Pace increases first half profit by 46% and announces proposed US acquisition
Pace, the leading independent developer of digital TV technologies for the global payTV industry, announces its results for the six months ended 30 June 2010.
Financial Highlights
- Revenues increased 21% to £635.2m (six months ended 30 June 2009: £526.5m)
- Improvement in gross margin to 18.6% (six months ended 30 June 2009: 17.2%)
- Adjusted1 operating margin increased to 7.5% (six months ended 30 June 2009: 6.5%)
- Profit before tax up 46% to £45.4m (six months ended 30 June 2009: £31.0m)
- Adjusted1 profit before tax up 39% to £47.8m (six months ended 30 June 2009: £34.3m)
- Basic EPS of 10.7p up 43% (six months ended 30 June 2009: 7.5p), with adjusted basic EPS of 11.6p up 40% (six months ended 30 June 2009: 8.3p)
- Interim dividend of 0.725p, increased by 45% (six months ended 30 June 2009: 0.5p)
- Strong balance sheet with cash of £94.1m (at 31 December 2009: £73.5m, at 30 June 2009: £48.9m)
Operating Highlights
- Pace delivered a strong first half and continues to increase market share, building on its recognition by IMS as the world’s number one set-top box company2
- Consistent strong demand from Pace’s global payTV markets leading to increased volume shipments up 12.9% to 9.6m (six months ended 30 June 2009: 8.5m)
- The Group won new customers and launched new platforms for existing customers that included Multichoice, M7, Sky Deutschland and Astro
- Continuing to establish leadership in TV-led home networking products
- Completed acquisition of Bewan Systems SA, the Paris-based IP and cable gateways specialist
Proposed acquisition
- Pace today announced the proposed acquisition of 2Wire Inc, a leading provider of advanced residential gateways and associated software and services for the broadband service provider market to widen Pace’s US customer base and opportunity
Commenting on the results, Neil Gaydon, Chief Executive Officer, said:
“In the first half, Pace delivered excellent revenue and profit growth and increased its cash position to further strengthen the balance sheet. These results were produced despite some challenges within the supply chain, due to the skill of our operations teams, scale and strong supplier relationships.
“Pace has become the world's leading supplier of digital set-top boxes, an achievement built on our deep understanding of the payTV operators’ business and market requirements and our ability to be first to deliver the technology that enables them to bring new services to market. With today’s announcement of our proposed acquisition of 2Wire, we expect to widen out our US customer base and opportunity as well as develop Pace’s technology capability.”
Outlook
The market demand for pay and subscription TV services continues to grow, and Pace’s increasing penetration, technology capability and geographic reach give the Board confidence in Pace’s platform for sustainable future growth.
The Group is now close to achieving its medium term 8% operating margin target, which the Board expects to be a sustainable level going forwards. Pace management will nevertheless strive to improve on this.
Given the Group’s first half performance and good visibility for the second half, the Board is in the process of revising its expectations for the 2010 financial year. In light of the Group’s operating momentum, strong market position and the ongoing demand for digital TV technologies, the Board believes Pace should have the objective of delivering annual revenue growth of at least mid-single digit over the medium term.
Please note this outlook statement does not incorporate any financial impact as a result of the proposed acquisition of 2Wire.
1 - Adjusted is before amortisation of other intangibles
2 - IMS survey of global digital set-top box shipments in 2009, published May 2010
Please download the full Interim Results statement from www.pace.com/companyreports
Contacts
Sarah West/Jonathan Glass
Brunswick
+44 20 7404 5959
Helen Kettleborough
Pace plc
Today only +44 20 7404 5959
Thereafter +44 1274 538005