pace plc annual report and accounts 2013
pace plc annual report and accounts 2013
a world leader in digital and 
broadband technologies
0picar13covermrindd   102 20032014   122358 pace creates technologies software 
hardware and services for the 
broadcast and broadband industries
pace solutions empower cable telco and satellite operators to simply 
and costeffectively innovate at the speed they want in the way they want 
for their subscribers pace has built up its experience and expertise over 
30 years and this is recognised by a customer base of over 200 operators 
around the globe
headquartered in the uk pace operates in markets across the world 
and employs around 2000 people in locations that also include the usa 
france brazil india and china
contents
strategic report
01 highlights
02 pace at a glance
04 chairman’s letter
05 chief executive officer’s review
10 our business model
12 our strategy
14 key performance indicators
16 risk management and principal risks
18 financial review
21 corporate responsibility
governance
24 board of directors
26 framework of corporate governance
29 audit  risk committee report
32 nomination committee report
33  r e m une r a t i on  c omm it t e e r e p or t
47 directors’ report
financial statements
51 independent auditors’ report
54 consolidated income statement
55  consolidated statement of comprehensive income
56 consolidated balance sheet
57 company balance sheet
58  statements of changes in shareholders’ equity
59  consolidated statement of cash flows
60 company statement of cash flows
61 notes
95 directors secretary and advisers
96  five year record and shareholder information
find out more online at 
wwwpacecom
0picar13covermrindd   1 20032014   122358 annual report and accounts 2013 pace plc 01
strategic report governance financial statements
strategic report
highlights 
operational highlights
 — continued strong progression against strategic plan
 — reconfirmed as the market leader in paytv hardware 
global number one in media servers settop boxes 
stbs and telco gateways
 — pace built on the momentum of 2012 with a number of 
key wins and a strong focus on product and customer 
project delivery for major launches and deployments 
in 2014
 — the transformation and rationalisation of our supply 
chain was completed delivering significant benefits 
in 2013 and beyond
 — announced highly accretive acquisition of aurora 
networks inc aurora completed on 6 january 2014
financial review on page 18 to 20 
chief executive officer’s review on pages 5 to 9 
financial highlights
 — increased operating profits through topline growth improved 
gross margins and increased operational efficiency
 — another year of strong cash flow generation 2090 million 
free cash flow 108 of adjusted ebita and sustainable cash 
flow business model in place
2013 key financials
 
adjusted ebita
1
1936m
 225
 
operating margin
2
78
 12ppt
operating profit  
preexceptionals
1510m
 421
 
revenue 
24692m
 27
2013 24692m
2012 24034m
2011 23093m
2013 1936m
2012 1581m
2011 1414m
2013 78
2012 66
2011 61
2013 1510m
2012 1063m
2011 857m
 
adjusted basic eps
3
443c
 262
full year proposed dividend 
per ordinary share
549c
 22
 
free cash flow
2090m
 144
 
profit before tax
1308m
 633
2013 1308m
2012 801m
2011 547m
2013 443c
2012 351c
2011 297c
2013 549c
2012 450c
2011 375c
2013 2090m
2012 1827m
2011 82m
1  operating profit before exceptional costs and amortisation of other intangibles
2   adjusted ebita as a percent of revenue is expressed as operating margin
3   adjusted eps is based on earnings before the posttax value of exceptional costs and amortisation of other intangibles
1picar13frontsmmrindd   1 20032014   122219 annual report and accounts 2013 pace plc 02
strategic report
pace at a glance
providing the solutions for growth 
in ever changing industries
pace creates worldleading technologies products and services for the paytv and broadband industries leveraging our complete 
portfolio of media servers settop boxes gateways sophisticated software and highly specialised services support pace solutions 
empower customers to simply and costeffectively deliver and evolve digital services at the speed they want and in the way they 
want enabling them to build their success pace’s 30 years of leadership experience and expertise is recognised by a customer 
base which includes over 200 of the world’s leading paytv and broadband operators that spans the globe
key facts
global 1 media 
servers
4
global 1 settop 
boxes
5
global 1 dsl 
residential gateways
6
revenue 2013 
247bn
over 2000 staff 
with offices 
in 14 countries
customers – 200 of the world’s leading paytv and broadband operators including
our history
1982
company founded
1995
first volume 
manufacturer of 
mpeg2 satellite 
settop boxes
1996
pace listed on 
london stock 
exchange
1997
1 millionth digital 
settop box 
manufactured
2008
acquisition of settop 
box division and 
connectivity solutions 
businesses of royal 
philips electronics
2010
acquisitions of 
2wire inc bewan 
and latens
2011
allan leighton 
appointed as pace 
chairman mike pulli 
appointed ceo
2012
100 millionth digital 
settop box 
manufactured
1996
pace supplied world’s 
first digital cable box 
for stream italy and 
the world first dvb 
satellite settop box 
for galaxy satellite 
broadcasting 
australia
2005
europe’s first 
mpeg4 high 
definition service 
launches with pace 
settop boxes 
premiere germany
2010
pace becomes the 
world’s leading 
supplier of settop 
boxes to the paytv 
market
2011
pace enables first 
interconnected 
multiroom dvr 
experience with 
directv’s home 
media center
2012
pace becomes the 
world’s leading 
supplier of media 
servers to the paytv 
market
2013
announced 
acquisition of aurora 
networks inc
 — eight of the world’s top ten paytv operators — 1 satellite cable and telco operators in the usa
4  by volume 2012 ihs research multimedia home gateways the future of the digital home
5  by volume 2012 ihs screen digest settop box market monitor h1 2013
6  by value 2012 infonetics broadband cpe and subscribers report 4q 2012
1picar13frontsmmrindd   2 20032014   122221 annual report and accounts 2013 pace plc 03
strategic report governance financial statements
north america
15405m
169
serve att comcast and 
directtv the largest operator 
in each sector
europe
3239m
195
key customers including liberty 
global sky deutschland 
sky italia and canal
latin america
3584m
43
serve eight of the ten largest 
paytv operations in the region
rest of world
2464m
203
key customers in anz 
subsaharan africa india 
and south east asia
2013 regional revenue split
2013 business unit revenue 
and adjusted ebita
2013 product revenue split
19796m
84
3758m
199
1138m
54
settop boxes 
and media servers
residential gateways software  services
product and services portfolio
eco
revenue
16795m 
165
adjusted ebita
1527m
60
pace americas pace international other
revenue
7812m 
181
adjusted ebita
835m
155
revenue
85m 
76
adjusted ebita
426m
268
