racoverfeb08layout 1  22208  1228  page 1 1
report  accounts
2007 jundec
operating highlights
m exceptional performance during the period in line with increased expectations
m solid underlying business trends platform for growth now embedded
m good balance of business across the group and broadened product range
m volume shipments of 24m settop boxes year ended 2 june 2007 39m
financial highlights
m revenues of £2499m year ended 2 june 2007 £3865m
m gross margin improvement to 203 year ended 2 june 2007 159
m profit before tax £154m year ended 2 june 2007 £49m
m earnings per share of 61p year ended 2 june 2007 30p
racoverfeb08layout 1  22208  1228  page 2 2
highlights 1
letter from the chairman 3
chief executive officer’s review 4 
chief financial officer’s review 7
report of the directors 9
remuneration report 20
statement of directors’ responsibilities 27
independent auditors’ report 28
financial statements 31
notes to the financial statements 37
directors secretary and advisers 60
five year record and shareholder information 61
contents
repaccountsjan08qxp  19208  1330  page 3 i am delighted to be able to give you a
further update on pace’s performance
such a short time since i last wrote to you  
as you will have seen from the company’s announcements pace has now moved to a december financial year
end  this means that from now on pace’s full year results will be published in the first calendar quarter and its
half year interim results will be published in the third  this annual report focuses on the last seven months
from june 2007 to the end of december 2007 reflecting the shortened financial year as we move to our new
reporting cycle
it has been a pleasure to see the team at pace deepen the company’s position as the leading digital tv
technology company and take greater advantage of the revenue opportunities available in the settop box
market  pace has achieved this by developing its business with new and existing customers delivering
profitable products on time increasing market share in important areas such as high definition and pvr as well
as investing in the right technologies for future growth  consequently i am delighted to see the exceptional
results your company has achieved in this shortened financial year which met our increased expectations   
in my last report i talked of our goal of achieving sustainable 20 gross margins for 2008  through the
management’s new business operating model and hard work throughout the entire group we are already able
to report a gross margin of 203  
as we continue to focus on the strength of our balance sheet the board has decided not to recommend a
dividend payment  we will continue to monitor this position
at the end of 2007 we announced our conditional agreement to acquire the settop box and connectivity
solutions business of royal philips electronics  we believe that this acquisition if approved will create more
opportunities to grow pace’s business better serve customers and provide increased scale  more information
will be provided on publication of the prospectus and circular which we expect to publish in early march 
good progress has been made and when i last spoke to you i said that there remained a great deal of work to
do to build a strong and resilient longterm business  since then i am very pleased to report that neil gaydon
and his team are continuing to deliver and their hard work is building a stable mature platform for future
results  the board has confidence in this platform for longterm business growth and creation of shareholder
value 
if you have comments on any aspect of this letter or indeed any part of the annual report i would be delighted
to hear from you either by writing to me at pace or by email at mikemctighepacemicrocom
yours sincerely
mike mctighe
chairman
29 january 2008
letter from the chairman
3
report  accounts
2007 jundec
mike mctighe
chairman
29 january 2008
repaccountsjan08qxp  22208  1145  page 4 4
chief executive officer’s review
d overview
at the end of a year where we celebrated our 25th anniversary i am pleased to report an outstanding period
for our business in which we delivered against our objectives and the strategy programme
since i last shared progress with you there have been significant developments at pace  we have strengthened
our position as the leading digital tv technology company with customer wins new product launches and
increased market share  financial performance has improved customer satisfaction is growing and we are
showing significant improvements against our company’s critical success factors of being on margin on time
and on quality
during the last seven months pace teams have worked on over 30 projects for our paytv customers around the
world  we have worked hard to develop and strengthen our position at heart of digital tv through advanced
settop box products and new technologies that meet the needs of our customers  at the end of the calendar
year 2007 we also announced our intention to acquire the settop box and connectivity solutions business of
royal philips electronics  
trading performance
we delivered a strong performance during this period meeting our increased expectations due to the actions
put in place to improve business efficiencies along with exceptional performance in north america 
product margins execution and quality all improved and we increased profitability to £154m year ended 2
june 2007 £49m on revenues of £2499m year ended 2 june 2007 £3865m  these revenues have remained
well balanced between our markets in north america 58 of total and those in europe and australasia 42
in terms of volumes europe and australasia were higher than north america  overall during the seven month
period we shipped 24m settop boxes with average selling prices rising from £100 to £102 due to demand for
higher specification products such as standard and high definition personal video recorders  we have been
able to meet this demand as well as win new business due to our ongoing early investment in new technology 
outlook
i am pleased with the results we have achieved and the depth of quality in our organisation that is enabling us
to deliver a solid sustainable platform for growth which is now embedded across the group 
demand for our products and services is being driven by increasing competition between paytv providers new
entrants new content delivery systems in addition to analogue switchoff in many markets  these
fundamental trends are expected to continue for the foreseeable future  for example operators are seeking to
drive up their average revenue per user arpu and satisfy their customers’ demands with paytv solutions that
are both innovative and easy to use  the competitive landscape is generating market excitement that is
stimulating consumer demand and further market development  
market surveys point to standard definition sd high definition hd and personal video recording pvr
continuing to grow  we have been successful in leading the market for hd and pvr products but this is still a
very new market and penetration levels in the majority of regions remain low  in fact leading analysts expect
that by the end of 2007 only 4 just over 2 million of the digital settop boxes shipped in emea europe middle
east and africa will be hd  during the same period it is expected that over 16 million new hdready tv panels
will have been shipped   this is an area of opportunity we will continue to work hard to succeed in
while the market remains difficult to predict and our performance is largely predicated on the performance of
our customers we are confident that we are investing in the right products and technologies to meet the
demands of our growing customer base and are on track to meet our expectations for the 2008 financial year
neil gaydon
chief executive officer
29 january 2008
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2007 jundec
d taking a closer look
pace continues to deliver
