28th Jul 2014 08:12
LONDON (Alliance News) - Pace PLC said Monday that Chief Financial Officer Roddy Murray has stepped down from his position with immediate effect, as the company raised its interim dividend for the half year to end-June and raised its guidance for full-year profits and cash flow.
Murray will be replaced by Belinda Ellis, current financial controller at the company.
The set-top box developer, which provides technology for Sky Italia and Sky Deutschland, said it expects to generate USD200 million of free cash flow for the full year.
It maintained its expectations for USD2.7 billion in revenue, and said it expects an operating margin of no less than 8.5% for 2014.
Pace raised its interim dividend to 2.25 cents per share, up from 1.83 cents per share in the previous year. The company said the increase in its dividend shows its confidence in its outlook and improving financial position.
The company posted a pretax profit of USD72.0 million for the six months to June 30, up from USD68.6 million a year earlier, despite seeing revenue decline to USD1.14 billion from USD1.32 billion, as it improved gross margin to 21.6% from 17.7%.
The company said that the decline in revenue was mostly caused by the run-rate effect of expected dual sourcing at major North American customers in the second half of 2014. However, margin improved due to efficiencies in the supply chain, improved revenue mix, and a contribution from its acquisitions Aurora Networks, it said.
Pace said the acquisition of Aurora Networks Inc has been successfully completed, and underlying demand for Aurora products is well ahead of its expectations.
Pace posted exceptional charges of USD3.5 million related to post-acquisition integration and restructuring costs.
The company reiterated confidence in meeting its medium-term target of 9% operating margin in 2015, as it continued to make progress toward its strategic plan during the half year. It expects revenue and profit to grow in the second half of the year, as demand for network products is stronger than it had expected.
"We continue to make good progress on executing our strategy; the integration of Aurora, key wins in all areas of our product and service portfolio across all of the regions that Pace operates in, and ongoing operational improvements give management confidence that we will maintain our momentum and make further progress in the second half of 2014 and beyond," said Chief Executive Officer Mike Pulli in a statement.
Broker Liberum maintained its Hold rating for Pace, saying that whilst results are ahead of its expectations, the departure of the "highly regarded" Murray is "likely to overshadow strong results".
Liberum noted that no reason was given for Murray's departure, and said that the "sudden departure would suggest there have been disagreements over strategy or personal reasons." Pace's results were released ahead of schedule because of Murray's exit.
"Pace is showing strong execution but longer-term structural challenges still linger," Liberum said.
Shares in Pace were trading up 0.5% at 370.30 pence Monday morning.
By Hana Stewart-Smith; [email protected]; @HanaSSAllNews
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