,000 51.0p 17.08.05 16.08.14
2000 Super Option        56,748 – – 56,748 – 375.0p 24.07.02 23.07.11
2000 Super Option 456,977 – 34,769 – 422,208 20.0p 21.01.04 20.01.13
2005 Unapproved Scheme 600,000 – – – 600,000 63.5p 18.04.09 17.04.16
2005 Unapproved Scheme – 902,127 – – 902,127 58.75p 02.10.09 01.10.16
Sharesave Scheme    9,633 – 9,633 – – 35.5p 01.10.06 31.03.07
Sharesave Scheme          3,141 – 3,141 – – 60.0p 01.04.07 30.09.07
Sharesave Scheme          – 9,782 – – 9,782 46.0p 01.12.09 30.05.10
David Brocksom
Approved Scheme 38,461 – – 38,461 – 78.0p 16.02.07 15.02.14
2000 Unapproved Scheme 211,539 – – 105,770 105,769 78.0p 16.02.05 15.02.14
2000 Unapproved Scheme 80,000 – – 60,000 20,000 51.0p 17.08.05 16.08.14
1996 Unapproved Scheme 200,000 – – 100,000 100,000 74.25p 02.08.08 01.08.15
2005 Unapproved Scheme – 472,098 – 472,098 – 58.75p 02.10.09 01.10.19
Sharesave Scheme               19,635 – – 19,635 – 48.0p 01.10.07 31.03.08
David McKinney
2005 Approved Scheme         47,430 – – – 47,430 63.25p 22.01.09 21.01.16
2005 Unapproved Scheme 202,570 – – – 202,570 63.25p 22.01.09 21.01.16
2005 Unapproved Scheme – 510,638 – – 510,638 58.75p 02.10.09 01.10.16
Sharesave Scheme          – 12,521 – – 12,521 46.0p 01.12.09 30.05.10
Stuart Hall
2005 Approved Scheme         – 40,955 – – 40,955 73.25p 02.04.10 01.04.17
2005 Unapproved Scheme – 505,120 – – 505,120 73.25p 02.04.10 01.04.17
*In the case of David Brocksom information given as at date of cessation, 2 February 2007.
On 16 October 2006 Neil Gaydon exercised an option over 9,633 shares under the Sharesave Scheme, retaining such shares. The
share price at this date was 58.50p, giving a notional gain of £2,216. 
On 4 April 2007 Neil Gaydon exercised an option over 3,141 shares under the Sharesave Scheme, retaining such shares. The share
price at this date was 74p, giving a notional gain of £440. 
On 22 March 2007 Neil Gaydon exercised an option over 34,769 Super Options and sold 17,392 shares arising at a price of 71p
per share creating a gain of £5,323, after expenses. On 22 March 2007 Neil Gaydon gifted 17,377 shares to his wife. 
The mid-market price of shares in the Company on 1 June 2007 (the last dealing day before the financial year end) was 91p. The
lowest and highest closing mid-market prices of shares in the Company during the year were 34p and 91p respectively. 
Information concerning the performance conditions attached to the above options is contained on page 22. 
Directors’ Remuneration Report continued
25 Pace Micro Technology plc Report & Accounts 2007
$ 63107 Pace R&A 13-61 Qk7:R&A 13-61_  8/8/07  14:32  Page 25 Pace Micro Technology plc Report & Accounts 2007 26
EMPLOYEE TRUSTS 
The Company has established the Pace Micro Technology plc Employee Benefits Trust, which is capable of acquiring shares in the
Company in the market and using them for the purposes of satisfying new share options granted under the Company’s Share Option
Schemes. No shares were acquired by the Trust during the year. 
The Company has established the Pace QUEST (Qualifying Employee Share Trust), which is capable of acquiring shares in the
Company either through purchases in the market or allotment and of using any such shares for the purposes of satisfying options under
the Company’s Sharesave Scheme. No shares were acquired by the QUEST during the year. 
During the year 254,321 options under the Company’s Sharesave Scheme were exercised and were satisfied by shares transferred by
the QUEST .
PERFORMANCE GRAPH 
Set out below is a performance graph showing the total shareholder return of the Company for the five financial years ended 2 June
2007 compared to the total shareholder return of the FTSE Electronics and Electrical Equipment sector index which is considered by
the Board to be an appropriate benchmark index against which to compare the Company’s performance having regard to the principal
activities of the Group.
By order of the Board 
Anthony J Dixon 
Company Secretary 
24 July 2007  
Directors’ Remuneration Report continued
120
100
80
60
40
20
0
2002 2003 2004 2005 2006 2007
Pace FTSE Electronics & Electrical Equipment
$ 63107 Pace R&A 13-61 Qk7:R&A 13-61_  8/8/07  14:32  Page 26 27 Pace Micro Technology plc Report & Accounts 2007
The directors are responsible for preparing the Directors’ Report and the group and parent company financial statements in accordance
with applicable law and regulations. 
Company law requires the directors to prepare group and parent company financial statements for each financial year. Under that law
they are required to prepare the group financial statements in accordance with IFRSs as adopted by the EU and applicable laws and
have elected to prepare the parent company financial statements on the same basis. 
The group and parent company financial statements are required by law and IFRSs as adopted by the EU to present fairly the financial
position of the group and the parent company and the performance for the financial year; the Companies Act 1985 provides in relation
to such financial statements that references in the relevant part of that Act to financial statements giving a true and fair view are
references to their achieving a fair presentation. 
In preparing each of the group and parent company financial statements, the directors are required to: 
 select suitable accounting policies and then apply them consistently; 
 make judgements and estimates that are reasonable and prudent; 
 state whether they have been prepared in accordance with IFRSs as adopted by the EU; and 
 prepare the financial statements on the going concern basis unless it is inappropriate to presume that the group and the parent
company will continue in business. 
The directors are responsible for keeping proper accounting records that disclose with reasonable accuracy at any time the financial
position of the parent company and enable them to ensure that its financial statements comply with the Companies Act 1985. They
have general responsibility for taking such steps as are reasonably open to them to safeguard the assets of the group and to prevent
and detect fraud and other irregularities. 
Under applicable law and regulations, the directors are also responsible for preparing a directors’ report, directors’ remuneration report
and corporate governance statement that comply with that law and those regulations. 
A copy of the accounts of the Company is posted on the Pace Micro Technology plc website (www.pacemicro.com). 
The directors are responsible for the maintenance and integrity of the corporate and financial information included on the Company’s
website. Legislation in the UK governing the preparation and dissemination of financial statements may differ from legislation in other
jurisdictions.
Statement of Directors’ Responsibilities
$ 63107 Pace R&A 13-61 Qk7:R&A 13-61_  8/8/07  14:32  Page 27 Pace Micro Technology plc Report & Accounts 2007 28
We have audited the Group and parent company financial statements (the “financial statements”) of Pace Micro Technology plc for the
year ended 2 June 2007 which comprise the Group Income Statement, the Group and Parent Company Balance Sheets, the Group
and Parent Company Cash Flow Statements, the Group and Parent Company Statements of Changes in Equity, and the related notes.
These financial statements have been prepared under the accounting policies set out therein. We have also audited the information in
the Directors’ Remuneration Report that is described as having been audited. 
This report is made solely to the Company’s members, as a body, in accordance with section 235 of the Companies Act 1985. Our
audit work has been undertaken so that we might state to the Company’s members those matters we are required to state to them in
an auditor’s report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone
other than the Company and the Company’s members as a body, for our audit work, for this report, or for the opinions we have formed. 
Respective responsibilities of directors and auditors 
The directors’ responsibilities for preparing the Annual Report, the Directors’ Remuneration Report and the financial statements in
accordance with applicable law and International Financial Reporting Standards (IFRSs) as adopted by the EU are set out in the
Statement of Directors’ Responsibilities on page 27. 
Our responsibility is to audit the financial statements and the part of the Directors’ Remuneration Report to be audited in accordance
with relevant legal and regulatory requirements and International Standards on Auditing (UK and Ireland). 
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 part of the Directors’ Remuneration Report to be audited have been properly prepared in accordance with the Companies Act
1985 and, as regards the Group financial statements, Article 4 of the IAS Regulation. We also report to you whether in our opinion
the information given in the Directors’ Report is consistent with the financial statements. The information given in the Directors’ Report
includes that specific information presented in the Chief Executive Officer’s Review and the Chief Financial Officer’s Review that is
cross referred from the Business Review section of the Directors’ Report. 
In addition we report to you if, in our opinion, 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 other
transactions is not disclosed. 
We review whether the Corporate Governance Statement reflects the Company’s compliance with the nine provisions of the 2003
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 form an opinion on the
effectiveness of the Group’s corporate governance procedures or its risk and control procedures. 
We read the other information contained in the Annual Report and consider whether it is consistent with the audited financial
statements. We consider the implications for our report if we become aware of any apparent misstatements or material inconsistencies
with the financial statements. Our responsibilities do not extend to any other information. 
Independent Auditors’ Report to the Members of
Pace Micro Technology plc
$ 63107 Pace R&A 13-61 Qk7:R&A 13-61_  8/8/07  14:32  Page 28 Basis of audit opinion 
We conducted our audit in accordance with International Standards on Auditing (UK and Ireland) 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 part of the Directors’ Remuneration Report to be audited. It also includes an assessment of the significant estimates and
judgments made by the directors in the preparation of the financial statements, and of whether the accounting policies are appropriate
to the Group’s and 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 part of the Directors’
Remuneration Report to be audited 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 and the part
of the Directors’ Remuneration Report to be audited. 
Opinion 
In our opinion: 
 the Group financial statements give a true and fair view, in accordance with IFRSs as adopted by the EU, of the state of the
Group’s affairs as at 2 June 2007 and of its profit for the year then ended; 
 the parent company financial statements give a true and fair view, in accordance with IFRSs as adopted by the EU as applied in
accordance with the provisions of the Companies Act 1985, of the state of the parent company’s affairs as at 2 June 2007; 
 the financial statements and the part of the Directors’ Remuneration Report to be audited have been properly prepared in
accordance with the Companies Act 1985 and, as regards the Group financial statements, Article 4 of the IAS Regulation; and 
 the information given in the Directors’ Report is consistent with the financial statements. 