i am delighted to report that we continue to deliver the pace vision of great products to our customers every
time for both our internal and external customers doing so with excellence and enthusiasm  our portfolio of
paytv customers is the best in the world and we now have the optimum structure to deliver on their needs for
leading products  we provide a full range of services from strategic advice as to the technology decisions our
customers need to make through to the development and delivery of customised settop box solutions that in
turn we integrate for each operator’s unique system and network  of course our relationship does not stop
there as our products once installed are software upgradeable and therefore we provide long term customer
support with many relationships going back over twenty years
pace has a world leading team of engineers dedicated to developing digital tv technology  over 60 of our
employees are engineers where we employ specialists and experts in software hardware and systems
integration  our emphasis on innovation means that today pace has been granted over 100 patents with over
200 applications pending  our creative approach and the developments we have pioneered in digital tv
technology enables us to diversify with first to market profitable products that put us at the heart of the
fascinating interconnected and interoperable media universe  
we treat our ability to innovate and lead in this way with the same emphasis and care that we treat our focus on
delivering products to our customers our focus on these two areas means that we can deliver with excellence
today while planning for the future of pace the digital tv market and our customer requirements
pace at the heart of digital tv
the settop box embodies a digital tv service within the home and is a highly complex electronic device  that
complexity demands indepth customer relationships and close partnerships with third party technology and
silicon providers if our products are to deliver the services our customers demand and to the quality they expect
pace is at the heart of making this happen we are the hub in the value chain  we have the widest range of
industry partnerships from conditional access providers to software application developers ensuring we
deliver the best settop box products for our customers  
our customer centric organisational structure built around core technology requirements of our customers has
enabled us to make important steps forward in our industry position improving the effectiveness of these
business critical relationships  we aim to be one of the world’s leading digital settop box companies by
continuing to win business with the world’s leading paytv operators growing relationships with our existing
customers winning new customers and developing world leading technological products ahead of our
competition 
geographical performance
our approach is driving performance improvements across all of our markets  in north america the world’s
largest market for digital television technology we performed strongly shipping 09m settop boxes in the seven
month period year ended 2 june 2007 12m we have strengthened our us cable market position by investing
early in next generation products and have been quick to market with our new ocapready cablecard™ range
that meets new us regulatory requirements for separable security in cable settop boxes  orders for our
cablecard products are increasing while demand for satellite products remained strong 
we also delivered a strong performance in emea and apac markets achieving a level of shipments into the
emea region of 13m settop boxes year ended 2 june 2007 22m and shipments into the apac region of 02m
year ended 2 june 2007 04m  demand for our hd pvr grew digiturk recently launched its hd pvr service
using pace settop boxes which is the first implementation of our new irdeto conditional access  opentv
middleware platform  as anticipated this platform is enabling us to win new customers and in september we
announced multichoice in south africa  multichoice is typical of the customers we 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 it was announced that we will supply viasat for their
hd pvr launch in the nordic countries  a pace team has been working on this product to create the specific
customised hd pvr the customer requires for its service  each operator settop box we create requires a unique
product development and one which also creates a good return on investment
repaccountsjan08qxp  19208  1330  page 6 6
these new business wins have extended pace’s customerbase of leading paytv operators that 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   
d new developments and diversification
pace’s retail product range
pace is at the centre of the digital tv market with a very experienced understanding of the needs of both
operators and consumers  for the last 10 years our focus has been on strengthening and developing our
relationships with operators to provide outstanding settop boxes and network products that access paytv
pace is now preparing to bring to market a product range that allows payasyougo business models where
consumers can mix some subscription channels with ondemand movies and free content  consumers will be
able to purchase this product range direct through their retailer  this is another example of pace’s commitment
to innovate where there is a clear market need for a solution 
networks 
at the international broadcasting convention in september 2007 we announced the launch of pace networks
a new business unit that will open new markets for us further up the chain in the delivery of digital content by
utilising our skills in tv dvb docsis and ip technologies  this business will use a different business model and
route to market to those employed in our settop box business to reach both existing customers and customers
in new and different markets  
the first networks product is pace multidweller™ which we have been developing for the last couple of years
and enables operators to deliver a full suite of interactive digital services to customers in multidwelling units
mdus including digital video broadband and telephony  today over 50 of europe’s population live in mdus
multidweller is a very cost effective and easy to install method of converting existing distribution networks
within mdus into highspeed tripleplay bidirectional networks without the need for any modification or
additional cabling  we will not only provide the consumer premise equipment but will licence the settop box
technology to enable third party settop box manufacturers to communicate with multidweller  we are already
working with our first customer and i am excited about the possibilities and opportunities networks could open
up for us
new pace with broader and deeper reach
our intention to acquire the philips stb and cs business announced on 19th december 2007 carries the aim of
creating a leading centre of excellence in the settop box industry  pace and philips have a shared heritage in
the settop box market of over 20 years each and there is a strong complimentary and strategic fit from
customer product geographic culture and scale perspectives  
the transaction would result in the acquisition of two key business units from royal philips electronics  these
assets are the settop box and connectivity solutions units with the latter developing products that include
advanced residential gateways for home networking and internet connectivity  we believe there is potential for
substantial benefits and growth by applying our proven operating model and structure to the philips business
our approach has delivered a material improvement in our operating and financial performance as can be seen
from the 2007 results
to conclude i am pleased to report a confident view of progress for the next year with opportunities for growth
in existing and new markets
neil gaydon
