Surface Technology Systems

Surface Technology Systems supplies the equipment that allows makers of micro-electro mechanical systems to scratch silicon chips. In the words of chief executive Ian Smith - 'we make large and hi-tec capital equipment that is then used to make other devices fabricated using semiconductor technology'. In a bearish trading statement, Smith said the global downturn has continued to put pressure on some of its markets throughout the world in 2002. In addition he said that first-half orders were below expectations as customers delayed their purchasing decisions. Furthermore, where orders have been won the gross margin has been affected by lower average prices for machines. He also flags up a £1.3m one-off component inventory charge for the first half. All of this means interim losses will be wider than expected when the company reports next month. Furthermore, expectations of a 2002 full-year profit will not be met, since Smith expects to make a further loss in the second half as 'adverse market conditions' continue. Back in March the group unveiled a sparkling set of annual numbers to 31 December. Sales surged 58% to £56.7m, operating profits put on 70% to £6.1m and pre-tax profits powered ahead 86% to £5.3m. House broker Rowan Dartington now expects a £6.8m pre-tax loss for 2002. The shares were issued at 138p in December 2000.

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Sector: Software & Computer Services

Companies: Surface Technology

Market cap: £10.97m

PE Forecast: n/a

Share price: 35p

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