KPMG Audit Plc 
Chartered Accountants 
Registered Auditor 
Leeds 
24 July 2007
Independent Auditors’ Report to the Members of
Pace Micro Technology plc continued
29 Pace Micro Technology plc Report & Accounts 2007
$ 63107 Pace R&A 13-61 Qk7:R&A 13-61_  8/8/07  14:32  Page 29  
Pace Micro Technology plc Report & Accounts 2007 30
CONTENTS
31 FINANCIAL STATEMENTS
37 NOTES TO THE FINANCIAL STATEMENTS
59 DIRECTORS, SECRETARY AND ADVISERS
60 FIVE YEAR RECORD AND SHAREHOLDER INFORMATION
Financial Statements 2007
$ 63107 Pace R&A 13-61 Qk7:R&A 13-61_  8/8/07  14:32  Page 30 31 Pace Micro Technology plc Report & Accounts 2007
Note 52 weeks ended 2 June 2007 52 weeks ended 3 June 2006
Results Exceptional Results for Results Exceptional Results for
before items the year before Items the year
exceptional exceptional
items items
£000 £000 £000 £000 £000 £000
Revenue 3 386,513 – 386,513 178,095 – 178,095
Cost of sales 5 (324,865) – (324,865) (145,984) (5,500) (151,484)
Gross Profit 61,648 – 61,648 32,111 (5,500) 26,611
Administrative expenses:
Research & development
expenditure 5 (28,949) – (28,949) (21,433) (3,500) (24,933)
Other administrative 
expenses 5 (24,379) (1,208) (25,587) (26,864) (2,383) (29,247)
Total Administrative expenses (53,328) (1,208) (54,536) (48,297) (5,883) (54,180)
Other operating expenses:
Impairment loss on available for sale
financial asset 5 – – – – (505) (505)
Operating profit/(loss) 8,320 (1,208) 7,112 (16,186) (11,888) (28,074)
Finance income 6 138 – 138 755 – 755
Finance costs 6 (2,325) – (2,325) (131) – (131)
Profit/(loss) before tax 6,133 (1,208) 4,925 (15,562) (11,888) (27,450)
Tax credit/(charge) 8 1,841 (1,334)
Profit/(loss) after tax 6,766 (28,784)
Attributable to:
Equity holders of the Company 6,766 (28,784)
Basic earnings/(loss) per
ordinary share 9 3.0p (13.0)p
Diluted earnings/(loss) per
ordinary share 9 3.0p (13.0)p 
Consolidated Income Statement
For the 52 weeks ended 2 June 2007
$ 63107 Pace R&A 13-61 Qk7:R&A 13-61_  8/8/07  14:32  Page 31 Note 2 June 2007 3 June 2006
£000 £000
Assets
Non Current Assets
Property, plant and equipment 10 6,508 7,671
Goodwill 10 9,436 9,436
Intangible assets – development expenditure 10 13,670 11,286
Available for sale financial assets 11 349 349
Deferred tax assets 12 4,968 2,887
Total Non Current Assets 34,931 31,629
Current Assets
Inventories 13 25,268 34,792
Trade and other receivables 14 52,563 42,337
Cash and cash equivalents 12,049 –
Total Current Assets 89,880 77,129
Total Assets 124,811 108,758
Equity
Issued capital 19 11,659 11,576
Share premium 20 36,751 36,246
Translation reserve 227 240
Retained earnings 21 2,300 (5,595)
Total Equity 50,937 42,467
Liabilities
Non Current Liabilities
Interest bearing loans and borrowings 16 99 154
Provisions 18 9,646 9,284
Total Non Current Liabilities 9,745 9,438
Current Liabilities
Trade and other payables 15 59,368 45,406
Current tax liabilities 282 3
Interest bearing loans and borrowings 16 60 5,937
Provisions 18 4,419 5,507
Total Current Liabilities 64,129 56,853
Total Liabilities 73,874 66,291
Total Equity and Liabilities 124,811 108,758
Pace Micro Technology plc Report & Accounts 2007 32
Consolidated Balance Sheet
At 2 June 2007
These financial statements were approved by the Board of Directors on 24 July 2007 and were signed on its behalf by:
Neil Gaydon Chief Executive Officer
Stuart Hall Chief Financial Officer
$ 63107 Pace R&A 13-61 Qk7:R&A 13-61_  8/8/07  14:32  Page 32 33 Pace Micro Technology plc Report & Accounts 2007
Note 2 June 2007 3 June 2006
£000 £000
Assets
Non Current Assets
Property, plant and equipment 10 5,229 6,348
Intangible assets – development expenditure 10 13,670 11,286
Investments in group and other companies 11 9,749 9,749
Deferred tax assets 12 4,968 2,887
Total Non Current Assets 33,616 30,270
Current Assets
Inventories 13 25,268 19,160
Trade and other receivables 14 52,099 53,594
Cash and cash equivalents 11,275 –
Total Current Assets 88,642 72,754
Total Assets 122,258 103,024
Equity
Issued capital 19 11,659 11,576
Share premium 20 36,751 36,246
Retained earnings 21 (2,401) (10,240)
Total Equity 46,009 37,582
Liabilities
Non Current Liabilities
Provisions 18 9,646 9,284
Total Non Current Liabilities 9,646 9,284
Current Liabilities
Trade and other payables 15 61,820 43,479
Current tax liabilities 364 275
Interest bearing loans and borrowings 16 – 6,897
Provisions 18 4,419 5,507
Total Current Liabilities 66,603 56,158
Total Liabilities 76,249 65,442
Total Equity and Liabilities 122,258 103,024
Company Balance Sheet
At 2 June 2007
These financial statements were approved by the Board of Directors on 24 July 2007 and were signed on its behalf by:
Neil Gaydon Chief Executive Officer
Stuart Hall Chief Financial Officer
$ 63107 Pace R&A 13-61 Qk7:R&A 13-61_  8/8/07  14:32  Page 33 Group Share ShareTranslation Retained Total 
capital premium reserve earnings equity
£000 £000 £000 £000 £000
Balance at 4 June 2005 11,349 35,677 150 22,576 69,752
Loss for the period – – – (28,784) (28,784)
Currency translation adjustments – – 90 – 90
Total income and expense for the period – – 90 (28,784) (28,694)
Employee share incentive charges – – – 493 493
Movement in employee share trusts – – – 120 120
Issue of shares 227 569 – – 796
Balance at 3 June 2006 11,576 36,246 240 (5,595) 42,467
Profit for the period – – – 6,766 6,766
Currency translation adjustments – – (13) – (13)
Total income and expense for the period – – (13) 6,766 6,753
Employee share incentive charges – – – 684 684
Movement in employee share trusts – – – 445 445
Issue of shares 83 505 – – 588
Balance at 2 June 2007 11,659 36,751 227 2,300 50,937
Company
Balance at 4 June 2005 11,349 35,677 – 17,210 64,236
Loss for the period (Total income and expense) – – – (28,063) (28,063)
Employee share incentive charges – – – 493 493
Movement in employee share trusts – – – 120 120
Issue of shares 227 569 – – 796
Balance at 3 June 2006 11,576 36,246 – (10,240) 37,582
Profit for the period (Total income and expense) – – – 6,710 6,710
Employee share incentive charges – – – 684 684
Movement in employee share trusts – – – 445 445
Issue of shares 83 505 – – 588
Balance at 2 June 2007 11,659 36,751 – (2,401) 46,009
Pace Micro Technology plc Report & Accounts 2007 34
Consolidated Statement of Changes
in Shareholders’ Equity
$ 63107 Pace R&A 13-61 Qk7:R&A 13-61_  8/8/07  14:33  Page 34 35 Pace Micro Technology plc Report & Accounts 2007
52 weeks 52 weeks 
ended 2 June ended 3 June
2007 2006
£000 £000
Cash flows from operating activities
Profit/(loss) before tax 4,925 (27,450)
Adjustments for:
Share based payments charge 684 493
Depreciation of property, plant and equipment 4,277 4,116
Amortisation and impairment of development expenditure 14,172 13,296
Impairment of available for sale financial assets – 505
Loss on sale of property, plant and equipment 90 241
Net financial charge/(income) 2,187 (624)
Movement in trade and other receivables (9,966) 9,490
Movement in trade and other payables 13,794 13,871
Movement in inventories 9,524 (24,657)
Movement in provisions (826) 51
Cash generated from/(used in) operations 38,861 (10,668)
Interest paid (2,361) (142)
Tax paid (124) (258)
Net cash generated from/(used in) operating activities 36,376 (11,068)
Cash flows from investing activities
Acquisition of trade investments – (180)
Purchase of property, plant and equipment (3,256) (5,862)
Development expenditure (16,556) (17,132)
Proceeds from sale of property, plant and equipment – 5
Interest received 138 842
Net cash used in investing activities (19,674) (22,327)
Cash flows from financing activities
Proceeds from issue of share capital 588 796
Proceeds from exercise of employee share options 445 120
Repayment of loans (55) (50)
Net cash generated from financing activities 978 866
Net change in cash and cash equivalents 17,680 (32,529)
Cash and cash equivalents at start of period (5,880) 26,647
Effect of exchange rate fluctuations on cash held 249 2
Cash and cash equivalents at end of period 12,049 (5,880)
Consolidated Cash Flow Statement
For the 52 weeks ended 2 June 2007
$ 63107 Pace R&A 13-61 Qk7:R&A 13-61_  8/8/07  14:33  Page 35 52 weeks 52 weeks 
ended 2 June ended 3 June 
2007 2006
£000 £000
Cash flows from operating activities
Profit/(loss) before tax 4,629 (27,315)
Adjustments for:
Share based payments charge 684 493
Depreciation of property, plant and equipment 3,795 3,600
Amortisation of development expenditure 14,172 13,296
Impairment of available for sale financial assets – 505
Loss on sale of property, plant and equipment 78 239
Net financial income 2,169 (717)
Movement in trade and other receivables 1,239 (2,994)
Movement in trade and other payables 18,597 9,892
Movement in inventories (6,108) (9,860)
Movement in provisions (826) 51
Cash generated from/(used in) operations 38,429 (12,810)
Interest paid (2,361) (44)
Tax paid – –
Net cash generated from/(used in) operating activities 36,068 (12,854)
Cash flows from investing activities
Acquisition of trade investments – (180)
Purchase of property, plant and equipment (2,754) (5,236)
Development expenditure (16,556) (17,132)
Proceeds from sale of property, plant and equipment – 5
Interest received 136 838
Net cash used in investing activities (19,174) (21,705)
Cash flows from financing activities
Proceeds from issue of share capital 588 796
Proceeds from exercise of employee share options 445 120
Net cash generated from financing activities 1,033 916
Net change in cash and cash equivalents 17,927 (33,643)
Cash and cash equivalents at start of period (6,897) 26,744
Effect of exchange rate fluctuations on cash held 245 2
Cash and cash equivalents at end of period 11,275 (6,897)
Pace Micro Technology plc Report & Accounts 2007 36
Company Cash Flow Statement
For the 52 weeks ended 2 June 2007
$ 63107 Pace R&A 13-61 Qk7:R&A 13-61_  8/8/07  14:33  Page 36 37 Pace Micro Technology plc Report & Accounts 2007
1 BASIS OF PREPARATION AND BUSINESS ENVIRONMENT
The following accounting policies have been applied consistently in dealing with items which are considered material in relation
to the financial statements.