1picar13frontsmmrindd   3 20032014   122221 annual report and accounts 2013 pace plc 04
strategic report
chairman’s letter
following a turnaround 
year in 2012 2013 has 
been a year of further 
recovery and expansion
dear shareholder
following a turnaround year in 2012 
2013 has been a year of further recovery 
and expansion the business has made 
good progress on its strategic plan 
delivered very strong financial results 
and through both organic developments 
and the acquisition of aurora has 
created a platform for further growth 
pace is making headway to becoming  
a “great technology company”
2013 has been a year of tangible 
progress with the group achieving 
a 225 increase in adjusted ebita 
through topline growth improved 
revenue mix supply chain efficiency 
and increased operational efficiency 
the group delivered strong free cash flow 
of 2090 million a second consecutive 
year of over 100 cash generation this 
sustainable strong free cash flow model 
gives the company confidence and 
flexibility to identify and invest in both 
organic and acquisitive opportunities 
which will deliver longterm value to 
our customers and our shareholders
strategic review
consistent with my statement last year 
the group remains focused on the 
evolution and execution of its strategic 
plan that we communicated to the 
market in november 2011
 — transform core economics improve 
our operating performance and 
leverage scale
 — paytv hardware leadership build 
on our position as a world leading 
settop box stb residential gateway 
and media server company and
 — widen out in software services 
and integrated solutions accelerate 
“widening out” by pursuing opportunities 
to provide software and services assets 
for current and new customers
aurora acquisition
the acquisition of aurora represents 
an important evolution in the strategic 
plan and enhances our strategy to grow 
a broader platform across hardware 
software  services aurora will allow pace 
to expand beyond our existing business 
and build deeper and more embedded 
relationships with our customers by taking 
us beyond the home and into network 
infrastructure network operators have an 
everincreasing need to costeffectively 
deliver increased bandwidth to their 
customers and aurora provides equipment 
that fulfils this need in an efficient way 
the company believes that aurora will 
strengthen pace’s position as a market
leading solutions provider for the paytv 
and broadband industries i would 
like to take this opportunity to thank our 
shareholders for supporting this acquisition 
and believe it will deliver significant value 
to pace and our customers in 2014 
and beyond
pace is now over two years into the 
strategic plan and although there is still 
a lot of work to be done and opportunity 
for improvement we are well on track 
against the targets and objectives set at 
the time the addition of aurora further 
strengthens the board’s confidence that 
we can achieve our midterm target 
of 9 operating margin
7
 in 2015
dividends
the strong performance in 2013 and 
the trajectory of the business give the 
board confidence to continue building on 
the progressive dividend policy that was 
introduced in 2009 therefore the board 
is recommending a final dividend of 
366 cents per share giving a full year 
dividend of 549 cents per share a 22 
increase on 2012 the dividend reflects 
the robust ongoing cash generation 
of the business
if you have any comments on my letter 
or 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  
allanleightonpacecom
yours sincerely
allan leighton
chairman
4 march 2014
allan leighton
chairman
board of directors on page 24 and 25 
corporate governance on page 26 to 28 
7 operating margin is adjusted ebita as a percentage of revenue
1picar13frontsmmrindd   4 20032014   122221 annual report and accounts 2013 pace plc 05
strategic report governance financial statements
chief executive officer’s review
mike pulli
chief executive officer
we have delivered a strong 
set of financial results 
made good progress 
on our strategic plan and 
created a platform for 
continued improvement
2013 has been a year of further recovery 
and expansion for pace we have delivered 
a strong set of financial results made good 
progress on our strategic plan and created 
a platform for continued improvement in 
operating performance over the next 
few years
key highlights of the year
the strategic review we undertook in 2011 
highlighted that we operate in sustainable 
and profitable markets where we have 
differentiated capabilities however the 
group must execute on its three primary 
objectives to take advantage of the 
opportunities for improving both the level 
and quality of its earnings we remain 
focused on these objectives and have 
made good progress both in delivering 
strong results in 2013 building on the 
recovery made in 2012 and paving the 
way for improvement in 2014 and beyond
this progress is reflected in 2013 revenues 
of 24692 million up 27 on 2012 and 
adjusted ebita of 1936 million up 225 
on 2012 equivalent to 78 of revenues 
up 12ppt on 2012
in addition to the various organic 
developments pace has undertaken 
over the past two years the acquisition of 
aurora is a key step in the evolution of pace 
and enhances our strategy to grow a broader 
platform across hardware software 
 services
strategic plan
transform core economics
continued focus on efficiency has delivered 
further sustainable overhead savings and 
the transformation and rationalisation of our 
supply chain was completed delivering 
significant benefits in 2013 and beyond
 — underlying operating expenses 
excluding the impact of ias 38 
accounting reduced by 162 million 
58 in 2013 this was due to further 
efficiency programmes across the 
business and the impact of a full year’s 
runrate of the changes implemented 
in 2012 whilst reducing the overall 
operating expenses pace has continued 
to invest further in software  services 
and other growth opportunities 
 — the transition to a consolidated 
electronics manufacturing services 
ems partner footprint was completed 
in the year all new products are being 
developed through this model and the 
financial and operational benefits are 
now being realised and will drive 2014 
profitability further supply chain 
transformation activities are underway 
that will deliver value in 2014 and beyond
summary 
 — increased operating 
profits through topline 
growth improved gross 
margins and increased 
operational efficiency
 — strong cash flow generation 
2090 million free cash flow 
108 of adjusted ebita and 
sustainable cash flow business 
model in place
 — announced highly 
accretive acquisition of 
aurora networks inc a leading 
provider of optical transport and 
access network solutions
 — the board is confident that 
the company will make 
further progress in 2014
 — revenues expected 
to be c 27 billion
 — operating margin expected 
to be c 85
 — strong cash flow will 
continue and pace expects 
to generate at least 
