Shares in Pace sparked 28 per cent higher as the digital set-top box maker's results easily beat market expectations. The company is enjoying strong demand for new products, but the real masterstroke was last year's £66m acquisition of the Philips decoder business in France.
Heavily loss-making at the time, Pace returned the operation to the black within just three months. It chipped in sales of £293m and profits of £8.4m this year, as Pace strengthened its management and delivered cost savings. The deal also delivered 20 new customers and over 30 new products.
That means Pace has jumped from eighth place to become the world's third-largest supplier of set-top boxes, shipping a record 13.1m units over the year. The move from analogue to digital pay TV is driving demand, as is its strong technology capability. Pace has close links with customers such as Sky and British Telecom, but the US is its largest market with customers such as Comcast.
The company is now developing a new MultiDweller product targeted at households living in apartment blocks - research shows that half of Europe and Asia's populations live in such accommodation.
Pace generated £50m of cash last year, which meant the payment of its first dividend since 2002. Broker Altium expects 2009 adjusted pre-tax profits of £40.3m and EPS of 9.6p.
PACE (PIC) | ||||
|---|---|---|---|---|
| ORD PRICE: | 77p | MARKET VALUE:s | £230m | |
| TOUCH: | 76-77p | 12-MONTH HIGH: | 98p | LOW: 35p |
| DIVIDEND YIELD: | 0.8% | PE RATIO: | 19 | |
| NET ASSET VALUE: | 48p* | NET CASH: | £37.7m | |
| Year to 31 Dec | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2004 | 240 | 3.9 | 3.7 | nil |
| 2005 | 253 | 9.0 | 6.2 | nil |
| 2006 | 178 | -27.5 | -13.0 | nil |
| 2007** | 387 | 4.9 | 3.0 | nil |
| 2008 | 746 | 13.8 | 4.0 | 0.6 |
| % change | - | - | - | - |
Ex-div: 3 Jun Payment: 3 Jul *Includes intangible assets of £126m, or 42p a share **May year-end until 2007 | ||||