BASIS OF PREPARATION
The financial statements have been prepared in accordance with applicable accounting standards and under the historical cost
convention as modified by the revaluation of derivative instruments.
Significant judgements, key assumptions and estimation uncertainty
The Group’s main accounting policies affecting its results of operations and financial condition are set out on pages 39 to 42.
Judgements and assumptions have been required by management in applying the Group’s accounting policies in many areas.
Actual results may differ from the estimates calculated using these judgements and assumptions. Key sources of estimation
uncertainty and critical accounting judgements are as follows:
Inventory and purchase commitments
As referred to in the Business Environment section below, the Group customarily has a level of inventory and purchase commitments,
the realisation of which is not certain. As noted in the Annual Report for the year ended 3 June 2006, and as a result of delays in
the launch of certain products for the North American market, the Group had stock and purchase commitments for these products
of £23m and £60m respectively where there were not corresponding customer approvals or purchase agreements. As a result of
subsequent approvals and shipments, the Group’s net exposure to such North American product has reduced to £2.6m at 2 June
2007. The Directors have considered the ongoing sales and consider that this value is likely to be reaslised.
Going concern
The Group has put in place new borrowing facilities to January 2010, based upon 85% of relevant trade debtors, as adjusted,
up to a maximum of £35m. These facilities are subject to financial performance covenants.
The Board has prepared a working capital forecast based upon assumptions as to trading and the realisation of inventory, and the
matters above, as well as building in the other circumstances noted in the Business Environment section below. The Board has
also modelled a number of alternative business scenarios. Based upon these the Board has concluded that the Group has adequate
working capital, will meet the financial performance covenants and that therefore it is appropriate to use the going concern basis
of preparation for this financial information.
Warranties
Pace provides product warranties for its set-top boxes. Although it is difficult to make accurate predictions of potential failure
rates or the possibility of an epidemic failure, as a warranty estimate must be calculated at the outset of a product before field
deployment data is available, these estimates improve during the lifetime of the product in the field.
A provision for warranties is recognised when the underlying products are sold. The provision is based on historical warranty data
and a weighting of all possible outcomes against their associated probabilities. The level of warranty provision required is
reviewed on a product by product basis and provisions adjusted accordingly in the light of actual performance.
Royalties
Pace’s products incorporate third party technology, usually under licence. Inadvertent actions may expose Pace to the risk of
infringing third party intellectual property rights. Potential claims can still be submitted many years after a product has been
deployed. Any such claims are always vigorously defended.
A provision for royalties is recognised where the owners of patents covering technology allegedly used by the Group have indicated
claims for royalties relating to the Group’s use (including past usage) of that technology. Having taken legal advice, the board
considers that there are defences available that should mitigate the amounts being sought. The Group will vigorously negotiate
or defend all claims but, in the absence of agreement, the amounts provided may prove to be different from the amounts at which
the potential liabilities are finally settled. The provision is based on the latest information available.
EU Import duty classification
Pace, along with other set top box manufacturers and broadcasters, continues to monitor the potential re-interpretation by
European Union customs authorities of customs regulations that could result in the extension of import duties to interactive set-
top boxes manufactured outside, but imported into, the EU. No final decision has been made so it remains impossible to quantify
any potential impact. However, Pace has analysed its options against the range of possible outcomes and has plans to manage
these outcomes.
Notes
$ 63107 Pace R&A 13-61 Qk7:R&A 13-61_  8/8/07  14:33  Page 37 Writ Issued against Company
A writ has been issued against the Company by a former customer relating to the supply of set-top boxes in 2000/2001. The
amount claimed is $7.2m. The Directors believe that they have good defences to the claim and that, in the absence of any
liability, no provision has been made. In addition on 15 July 2007 Pace filed a counter claim for circa $10m against this former
customer and a related third party.
INTERNATIONAL FINANCIAL REPORTING STANDARDS
The Group’s financial statements have been prepared in accordance with International Financial Reporting Standards (“IFRS”)
as adopted by the European Union and International Financial Reporting Interpretations Committee (“IFRIC”) interpretations and
with those parts of the Companies Act 1985 applicable to companies reporting under IFRS. The Company’s Financial statements
have been prepared on the same basis and as permitted by section 230(3) of the Companies Act 1985, no income statement
is presented for the Company.
FINANCIAL YEAR END
The annual financial statements are drawn up to the Saturday nearest to 31 May. The current year’s financial statements are for
the 52 weeks ended 2 June 2007 and the previous year’s financial statements are for the 52 weeks ended 3 June 2006.
The Pace Board resolved on 23 July 2007 to change its accounting reference date from 31 May to 31 December. The next
audited financial statements will be for the seven month period to 31 December 2007.
BASIS OF CONSOLIDATION
The Group financial statements consolidate those of the Company and of its subsidiary undertakings (note 11) drawn up to 2
June 2007. The results of subsidiaries acquired in the period are included in the income statement from the date they are
acquired. On acquisition, all of the subsidiaries’ assets and liabilities that exist at the date of acquisition are recorded at their fair
values reflecting their condition at that date. Subsidiaries are entities controlled by the Company. Control exists when the
Company has the power, directly or indirectly, to govern the financial and operating policies of an entity so as to obtain benefits
from its activities. In assessing control, potential voting rights that presently are exercisable or convertible are taken into account.
Intra-group transactions, including sales, profits, receivables and payables, have been eliminated on the Group consolidation.
Investments in subsidiaries are carried at cost loss any impairment loss in the financial statements of the Company
BUSINESS ENVIRONMENT 
Priorities
The Group continues to focus on:
 Operational excellence to deliver a range of quality products on time and profitably for the Company’s global customer base.
 Growing deeper customer relationships by ensuring Pace has the products and services needed in order for them to be
competitive and to improve their average revenue per user (ARPU).
 Utilising the Company’s core skills to create innovative technology and solutions that will excite the market and drive long-
term business growth.
Customers and Markets
The global market for payTV products (primarily set-top box products) is growing, although concentrated within a limited number
of operators, some of which are currently in an unprofitable business development phase. The payTV market is attractive, and
as with most modern markets, it is highly competitive with the Company’s competitors ranging from divisions of large
multinational electronics companies to specialist smaller companies. There are a number of barriers to market entry, in particular
a requirement for complex post-deployment support to ensure deployed set-top boxes can continue to deliver over time a payTV
service as this service grows in size and sophistication.
Orders placed by the Company’s payTV customers are typically large one-off orders for delivery over a number of months with
supplemental orders for additional volumes. As the eventual deployment of the set-top boxes can be unpredictable, revenues can
be volatile. The difficulty in predicting the Company’s business flow and its risks can be exacerbated by a number of other factors
including, for example, the development process for an advanced set-top box which can take over 12 months. The Group works
on long lead times (e.g. four months or more) for component supply and manufacture, typical of the industry. In the US market,
in particular, customers firm order lead times may be less than the component lead times. There are third party delivery risks,
for example, difficulties in the delivery of components or software code, and the final go ahead for manufacture and firm
contractual commitments is usually dependent on product approvals and acceptance both from the operator and sometimes from
third parties. In addition, there is a requirement for frequent design revisions that take into account price deflation and
introduction of new, more cost effective electronic components. The revision process places increased demand on engineering
resources but, at the same time, provides a further barrier to entry to new competitors.
The combined impact of these factors, together with the need to meet customers delivery requirements, imposes risk on the
Company’s product introduction programme.
Pace Micro Technology plc Report & Accounts 2007 38
Notes continued
$ 63107 Pace R&A 13-61 Qk7:R&A 13-61_  8/8/07  14:33  Page 38 39 Pace Micro Technology plc Report & Accounts 2007
Currency Risks
The Group’s functional currency is Sterling. The standard ‘industry currency’ is the US dollar, with the majority of components
and manufacturing capacity purchased in this currency. As a result, due to part of the Group’s sales being in Sterling and Euros
(the sale prices of which will be fixed for months in advance) the Group remains exposed to the risk of foreign currency
movements. To manage this risk, the Group’s treasury policy is progressively to cover cash flows when these are sufficiently
certain and to seek a greater percentage of US dollar sales to provide a commercial hedge against currency exposures.
Interest Rate Risk
The Group’s policy is to review regularly the terms of its available short term borrowing facilities and to assess individually and
manage each long-term borrowing commitment accordingly. The Group does not currently take out any interest rate swaps.
Credit Risk
Management has a credit insurance policy in place, which provides cover over most debtors, subject to excesses, and the
exposure to credit risk is monitored on an ongoing basis. The Group does not require collateral in respect of financial assets.
Deposit investments are undertaken only in liquid securities and only with counterparties that have a credit rating equal or better
than the Group. 
Engineering
The Group is dependent on the technological skills of its employees and is working to increase the average skill base at all of the
main development sites. At the same time the Company is seeking to outsource a larger part of its development and next
generation cost down activity to independent development centres and design and manufacturing partners. During the last year
a significant number of new products for new customers have been developed. Development costs directly attributable to these
products are capitalised according to specified criteria and amortised over the product life.