185 million of free  
cash flow
business model on page 10 and 11 
1picar13frontsmmrindd   5 20032014   122221 annual report and accounts 2013 pace plc 06
strategic report
continued
chief executive officer’s review
strategic plan continued
transform core economics continued
 — cash generation was strong 
throughout the year free cash flow was 
2090 million 2012 1827 million 
due to further realignment of working 
capital and tight management of capital 
expenditure this enabled pace to repay 
its debt in full prior to the end of the 
financial year
8
 and achieve a net 
cash position of 330 million at 
31 december 2013 net debt at 
31 december 2012 1633 million
the various components of the 
transform core economics stream of the 
strategic plan are now well embedded 
across the company and are delivering 
significant financial and operational benefits 
however the company believes significant 
opportunities remain for further improvement 
and will pursue areas of inefficiency and 
relentlessly strive to continually improve 
operating effectiveness across all areas 
of the business
paytv hardware leadership
pace was reconfirmed as the market 
leader in paytv hardware global number 
one in settop boxes
9
 media servers
10
 
and telco
11
 gateways
 — stb and media server revenues 
were up 84 to 19796 million in 
2013 2012 18260 million driven 
largely by the high demand for media 
servers in h1 2013 in north america 
and a number of new deployments 
in h2 2013
 — the move to media servers and 
whole home solutions is continuing 
at speed across the globe demand 
from customers in north america 
was strong with media servers now 
comprising over 28 of shipments 
in that market 2012 14 in the year 
pace announced a large number 
of media server wins beyond north 
america with the first international 
deployment at get tv in norway and 
a number of deployments planned in 
2014 including liberty global foxtel 
and telenet we have a strong media 
server pipeline and anticipate increased 
demand across the globe in 2014 
and beyond
 — iptv is a segment in which pace has 
previously been underrepresented 
in 2013 pace began shipping 
mediaroom enabled digital video 
recorders dvrs and stbs to att 
and centurylink two of the largest 
telecommunications providers 
in north america and telefonica 
in brazil and chile
 — demand for traditional stbs remains 
strong in the year pace achieved next 
generation hardware wins at a number 
of longstanding tier one customers 
and announced a multiproduct deal 
with charter communications a major 
cable operator in north america that 
pace had not previously supplied 
product to
 — gateway revenues were down 
199 to 3758 million in 2013 
2012 4694 million as the impact 
of expected dual sourcing at a major 
customer was only partially offset 
by new wins at customers such 
as gvt and mts
pace was confirmed as the market leader 
in paytv hardware and global number 
one in settop boxes media servers 
and telco gateways
8 a new five year 150 million revolving credit facility plus a five year term loan of 310 million to finance the acquisition of aurora networks inc was put in place on 6 january 2014
9  by volume 2012 ihs screen digest settop box market monitor h1 2013
10  by volume 2012 ihs research multimedia home gateways the future of the digital home
11  by value 2012 infonetics broadband cpe and subscribers report 4q 2012
1picar13frontsmmrindd   6 20032014   122221 annual report and accounts 2013 pace plc 07
strategic report governance financial statements
widen out in software services 
and integrated solutions
pace achieved a number of key wins 
and deployments across all areas of our 
software  services offerings and has 
a strong pipeline into 2014 revenues in 
this area increased 54 to 1138 million 
in 2013 2012 1080 million 
 — the pace elements software platform 
continues to gain significant traction as 
part of an advanced integrated solution 
with a number of wins in the year 
deliveries underway for wins achieved 
in 2013 at foxtel and other customers 
and deployments at customers such 
as telefonica vivo sky new zealand 
altibox and elisa the elements platform 
is currently being used by 33 million 
subscribers which are expected 
to increase in 2014 
 — pace elements is also a key part of 
our integrated solutions for emerging 
markets we have a number of operators 
deployed with this solution pace 
hardware software and latens 
conditional access system in india 
and have an encouraging pipeline 
in southern asia central and eastern 
europe and cis
 — the pace eco service management 
suite continues to evolve with a number 
of new modules launched in the year 
to provide increased functionality and 
wins at customers such as telstra 
telmex and bell aliant these wins 
build on a strong global customer 
footprint that includes att and bskyb 
the eco platform is currently supporting 
our customers to manage over 30 million 
devices across the world
 — the latens softwarebased 
conditional access and digital rights 
management drm business made 
good headway with a 52 growth in 
the number of subscribers the product 
is deployed to in 2013 on both pace 
and other vendors’ hardware and 
wins at a number of customers 
including telenet
12  ebitda calculated as income from operations plus depreciation and amortisation us gaap as reported
aurora acquisition
the acquisition of aurora networks inc for a headline consideration 
of 310 million on a debt and cash free basis plus a further 
13 million relating to tax benefits to be recovered over the three 
years post acquisition was announced on 23 october 2013 and 
completed on 6 january 2014 the headline consideration represents 
a historic evebitda
12
 multiple of 105x before synergies and 82x after 
expected annual runrate synergies based on the results of aurora 
for the twelve months to 31 march 2013
what does aurora do
aurora is a leading developer and manufacturer of advanced 
nextgeneration optical transport and access network solutions for 
broadband networks that support the convergence of video data 
and voice applications with a leading presence in products that are 
increasingly important for cable operators as they fulfil consumers’ 
constant demand for everincreasing bandwidth the acquisition 
further strengthens pace’s relationships with its customers 
what does aurora bring to pace
 — positions pace to support operators’ and consumers’ constant 
demand for costeffective delivery of everincreasing bandwidth
 — highly profitable and growing business with bluechip customer 
base and marketleading positions serving over 200 customers in 
50 countries including all of the top ten cable operators in the us
 — strong management team that has delivered 30 straight quarters 
of profitability
 — creates deeper and more embedded relationships with key customers
 — crosssell opportunity across customer footprints
 — further widens pace out beyond paytv customer premise 
equipment cpe
how is the integration going