chief executive officer
29 january 2008
repaccountsjan08qxp  19208  1330  page 7 our customer focus and new business
operating model has delivered improved
results with strong underlying performance
trends in particular gross margin
improvement 
we have established a strong platform for growth by concentrating on profitable business as well as investing
in new technologies  to help achieve our goals we have deepened financial knowledge throughout the
organisation empowering our people to make better informed business decisions  this is beginning to deliver
strong results as we continue in our development as a world class technology company
trading in the period
in the seven month period we shipped 24m settop boxes year ended 2 june 2007 39m with revenues of
£2499m year ended 2 june 2007 £3865m  average selling prices rose from £100 to £102 reflecting the
growing demand for higher specification products such as hd pvr a demand we have been able to meet due
to our ongoing early investment in new technology  
gross margin of 203 shows a significant improvement from the previous year year ended 2 june 2007 159
through thorough and close management of the business  
overheads
overheads excluding the impact of ias38 were £372m year ended 2 june 2007 £557m excluding
restructuring costs  rd spend before capitalisation of development expenditure in line with ias38 was
£215m year ended 2 june 2007 £313m as pace continued to invest in higher specification products such as
hd pvr and new technologies the ias38 adjustment was a net credit of £22m year ended 2 june 2007 net
credit £24m principally as a result of the investment in multidweller and retail products that are scheduled to
be launched during 2008
at the yearend our total headcount was 583 2 june 2007 599 which includes 406 people in engineering 2
june 2007 390 but excludes the 125 outsourced engineers working in our pace india office in bangalore that
are subcontracted from tata elxsi 2 june 2007 118
profit before tax and profit for the period
profit before tax was £154m year ended 2 june 2007 £49m  the interest charge was £05m year ended 2
june 2007 £22m the reduced level of charges reflecting higher levels of cash held during the period 
profit for the period was £144m year ended 2 june 2007 £68m
taxation
at 31 december 2007 the group has a deferred tax asset of £51m representing uk tax losses of c£18m  a tax
charge of £09m year ended 2 june 2007 credit £18m reflects overseas tax charges of £04m and deferred tax
movements of £05m relating to change in uk corporation tax rate from 30 to 28 and recognition of losses  
chief financial officer’s review
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2007 jundec
stuart hall
chief financial officer
29 january 2008
repaccountsjan08qxp  19208  1330  page 8 we will start to incur a normal uk tax charge and will start to pay uk tax again once available tax losses are
utilised in addition to the uk where all of the commercial risk in our product strategy is taken we have a tax
exposure to us french and other overseas jurisdictions
cash flow and banking facilities
the net working capital position at 31 december 2007 was £584m 2 june 2007 £305m  this change was due
to an inventory increase of £34m in line with normal working capital requirements debtor increase of £498m
and creditor increase of £133m  debtors increased due to the exceptional sales performance and debtor days
increased to 52 days year ended 2 june 2007 46 days due to customer mix  creditor days of 64 days remained
in line with the prior year of 65 days
due to the increase in the level of working capital at the period end the group finished the period with a net
borrowings position of £121m 2 june 2007 net cash £119m  
d balance sheet
non current assets
property plant and equipment levels show an increase from £65m to £86m principally due to the investment
in refurbishing and upgrading our headquarters 
intangible assets represent capitalised development expenditure as required under ias38 and have increased
from £137m to £159m due to our investments in multidweller and retail products
current assets and current liabilities
as noted above the net working capital position has changed in the period due to higher revenues
provisions within one year relate entirely to the appropriate element of warranty provisions held
noncurrent liabilities
noncurrent liabilities represent royalties and warranty provisions both of which have increased in line with the
levels of business
foreign exchange
while a significant proportion of income has been received in the period in us dollars from sales into the us
there remains much income that is received in sterling or euros the majority of our production costs are
designated in us dollars we have a policy of hedging progressively against movements in the value of foreign
currencies in respect of specific cash receipts and payments expected over the next 6 months 
yearend rates used in the accounts are 199£1 2 june 2007 198£1 and €139£1 2 june 2007 €146£1
basis of preparation
note 1 to the financial statements contains the significant accounting judgements key assumptions and
estimation uncertainties used in preparing the accounts
looking ahead 2008 will be the first full year of our new reporting cycle where the year will close on 31
december  this will enable us to more closely align our business reporting cycle with those of our principal
customers and suppliers which will benefit us in the future
stuart hall
chief financial officer
29 january 2008
8
repaccountsjan08qxp  19208  1330  page 9 the directors present their report to
shareholders on pages 9 to 19 together with
the audited financial statements for the 7
month period “period” ended 31 december
2007 prior year 52 weeks ended 2 june 2007
d principal activities
the group’s principal activities are the development design and distribution of digital receivers and receiver
decoders for the reception of digital television and the receptiontransmission of interactive services telephony
and highspeed data the group also provides engineering design support services and software applications
to its settop box customers each of these services may be delivered over satellite cable terrestrial and ip
network transmission systems
d business review and financial results
the information that fulfils the requirements of the business review and management report including a
review of the group’s activities developments and the financial results for the period including the key financial
performance indicators relevant to the business of the company principally revenue gross margin  profit
before tax and cash can be found on pages 4 to 6 of the chief executive officer’s review and the chief financial
officer’s review on pages 7 and 8  the aforementioned information is incorporated in this report by reference
risks and uncertanties
the following are the key risks and uncertainties  relevant to the business of the group
customers and markets
orders placed by the company’s paytv customers are typically large oneoff orders for delivery over a
number of months with supplemental orders for additional volumes  as the eventual rate of deployment
of the settop boxes can be unpredictable revenues can be volatile  the difficulty in predicting the
company’s business flow and its risks can be exacerbated by a number of other factors including for
example the development process for an advanced settop box which can take over 12 months  the
group works on long lead times eg four months or more for component supply and manufacture typical
of the industry  in the us market in particular customers’ firm order lead times may be less than the
component lead times  there are third party delivery risks for example difficulties in the delivery of
components or software code and the final go ahead for manufacture and firm contractual commitments
are usually dependent on product approvals and acceptance both from the operator and sometimes from