To improve business effectiveness, so the Group is better able to manage the significant volume of development work currently
underway and in plan, there has been a significant internal re-organisation programme. The programme has focused on
organisation structures and is now focused on business processes; in particular improving the effectiveness of the Group’s
development process both in effectiveness of delivery and in the improvement of product cost.
Third Party and Other Risks
The business environment in respect of the use of third party technology and of product warranties is described under “Significant
judgements, key assumptions and estimation uncertainty” above
The Group outsources its manufacture to third party specialist electronics manufacturers, in particular to Solectron Corporation
and to Asustek.
Regulatory
Like all other businesses, the Group remains exposed to changes in the regulatory environment, including potential modifications
in import duty regimes, discussions on which have been and continue to be held. The Company has managed the implementation
of the EU WEEE and RoHs directives in the period.
2 ACCOUNTING POLICIES
GOODWILL
All business combinations are accounted for by applying the purchase method. Goodwill represents the excess of the fair value
of the consideration paid on acquisition of a business over the fair value of the assets, including any intangible assets identified
and liabilities and contingent liabilities acquired. Goodwill is not amortised but is measured at cost less impairment losses. In
determining the fair value of consideration, the fair value of equity issued is the market value of equity at the date of completion,
and the fair value of contingent consideration is based upon the extent to which the directors believe performance conditions will
be met and thus whether any further consideration will be payable.
As permitted by IFRS 1, goodwill arising on acquisitions before 29 May 2004 (date of transition to Adopted IFRS) has been
frozen at the UK GAAP amounts subject to being tested for impairment annually. The Group performs its annual impairment
review at the cash-generating unit level.
Notes continued
$ 63107 Pace R&A 13-61 Qk7:R&A 13-61_  8/8/07  14:33  Page 39 RESEARCH AND DEVELOPMENT EXPENDITURE
All on-going research expenditure is expensed in the period in which it is incurred. Where a product is technically feasible,
production and sales are intended, a market exists, and sufficient resources are available to complete the project, development
costs are capitalised and subsequently amortised on a straight-line basis over the estimated useful life of the product concerned
from commercial launch. The expenditure capitalised includes the cost of materials, direct labour and an appropriate proportion
of overheads. Where these conditions are not met development expenditure is recognised as an expense in the period in which
it is incurred. Capitalised development expenditure is stated at cost less accumulated amortisation and impairment losses. The
estimated useful lives for development expenditure are estimated to be in a range of between 6 and 18 months.
Capitalised development expenditure is not treated as a realised loss for the purpose of determining the Company’s distributable
profits as the costs meet the conditions required to be treated as an asset in accordance with IAS 38.
The amortisation of capitalised development expenditure is charged to the Income Statement in research and development
expenditure within Administrative expenses category. 
IMPAIRMENT CHARGES
The Company considers at each reporting date whether there is any indication that non-current assets are impaired. If there is
such an indication, the Company carries out an impairment test by measuring an asset’s recoverable amount, which is the higher
of its fair value less costs to sell and its value in use (effectively the expected cash to be generated from using the asset in the
business). If the recoverable amount is less than the carrying amount an impairment loss is recognised, and the asset is written
down to its recoverable amount.
An impairment loss in respect of goodwill is not reversed.
In respect of other assets, an impairment loss is reversed when there is an indication that the impairment loss may no longer
exist and there has been a change in the estimates used to determine the recoverable amount. 
An impairment loss is reversed only to the extent that the asset’s carrying value does not exceed the amount that would have
been determined, net of depreciation or amortisation, if no impairment loss had been recognised.
REVENUE RECOGNITION
Revenue comprises the value of sales of goods and services to third party customers occurring in the period, stated exclusive of
value added tax and net of trade discounts and rebates.
Revenue on the sale of goods is recognised when substantially all of the risks and rewards in the product have passed to the
customer, and substantially all of the Group’s work is completed which is usually upon delivery to the customer, or his agent.
Revenue in respect of services rendered, including engineering consultancy and support and software services, is recognised over
the period over which they are performed, in relation to the level of work undertaken, project milestones achieved and any future
obligations remaining.
The Company does not enter into contracts that cover both the provision of hardware and services in combination.
GOVERNMENT GRANTS
Grants in respect of specific research and development projects are credited to research and development costs within the income
statement or against the capitalised development expenditure as appropriate to match to the project’s related expenditure.
CASH AND CASH EQUIVALENTS
Cash and cash equivalents comprise cash balances and call deposits. The Company considers all highly liquid investments with
original maturity dates of three months or less to be cash equivalents. Bank overdrafts that are repayable on demand and form
an integral part of the Group’s cash management system are included as a component of cash and cash equivalents for the
purpose of the statement of cash flows.
ALLOWANCE FOR DOUBTFUL DEBTS
Trade receivables are assessed individually for impairment, or collectively where the receivables are not individually significant.
Where necessary, provisions for doubtful debts are recorded in the income statement. 
INVENTORY
Inventory is stated at the lower of cost and net realisable value. Cost is determined on a first-in-first-out basis and includes
appropriate transport and handling costs but excludes royalties due only on ultimate sale. Where necessary, provision is made
for obsolete, slow-moving and defective inventory.
Pace Micro Technology plc Report & Accounts 2007 40
Notes continued
$ 63107 Pace R&A 13-61 Qk7:R&A 13-61_  8/8/07  14:33  Page 40 41 Pace Micro Technology plc Report & Accounts 2007
PROPERTY, PLANT AND EQUIPMENT
The cost of items of property, plant and equipment is its purchase cost, together with any incidental costs of acquisition. 
Depreciation is calculated so as to write off, on a straight-line basis over the expected useful economic lives of the asset
concerned, the cost of property, plant and equipment, less any estimated residual values, which are adjusted, if appropriate, at
each balance sheet date. The principal economic lives used for this purpose are:
Long Leasehold properties Period of lease 
Short Leasehold properties Period of lease 
Plant and machinery One to ten years 
Motor vehicles Four years 
Provision is made against the carrying value of items of property, plant and equipment where an impairment in value is deemed
to have occurred. 
LEASED ASSETS 
Leases in terms of which the Group assumes substantially all the risks and rewards of ownership are classified as finance leases.
Assets held under finance leases and hire purchase contracts are capitalised in the balance sheet and depreciated over their
expected useful lives. The interest element of leasing payments represents a constant proportion of the capital balance
outstanding and is charged to the income statement over the period of the lease.
All other leases are regarded as operating leases and the payments made under them are charged to the income statement on a
straight-line basis over the lease term.
CURRENCY TRANSLATION
Transactions in foreign currencies are translated at the exchange rate ruling at the date of transaction. Monetary assets and
liabilities denominated in foreign currencies are translated at the rates of exchange ruling at the balance sheet date.
Exchange differences of a trading nature are dealt with in the income statement. The assets and liabilities of foreign operations,
including goodwill and fair value adjustments arising on consolidation are translated at foreign exchange rates ruling at the
balance sheet date. The revenues and expenses of foreign operations are translated at an average rate approximate to the foreign
exchange rate ruling at the date of the transactions. 
Exchange differences from the above are taken directly to the translation reserve. They are released to the income statement on
disposal.
DERIVATIVE FINANCIAL INSTRUMENTS
The Group uses derivative financial instruments, usually forward foreign exchange contracts, to hedge its exposure to foreign
exchange risks arising from operational, financing and investment activities. In accordance with its treasury policy, the Group
does not hold or issue derivative financial instruments for trading purposes. 
None of the Group’s derivative contracts qualify for hedge accounting and are valued (ie marked to market) at the balance sheet
date and any resulting profits or losses are taken to the income statement.
TAXES
Current tax, including UK corporation tax and foreign tax, is provided at amounts expected to be paid (or recovered) using the
tax rates that have been enacted or substantively enacted by the balance sheet date.
Deferred tax is provided using the balance sheet liability method, providing where relevant for temporary differences between the
carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for taxation purposes. Deferred
tax is measured using the tax rates that have been enacted or substantively enacted by the balance sheet date and are expected
to apply when the asset is realised or the liability settled. 
A net deferred tax asset is recognised only when it is probable that sufficient taxable profits will be available in the foreseeable
future from which the reversal of the temporary differences can be deducted.
SHARE-BASED PAYMENTS
The Company issues equity-settled share-based payments to certain employees. Equity-settled share-based payments are
measured at fair value at the date of grant. Fair value is measured by use of the Black-Scholes pricing model. The fair value
determined at the grant date of the equity-settled share-based payments is expensed on a straight-line basis over the vesting
period, based on the Company’s estimate of the number of shares that will eventually vest.
Notes continued
$ 63107 Pace R&A 13-61 Qk7:R&A 13-61_  8/8/07  14:33  Page 41 The value of the charge is adjusted in the income statement over the remainder of the vesting period to reflect expected and
actual levels of option vesting, with the corresponding adjustment made in equity.
The Company has applied the exemption available under IFRS 2, to apply its provisions only to those options granted after 7
November 2002 and which were outstanding at 1 January 2005.
EMPLOYEE SHARE OWNERSHIP PLANS
The material assets, liabilities, income and costs of the Pace Micro Technology plc Employee Benefits Trust and the Pace Micro
Technology QUEST are treated as being those of the Company. Until such time as the Company’s own shares vest unconditionally
with employees, the consideration paid for the shares is deducted in arriving at equity.
EMPLOYEE BENEFITS
Obligations for contributions to defined contribution pension plans are recognised as an expense in the income statement as
incurred. The Group has no defined benefit arrangements in place.
AVAILABLE FOR SALE FINANCIAL ASSETS
Available for sale financial assets are stated at the lower of the carrying amount and fair value less costs to sell if their carrying
amount is recovered principally through a sale transaction rather than through continuing use.
INVESTMENT INCOME
Investment income relates to interest income, which is accrued on a time basis, by reference to the principal outstanding and at
the effective interest rate applicable.
EQUITY INSTRUMENTS
Equity instruments issued by the Company are recorded at the proceeds received, net of direct issue costs. 
DIVIDENDS PAYABLE
Distributions to equity holders are disclosed as a component of the movement in shareholders’ equity. A liability is recorded for
a final dividend when the dividend is declared by the Company’s shareholders, and, for an interim dividend, when the dividend
is paid.