aurora is now operating as a standalone strategic business unit sbu 
retaining the aurora brand and managing a separate pl to retain 
focus and accountability for business performance whilst leveraging 
pace group common services as such revenue and adjusted ebita 
contribution for aurora networks will be broken out as a separate 
sbu in subsequent statutory reports the integration of aurora into 
the pace structure is progressing well based on current progress 
the company is confident that the integration of aurora will be complete 
by the end of q2 2014 and is highly confident that the expected 
synergies stated at the point of the acquisition will be achieved 
4 million realised in 2014 at a cost of 4 million and 8 million 
runrate saving realised in 2015 at no additional cost
a further update on integration and aurora trading will be provided in 
the q1 2014 interim management statement on thursday 24 april 2014
full details are available on 
wwwpacecominvestors
1picar13frontsmmrindd   7 20032014   122223 annual report and accounts 2013 pace plc 08
continued
strategic report
chief executive officer’s review
business performance
pace has a broad global footprint within 
which individual markets are at varying 
stages of development overall the markets 
in which pace operates have remained 
strong during the year with paytv 
continuing to show varying levels of 
subscriber and average revenue per 
user arpu growth despite perceived 
disruptive threats from new overthetop 
ott market entrants and economic 
uncertainty in emerging markets on a 
global basis digital paytv subscribers 
are expected to grow at c28 compound 
annual growth rate cagr between 2014 
and 2017
13

north america
north america is the largest most 
advanced and most profitable market for 
digital paytv and broadband technology 
in the world with over 112 million paytv 
subscribers and close to 104 million 
broadband connections
14
 we believe 
the digital paytv market in north america 
will remain flat in terms of the number 
of subscribers for the foreseeable future 
with gross subscriber acquisition being 
offset by customer churn between the 
various paytv offerings
pace is the only vendor to all of the 
largest operators in each of the cable 
satellite and telco markets serving 
comcast directv and att respectively 
in each case pace supplies its most 
advanced inhome technology in addition 
pace also serves a large number of other 
cable and telco operators in both 
the usa and canada
total revenues in north america 
increased by 169 to 15405 million 
in 2013 2012 13176 million driven 
largely by strong demand from directv 
and comcast for media server products 
in h1 2013 and new wins in h2 2013 
these confirmed pace’s continued position 
of technological leadership in our sector 
and we remain confident about the longterm 
strength of the market for our products 
in north america
gateway revenues decreased by 
223 to 3486 million reflecting a 
strong comparative period in 2012 and 
the dual sourcing of supply by a major 
customer the company believes overall 
market demand remains strong for high 
performance residential gateways from 
telcos and internet service providers isps 
to effectively deliver high quality 
tripleplay services
software  services revenues in 
north america decreased by 189 to 
681 million reflecting a decreased call 
volume in the customer care business 
the software  services revenue in 
north america is primarily comprised of 
customer care eco service management 
software and professional services
latin america
the latam market is a large diverse and 
fast growing market within which pace 
serves satellite cable iptv and hybrid 
operators across the region with brazil 
mexico and argentina the key markets
the overall market has expanded 
significantly over the last few years and 
continues to display strong subscriber 
growth with a predicted 10 cagr from 
2014 to 2017
15
 this growth is led by a 
number of factors including greenfield 
markets deregulation in brazil the 2014 
world cup and 2016 olympics in brazil 
and a number of growing paytv operators 
in the region demand for paytv is strong 
at all levels of technology standard 
definition sd to support analogue to 
digital transition high definition hd 
continues to grow to meet growing 
consumer expectations and operators 
are starting to develop highend personal 
the markets in which pace operates 
have remained strong during the 
year with paytv continuing to show 
subscriber and arpu growth
13 14 and 15 ihs television intelligence service 2014
1picar13frontsmmrindd   8 20032014   122223 annual report and accounts 2013 pace plc 09
strategic report governance financial statements
video recorders pvrs and media 
servers for rollout in 2014 and beyond
pace revenue in latam decreased by 43 
to 3584 million 2012 3744 million 
due to a reduction in demand from a key 
customer pace continues to have a diverse 
business in latam pace provides product 
to eight of the ten largest paytv providers 
in the region and has made good progress 
in widening out the solutions provided in 
this market in 2013 pace achieved its first 
deployments of the following products 
gateway solutions at gvt integrated 
solution of pace elements and pace 
hardware with vivo telefonica and eco 
service management at ondigital in brazil 
the company expects to make further 
progress with these solutions and remains 
confident that latam offers strong revenues 
and profitability and is strategically well 
positioned in key markets and customers 
in the region
europe
europe remains a fragmented and highly 
customer specific territory for pace 
revenues in europe were down by 195 
to 3239 million 2012 4024 million 
however sustainable improvements in 
product mix ensured that the company 
generated the same profit on the lower 
revenue base the decrease in revenue 
was mainly due to a reduced win rate of 
new products in 2011 which adversely 
affected revenue in 2012 and 2013 sales 
performance is improving and we have 
achieved key wins in new and existing 
customers which we expect will lead 
to growth in h2 2014 
singledigit growth is predicted in the 
underlying european market
16
 however 
we expect significant growth in the media 
server segment of the market as operators 
in europe follow the innovation of north 
american operators pace launched its first 
media server outside of north america at 
get tv in norway and has been awarded 
media server contracts with a number 
of operators including liberty global
in addition the group is seeing 
increasing demand from operators for 
integrated solutions incorporating pace 
hardware and software assets that can 
be quickly deployed and that enable 
the operator to innovate and differentiate 
in highly competitive markets pace is 
focused on developing opportunities 
in this area of the market and has 
a number of projects underway
rest of world
rest of world covers a diverse range of 
markets which are developing at different 