third parties
product liability claims
in common with many companies in the industry the group is exposed to the risk of product liability claims
made by customers or affected third parties should the group’s products not fulfil the terms of the
contracts under which they are sold the group has in place quality control and other operational
procedures to mitigate this risk
report of the directors
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2007 jundec
repaccountsjan08qxp  19208  1330  page 10 credit risk
the central finance function of the group obtains reports from third party sources in respect of the credit
worthiness of key customers and suppliers and sets individual credit limits as appropriate a credit
insurance policy is maintained which provides cover over certain debtors subject to excesses and the
exposure to credit risk is monitored on an ongoing basis  deposit investments are generally undertaken
only in liquid securities and with counterparties that have credit ratings equal to or better than the group
liquidity risk
the group policy with respect to liquidity risk is to maintain a sufficient level of undrawn committed
borrowing facilities to meet any unforeseen obligations or liabilities short term cash balances together
with undrawn committed credit facilities enable the group to manage its credit risk
royalties
the company’s products incorporate third party technology usually under licence  inadvertent actions
may expose the company to the risk of infringing third party intellectual property rights  potential claims
can be submitted many years after a product has been deployed
regulatory
like all other businesses the group remains exposed to changes in the regulatory environment including
potential modifications in import duty regimes discussions on which have been and continue to be held
currency risks
the group’s functional currency is sterling the standard ‘industry currency’ is the us dollar with the
majority of components and manufacturing capacity purchased in this currency as a result due to part of
the group’s sales being in sterling and euros the sale prices of which will be fixed for months in advance
the group remains exposed to the risk of foreign currency movements to manage this risk the group’s
treasury policy is progressively to cover cash flows when these are sufficiently certain and to seek a greater
percentage of us dollar sales to provide a commercial hedge against currency exposures
interest rate risk
the group’s policy is to review regularly the terms of its available short term borrowing facilities and to
assess individually and manage each longterm borrowing commitment accordingly the group does not
currently take out any interest rate swaps
financial results
the consolidated income statement for the 7 months ended 31 december 2007 is set out on page 31 the
profit before tax was £154 million 52 weeks ended 2 june 2007 £49 million
d dividend
no interim dividend was paid during the period the directors do not recommend the payment of a final
dividend 52 weeks ended 2 june 2007 nil
d share capital
changes in the company’s share capital during the 7 months ended 31 december 2007 are set out in note 19 to
the financial statements
10
repaccountsjan08qxp  19208  1330  page 11 d significant shareholdings
the company has been notified of the following significant shareholdings as at 29 january 2008
number  of issued
of shares share capital
david hood and related family trusts 44486957 1903 
gartmore investment management 24774480 1060
legal  general investment management limited 11884876 508
barclays investors 11736882 502
robert fleming and related family trusts 8880178 380
d directors
the names of the current directors of the company are shown below  all those listed held office throughout the
period
mike mctighe 
mike aged 54 was appointed a nonexecutive director in june 2001 and became chairman on 1 may 2006 he
is currently chairman of a number of private equitybacked companies and in addition is a member of the
board of ofcom a director of london metal exchange holdings ltd and a nonexecutive director of alliance 
leicester plc mike also advises a number of private equity partnerships previously he was chairman  ceo of
carrier1 international sa and before that executive director  chief executive global operations of cable 
wireless plc prior to these experiences mike spent 5 years with philips of the netherlands 5 years with
motorola and 10 years with ge
neil gaydon
neil aged 47 was appointed chief executive officer in april 2006 he was appointed to the board in june 2002
as worldwide sales and marketing director he has been with the company since 1995 and as president pace
americas spearheaded the development of the company’s us business between 1999 and december 2003
prior to this he was regional sales director emea and head of new business development and product
marketing for the company he is a board member of bradford city of film
pat chapmanpincher
pat aged 60 was appointed a nonexecutive director in february 2005 and became senior independent
director in may 2006 she has over 30 years’ experience in the communications industry from senior roles in
multinational internet and telecoms companies to participating in technology company startups a founding
partner of the cavell group which specialises in operational consultancy ip and wireless technologies she is
also chairman of rapid mobile ltd a nonexecutive director of stepstone asa and a nonexecutive director of
friends of the earth 
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2007 jundec
repaccountsjan08qxp  19208  1330  page 12 rob fleming 
rob aged 51 joined the company in 1983 and became operations director in 1984 with responsibility for
production and distribution with effect from february 1999 he assumed responsibility for the engineering
function within the group and became a nonexecutive director of the company in may 2001 he is chief
executive of the franklyn group limited a care property group and a board member of bradford urc
marten fraser 
marten aged 61 was appointed a nonexecutive director in february 2005 a chartered accountant he was
previously senior partner at pricewaterhousecoopers nottingham where he worked in the audit and business
advisory services department and prior to this he was the partner in charge of the east midlands practice of
price waterhouse
stuart hall
stuart aged 40 was appointed chief financial officer and joined the board on 2 april 2007 before joining the
company he was group finance director of iqe plc and prior to that finance director of energis squared limited
and director of performance management for energis goup plc he has also been finance director at wbf ltd
part of the adare printing group plc carnography plc and race electronics he qualified as a chartered
accountant with bdo binder hamlyn
david mckinney
david aged 46 was appointed chief operating officer in april 2006 and joined the board on 24 october 2006
he has been with the company since november 2005 joining as director of engineering and operations with
responsibility for operations engineering test and quality strategy previously david spent ten years in the
semiconductor industry including nec semiconductors and digital equipment corporation before moving to
and spending over ten years in the telecommunications sector including motorola and royal philips electronics
where he held senior executive and operational management roles
neil gaydon and rob fleming will retire by rotation at the annual general meeting of the company and offer
themselves for reelection details of the executive directors’ service contracts and the nonexecutive directors’
letters of appointment are disclosed on pages 22 and 23
d payment to suppliers
it is the policy of the group to agree terms and conditions for its business transactions with suppliers which are