PROVISIONS
A provision is recognised in the balance sheet when the Group has a present legal or constructive obligation as a result of a past
event, and it is probable that an outflow of economic benefits will be required to settle the obligation.
(a) Royalties
A provision for royalties is recognised where the owners of patents covering technology allegedly used by the Group have indicated
claims for royalties relating to the Group’s use (including past usage) of that technology. The provision is based on the latest
information available. 
(b) Warranties
A provision for warranties is recognised when the underlying products or services are sold. The provision is based on historical
warranty data and a weighting of all possible outcomes against their associated probabilities. The level of warranty provision
required is reviewed on a product by product basis and provisions adjusted accordingly in the light of actual performance.
(c) Restructuring
A provision for restructuring is recognised when the Group has approved a detailed and formal restructuring plan, and the
restructuring has either commenced or has been announced publicly. Provisions are not recognised for future operating losses.
(d) Onerous contracts
A provision for onerous contracts is recognised when the expected benefits to be derived by the Group from a contract are lower
than the unavoidable cost of meeting its obligations under the contract.
ACCOUNTING STANDARDS ISSUED BUT NOT ADOPTED
No impact is expected upon the result or net assets of the Group or Company from any standards that are available for early
adoption, but have not been early adopted. 
Pace Micro Technology plc Report & Accounts 2007 42
Notes continued
$ 63107 Pace R&A 13-61 Qk7:R&A 13-61_  8/8/07  14:34  Page 42 43 Pace Micro Technology plc Report & Accounts 2007
3 SEGMENTAL ANALYSIS
The Group’s principal activities are the development, design and distribution of digital receivers and receiver decoders, for the
reception of digital television and the reception/transmission of interactive services, telephony and high speed data (“set-top
boxes”). The Group also provides engineering design, software applications and support services to Multiple Service Operators,
broadcasters, telecommunications companies and retail markets worldwide. Each of these services may be delivered over
satellite, cable, terrestrial and IP network transmission systems.
The Directors have undertaken a review of the Group’s continuing operations and its associated business risks and consider that
the continuing operations should be reported as a single business segment. The Directors consider that the continuing operations
represent one product offering with similar risks and rewards and should be reported as a single business segment in line with
the Group’s internal reporting framework.
The geographical analysis of revenue which arises from the sale of goods and the provision of software, hardware and other
consultancy services to third party customers is as follows:
Revenue by destination 2007 2006
£000 £000
United Kingdom 69,487 64,446
Continental Europe 62,693 56,517
Far East and Australasia 30,888 38,309
North America 223,239 18,823
Rest of the World 206 –
386,513 178,095
All revenue originates in the United Kingdom from continuing operations and there is no material inter-segment turnover.
Predominantly all profits, capital expenditure and assets arise or are held in the United Kingdom.
4 EXPENSES AND AUDITORS’ REMUNERATION
2007 2006
£000 £000
Fees payable to the Company’s auditors for the audit of:
– Company’s annual accounts 155 201
Fees payable to the Company’s auditors and its associates for other services to the Group:
– audit of the Company’s subsidiaries financial statements pursuant to legislation 8 8
– other services relating to taxation 16 20
– other services pursuant to interim reporting 40 31
– services relating to corporate restructuring 200 –
Depreciation of plant, property and equipment
– owned 4,277 4,116
Other operating lease rental
– land and buildings 1,247 1,372
– motor vehicles 101 144
Loss on disposal of plant, property and equipment 90 241
Net foreign exchange gains/(losses) recognised within operating profit/loss 439 (340)
Notes continued
$ 63107 Pace R&A 13-61 Qk7:R&A 13-61_  8/8/07  14:34  Page 43 5   EXCEPTIONAL ITEMS
2007 2006
£000 £000
Exceptional charge in respect of US product – 9,000
Restructuring and reorganisation costs 1,208 2,383
Impairment loss on trade investment – 505
1,208 11,888
An exceptional charge was made in the 52 weeks ended 2 June 2006 following the delay in the delivery of US product, which
charge was reflected as a £5.5m inventory write down and a £3.5m charge against capitalised development costs. The US
product relates to the HD PVR product for the US cable market, where delays have affected the anticipated product life.
The restructuring and reorganisation charges in both periods relate to a restructuring programme within the Group.
The impairment loss in the 52 weeks ended 2 June 2006 related to the Company’s investment in VegaStream Limited.
6 FINANCE INCOME/COSTS
2007 2006
£000 £000
Finance income - Interest on bank deposits 138 755
Borrowing costs:
Bank loans and overdrafts 1,463 131
Other 862 –
Finance costs 2,325 131
7 STAFF NUMBERS AND COSTS
The average number of persons (including directors) employed by the Group and Company during the year, analysed by category
were as follows:
Group                                    Company
2007 2006 2007 2006
Research and development 403 382 300 312
Administration 140 108 111 85
Sales and marketing 24 64 20 33
Manufacturing and operations 47 75 36 65
614 629 467 495
The aggregate payroll costs of these persons were as follows:
Group                                    Company
2007 2006 2007 2006
£000 £000 £000 £000
Wages and salaries 26,945 26,916 21,055 20,031
Social security costs 3,367 3,479 3,055 3,451
Other pension costs 950 1,096 824 828
Share based payments (see note 24) 684 493 684 493
Redundancy costs 1,045 1,284 930 958
32,991 33,268 26,548 25,761
Pace Micro Technology plc Report & Accounts 2007 44
Notes continued
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7 STAFF NUMBERS AND COSTS continued
Remuneration Of Directors
The remuneration, share options and pension entitlements of the directors are disclosed in the Remuneration Report on pages
21 to 26.
8 TAX CHARGE/(CREDIT)
2007 2006
The tax charge/(credit) is based on the profit/(loss) for the year and comprises: £000 £000
Current tax:
Adjustments in respect of previous periods – –
Overseas tax charge 240 212
Total current tax charge/(credit) 240 212
Deferred tax:
Origination and reversal of timing differences (note 12) (2,081) 1,122
Tax (credit)/charge in Consolidated Income Statement (1,841) 1,334
Reconciliation of effective tax rate: 2007 2006
£000 £000
Profit/(loss) before tax 4,925 (27,450)
Tax using domestic corporation tax rate at 30% (2006: 30%) 1,478 (8,235)
Effects of:
Expenses not deductible for tax purposes 933 1,180
Tax losses utilised in period (2,235) –
Tax losses not recognised in period – 9,191
Research and development tax credit (940) (938)
Overseas tax not at 30% 60 53
Adjustments to tax charge in respect of previous periods (1,137) –
Adjustments to tax charge in respect of overseas losses – 83
Total tax charge/(credit) (1,841) 1,334
9   EARNINGS/(LOSS) PER ORDINARY SHARE
Basic and diluted earnings/loss per share
The calculation of basic earnings/(loss) per share is based on a profit for the year of £6,766,000 (2006: loss of £28,784,000)
divided by the weighted average number of ordinary shares in issue of 225,501,387 (2006: 221,742,588), excluding shares
held by the QUEST and Employee Benefits Trust.
2007 2006
Number of shares m m
Weighted average number of ordinary shares in issue during the year 225.5 221.7
Dilutive effect of options outstanding 1.4 2.9
Diluted weighted average number of ordinary shares in issue during the year 226.9 224.6
Diluted earnings per ordinary share varies from basic earnings per ordinary share due to the effect of the notional exercise of
outstanding share options.
Notes continued
$ 63107 Pace R&A 13-61 Qk7:R&A 13-61_  8/8/07  14:34  Page 45 10 INTANGIBLE ASSETS AND PROPERTY, PLANT AND EQUIPMENT
Intangible assets Property, plant and equipment
Short Total
Long leasehold property,
Development leasehold land and Plant and Motor plant and
Goodwill expenditure buildings buildings machinery vehicles equipment
Group £000 £000 £000 £000 £000 £000 £000
Cost
At 5 June 2005 9,436 8,437 607 4,633 16,351 30 21,621
Exchange adjustments – – 9 (9) (11) – (11)
Additions – 17,132 – 698 5,167 – 5,865
Retirement of Assets – (9,579) – – – – –
Disposals – – – (533) (3,326) – (3,859)
At 4 June 2006 9,436 15,990 616 4,789 18,181 30 23,616
Exchange adjustments – – – (21) (189) – (210)
Additions – 16,556 – 43 3,213 – 3,256
Retirement of Assets – (9,459) – – – – –
Disposals – – – – (432) – (432)
At 2 June 2007 9,436 23,087 616 4,811 20,773 30 26,230
Amortisation/depreciation
At 5 June 2005 – 987 240 3,883 11,283 30 15,436
Exchange adjustments – – 3 (8) 11 – 6
Provided in the year – 9,796 22 293 3,801 – 4,116
Retirement of Assets – (9,579) – – – – –
Impairment (see note 5) – 3,500 – – – – –
Disposals – – – (481) (3,132) – (3,613)
At 4 June 2006 – 4,704 265 3,687 11,963 30 15,945
Exchange adjustments – – – (20) (138) – (158)
Provided in the year – 12,470 21 242 4,014 – 4,277
Retirement of Assets – (9,459) – – – – –
Impairment –1,702–––––
Disposals – – – – (342) – (342)
At 2 June 2007 – 9,417 286 3,909 15,497 30 19,722
Net book amount at 4 June 2005 9,436 7,450 367 750 5,068 – 6,185
Net book amount at 3 June 2006 9,436 11,286 351 1,102 6,218 – 7,671
Net book amount at 2 June 2007 9,436 13,670 330 902 5,276 – 6,508
Impairment tests for cash generating units containing goodwill
All the goodwill relates to intellectual property and know-how acquired with the purchase of Xcom Multimedia Communications
SA in February 2001. These intellectual property and know-how assets are used as an integral part of the development of products
which, to date, have been sold mainly into Pace’s Continental European markets. Accordingly, for impairment testing purposes to
date the goodwill has been allocated to a cash generating unit comprising the Group’s Continental European business.