rates the highly developed markets in 
australia new zealand and south east 
asia the “fast following” markets in the 
middle east and africa and the fast 
growing indian market revenues in rest 
of world are down 203 to 2464 million 
2012 3090 million this decrease was 
due to reduced demand from a number 
of large customers as they prepared for 
new product launches in h2 2013 and 
2014 however despite the reduced 
revenue profitability increased in the 
year reflecting improved product mix
india is a key growth market for pace 
as the country experiences large paytv 
subscriber growth and the transition from 
analogue to digital progresses in the cable 
sector during the year pace secured 
deals with a number of operators for 
its integrated solution for cable which 
combines stb hardware elements 
software platform and latens 
conditional access system
the company remains confident that 
these markets will provide significant 
growth opportunities both at the high end 
of the market with hd pvr and media 
server products and also as the uptake 
of paytv and digitisation continues in 
emerging greenfield markets allowing 
pace to increase its footprint with new 
customers through software and 
integrated solutions
board changes
mike inglis retired from his role as a 
nonexecutive director at the annual 
general meeting on 24 april 2013
2014 outlook
considerable progress has been made 
in delivering on our strategy in 2013 but 
there remains further opportunity in 2014 
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 27 billion
 — operating margin for 2014 is expected 
to be c 85 and
 — strong cash flow will continue and 
pace expects to generate at least 
185 million of free cash flow
mike pulli
chief executive officer
4 march 2014
16  ihs television intelligence service 2014
our 2013 strategic report 
from page 1 to page 23 
has been reviewed and 
approved by the board of 
directors on 4 march 2014
1picar13frontsmmrindd   9 20032014   122223 annual report and accounts 2013 pace plc 10
strategic report
our business model
what we do
pace’s principal activities are the development design and distribution of technologies products and services for managed 
subscription television telephony and broadband services and the provision of engineering design and software applications to its 
customers the group also provides related support services including consulting systems integration and customer care centres
how we do it
pace has a robust and sustainable business model that delivers value to our customers investors and employees
world leading product 
and service portfolio
 — reconfirmed as market leader 
in paytv hardware
 — complete portfolio of technologies 
products and services that have 
been designed to enable operators 
to lead in the competitive and 
fast moving broadcast and 
broadband markets 
chief executive officer’ s review on page 5 to 9 
our strategy on page 12 and 13 
pace delivers value through 
a business model based 
on our core strengths
extensive partner ecosystem
 — strong go to market and 
development relationships with key 
silicon technology conditional 
access middleware and other 
technology partners
 g l o b a l w o r k f o r ce 
and scale
 — operations across 6 continents 
with significant presence in uk 
france usa brazil and india
 — highly experienced workforce 
specialising in paytv and 
broadband technologies
global bluechip 
customer base
 — serving over 200 of the world’s 
largest paytv customers across 
multiple geographies
 — only vendor to serve the largest 
operator in each of the north 
american cable satellite and 
telco markets
1  decentralised and customer 
focused structure
2 focused innovation
3  industrialised global 
delivery model
4 financial discipline
5 strong cash flow generation
1picar13frontsmmrindd   10 20032014   122223 annual report and accounts 2013 pace plc 11
strategic report governance financial statements
5   strong cash 
flow generation
 — blue chip customers
 — efficient working 
capital model
 — low capital intensity
chief executive officer
finance
financial reporting and control tax treasury business intelligence it strategy and investor relations
legal
corporate legal information security intellectual property and licensing
operations
procurement supply chain and quality  environmental
  cat  customer account team cst  central support team
pace americas pace international aurora networks
cable cat
satellite cat
telco cat
north europe cat
mea  south 
 europe cat
apac cat
aurora networks  
cat
brazil cat
pace americas csts
operations finance legal hr 
marketing
pace international csts
operations finance legal hr 
marketing
aurora networks csts
operations finance legal hr 
marketing
strategic business units
decentralised sbu model 
with resources in market 
close to key customers
1   decentralised and customer focused structure
 — pace goes to market through strategic business units 
sbus – these are standalone units that contain 
product management sales engineering and 
operations teams
 — the customer account teams cats within the sbus 
are located close to the customer and are focused on 
the delivery of products and services to a particular 
market segment or region
 — the sbus are supported by a lean corporate structure 
which provides governance and shared services that 
are required by the sbus
2   focused innovation
 — product roadmaps developed in partnership 
with customers
 — focused advanced development enables pace 
to lead market in step change technologies
4   financial discipline 
 — strong net 
assets position
 — robust discipline on 
capital investment
 — conservatively geared 
balance sheet
3   industrialised global delivery model 
 — engineering close to customer with core engineering 
centres with scale and expertise
 — robust efficient and scalable global supply chain
 — outsourced manufacturing overseen by rigorous 
pace governance and quality control
hr
people strategy and policy corporate hr
corporate
centralised lean 
corporate structure 
providing governance 
and shared services
1picar13frontsmmrindd   11 20032014   122223 annual report and accounts 2013 pace plc 12
strategic report
 — build on software 
and service platforms 
to become a leading 
provider of user 
experience and customer 
management solutions
 — leverage leadingedge 
position across hardware 
and software to drive next 
wave of innovation
our strategy
over the last two years pace has delivered 
against its strategic plan and the board 
believes there is significant opportunity 
for further improvement
pace’s strategic review communicated at q4 2011 ims on 17 november concluded that
 — pace’s paytv customers have robust businesses but need to innovate to maintain their position in an increasingly 
competitive market
 — pace has the products and capabilities to meet our customers’ needs for innovation
 — through delivering these products pace will change the shape of our business and improve the quality of our earnings