varied from time to time payment is made in accordance with those terms subject to the other terms and
conditions being met by the supplier the group does not follow any code or standard on payment practice
creditor days at the end of the period for the group were 64 days 52 weeks ended 2 june 2007 65 days and
for the company were 64 days 52 weeks ended 2 june 2007 65 days
d research and development
the directors regard it as fundamental to the future success of the group to engage in a substantial ongoing
programme of research and development of new products spending £215 million in the period 52 weeks
ended 2 june 2007 £313m and charging £193 million 52 weeks ended 2 june 2007 £289m to the income
statement during the year following the treatment under ias38
d donations
during the period the group donated £25000 52 weeks ended 2 june 2007 £40800 to charitable causes no
political donations were made further details of the charitable and communityrelated activities of the group
are given on page 17 
12
repaccountsjan08qxp  19208  1330  page 13 corporate governance
the directors believe that save in respect of the performance evaluation of the board and its committees as
indicated below the company has complied throughout the period with the combined code on corporate
governance dated june 2006 as revised and adopted by the financial reporting council the board confirms
that it has established the necessary procedures designed to maintain a sound system of internal control and
that there is an ongoing process for identifying evaluating and managing the significant risks faced by the
company
d board of directors
the group is controlled through the board of directors which comprises three executive and four nonexecutive
directors who bring a wide range of skills and experience to the board biographical details of all directors are
to be found on pages 11 and 12 the chairman mike mctighe is mainly responsible for the running of the board
ensuring together with the company secretary that it receives timely and clear information appropriate to
enable it to discharge its duties the responsibilities of the chief executive officer neil gaydon focus on running
the group’s business and implementing group strategy the chief executive officer is assisted in managing the
business on a daytoday basis by the executive committee as further described below all the nonexecutive
directors are deemed by the board to be independent apart from rob fleming who was previously an executive
director of the company in addition the board has designated pat chapmanpincher as the senior independent
director all directors have access to the advice and services of the company secretary and are able to take
independent professional advice at the company’s expense in the furtherance of their duties if necessary all
directors in accordance with the combined code submit themselves for reelection at least once every three
years new directors receive a programme of tailored induction on joining the board and all directors are offered
the opportunity to continually update their skills and knowledge by attending external training events 
the board has a formal schedule of matters specifically reserved to it and normally meets monthly it is
responsible for overall group strategy acquisition and divestment policy approval of major capital expenditure
projects and consideration of significant financing matters it reviews the strategic direction of the group and
conducts formal strategy reviews together with other senior executives within the group at least once a year
the chairman holds meetings with the nonexecutive directors without the executive directors being present at
least twice during the year 
it is the policy of the board to undertake a formal review and evaluation of its performance including the
performance of its committees and individual directors on an annual basis this is conducted by written
feedback in standardised form from each director to the chairman or the senior independent director in the case
of appraisal of the chairman  the board did not undertake such a review and evaluation during the 7month
period ended 31 december 2007 since such an exercise had been conducted in may 2007 during the previous
financial year  a formal review and evaluation will be conducted in the year ending 31 december 2008
the board has established the following committees each of which has written terms of reference specifying
its authority and duties and copies of which are publicly available on the company’s website
wwwpacemicrocom 
the audit committee is comprised of independent designated nonexecutive directors pat chapmanpincher
and marten fraser who is the chairman of the committee the committee has primary responsibility for making
recommendations on the appointment reappointment or removal of the auditors and receives and reviews
reports from management and from the auditors relating to the interim and annual accounts and the control
systems in use throughout the group meetings are held by the committee with the auditors without executive
management being present at least once a year and the committee reviews arrangements by which staff may
in confidence raise concerns about possible improprieties including review of the group whistleblowing policy 
the executive committee is chaired by neil gaydon as chief executive officer the committee generally meets
once a month and ensures that the strategy plans and policies previously agreed or delegated by the board are
implemented
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2007 jundec
repaccountsjan08qxp  19208  1330  page 14 the executive committee comprises the three executive directors together with the following senior executives
anthony dixon general counsel 
jill ezard director of human resources 
david gillies director of technology 
helen kettleborough director of corporate communications 
michael pulli president pace americas 
richard slee president emea  apac
the remuneration committee is comprised of mike mctighe and independent designated nonexecutive
directors marten fraser and pat chapmanpincher who is the chairman of the committee the committee is
responsible for setting the remuneration of the executive directors and other members of the executive
committee including making recommendations regarding the grant of share options the members of the
committee have no personal interest other than as shareholders in the matters to be decided no potential
conflicts of interest arising from crossdirectorships and no daytoday involvement in the running of the
business 
the nominations committee is comprised of nonexecutive directors pat chapmanpincher marten fraser and
rob fleming together with chief executive officer neil gaydon and is chaired by mike mctighe its purpose is
to consider and make recommendations to the board regarding the appointment of new directors
d board and committee meetings attendance
board audit remuneration nominations
committee committee committee
total meetings 6 2 1 0
pat chapmanpincher 6 2 1 0
robert fleming 6   0
marten fraser 6 2 1 0
neil gaydon 6   0
stuart hall 5   
david mckinney 6   
mike mctighe 6  0 0
d directors’ remuneration
the remuneration committee reviews the performance of the executive directors and other members of the
executive committee as a prelude to recommending their annual remuneration bonus awards and award of
share options to the board for final determination the final determinations are made by the board as a whole
but no director plays a part in any discussions concerning their own remuneration
the remuneration report of the directors to shareholders is set out on pages 20 to 26 and includes the
remuneration policy of the company and details of directors’ incentive payments and the related performance
criteria
14
repaccountsjan08qxp  19208  1330  page 15 d authority to purchase own shares