The recoverable amount of the above unit including the goodwill is based upon value in use calculations and is higher than the
carrying value of the assets and goodwill allocated to this unit. The calculations use cash flow projections based on actual
operating results, budget and a 3 year forecast, reflecting known purchase orders, sales contracts and estimates relating to the
net result from planned products launches. Thereafter, a growth rate of 1% on sales and 2% in overheads has been used to
extrapolate results to cover 5 years in total. A discount rate of 12% has been used in discounting the projected cash flows.
Development expenditure for the Group and Company comprises a number of projects at varying levels of completion. Such
expenditure will be amortised from the date of commercial launch in line with the accounting policies set out in note 2. 
Retirements of development expenditure represent the deletions of the cost and related amortisation at the end of products
commercial lives.
Pace Micro Technology plc Report & Accounts 2007 46
Notes continued
$ 63107 Pace R&A 13-61 Qk7:R&A 13-61_  8/8/07  14:34  Page 46 47 Pace Micro Technology plc Report & Accounts 2007
10 INTANGIBLE ASSETS AND PROPERTY, PLANT AND EQUIPMENT continued
Intangible assets                 Property, plant and equipment
Short Total
leasehold property,
Development land and Plant and Motor plant and
expenditure buildings machinery vehicles equipment
Company £000 £000 £000 £000 £000
Cost
At 5 June 2005 8,437 4,290 13,112 30 17,432
Additions 17,132 680 4,556 – 5,236
Disposals (9,579) (529) (3,319) – (3,848)
At 4 June 2006 15,990 4,441 14,349 30 18,820
Additions 16,556 28 2,726 – 2,754
Disposals (9,459) – (408) – (408)
At 2 June 2007 23,087 4,469 16,667 30 21,166
Amortisation/depreciation
At 5 June 2005 987 3,592 8,854 30 12,476
Provided in the year 9,796 253 3,347 – 3,600
Retirement of Assets (9,579) – – – –
Impairment (see note 5) 3,500 – – – –
Disposals – (476) (3,128) – (3,604)
At 4 June 2006 4,704 3,369 9,073 30 12,472
Provided in the year 12,470 227 3,568 – 3,795
Retirement of Assets (9,459) – – – –
Impairment 1,702 – – – –
Disposals – – (330) – (330)
At 2 June 2007 9,417 3,596 12,311 30 15,937
Net book amount at 4 June 2005 7,450 698 4,258 – 4,956
Net book amount at 3 June 2006 11,286 1,072 5,276 – 6,348
Net book amount at 2 June 2007 13,670 873 4,356 – 5,229
Notes continued
$ 63107 Pace R&A 13-61 Qk7:R&A 13-61_  8/8/07  14:34  Page 47 11 INVESTMENTS IN GROUP AND OTHER COMPANIES
Available for
sale financial
assets
Group £000
Cost at 5 June 2005 1,299
Additions 180
Cost at 4 June 2006 and 2 June 2007 1,479
Provision at 5 June 2005 (625)
Impairment (505)
Provision at 4 June 2006 and 2 June 2007 (1,130)
Net book value at 4 June 2005 674
Net book value at 3 June 2006 349
Net book value at 2 June 2007 349
Intra- Shares Available for
group in group sale financial
loans undertakings assets Total
Company £000 £000 £000 £000
Cost at 5 June 2005 65,945 6,038 719 72,702
Additions – – 180 180
Cost at 4 June 2006 and 2 June 2007 65,945 6,038 899 72,882
Provision at 5 June 2005 (62,583) – (45) (62,628)
Movement in period – – (505) (505)
Provision at 4 June 2006 and 2 June 2007 (62,583) – (550) (63,133)
Net book value at 4 June 2005 3,362 6,038 674 10,074
Net book value at 3 June 2006 3,362 6,038 349 9,749
Net book value at 2 June 2007 3,362 6,038 349 9,749
Pace Micro Technology plc Report & Accounts 2007 48
Notes continued
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11 FIXED ASSET INVESTMENTS continued
At 2 June 2007 the Company had a beneficial interest in the equity of the following subsidiary undertakings:
Nature of Percentage Country of Class of share
operations holding incorporation capital held
EURL New Com Immobilier** Holding Company 100% France Ordinary
Pace Advanced Consumer Electronics Limited Dormant 100% UK Ordinary
Pace Asia Pacific Limited*** Administrative/development support 100% Hong Kong Ordinary
Pace Distribution GmbH Dormant 100% Germany Ordinary
Pace Distribution (Overseas) Limited Holding Company 100% UK Ordinary/
Preference
Pace Micro Technology (HK) Limited Holding Company 100% Hong Kong Ordinary
Pace Micro Technology (Australia) Pty Limited Administrative/development support 100% Australia Ordinary
Pace Americas Limited (formerly Pace Micro
Technology (Support Services) Limited)*** Administrative/development support 100% UK Ordinary
Pace Micro Technology (Asia Pacific) Limited* Dormant 100% Hong Kong Ordinary
SCI Les 9 Tilleuls** Property Company 100% France Ordinary
Pace Europe SAS*** Administrative/development support 100% France Ordinary
Pace Micro Technology GmbH Administrative/development support 100% Germany Ordinary
Pace Micro Technology (India) Private Ltd*** Development support 100% India Ordinary
Pace Overseas Distribution Limited*** Dormant 100% UK Ordinary
* Denotes company owned by Pace Micro Technology (HK) Limited
** Denotes company owned by Pace Europe SAS
*** Denotes company owned by Pace Distribution (Overseas) Limited
Each of the subsidiary undertakings listed above have been consolidated in the Group’s financial statements.
12 DEFERRED TAX ASSETS
Deferred tax assets have been recognised in respect of differences between accounting and tax carrying values and trading losses
where it is probable that these assets will be recovered. 
All of the deferred tax assets were available for offset against deferred tax liabilities. The movements in deferred tax assets and
liabilities (prior to the offsetting of balances within the same jurisdiction as permitted by IAS 12 Income Taxes) during the period
are shown below:
Property, plant Trading Development
& equipment losses costs (IAS 38) Total
and Share based payments
Group and Company £000 £000 £000 £000
Recognised asset 
At 3 June 2006 1,629 4,644 (3,386) 2,887
Credited/(charged) to income statement 1,049 1,787 (755) 2,081
At 2 June 2007 2,678 6,431 (4,141) 4,968
Unrecognised deferred tax assets of £5.9m exist at the period end in respect of unutilised trading losses of £21m.
On 21 March 2007, the Chancellor announced that with effect from 1 April 2008 the standard rate of UK Corporation tax will
reduce from 30 per cent to 28 per cent. Based on the reduced Corporation tax rate of 28 per cent, the Group deferred tax asset
at 2 June 2007 would reduce by £331,000.
Notes continued
$ 63107 Pace R&A 13-61 Qk7:R&A 13-61_  8/8/07  14:34  Page 49 13 INVENTORIES
Group                                    Company
2007 2006 2007 2006
£000 £000 £000 £000
Raw materials and consumable stores 7,290 7,700 7,290 7,700
Finished goods 17,978 27,092 17,978 11,460
25,268 34,792 25,268 19,160
14 TRADE AND OTHER RECEIVABLES
Group                                    Company
2007 2006 2007 2006
£000 £000 £000 £000
Trade receivables 47,402 33,248 47,356 30,437
Amounts owed by subsidiary undertakings – – – 14,571
Other receivables 3,381 7,318 3,238 7,158
Prepayments and accrued income 1,780 1,771 1,505 1,428
52,563 42,337 52,099 53,594
15 TRADE AND OTHER PAYABLES
Group                                    Company
2007 2006 2007 2006
£000 £000 £000 £000
Trade payables 50,044 38,707 49,536 38,321
Amounts owed to subsidiary undertakings – – 4,311 –
Social security and other taxes 521 783 370 715
Other payables 528 745 186 361
Accruals 8,275 5,171 7,417 4,082
59,368 45,406 61,820 43,479
At 2 June 2007 certain Trade payables were the subject of a debenture under which such amounts were secured by way of
secondary fixed and floating charges over certain assets of the Group.
16 INTEREST BEARING LOANS AND BORROWINGS
Group                                    Company
2007 2006 2007 2006
Borrowings consist mainly of bank loans £000 £000 £000 £000
and overdrafts falling due:
Within one year 60 5,937 – 6,897
After one and within two years 60 56 – –
After two and within three years 39 98 – –
159 6,091 – 6,897
The banking facilities of £35 million (2006: £25 million) are available until January 2010. The facility is based on a percentage
drawdown of appropriate trade receivables as adjusted and is secured by a fixed and floating charge over the assets of Pace Micro
Technology plc and its subsidiary undertakings.
Pace Micro Technology plc Report & Accounts 2007 50
Notes continued
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17 DERIVATIVES AND OTHER FINANCIAL INSTRUMENTS
Short term debtors and creditors that meet the definition of a financial asset or liability respectively have been excluded from all
the following analysis, other than the currency risk exposures. 
This note provides information about the contractual terms of the Group and Company’s interest bearing loans and borrowings
(note 16). For more information about the Group and Company’s exposure to interest rate, credit risk and foreign currency risk,
see note 1.
(a) Interest rate risk profile of cash/bank overdrafts
Floating rate Interest free Total
Currency £000 £000 £000
At 2 June 2007:
Sterling 3,351 2 3,353
US Dollar 4,254 – 4,254
Euro 4,344 1 4,345
Other 97 – 97
Total 12,046 3 12,049
At 3 June 2006:
Sterling 2,684 2 2,686
US Dollar (2,032) 7 (2,025)
Euro (6,631) 1 (6,630)
Other 88 1 89
Total (5,891) 11 (5,880)
The interest rates on Sterling, US Dollar, Euro and other floating rate financial assets are linked to the relevant bank base rates.
(b) Interest rate risk profile of bank loans
Floating rate Interest free Total
Currency £000 £000 £000
At 2 June 2007:
Euro 159 – 159
159 – 159
At 3 June 2006:
Euro 211 – 211
211 – 211
The interest rate on Euro floating rate financial liabilities is linked to the relevant bank base rate.