 — pace has a clear implementation plan to deliver our strategic objectives and which targets up to 9 operating profit margin 
in the medium term
pace’s strategic objectives november 2011
strategic objectives
1
2
3
transform core economics
significantly improve efficiency of our core business through
 — opex efficiency improvement
 — cogs improvement
 — balance sheet and working capital improvement
build on our position as world leader in paytv hardware
build on our position as a world leading paytv hardware 
company across
 — settop box solutions
 — media server solutions
 — gateway solutions
widen out into software services and integrated solutions
widen out into software services and integrated solutions 
focusing on
 — next generation content security
 — integrated solutions
 — proactive customer care
5 year strategic intent
grow a broader platform across hardware software and services through delivery against the following three objectives
1picar13frontsmmrindd   12 20032014   122223 annual report and accounts 2013 pace plc 13
strategic report governance financial statements
1 2 3
transforming core economics
 — transformed supply chain – from eight to 
two core ems partners
 — opex reduced by 16 – from 302 million in 
2011 to 255 million in 2013
 — working capital reduced by 49
 — net debt of 322 million converted to net 
cash of 33 million in 24 months
paytv hardware leadership
 — 12 increase in settop box and media 
server revenues
 — from 0 to over 25 revenue from media 
servers – clear global 1
 — retained global leadership in settop boxes 
and dsl gateways
 — key wins with longterm tier 1 customers 
including directv comcast att charter 
liberty global foxtel and multichoice
software and services
 — 13 revenue growth across software  
services
 — key wins and deployments with tier 1 
customers for all product areas including 
elements at foxtel eco service 
management at sky and latens conditional 
access at telenet
evolving the pace strategy
pace reviews its strategic plan on an ongoing basis to ensure it is appropriate in light of external and internal developments 
following the performance over the last two years and the acquisition of aurora the strategy has evolved to incorporate 
the opportunities this presents
strategic objectives
1
2
3
continue to transform core economics
significantly improve efficiency of our core 
business through
 — opex efficiency improvement
 — cogs improvement
 — balance sheet and working capital improvement
build on our position as world leader 
in paytv hardware
build on our position as a world leading paytv 
hardware company across
 — settop box solutions
 — media server solutions
 — gateway solutions
widen out into software networks services 
and integrated solutions
widen out into software networks services 
and integrated solutions focusing on
 — next generation content security
 — integrated solutions
 — proactive customer care
5 year strategic intent
strategic kpi – operating margin
low expected high
staying still 5 6 7
12 years 6 to 65 7 to 75 8 to 95
34 years 7 to 8 8 to 9 9 to 10
5 years 8 plus 9 plus 10 plus
operating margin
progress against strategic plan over the last two years
 — a key target outlined in pace’s 
strategic plan is a 9 operating 
margin in 2015
 — in 2013 pace achieved an 
operating margin of 78
 — this performance is above initial 
expectations and reinforces the 
board’s confidence of achieving 
the target of 9 operating margin 
in 2015
transform core economics
the transform core economics stream has been very 
successful and delivered more value than initially 
expected however we believe there remains significant 
opportunity for further improvement in both the existing 
pace business and also the aurora acquisition
paytv hardware
this stream has performed well with leadership positions 
achieved in stbs media servers and dsl gateways and 
key wins with existing and new customers there is further 
opportunity for pace to improve in this area by winning 
business at new customers and in currently under
penetrated markets and by remaining at the forefront of 
technology and innovation with our current customers 
widen out
there is significant opportunity for pace to make further 
progress in widening out its offering in software networks 
services and integrated solutions this will be achieved 
through the development of current offerings and 
capabilities the successful integration and progress 
of aurora and potential acquisition opportunities
1picar13frontsmmrindd   13 20032014   122223 annual report and accounts 2013 pace plc 14
strategic report
key performance indicators
strategic strand kpi description fy12 fy13
12–13
change
overall
operating margin adjusted ebita as  of revenue 66 78 12ppt
eps growth basic adjusted eps is based on earnings before  
the posttax value of exceptional costs and  
amortisation of other intangibles
182 262 80ppt
1 transform core economics
cost to serve overheads as  of revenue 114 103 11ppt
cash conversion free cash flow as  of adjusted ebita 1155 1080 75ppt
net debt to ebitda net debt as a ratio of group ebitda 09x 0x na
2
 
maintain paytv 
hardware leadership
cpe hardware  
revenue growth
revenue growth across consumer 
premise equipment hardware categories  
inc stb media servers gateways
39 26 13ppt
3 
widen out into software 
networks services 
and integrated solutions
noncpe revenue growth revenue growth of all nonconsumer premise  
equipment categories inc software and services 
and networks
76 54 22ppt
 overheads represent administrative expenses excluding exceptional costs and amortisation of other intangibles
the board of directors track a number 
of kpis to assess the progress the 
business is making against the 
strategic plan objectives
1picar13frontsmmrindd   14 20032014   122223 annual report and accounts 2013 pace plc 15
strategic report governance financial statements
strategic strand kpi description fy12 fy13
12–13
change
overall
operating margin adjusted ebita as  of revenue 66 78 12ppt
eps growth basic adjusted eps is based on earnings before  
the posttax value of exceptional costs and  
amortisation of other intangibles
182 262 80ppt
1 transform core economics
cost to serve overheads as  of revenue 114 103 11ppt
cash conversion free cash flow as  of adjusted ebita 1155 1080 75ppt
net debt to ebitda net debt as a ratio of group ebitda 09x 0x na
2
 
maintain paytv 
hardware leadership
cpe hardware  
revenue growth
revenue growth across consumer 
premise equipment hardware categories  
inc stb media servers gateways
39 26 13ppt
3 
widen out into software 
networks services 
and integrated solutions
noncpe revenue growth revenue growth of all nonconsumer premise  
equipment categories inc software and services 
and networks
76 54 22ppt
 overheads represent administrative expenses excluding exceptional costs and amortisation of other intangibles
operating margin
2013 78
2012 66
cost to serve
2013 103
2012 114
cpe hardware revenue growth
2013 26
2012 39
noncpe revenue growth
2013 54
2012 76
