Interim Management Statement

Pace plc

14 November 2013

Pace plc: Interim Management Statement

Saltaire, UK, 14 November 2013: Pace plc, 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 2013 to 13 November 2013 ("period").

Trading Update

Trading performance in the period has shown good progress with continued momentum across the business.

· Key wins have been achieved in the period giving further confidence for 2014. Project delivery for the new wins is well underway and the underlying demand across the business is strong.

· Revenue in the period, as expected, was lower than the same period in 2012, reflecting the impact of dual-sourcing of Media Server supply by a large North American satellite customer.

· Gross margins in the period however benefitted from improved revenue mix and procurement savings resulting from improved supply chain effectiveness.

· Operating costs in the period are lower than in the same period in 2012.

· Adjusted EBITA and Return on Sales are higher than the same period in 2012, despite the lower revenue, reflecting the Company's continued progress towards improved medium term profitability.

· Cash flow in the period has been strong following the completion of the Electronic Manufacturing Services ("EMS") consolidation, working capital has been further reduced and Pace is now in a net cash position (Peak net debt of $321.7m at 31 December 2011).

Outlook

Trading in the period has been strong and the outlook for the remainder of the year is reiterated:

· Revenues for FY2013 expected to be broadly in-line with 2012;

· Operating margin for FY2013 is expected to be greater than 7.5%; and

· Strong cash flow will continue, and excluding acquisitions, Pace expects to retain a net cash position through to the end of 2013.

Commenting on today's announcement, Mike Pulli, CEO, said: "Following a strong first half in 2013, Pace has made further good progress in the period with continued momentum across the business.

The transformation of our supply chain is nearly complete and we are seeing meaningful benefits both operationally and financially. Wins with tier one customers reinforce our leadership position in PayTV hardware and our strategy of widening out our products and services continues to build momentum with wins and deployments across all of the regions we operate in.

The acquisition of Aurora represents an important step in the evolution of Pace and enhances our strategy to widen out and build a broader platform from which to drive revenue. Acquiring Aurora will allow Pace to expand beyond our core business and build deeper and more embedded relationships with our customers, which the Company believes will strengthen Pace's position as a market leading solutions provider for the PayTV and broadband industries.

We are confident about our trajectory and remain firmly focused on closing out the year and then making further progress in 2014."

Acquisition of Aurora

On 23 October Pace announced that it had entered into a conditional agreement with Aurora Networks, Inc. to acquire Aurora for a headline consideration of $310m in cash. A circular containing further details of the acquisition will be sent to Pace shareholders in due course, together with a notice convening a General Meeting to seek shareholder approval for the acquisition. Closing is expected to take place around the end of Q4 2013.

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:

Leadership in PayTV hardware:

· In the key focus area of IPTV, Pace is now shipping Mediaroom enabled DVRs and set-top boxes to AT&T and CenturyLink, two of the largest telecommunications providers in North America. Shipments to these important customers commenced in H2 2013.

· Charter Communications, a major cable operator in North America, has selected Pace for a multi-product deal with deployments already underway.

· Building on Pace's global partnership with TiVo that was announced in H1 2012, Mediacom is the second US cable operator to select a Pace hardware and TiVo software solution.

Widen out into software, services and integrated solutions:

· Altibox, the Norwegian triple play service provider, has selected Pace to deliver an integrated Whole Home solution, consisting of Media Server, Elements software, conditional access and client set-top boxes.

· Bell Aliant, one of the largest telecommunications providers in Canada, has selected Pace's next generation ECO Service Management platform.

Transform Core Economics:

· The transition to a consolidated Electronics Manufacturing Services (EMS) partner footprint is complete. All new products are being developed through this model and the financial and operational benefits are now being realised and will drive 2014 profitability.

· Through a strategic relationship with a local partner, Pace has established a manufacturing facility in South Africa which enables the Company to supply customer premise equipment locally to long-time customer MultiChoice and other operators in South Africa and Southern African Development Community countries.

· For the first time Pace has been recognised as a leader (joint 24th) in the "FTSE 350 Climate Disclosure Leadership Index". The Leadership index, compiled by PwC on behalf of the Carbon Disclosure Project, provides an evaluation tool for institutional investors and other stakeholders regarding climate change disclosure within the FTSE 350 Index.

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