at the annual general meeting in 2007 the company was authorised by shareholders to purchase up to
23320653 of its own ordinary shares representing 10 per cent of its issued share capital as at 18 october 2007
the company did not utilise this authority during the year the authority for the company to purchase its own
shares expires at the conclusion of the annual general meeting in 2008 and a resolution to renew it will be
proposed at that meeting
d accountability and audit
a detailed review of the performance of the group’s business is contained in the chief executive officer’s review
and the chief financial officer’s review these statements together with the letter from the chairman and the
report of the directors are intended to present a balanced assessment of the group’s position and prospects
the directors’ responsibility for the financial statements is described on page 27 and the responsibilities of the
auditors are described on pages 28 and 29
d internal controls
overall responsibility for the group’s system of internal control rests with the board of directors the board has
delegated certain of its powers to the audit committee to review the effectiveness of the systems of control and
to receive reports from the auditors and from the management relating to the interim and annual accounts and
the control systems in use throughout the group
during the period and up to the date of this report the board carried out a review of the effectiveness of the
group’s internal controls the reviews were undertaken in accordance with the financial reporting council’s
guidance under the following headings and were aimed at clearly identifying the systems already in place and
the action plans necessary to improve areas of control weakness 
the control environment subject to those powers and limits of authority reserved by the board and to the
group policies and guidelines they have established the conduct of the business of the group is delegated
within a clearly defined organisational structure and approved level of authority the board has also adopted a
code of business ethics which has been incorporated into the employee handbook issued to all employees 
risk assessment the directors and senior managers are responsible for identifying and monitoring sources of
potential business risk and financial risk and for taking such preventative and protective actions as they
consider necessary to manage such risks effectively during the year a risk assessment review of the group’s
business has been conducted in conjunction with the executive committee the board has received and
considered this review as part of an annual risk and control assessment 
the group’s systems are designed to identify and manage rather than eliminate significant business risks
including the risk of failure to achieve business objectives and can only provide reasonable not absolute
assurance against material misstatement or loss business risks are identified evaluated and managed through
functional line management reporting to divisional meetings executive committee meetings and board
meetings as appropriate each member of the executive committee is required to highlight and report on any
significant business risks identified within their sphere of responsibility 
the key business risks associated with the timely completion of longterm development projects and ongoing
business risks including alleged infringement of third party intellectual property rights are managed by cross
functional teams of senior employees business continuity plans addressing physical risks to the group’s
development sites are reviewed and updated at least annually  the group has adopted customer account
teams so as to focus the business on customer needs
financial control and information systems the group’s strategic direction is reviewed regularly by the board
and plans budgets and performance targets are reviewed and approved at least annually directors receive
monthly summaries of financial results which compare actual performance with targets together with detailed
management reports that identify the reasons for variances and the progress achieved business planning
documents are revised on a regular basis in line with actual and expected performance
15
report  accounts
2007 jundec
repaccountsjan08qxp  19208  1330  page 16 control procedures financial control procedures have been developed for all of the main business functions
and have been documented in a procedures manual authorisation limits for purchases and capital expenditure
are specified and procedures are in place for minimising exposure to potential weaknesses in the receipt
handling and despatch of goods all the group’s main sites have received accreditation for bsi iso 9001 2000 
monitoring systems monitoring of the internal control systems is carried out by the centralised group finance
function
the audit committee considers annually whether there is a need to appoint a dedicated internal auditor and has
determined that having regard to the size of the group and the control and monitoring systems referred to
above there is no current business requirement for such an appointment 
although no system of internal financial control can provide absolute assurance against material misstatement
or loss the group’s systems are designed to provide the directors with reasonable assurance that transactions
are authorised and completely and accurately recorded that assets are safeguarded and that material errors
irregularities and actions contrary to group policies and directions are either prevented or promptly discovered 
d going concern
the directors having taken account of the group’s available bank facilities and having reviewed the group’s
budget and forecasts for the period to 31 january 2009 consider that the group has adequate resources to
continue in operational existence for the foreseeable future accordingly they continue to adopt the going
concern basis in preparing the financial statements
corporate social responsibility
d employment policies
the directors recognise the importance of the group’s employees to its success and future development and
are committed to providing an environment that will attract motivate and reward high quality employees the
group continues to invest in a range of internal and external initiatives to promote employee development this
commitment has been acknowledged by investors in people iip recognition 
employees are kept informed of matters affecting them as employees and factors affecting the performance of
the group through monthly employee meetingsbriefings across all the group’s main sites and a company
newsletter “pacesetter” in the uk meetings of the employee partnership an elected forum for the discussion
of work related issues are held with members of the executive committee at least four times per year 
the group welcomes applications for employment from all sectors of the community and is striving to promote
equality of opportunity in employment regardless of age sex sexual orientation disability or ethnic origin it is
the group’s policy that training career development and promotion opportunities should be available to all
employees in the event that an employee becomes disabled the group makes reasonable adjustments where
any aspect of premises or working practices puts such a disabled employee at a substantial disadvantage
compared with a nondisabled employee 
d health and safety
the group has an established health and safety committee made up of health and safety representatives the
health and safety officer and other persons with expert knowledge who review health and safety issues
relevant to the group’s business other safetyrelated committees also conduct periodic reviews of specific work
practices these actions complement the health and safety executive’s “working well together” initiatives
adopted and implemented by the company 
the health and safety officer continues to carry on ergonomic risk assessments and developing ergonomic
