Strong performance in 2013: Adjusted EBITA up 22.5% to $193.6m, Free cash flow up 14.4% to $209.0m, Dividend up 22% to 5.49c per share.
Financial highlights
Revenue up 2.7% to $2,469.2m (2012: $2,403.4m).
Adjusted EBITA up 22.5% to $193.6m (2012: $158.1m).
Operating margin up 1.2 percentage points to 7.8% (2012: 6.6%).
Profit after tax up 65.6% to $96.7m (2012: $58.4m).
Basic EPS up 60.8% to 31.2c (2012: 19.4c) with Adjusted basic EPS3 up 26.2% to 44.3c (2012: 35.1c).
Proposed final dividend 3.66c per share, resulting in full year dividend of 5.49c per share, a 22% increase on 2012
(2012: 4.50c).
Free cash flow$209.0m (2012: $182.7m).
Debt repaid in full prior to the end of the financial year (nil gross debt), cash position of $33.0m as at 31 December 2013
(31 December 2012: $163.3m net debt5).
Operating highlights
Increased operating profit through top-line growth, improved revenue mix, supply chain efficiency and increased operational efficiency.
Highly accretive acquisition of Aurora Networks, Inc ("Aurora") (completed on 6 January 2014), a leading provider of Optical Transport and Access Network solutions.
Further progress made against the Strategic Plan laid out in November 2011:
o Transform core economics:
The rationalisation of the Electronic Manufacturing Services ("EMS") footprint was completed, delivering significant operational and financial benefits in 2013 and beyond.
Continued focus on efficiency has delivered further sustainable overhead savings; $16.2m (5.8%) underlying savings compared to 2012.
Further Working Capital reductions and robust cash management enabled a second consecutive year of over 100% free cashflow to EBITA generation.
o PayTV hardware leadership:
Reconfirmed as the market leader in PayTV hardware; global number one in Media Servers6, Set-top boxes ("STBs")7 and Telco Gateways8.
2.6% revenue growth in PayTV hardware (2012: 3.9%) to $2,355.4m with strong demand from major customers and a number of wins achieved in previously under-penetrated markets such as cable in Europe and Internet Protocol Television ("IPTV").
o Widen out into Software, Services and Integrated Solutions:
Built on the momentum of 2012 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 2014.
5.4% growth in software and services revenue to $113.8m (2012: 7.6% to $108.0m).
2014 Outlook
Considerable progress has been made in delivering on our strategy in 2013 and there remains further opportunity in 2014 to build on this success to develop and improve the performance of the Company.
The Board is confident that the Group (including Aurora) will make further progress in 2014:
Revenues for 2014 expected to be c. $2.7bn.
Operating margin for 2014 is expected to be c. 8.5%.
Strong cash flow will continue, and Pace expects to generate in excess of $185m of free cash flow.
Commenting on the results, Mike Pulli, Chief Executive Officer said:
"I am pleased to report that Pace has performed above expectations in 2013, by delivering increased operating profits through both top-line growth and operational efficiency, with a sustainable high level of cash generation. We have made good headway on executing our strategy and there remains significant opportunity for further improvement.
Pace continues to lead the market in innovation with great products and services, demand from our customers has remained strong and we continue to win new business.
I am excited about the acquisition of Aurora Networks, which will enable Pace to widen out into network infrastructure and build deeper, more embedded relationships with our customers, strengthening Pace's position as a market leading solutions provider for the PayTV and broadband industries. The teams have hit the ground running and made great progress with the integration of Aurora. I am confident that we will complete the integration by the end of Q2 2014 and deliver the expected synergy benefits.
The strong performance in 2013 and the momentum of the business going into 2014 give the Board confidence to increase the final dividend by 20%. The Board is recommending a final dividend of 3.66c per share, giving a full year dividend of 5.49c per share, a 22% increase on 2012.
We are confident about our trajectory and are focused on making further progress in 2014 and beyond".
