Pace Micro Technology plc results for the seven month period ended 31 December 2007

Tuesday, January 29th, 2008 
Pace Micro logo

Operating Highlights

  • Exceptional performance during the period, in line with increased expectations
  • Solid underlying business trends, platform for growth now embedded
  • Good balance of business across the group and broadened product range
  • Volume shipments of 2.4m set-top boxes (year ended 2 June 2007: 3.9m)

Financial Highlights

  • Revenues of £249.9m (year ended 2 June 2007: £386.5m)
  • Gross margin improvement to 20.3% (year ended 2 June 2007: 15.9%)
  • Profit before tax £15.4m (year ended 2 June 2007: £4.9m)
  • Earnings per share of 6.1p (year ended 2 June 2007: 3.0p)

SALTAIRE, UK — Pace Micro Technology, the leading independent developer of digital TV technologies for the global pay-TV industry, announces its audited financial results for the seven month period ended 31 December 2007.

Results Overview

North America, the world’s largest market for digital television technology, has performed strongly with shipments of 0.9m set-top boxes in the seven month period (year ended 2 June 2007: 1.2m). Strengthening its US market position by investing early in next generation products, Pace has been quick to market with its new OCAP-ready CableCARD™ range to meet new US regulatory requirements for separable security in cable set-top boxes. Orders of CableCARD products have begun to increase, while demand for satellite products remained strong. Pace continued to develop and deepen its customer relationships in North America in the period and now supplies over 40 operators, including the two largest payTV organisations, DirecTV and Comcast, where Pace has order coverage through 2008.

Pace performed strongly in the EMEA and APAC markets, achieving a level of shipments into the EMEA region of 1.3m set-top boxes (year ended 2 June 2007: 2.2m), and shipments into the APAC region of 0.2m (year ended 2 June 2007: 0.4m). Demand for HD PVR has grown and Digiturk has recently launched a HD PVR service using Pace set-top boxes, which is also the first implementation of Pace’s new Irdeto conditional access / OpenTV middleware platform. As expected this platform is enabling Pace to win further new customers in these regions and in September Pace announced a business win with Multichoice in South Africa. Multichoice is typical of the customers Pace aims to work with: the leading payTV operator in a region with rights to the best content, strong engineering and a customer base receptive to the latest developments in digital TV technology. Most recently Pace was chosen by existing customer Viasat to launch HD PVR in the Nordic countries.

Multichoice and Digiturk have extended Pace’s customer-base of leading payTV operators that also includes BSkyB, Sky Italia, and UPC in EMEA. In Australia and New Zealand Pace has continued to ship products to Foxtel, Optus and Sky New Zealand.

Looking further ahead, Pace is building on its leadership and skills in digital TV technology to develop in new markets. Key initiatives include Pace Networks, a new business unit to target opportunities further up the digital delivery chain, and a re-entry into retail markets with an advanced hybrid product. The first Networks product will be MultiDweller™, a network class of product that converts existing wiring in apartment blocks into high-speed triple-play bi-directional networks, without the need for any modification or additional cabling.

Philips STB and CS business Proposed Acquisition

On 19 December 2007 Pace announced that it had entered into a conditional agreement to acquire the set-top box and connectivity solutions business of Royal Philips Electronics. The Philips STB and CS Business employs approximately 335 staff predominantly based in France and is a leading designer and supplier of a range of digital TV products including satellite, cable, terrestrial and IPTV set-top box products. While the Board is confident in the organic growth prospects for Pace, the proposed acquisition would provide complementary product ranges, customers and geographical reach to Pace’s existing business.

The acquisition is classified as a ‘reverse takeover’ under the Listing Rules by virtue of its size and is as a result conditional, inter alia, on the approval of Pace shareholders which will be sought at a General Meeting of Pace expected to take place in March 2008 following posting of the circular and publication of the prospectus. As the acquisition is classified as a ‘reverse takeover’, the ordinary shares of Pace have been suspended from trading since 19 December 2007 and will re-commence trading on the posting of the circular to shareholders and publication of the prospectus, expected to be in early March.

[On the 19th May 2008 Pace Micro Technology plc changed its name to Pace plc]