Notes continued
$ 63107 Pace R&A 13-61 Qk7:R&A 13-61_  8/8/07  14:35  Page 51 17 DERIVATIVES AND OTHER FINANCIAL INSTRUMENTS continued
(c) Currency exposures
The table below shows the Group’s currency exposures that give rise to the net currency gains and losses recognised in the
income statement. Such exposures comprise the monetary assets and monetary liabilities of the Group which are not
denominated in the operating or functional currency of the operating unit involved.
Net foreign currency monetary assets/(liabilities)
US Dollar Euro Other Total
Functional currency of group operation £000 £000 £000 £000
At 2 June 2007:
Sterling (8,349) 11,635 (698) 2,588
Euro – – – –
Other – (12) – (12)
Total (8,349) 11,623 (698) 2,576
At 3 June 2006:
Sterling 10,264 12,905 (501) 22,668
Euro 47 – – 47
Other 1,395 (25) – 1,370
Total 11,706 12,880 (501) 24,085
(d) Gains and losses on currency derivatives
The majority of the Group’s production costs are denominated in US Dollars. The Group endeavours to obtain as much of its
income as possible in US Dollars but a significant proportion of income is currently received in Sterling or Euros. The Group’s
policy is to hedge forward progressively against movements in the value of foreign currencies, in respect of cash receipts and
payments expected from transactions over the next 6 months.
Outstanding currency derivatives:
Sell Buy Principal Average
Currency Currency Amount Rate Maturity
At 2 June 2007: Euro US Dollar $63.7m 1.34 Jun 07-Feb 08
At 3 June 2006: Euro Sterling £14m 1.44 July-August 
Euro US Dollar $20m 1.21 2006
The Group’s derivatives contracts do not qualify for hedge accounting and are valued (ie marked to market) at the balance sheet
date and accordingly £87,652 (2006: £442,969) of losses have been taken to the income statement.
Pace Micro Technology plc Report & Accounts 2007 52
Notes continued
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18 PROVISIONS
Royalties Onerous
under negotiation contracts Warranties Total
£000 £000 £000 £000
Group and Company
At 3 June 2006 6,262 493 8,036 14,791
Net charge for the year 1,854 – 4,134 5,988
Utilised (643) (493) (5,578) (6,714)
At 2 June 2007 7,473 – 6,592 14,065
Due within one year – – 4,419 4,419
Due after one year 7,473 – 2,173 9,646
Royalties under negotiation
The owners of patents covering technology allegedly used by the Group have indicated claims for royalties relating to the Group’s
use (including past usage) of that technology. Negotiations over these liabilities continue for long periods of time. The directors
have made provision for the potential royalties payable based on the latest information available. Having taken legal advice, the
Board considers that there are defences available that should mitigate the amounts being sought. The Group will vigorously
negotiate or defend all claims but, in the absence of agreement, the amounts provided may prove to be different from the amounts
at which the potential liabilities are finally settled.
Given the nature of the claims it is not possible to be more specific with regard to the timing of outflows.
Onerous contracts
The onerous contract provisions related to unavoidable commitments in respect of the unexpired portion of leases of properties
that the Company no longer occupies. The provisions were calculated with regard to the terms of the related leases, as have the
timings of outflows which all occurred within the year.
Warranties
Pace provides product warranties for its set-top boxes from the point of sale and a provision for warranties is recognised when
the underlying products are sold. The provision is based on historical warranty data, principally historical failure rates and related
cost of repair information, and a weighting of all possible outcomes against their associated probabilities. The level of warranty
provision required is reviewed on a product by product basis and provisions adjusted accordingly in the light of actual
performance.
Although it is difficult to make accurate predictions of potential failure rates or the possibility of an epidemic failure, as a warranty
estimate must be calculated at the outset of product shipment before field deployment data is available, these estimates improve
during the lifetime of the product in the field.
It is expected that the expenditure with regard to warranties will be incurred within three years of the balance sheet date.
Notes continued
$ 63107 Pace R&A 13-61 Qk7:R&A 13-61_  8/8/07  14:35  Page 53 19 SHARE CAPITAL
2007 2006
Number £000 Number £000
Authorised
Ordinary shares of 5p each 300,000,000 15,000 300,000,000 15,000
Allotted, called up and fully paid
Ordinary shares of 5p each 233,189,995 11,659 231,521,866 11,576
During the year, the Company allotted Ordinary shares as follows:
Nominal
value Consideration
Number £000 £000
Employee share option scheme (35.5 pence) 914,576 46 325
Employee share option scheme (14.5 pence) 148,960 7 21
Employee share option scheme (15.8 pence) 175,039 9 28
Employee share option scheme (51.0 pence) 25,000 1 13
Employee share option scheme (32.0 pence) 36,058 2 11
Employee share option scheme (60.0 pence) 60,496 3 36
Employee share option scheme (48.0 pence) 15,206 1 7
Employee share option scheme (59.5 pence) 10,301 – 6
Employee share option scheme (49.0 pence) 3,711 – 2
Employee share option scheme (58.0 pence) 50,000 3 29
Employee share option scheme (40.75 pence) 80,214 4 33
Employee share option scheme (52.0 pence) 148,568 7 77
1,668,129 83 588
The Company has granted options which are subsisting (including directors’ options) in respect of the following presently
unissued ordinary shares of 5p each.
Number of ordinary Price per share
shares subject to option Exercise period pence
35,000 19 August 2000 to 18 August 2007 42.5
225,000 7 July 2002 to 6 July 2009 200.0
430,974 11 January 2003 to 10 January 2010 599.5
101,658 17 July 2003 to 16 July 2010 857.5
118 17 July 2001 to 16 July 2010 857.5
25,005 29 January 2004 to 28 January 2011 610.0
1,750 29 January 2002 to 28 January 2011 610.0
216,000 24 July 2005 to 23 July 2011 375.0
192,296 24 July 2004 to 23 July 2011 375.0
28,463 18 January 2005 to 17 January 2012 357.0
499,803 22 October 2003 to 21 October 2012 15.75
20,158 22 October 2005 to 21 October 2012 15.75
100,000 22 October 2006 to 21 October 2012 15.75
80,000 26 August 2004 to 25 August 2013 51.0
100,000 3 February 2005 to 2 February 2014 75.0
25,000 17 August 2008 to 16 August 2014 51.0
120,000 17 August 2005 to 16 August 2014 51.0
62,500 7 October 2007 to 6 October 2014 48.0
87,500 7 October 2005 to 6 October 2014 48.0
250,000 23 January 2009 to 22 January 2016 63.25
425,000 2 August 2008 to 1 August 2015 74.25
3,266,513 2 October 2009 to 1 October 2016 58.75
75,000 28 November 2009 to 27 November 2016 61.25
50,000 19 February 2010 to 18 February 2017 69.5
75,000 16 March 2010 to 15 March 2017 66.5
75,000 26 April 2010 to 25 April 2017 73.25
75,000 15 May 2010 to 14 May 2017 80.75
250,190 3 March 2008 to 30 May 2008 58.0
6,892,928
The Pace Micro Technology plc Employee Benefits Trust has granted options over existing shares and the QUEST has acquired
shares to satisfy certain Sharesave options. Details of these additional options are shown in note 21.
Pace Micro Technology plc Report & Accounts 2007 54
Notes continued
$ 63107 Pace R&A 13-61 Qk7:R&A 13-61_  8/8/07  14:35  Page 54 55 Pace Micro Technology plc Report & Accounts 2007
20 SHARE PREMIUM ACCOUNT
Group and Company £000
At 3 June 2006 36,246
Premium on allotments 505
At 2 June 2007 36,751
The shares allotted during the year are listed in note 19.
21 RETAINED EARNINGS
Group £000
At 3 June 2006 (5,595)
Retained profit for the year 6,766
Employee share incentive charges 684
Settlement of share options from employee share trusts 445
At 2 June 2007 2,300
Company £000
At 3 June 2006 (10,240)
Retained profit for the year 6,710
Employee share incentive charges 684
Settlement of share options from employee share trusts 445
At 2 June 2007 (2,401)
Own shares held
The following amounts have been deducted from the retained reserves of the Group and Company.
At 2 June 2007 the Pace Micro Technology plc Employee Benefits Trust and QUEST held 5,954,678 (2006: 7,354,894) shares
in the Company which cost £20,066,470 (2006: £21,304,000). These shares are held to satisfy options granted to employees.
The amounts arising on settlement of share options from the employee share trusts represents cash receipts from the exercise of
relevant share options.
The Pace Micro Technology plc Employee Benefits Trust has granted options to employees (including directors’ options) over
ordinary shares of 5p each as follows:
Number of ordinary Price per share
shares subject to option Exercise period pence
739,530 24 September 2001 to 23 September 2008 64.0
540,919 26 January 2002 to 25 January 2009 84.5
292,500 7 July 2002 to 6 July 2009 200.0
17,931 17 July 2001 to 16 July 2010 857.5
131,805 29 January 2002 to 28 January 2011 610.0
429,231 21 January 2004 to 20 January 2013 20.0
1,303,783 26 August 2004 to 25 August 2013 51.0
105,769 16 February 2005 to 15 February 2014 78.0
680,013 17 August 2005 to 16 August 2014 51.0
875,000 2 August 2008 to 16 August 2015 74.25
600,000 18 April 2009 to 17 April 2016 63.5
3,059,704 2 October 2009 to 1 October 2016 58.75
546,075 3 April 2010 to 2 April 2017 73.25
9,322,260
Notes continued
$ 63107 Pace R&A 13-61 Qk7:R&A 13-61_  8/8/07  14:35  Page 55 21 RETAINED EARNINGS continued
The QUEST has used previously acquired shares in the Company, either through purchase in the market or by allotment, for the
purpose of satisfying the grant of options under the Sharesave Schemes. The following options are outstanding:
Number of ordinary Price per share
shares subject to option Exercise period pence
97,795 1 April 2007 to 30 September 2007 60.0
131,153 1 October 2007 to 31 March 2008 48.0
334,103 1 April 2008 to 30 September 2008 32.0
334,677 1 October 2008 to 31 March 2009 59.5
390,857 1 April 2009 to 30 September 2009 49.0
988,735 1 December 2009 to 30 May 2010 46.0
2,277,320
22 PROFIT/LOSS FOR THE YEAR
The parent Company has taken advantage of Section 230 of the Companies Act 1985 and has not included its own income
statement in these financial statements. The Group profit/(loss) includes a parent Company profit after tax of £6,710,000 (2006:
loss after tax of £28,063,000).
