Pace plc: Interim Management Statement

Pace plc: Interim Management Statement

Saltaire, UK, 24 April 2014: 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 January 2014 to 23 April 2014.

At its Annual General Meeting scheduled to take place today, Allan Leighton, Chairman, will say:

"I am pleased to report that Pace has made a good start to the new financial year. Forecast demand for both current and new products is building as the year progresses, giving the Board confidence that the company is on track to achieve the guidance of c. $2.7bn revenue for the year. In line with our expectations, revenue in the period was lower than the same period in 2013 reflecting the impact of dual-sourcing of Media Servers and Gateways. Gross margins in the period are well ahead of Q1 2013 due to the positive impact of improved revenue mix, procurement benefits and Aurora. Operating costs, excluding Aurora, continue to trend down reflecting on-going improvements in operating efficiency.

Profitability for the Group is in line with our expectations and the robust cash flow generation has continued.

The acquisition of Aurora Networks, Inc. closed on 6 January 2014 and both the integration activity and trading in the period are ahead of expectations. The integration is largely complete and all steps have been implemented to realise the previously stated synergy savings of $4m in 2014 and $8m in 2015. Underlying demand has been strong and the trading outlook is positive. We expect Aurora to be a significant profit and cash contributor in 2014.

We continue to focus on the execution of our Strategic Plan and have made good headway in the period:

· Continue to Transform Core Economics: We continue to drive further efficiencies in the core Pace business and have made a good start in applying the principles and processes to Aurora to drive improvements in cost of goods, overheads and working capital.

· PayTV Hardware Leadership: 

o BeIn Sports, the leading PayTV provider in the Middle East and North African region, has selected Pace to supply Home Media Servers and High Definition Set-top Boxes ("STBs") for their roll-out across the region.

o Encouraging progress has been made in the fast growing Indian market where Pace has been selected to provide next generation STBs to Tata Sky, the leading satellite operator, and to provide integrated solutions consisting of Pace STBs, software and conditional access to E-Digital, a leading regional operator.

o New STB wins have been achieved at a number of long term customers in Europe including Zon Optimus in Portugal.

· Widen out into Software, Networks, Services and Integrated Solutions:

o Pace has built on the momentum of 2013 with a number of key wins across all areas of our software and services offerings and a strong focus on product and customer project delivery for major launches and deployments in the year.

o Foxtel, the largest PayTV provider in Australia, and TDS Telecom, a major telecoms operator in the United States have selected Pace's ECO Service Management platform to support their connected customers.

o Pace has been selected to provide its Titanium software Conditional Access System to support Viva Broadcast's launch in the Indonesian market.

2014 Outlook

The Board remains confident of achieving the outlook stated on 4 March 2014:

· Revenues for 2014 expected to be c. $2.7bn (2013: $2.47bn)

· Operating margin for 2014 is expected to be c. 8.5% (2013: 7.8%).

· Strong cash flow will continue, and Pace expects to generate in excess of $185m of free cash flow (2013: $209m)."

The Group will be announcing its half year results for the period ending 30 June 2014 on 29 July 2014.

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For further information please contact:

Charles Chichester / James Fearnley Roddy Murray / Chris Mather

RLM Finsbury Pace plc

+44 (0) 207 251 3801 +44 (0) 1274 538 330