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Pace plc Increases Full-Year Profit Guidance

paceThe share price of Pace (LSE: PIC) — the developer of set-top box and related technologies for the pay-TV and broadband services industry — is currently down (albeit barely)  following publication of interim results for the 6 months to 30 June 2014, in which it increased guidance for full-year profits and cash flow.

Gross profit was up 5.4%, to $245.8m, on a margin of 21.6% (up from H1 2013’s 17.7%), despite a 13.6% fall in revenue — in line with management expectations — which was down to $1,138.9m. Profit-after-tax rose 9.3%, up to $55.4m, and free cash flow increased 18.4%, to $108.9m.

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Adjusted earnings before interest, tax and amortisation (EBITA) was up 9.9%, at $106.3m.  Basic earnings per share (EPS) grew 8.5%, rising to 17.8 cents, with adjusted EPS up 15.4%, at 25.5c. The company has recommended an interim dividend of 2.25 cents per share, which is an increase of 23% over H1 2013.

Because of what is described as increased momentum in revenue, Pace has raised its guidance for full-year revenue to around $2.7bn, with an operating margin of “no less than 8.5%”, and has said it now expects to generate “in excess” of $200m of free cash flow.

Commenting on the results, CEO Mike Pulli said:

I am pleased to report we have had a successful first half of the year and have made considerable progress. Pace is continuing to evolve into a more profitable, cash generative business with a broader spread of customers.

“We continue to make good progress on executing our strategy; the integration of Aurora, key wins in all areas of our product and service portfolio across all of the regions that Pace operates in, and ongoing operational improvements give management confidence that we will maintain our momentum and make further progress in the second half of 2014 and beyond.

At 368.1p, Pace’s share price is up 16.6% so far in 2014, versus rise of just 0.8% in the FTSE 100.  And Pace is well ahead of the index over five years, with its share price recording an 85% gain, compared to the FSTE 100’s 49%. 

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Jon Wallis has no position in any shares mentioned.

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