eps growth
2013 262
2012 182
cash conversion
2013 1080
2012 1155
net debt to ebitda
2013 0x
2012 09x
1picar13frontsmmrindd   15 20032014   122223 annual report and accounts 2013 pace plc 16
strategic report
risk management and principal risks
the following are the key risks and uncertainties relevant to the business of the group
risk potential impact mitigations
strategic risks
customers and markets
revenue concentration from a small number 
of large customers
customer orders are typically short to midterm 
commitments with no longterm guarantee
 
volatile revenue trends
procedures are in place to monitor the 
financial and operating strength of customers
suppliers
the group works on long lead times for 
component supply and manufacture
concentration on a small number 
of manufacturing partners
lack of flexibility
loss of product availability
procedures are in place to monitor the 
financial and operating strength of suppliers
the group uses dual or multi source 
suppliers where possible to mitigate 
the risk
financial risks
royalties
the group’s products incorporate 
third party technology
inadvertent actions may expose the group to the 
risk of infringing third party intellectual property rights
cash outflow
reputational damage
the audit  risk committee and board 
receive a semiannual report from the 
general counsel regarding royalty claims 
under negotiation all material claims are 
monitored by outside legal counsel
the group operates a system of internal control and risk management in order to provide 
assurance that it is managing risk whilst achieving its business objectives 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 but can provide only 
reasonable not absolute assurance against material misstatement or loss
no system can fully eliminate risk and therefore the understanding of operational risk is central to the management process within pace 
the longterm success of the group depends on the continual review assessment and control of the key business risks it faces 
to enable shareholders to appreciate what the business considers are the main operational risks they are briefly outlined below
robust risk management
1picar13frontsmmrindd   16 20032014   122223 annual report and accounts 2013 pace plc 17
strategic report governance financial statements
risk potential impact mitigations
financial risks continued
currency risks
the group operates globally and is exposed to 
foreign exchange risks on both revenue and costs
adverse impact on 
the income statement
the group’s treasury policy is to 
progressively hedge cash flows when they 
are sufficiently certain and to seek price 
variations through contractual mechanisms
other risks
innovation
product development process can take over 
twelve months
research and development effort may not be 
appropriately targeted on the correct areas
loss of technology  
andor market advantage
engineering teams split into 
specialist areas
sbu teams closely aligned to customer 
requirements and product roadmaps
product liability claims
the group is exposed to the risk of product 
liability claims made by customers or affected 
third parties
cash outflow
reputational damage
the group has in place quality control 
and other operational procedures 
to mitigate this risk
natural disasters
appropriateness of business continuity plans
loss of ability to service 
customer demand
business continuity management 
programmes exist internally and 
at manufacturing partners
it systems and security
major system failure information security breach 
and inadequate information systems
loss of ability to service 
customer demand
cash outflow
it general and application controls
annual internal audit testing 
external penetration testing
in addition the audit  risk committee considers other strategic and financial risks which are relevant to the group 
these are shown on page 31
corporate governance on page 26 to 28 
audit committee on page 29 to 31 
1picar13frontsmmrindd   17 20032014   122223 annual report and accounts 2013 pace plc 18
strategic report
financial review
the financial position of pace improved 
significantly in 2013 this improvement is 
reflected in the 27 increase in revenue 
to 24692 million a 58 reduction in 
underlying operating costs a 225 increase 
in adjusted ebita to 1936 million and 
the repayment of the company’s 
external debt
pace has become a more profitable 
company with operating margin increasing 
from 66 to 78 in addition free cash 
flow generation has been strong in 2013 
at 2090 million 1080 of adjusted 
ebita due to the continued benefits 
of robust cash management and further 
realignment of working capital which 
reduced by 464 to 584 million as a 
result of the strong cash flow the existing 
debt facility was repaid in full and ahead 
of schedule nil gross debt and a cash 
position of 330 million was achieved 
at the close of the year net debt of 
1633 million at 31 december 2012
new five year facilities were put in place 
on 6 january 2014 to fund the acquisition 
of aurora networks inc and the company 
is well placed and efficiently funded 
to develop and grow in 2014
group trading results
group revenue of 24692 million 
2012 24034 million increased by 
27 driven by strong demand for next 
generation media server product in the 
first half of the year in the year 57 of 
revenue was generated by the top three 
customers 2012 49 a reduction from 
59 in h1 2013 as customer concentration 
decreased a trend expected to continue 
into 2014
the financial position 
of pace improved 
significantly in 2013
summary 
 — pace has become a more 
profitable company with 
operating margin increasing 
from 66 to 78
 — free cash flow generation 
has been strong in 2013 
at 2090 million 1080 
of adjusted ebita
 — new five year facilities were 
put in place on 6 january 
2014 to fund the acquisition 
of aurora networks inc and 
the company is well placed 
and efficiently funded to 
develop and grow in 2014
 — the full year proposed dividend 
increases 22 to 549 cents 
per share 2012 450 cents 
per share – reflecting the 
board’s confidence in the 
outlook for the company and 
its improving financial position
fy 2013
m
fy 2012
m
revenue 24692 24034
gross profit 4482 4330
gross margin  182 180
adjusted operating costs 2546 2749
adjusted ebitda 2186 1791
adjusted ebita 1936 1581
operating margin 78 66
exceptional costs 122 125
amortisation of other intangibles 426 518
net finance expense 80 137
profit before tax 1308 801
tax charge 341 217
profit after tax 967 584
 preexceptional costs and amortisation of other intangibles
roddy murray
chief financial officer
audit committee on page 29 to 31 
1picar13frontsmmrindd   18 20032014   122223 annual report and accounts 2013 pace plc 19
strategic report governance financial statements
gross profit of 4482 million 
2012 4330 million is up 35 
gross margin percentage in 2013 was 
182 an increase of 02ppt on 2012 
reflecting the supply chain transformation 
and an improved revenue mix as pace 
broadens out its customer base