strategies whilst safety representatives conduct site inspections these activities along with others contribute
to the further advancement of local workplace health and safety awareness and improvement generic and
detailed risk assessments chemical assessments and safe systems of work guidance are maintained for the
benefit of employees on the company’s intranet site 
16
repaccountsjan08qxp  19208  1330  page 17 the importance of ongoing health and safety awareness training for managers and safety representatives is
recognised as part of this process a number of health and safety “toolbox talks” have been designed to replace
the iosh managing safely courses previously provided
the number of uk workplace accidents during the 7month period ended 31 december 2007 was 5 and as in
previous years none of these were reportable under riddor a report concerning health and safety aspects of
the group’s business and copies of specific group safety policy documents can be obtained from the company
secretary 
d charitable and community support
the group has an established charitable donations committee comprising employees based at the group’s
premises in the uk the usa and france the committee which meets once a month considers all requests for
charitable and community project assistance within a financial budget and criteria approved by the board on
an annual basis 
the group’s support through the committee is focused on the local geographical area of pace’s premises in
saltaire grenoble and boca raton in florida as well as the charitable and community initiatives of group
employees the corporate charity policy focus is to support local charities of benefit to the local area and people
living close to each group site 
during the period 69 requests for support were considered by the committee 62 of these satisfying the criteria
and receiving financial support amounting to £25000 the participation of employees of the group in
community and charitable activities outside work hours has been encouraged by the provision of funds to
match individual sponsorship raised
further details of the charitable and community donations made during the year and criteria for awards made
by the charitable donations committee can be obtained from the company secretary
d environmental management
the company has maintained certification to the international management standard iso 14001 at its saltaire
grenoble and florida sites and the group environmental policy has been applied to all pace sites worldwide the
company is a signatory to the european code of conduct on energy efficiency of digital tv service systems eu
code of conduct and is committed to ensure that products are designed to minimise energy consumption 
the company continues to monitor its environmental activitiesimpacts details of which are available from the
company secretary or the company’s website httpwwwpacemicrocom
the company has adopted procedures for compliance with new environmental legislation including
regulations implemented pursuant to the waste from electrical and electronic equipment weee directive the
company’s business is also compliant with the restriction of hazardous substances rohs directive 
during the period the company developed an executive driven strategy to improve its environmental
performance the strategy focuses on three core areas site operations product and supply chain
environmental improvements rollout of the strategy will commence in the first quarter of 2008 
17
report  accounts
2007 jundec
repaccountsjan08qxp  19208  1330  page 18 during the period the company set environmental objectives and achieved the following outcomes
activityimpact objective achieved in not 
progress achieved
environmental management system ems
1 pace environmental strategy develop executive driven 


Summary:
 4
chief executive officer’s review
d overview
at the end of a year where we celebrated our 25th anniversary i am pleased to report an outstanding period
for our business in which we delivered against our objectives and the strategy programme
since i last shared progress with you there have been significant developments at pace  we have strengthened
our position as the leading digital tv technology company with customer wins new product launches and
increased market share  financial performance has improved customer satisfaction is growing and we are
showing significant improvements against our company’s critical success factors of being on margin on time
and on quality
during the last seven months pace teams have worked on over 30 projects for our paytv customers around the
world  we have worked hard to develop and strengthen our position at heart of digital tv through advanced
settop box products and new technologies that meet the needs of our customers  at the end of the calendar
year 2007 we also announced our intention to acquire the settop box and connectivity solutions business of
royal philips electronics  
trading performance
we delivered a strong performance during this period meeting our increased expectations due to the actions
put in place to improve business efficiencies along with exceptional performance in north america 
product margins execution and quality all improved and we increased profitability to £154m year ended 2
june 2007 £49m on revenues of £2499m year ended 2 june 2007 £3865m  these revenues have remained
well balanced between our markets in north america 58 of total and those in europe and australasia 42
in terms of volumes europe and australasia were higher than north america  overall during the seven month
period we shipped 24m settop boxes with average selling prices rising from £100 to £102 due to demand for
higher specification products such as standard and high definition personal video recorders  we have been
able to meet this demand as well as win new business due to our ongoing early investment in new technology 
outlook
i am pleased with the results we have achieved and the depth of quality in our organisation that is enabling us
to deliver a solid sustainable platform for growth which is now embedded across the group 
demand for our products and services is being driven by increasing competition between paytv providers new
entrants new content delivery systems in addition to analogue switchoff in many markets  these
fundamental trends are expected to continue for the foreseeable future  for example operators are seeking to
drive up their average revenue per user arpu and satisfy their customers’ demands with paytv solutions that
are both innovative and easy to use  the competitive landscape is generating market excitement that is
stimulating consumer demand and further market development  
market surveys point to standard definition sd high definition hd and personal video recording pvr
continuing to grow  we have been successful in leading the market for hd and pvr products but this is still a
very new market and penetration levels in the majority of regions remain low  in fact leading analysts expect
that by the end of 2007 only 4 just over 2 million of the digital settop boxes shipped in emea europe middle
east and africa will be hd  during the same period it is expected that over 16 million new hdready tv panels
will have been shipped   this is an area of opportunity we will continue to work hard to succeed in
while the market remains difficult to predict and our performance is largely predicated on the performance of
our customers we are confident that we are investing in the right products and technologies to meet the
demands of our growing customer base and are on track to meet our expectations for the 2008 financial year
neil gaydon
chief executive officer
29 january 2008
repaccountsjan08qxp  19208  1330  page 5 5
report  accounts
2007 jundec
d taking a closer look
pace continues to deliver
i am delighted to report that we continue to deliver the pace vision of great products to our customers every
