Interim Management Statement

Pace plc: Interim Management Statement

Saltaire, UK, 18 November 2014: Pace plc ("the Company"), a leading global developer of technologies and products for PayTV and broadband service providers, today announces its Interim Management Statement for the period 1 July 2014 to 17 November 2014 ("the Period").

Profitability ahead of expectations in the Period. Record Q4 profit anticipated, full year profit guidance increased.

Trading Update

Positive trading performance in the Period with increased profitability and good momentum going into Q4:

· Underlying demand for Pace's products and services continues to be strong and revenues in the period were ahead of the prior year.

· Gross margins in the Period were ahead of expectations due to an improved revenue mix and procurement savings from ongoing supply chain effectiveness improvements.

· Despite continued investment in growth opportunities, operating costs were lower than expected due to ongoing efficiency initiatives.

· Adjusted EBITA and operating margins were ahead of expectations due to a stronger mix of revenues and lower operating costs.

· Cash flow continues to be strong and the Company is on track to achieve its cash flow targets for the year.

Outlook

The outlook for the year is updated based on trading in the Period:

· Revenues for 2014 are now expected to be between $2.6bn and $2.65bn (2013: $2.47bn), reflecting a short-term shift in phasing from this year into next year;

· Operating margin for 2014 is now expected to be greater than 9.0% (2013: 7.8%), equivalent to greater than $235m adjusted EBITA (2013: $194m); and

· Strong cash flow to continue, and Pace expects to generate in excess of $200m of free cash flow in 2014 (2013: $209m).

Board Changes

· The Company is pleased to announce that after completing a thorough search and interviewing a high calibre shortlist, Mark Shuttleworth, former CFO of Emirates Integrated Telecommunication Company PJSC, known as "du", will be appointed as Chief Financial Officer and join the Board of Directors with effect from 12 January 2015.

· In line with best practice corporate governance, the Company has taken the opportunity to rotate a number of roles within the Board. As such, John Grant has been appointed Senior Independent Director and remains Chairman of the Audit Committee, and Mike Inglis has been appointed Chairman of the Remuneration Committee. Pat Chapman-Pincher will remain as an Independent Non-Executive Director.

Commenting on today's announcement, Mike Pulli, CEO, said: "We continue to make good progress and have delivered another period of strong profitability and cash generation.

In the period, Pace has achieved a record number of major product launches across the globe, regaining leadership with a number of key customers and reinforcing Pace as a leader in innovation and delivery for the PayTV and broadband industries.

The Company continues to make further progress on its self-help initiatives with improvements in the efficiency of its supply chain and a reduction in operating costs. Notwithstanding the benefits realised over the last three years, there remains significant opportunity for further improvement.

We have a good line of sight to a record Q4 and remain firmly focused on closing out the year and maintaining this momentum into 2015."

Progress against Strategic Plan

In the period, Pace has made further good progress on the execution of its Strategic Plan, which was laid out in November 2011:

Maintain PayTV hardware leadership:

· Comcast, the leading US media and technology company, has begun deployment of the Pace Xi3 IP client set-top box and a new Pace XG1 DVR as part of their X1 next-generation television service.

· Pace continues to make progress with AT&T, one of the world's largest communications companies, on the development and deployment of DVR set-top boxes and new residential gateways.

· Building on Pace's global partnership with TiVo that was announced in H1 2012, Armstrong has selected Pace hardware to power their TiVo software solution. There are now five cable operators in North America using Pace and this solution.

· Pace has been selected by GVT, a major DTH and telco provider in Brazil, to provide their next-generation GPON Gateway and Set-top box products.

· Pace launched a number of Set-top box and Gateway products to the market including Pace's first range of advanced DOCSIS 3.0 Cable Gateway products to enable cable operators to support their customers' demand for advanced broadband services.

Widening out:

· Aurora Networks launched a number of new products and solutions to the market including support for the next generation DOCSIS 3.1 standard that will enable operators to achieve faster downstream and upstream broadband speeds.

Continue to transform core economics:

· Good progress has been made in increasing capacity in the Aurora supply chain and leveraging Pace's scale and expertise to meet the increasing demand for their products and services.

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Note to Editors:

Biography - Mark Shuttleworth, Chief Financial Officer Pace plc

Mark Shuttleworth will be appointed as Chief Financial Officer and join the Board of Directors with effect from 12 January 2015. A Yorkshireman, Mark will be based at Pace's Saltaire HQ.

Most recently, Mark served as the CFO of Emirates Integrated Telecommunication Company PJSC, known as "du" (DU:UH). He joined du in 2005 and was responsible for managing the financial and business investment strategy of the start-up operator; leading the $660m IPO of the business on the Dubai Financial Markets and building the business to a market capitalisation of $8bn and revenues of $3bn.

Prior to du, Mark was CFO of Qatar Telecom "QTel" (now "Ooredoo", ORDS:YH) from 2003 to 2005. Mark has also served as Group Finance Director of European Telecom PLC, Group Finance Director at ORA Telecom Ltd and held a number of senior finance roles at Sensormatic Electronics Corporation Inc.

Mark qualified as an accountant with Lubbock Fine and later worked at Price Waterhouse as a Senior Manager in Corporate Restructuring.