23 CAPITAL COMMITMENTS
Group and Company
2007 2006
£000 £000
Contracted but not provided for 996 990
24 EMPLOYEE BENEFITS
Pension plans 
The Group contributes to several defined contribution Group Personal Pension Plans, which all executive directors and employees
are entitled to join. The total expenses relating to these plans in the current year was £950,000 (2006: £1,096,000). At 2 June
2007 contributions of £Nil (2006: £Nil) were outstanding.
Share based payments 
Details of the Company’s share option schemes are included in notes 19 and 21 and the Remuneration Report. The number and
weighted average exercise price of share options is as follows:
Weighted Weighted
Average Number Average Number
Exercise of Exercise Of
Price Options Price Options
2007 2007 2006 2006
Outstanding at the beginning of the period 134p 16,383,227 129p 20,100,228
Granted during the period 59p 9,029,834 66p 4,152,476
Forfeited during the period 241p (3,852,208) 189p (3,018,921)
Exercised during the period 36p (3,068,345) 19p (4,850,556)
Outstanding at the end of the period 91p 18,492,508 134p 16,383,227
Exercisable at the end of the period 153p 5,545,647 170p 6,365,303
Pace Micro Technology plc Report & Accounts 2007 56
Notes continued
$ 63107 Pace R&A 13-61 Qk7:R&A 13-61_  8/8/07  14:35  Page 56 57 Pace Micro Technology plc Report & Accounts 2007
24 EMPLOYEE BENEFITS continued
Outstanding options were as follows
Weighted
average Weight
remaining average
Number contractual exercise
Range of exercise prices (pence) at 2 June 2007 life months price
14.5p to 20p 1,049,192 66 17p
32p to 49.5p 2,029,848 33 44p
51p to 75p 13,028,280 94 61p
78p to 84.5p 721,688 39 83p
190p to 200p 517,500 25 200p
357p to 375p 436,759 50 374p
599p to 610p 589,534 35 602p
857p to 945p 119,707 37 858p
18,492,508 78
The weighted average exercise price of options granted in the period was 59p (2006: 66p).
The weighted average fair value at the measurement date of options granted in the year was 22p (2006: 20p).
The weighted average exercise price at the date of exercise for options exercised in the year was 36p (2006: 19p).
The fair value of services received in return for share options granted are measured by reference to the fair value of share options
granted. The estimate of the fair value of the services received is measured based on a Black-Scholes model. The following table
gives the assumptions applied to the options granted in the respective periods shown. Expectations of early exercise are
incorporated into the model, where appropriate.
2007 2006
Average share price (pence) 60.0 61.4
Weighted average exercise price (pence) 91.0 134.0
Expected volatility (%) 60% 65%
Option life (years) 10 10
Dividend yield (%) 1.4% 1.4%
Risk free interest rate (%) 5.0% 4.5%
The expected volatility is based on the historic volatility (calculated based on the weighted average remaining life of the share
options), adjusted for any expected changes to future volatility due to publicly available information.
The charge for share based payments in respect of share options is £684,000 (2006: £493,000) which is comprised entirely
of equity settled transactions. 
Notes continued
$ 63107 Pace R&A 13-61 Qk7:R&A 13-61_  8/8/07  14:35  Page 57 25 LEASING COMMITMENTS
Total amounts payable under non-cancellable operating lease rentals are as follows:
Group Company
2007 2006 2007 2006
£000 £000 £000 £000
Land and buildings
Within one year 102 77 72 47
Between two and five years 1,039 1,404 94 144
In five years or more 5,688 6,320 5,688 6,320
6,829 7,801 5,854 6,511
Other
Within one year 10 36 10 36
Between two and five years 42 142 42 142
52 178 52 178
6,881 7,979 5,906 6,689
26 CONTINGENCIES
A writ has been issued against the Company by a former customer relating to the supply of set-top boxes in 2000/2001. The
amount claimed is circa $7.2m. The Directors believe that they have good defences to the claim and that, in the absence of any
liability, no provision has been made. In addition on 15 July 2007 Pace filed a counter claim for circa $10m against this former
customer and a related third party.
27 RELATED PARTIES
Identity of related parties 
The Group has a related party relationship with its subsidiaries and with its Directors. 
Transactions with subsidiaries 
The main transaction between the Company and its subsidiaries consist mainly of payments by the Company for engineering and
administrative support services provided by Pace Americas Limited and Pace Europe SAS. Total recharges of £10.9m were made
in the year. In addition inventory totalling £23m was sold from Pace Americas Limited to the Company to during the year. 
The amounts due to and from these subsidiaries are shown within notes 14 and 15. 
Transactions with key management personnel 
Key management of the Group is through the executive directors of the Company. The main transactions with these individuals
are disclosed in the Remuneration Report on pages 21 to 26. 
Of the share option charge of £684,000 made in the period, 33% relates to options granted to the executive directors. 
28 POST BALANCE SHEET EVENTS 
There are no significant or disclosable post balance sheet events. except as referred to in note 12 to the financial statements
(Deferred taxation).
Pace Micro Technology plc Report & Accounts 2007 58
Notes continued
$ 63107 Pace R&A 13-61 Qk7:R&A 13-61_  8/8/07  14:35  Page 58 59 Pace Micro Technology plc Report & Accounts 2007
DIRECTORS COMPANY SECRETARY
all of Victoria Road  Saltaire  BD18 3LF  England Anthony John Dixon
Robert Michael McTighe Non-executive Chairman
Neil Gaydon Chief Executive Officer
Stuart Andrew Hall Chief Financial Officer
David Alyn McKinney Chief Operating Officer
Patricia Chapman-Pincher Non-executive Director
Robert Arthur Fleming Non-executive Director
Marten Charles Fraser Non-executive Director
REGISTERED AND
HEAD OFFICE
Victoria Road
Saltaire
BD18 3LF
England
Registered Number 1672847
Directors, Secretary and Advisers
AUDITORS
KPMG Audit Plc
1 The Embankment
Neville Street
Leeds LS1 4DW
REGISTRARS
Capita Registrars Ltd
Northern House
Woodsome Park
Fenay Bridge
Huddersfield
HD8 0LA
STOCKBROKERS
Hoare Govett Limited
250 Bishopsgate
London EC2M 4AA
$ 63107 Pace R&A 13-61 Qk7:R&A 13-61_  8/8/07  14:35  Page 59 Pace Micro Technology plc Report & Accounts 2007 60
Five Year Record and Shareholder Information
2007 2006 2005 2004 2003
£000 £000 £000 £000 £000
Revenue 386,513 178,095 253,326 239,949 166,597
Profit/(loss) before tax** 4,925 (27,450) 8,963 3,880 (48,577)
Profit/(loss) before exceptional items and tax 6,133 (15,562) 9,108 5,380 17,554)
Profit/(loss) after tax 6,766 (28,784) 13,680 8,066 (48,031)
Diluted EPS/(LPS) 3.0p (13.0)p 6.2p 3.6p (21.3)p
Diluted EPS/(LPS) before exceptional items 
and goodwill amortisation* 3.0p (7.6)p 6.1p 4.5p (6.8)p
Total equity attributable to equity holders of  
the parent excluding goodwill*/** 41,501 33,031 60,316 45,702 31,590
* The comparatives for financial years 2003 to 2004 have been restated to reflect the impact of UITF38 Accounting for ESOP Trusts.
** The comparatives for 2005 (and net assets for 2004) are stated under Adopted International Financial Reporting Standards; all
other figures are stated on a UK GAAP basis.
SHAREHOLDER INFORMATION 
ANNUAL GENERAL MEETING 
The Company’s Annual General Meeting will be held at 12 noon on Friday 19 October 2007, at the Company’s head office, Victoria
Road, Saltaire, West Yorkshire BD18 3LF. 
A presentation “Digital Television Technology: how digital television works” will be given by David Gillies, Director of Technology,
following the conclusion of the Annual General Meeting.
CAPITA REGISTRARS 
Enquiries regarding shareholdings, change of address or other particulars should be directed in the first instance to the Company’s
Registrars, Capita Registrars, Northern House, Woodsome Park, Fenay Bridge, Huddersfield, HD8 0LA, or by telephone on 0870 162
3131. They also provide a range of online shareholder information services at www.capitashareportal.com where shareholders can
check their holdings and find practical help on transferring shares or updating their details. 
MULTIPLE ACCOUNTS ON THE SHAREHOLDER REGISTER 
If you have received two or more copies of this document, this means that there is more than one account in your name on the
shareholder register. This may be caused by either your name or address appearing on each account in a slightly different way. For
security reasons, the Registrars will not amalgamate the accounts without your consent. If you would like any multiple accounts
combined into one account, please write to Capita Registrars at the address given above. 
UNSOLICITED MAIL 
The Company is obliged by law to make its share register available upon request to the public and to other organisations, which may
use it as a mailing list, resulting in shareholders receiving unsolicited mail. Shareholders wishing to limit the receipt of such mail should
write to the Mailing Preference Service, DMA House, 70 Margaret Street, London W1W 8SS, or call +44 (0) 20 7291 3310 for an
application form or visit www.mps-online.org.uk 
PACE WEBSITE 
Shareholders are encouraged to visit our website, www.pacemicro.com, which has a wealth of information about the Company.
$ 63107 Pace R&A 13-61 Qk7:R&A 13-61_  8/8/07  14:35  Page 60 61 Pace Micro Technology plc Report & Accounts 2007
Notes
$ 63107 Pace R&A 13-61 Qk7:R&A 13-61_  8/8/07  14:35  Page 61  PACE MICRO TECHNOLOGY PLC
report & accounts 2007
MKT-R&A2007
PACE MICRO TECHNOLOGY PLC
Victoria Road Saltaire
BD18 3LF England
Tel +44 (0)1274 532000
Fax +44 (0)1274 532010
www.pacemicro.com
BRINGING 
TECHNOLOGY HOME
Pace and               are trademarks and/or registered trademarks of Pace Micro Technology plc.
Registered in England No 1672847
PACE MICRO TECHNOLOGY PLC REPORT & ACCOUNTS 2007
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