time for both our internal and external customers doing so with excellence and enthusiasm  our portfolio of
paytv customers is the best in the world and we now have the optimum structure to deliver on their needs for
leading products  we provide a full range of services from strategic advice as to the technology decisions our
customers need to make through to the development and delivery of customised settop box solutions that in
turn we integrate for each operator’s unique system and network  of course our relationship does not stop
there as our products once installed are software upgradeable and therefore we provide long term customer
support with many relationships going back over twenty years
pace has a world leading team of engineers dedicated to developing digital tv technology  over 60 of our
employees are engineers where we employ specialists and experts in software hardware and systems
integration  our emphasis on innovation means that today pace has been granted over 100 patents with over
200 applications pending  our creative approach and the developments we have pioneered in digital tv
technology enables us to diversify with first to market profitable products that put us at the heart of the
fascinating interconnected and interoperable media universe  
we treat our ability to innovate and lead in this way with the same emphasis and care that we treat our focus on
delivering products to our customers our focus on these two areas means that we can deliver with excellence
today while planning for the future of pace the digital tv market and our customer requirements
pace at the heart of digital tv
the settop box embodies a digital tv service within the home and is a highly complex electronic device  that
complexity demands indepth customer relationships and close partnerships with third party technology and
silicon providers if our products are to deliver the services our customers demand and to the quality they expect
pace is at the heart of making this happen we are the hub in the value chain  we have the widest range of
industry partnerships from conditional access providers to software application developers ensuring we
deliver the best settop box products for our customers  
our customer centric organisational structure built around core technology requirements of our customers has
enabled us to make important steps forward in our industry position improving the effectiveness of these
business critical relationships  we aim to be one of the world’s leading digital settop box companies by
continuing to win business with the world’s leading paytv operators growing relationships with our existing
customers winning new customers and developing world leading technological products ahead of our
competition 
geographical performance
our approach is driving performance improvements across all of our markets  in north america the world’s
largest market for digital television technology we performed strongly shipping 09m settop boxes in the seven
month period year ended 2 june 2007 12m we have strengthened our us cable market position by investing
early in next generation products and have been quick to market with our new ocapready cablecard™ range
that meets new us regulatory requirements for separable security in cable settop boxes  orders for our
cablecard products are increasing while demand for satellite products remained strong 
we also delivered a strong performance in emea and apac markets achieving a level of shipments into the
emea region of 13m settop boxes year ended 2 june 2007 22m and shipments into the apac region of 02m
year ended 2 june 2007 04m  demand for our hd pvr grew digiturk recently launched its hd pvr service
using pace settop boxes which is the first implementation of our new irdeto conditional access  opentv
middleware platform  as anticipated this platform is enabling us to win new customers and in september we
announced multichoice in south africa  multichoice is typical of the customers we 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 it was announced that we will supply viasat for their
hd pvr launch in the nordic countries  a pace team has been working on this product to create the specific
customised hd pvr the customer requires for its service  each operator settop box we create requires a unique
product development and one which also creates a good return on investment
repaccountsjan08qxp  19208  1330  page 6 6
these new business wins have extended pace’s customerbase of leading paytv operators that 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   
d new developments and diversification
pace’s retail product range
pace is at the centre of the digital tv market with a very experienced understanding of the needs of both
operators and consumers  for the last 10 years our focus has been on strengthening and developing our
relationships with operators to provide outstanding settop boxes and network products that access paytv
pace is now preparing to bring to market a product range that allows payasyougo business models where
consumers can mix some subscription channels with ondemand movies and free content  consumers will be
able to purchase this product range direct through their retailer  this is another example of pace’s commitment
to innovate where there is a clear market need for a solution 
networks 
at the international broadcasting convention in september 2007 we announced the launch of pace networks
a new business unit that will open new markets for us further up the chain in the delivery of digital content by
utilising our skills in tv dvb docsis and ip technologies  this business will use a different business model and
route to market to those employed in our settop box business to reach both existing customers and customers
in new and different markets  
the first networks product is pace multidweller™ which we have been developing for the last couple of years
and enables operators to deliver a full suite of interactive digital services to customers in multidwelling units
mdus including digital video broadband and telephony  today over 50 of europe’s population live in mdus
multidweller is a very cost effective and easy to install method of converting existing distribution networks
within mdus into highspeed tripleplay bidirectional networks without the need for any modification or
additional cabling  we will not only provide the consumer premise equipment but will licence the settop box
technology to enable third party settop box manufacturers to communicate with multidweller  we are already
working with our first customer and i am excited about the possibilities and opportunities networks could open
up for us
new pace with broader and deeper reach
our intention to acquire the philips stb and cs business announced on 19th december 2007 carries the aim of
creating a leading centre of excellence in the settop box industry  pace and philips have a shared heritage in
the settop box market of over 20 years each and there is a strong complimentary and strategic fit from
customer product geographic culture and scale perspectives  
the transaction would result in the acquisition of two key business units from royal philips electronics  these
assets are the settop box and connectivity solutions units with the latter developing products that include
advanced residential gateways for home networking and internet connectivity  we believe there is potential for
substantial benefits and growth by applying our proven operating model and structure to the philips business
our approach has delivered a material improvement in our operating and financial performance as can be seen
from the 2007 results
to conclude i am pleased to report a confident view of progress for the next year with opportunities for growth
in existing and new markets
neil gaydon
chief executive officer
29 january 2008
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