operating costs preexceptional charges 
and amortisation of other intangibles 
decreased by 203 million 74 to 
2546 million 2012 2749 million 
the underlying decrease excluding the 
impact of ias 38 accounting adjustments 
is a decrease of 162 million 58 
to 2619 million 2012 decrease of 
278 million considerable progress has 
been made in improving operating efficiency 
across the company during the year 
the cost savings reflect a scaling down of 
corporate resources and a reorganisation 
of the americas and international business 
units over the past two years
adjusted ebita was 1936 million 
2012 1581 million an operating 
margin of 78 against 66 in 2012
exceptional costs of 122 million 
2012 125 million relate to restructuring 
costs in the americas and international 
sbus and corporate 42 million the 
acquisition process for aurora networks inc 
69 million and aborted acquisition 
costs incurred in the year 11 million
amortisation of other intangibles 
primarily reflecting the annual charge 
for intangible assets acquired in 2010 
was 426 million 2012 518 million
segmental analysis
the group operates through sbus 
pace americas and pace international 
are deemed by the board to represent 
operating segments under ifrs 8 
with revenues and adjusted ebita 
in the table above
movements in revenue are described 
above although not wholly consistent 
revenues in north america belong 
primarily to the americas sbu revenues 
in europe and rest of world belong 
largely to the international sbu and 
revenues in latam belong to both the 
americas and international sbus
pace americas’ revenue increased by 
2376 million 165 in 2013 reflecting 
strong demand for next generation media 
server products and operating margin 
decreased to 91 2012 100 the 
performance of pace international improved 
with adjusted ebita contribution increasing 
155 despite revenue decreasing by 
181 and operating margin improved 
from 76 to 107
other amounts include central and 
unallocated costs and other immaterial 
sbus which are operating segments 
that are allowed to be aggregated 
under ifrs 8
the loss in other decreased by 268 
to 426 million 2012 582 million
finance costs
net financing costs of 80 million 
2012 137 million reflect a reduction 
in average net debt during the period 
costs incurred include the amortisation 
of facilities fees of 21 million 03 million 
of which were accelerated during the 
year as debt was repaid in full
profit before tax
profit before tax was 1308 million 
2012 801 million an increase of 
507 million 633 on 2012 
taxation
the tax charge of 341 million 
2012 charge 217 million results from 
the full year effective tax rate of 261 
2012 271 the rate reduction reflects 
lower corporate tax rates in the uk the cash 
cost of corporate tax was 238 million 
123 of adjusted ebita 2012 238 million 
15 1 of adjusted ebita
profit after tax
profit after tax was 967 million 
2012 584 million an increase 
of 383 million 656 on 2012 
earnings per share
basic earnings per share eps was 
312 cents 2012 194 cents an increase 
of 608 adjusted basic eps which 
removes the tax affected impact of the 
exceptional costs and amortisation of other 
intangibles to reflect underlying performance 
is 443 cents 2012 351 cents an increase 
of 262
fy 2013
m
fy 2012
m
revenue
pace americas 16795 14419
pace international 7812 9536
other 85 79
total revenue 24692 24034
adjusted ebita
pace americas 1527 1440
pace international 835 723
other 426 582
total adjusted ebita 1936 1581
1picar13frontsmmrindd   19 20032014   122224 annual report and accounts 2013 pace plc 20
strategic report
continued
financial review
balance sheet
intangible development expenditure assets 
increased by 81 million 2012 24 million 
increase due to continued investment in 
product development and an increased 
number of development projects
tangible fixed assets decreased in 
the period as the depreciation charge of 
250 million exceeded capital expenditure 
of 216 million the 216 million capital 
expenditure reflected a reduction of 
10 million from 2012 and is in line 
with the expected ongoing level for 
the company
working capital
net working capital was reduced by 
506 million 464 to 584 million 
in the period as commercial terms with 
suppliers were realigned to match 
pace’s working capital cycle inventory 
control processes strengthened and a 
more focused approach was taken to 
cash collection from our customers
inventory reduced by 253 million 
139 to 1568 million during 2013 
reflecting the improved controls in the 
business average stock turn in the year 
was 84 times against 87 times in 2012 
due to the additional inventory required 
to support the ems rationalisation
debtor days increased by seven days 
to 60 days at december 2013 reflecting 
a change in sales mix the quality of the 
company’s customer base is excellent 
and our customers pay us to terms
creditor days increased from 83 days 
to 90 days at 31 december 2013 
contributing a oneoff benefit to cash 
flow of c 29 million
debt
the cash balance of 330 million at 
31 december 2013 compares to a net 
debt of 1633 million at the end of the 
prior year during the year two scheduled 
facility repayment instalments were 
paid of 375 million each in june and 
december 2013 and the remaining 
750 million of the term loan taken out 
to buy 2wire inc was repaid ahead of 
plan on 31 december 2013 in addition 
the outstanding balance of the revolving 
credit facility was fully repaid in the year 
31 december 2012 90 1 million drawdown
the company believes that a net debt to 
ebitda ratio of not more than two times 
is an appropriate and efficient capital 
structure for pace
new borrowing facilities were put in place 
on 6 january 2014 to finance the purchase 
of aurora networks inc a five year 
310 million term loan plus a five year 
revolving credit facility of 150 million 
to give the company flexibility around 
investment and working capital post the 
aurora acquisition the proforma net debt 
to ebitda ratio is just above one times
liquidity and cash flows
a key performance measure for the 
group is free cash flow which was 
2090 million 2012 1827 million and 
represented 1080 of adjusted ebita 
2012 1156 cash outflows from 
interest payable net of interest received 
were 59 million 2012 111 million 
cash invested in acquisitions in the form 
of deferred consideration paid was nil 
2012 157 million cash spent on 
exceptional costs was 104 million 
2012 179 million
the board is confident that the company 
will continue to be strongly cash flow 
positive in 2014 and that the company’s 
committed bank facilities are more than 
sufficient to meet its short to mediumterm 
funding needs
foreign currency
in the period approximately 812 of the 
group’s revenues were denominated in usd 
2012 765 7 7 in euros 2012 100 
107 in brazilian real 2012 130 
and 04 in sterling 2012 05 
the impact of nonusd revenues costs 
and overheads continues to be addressed 
through pace’s foreign exchange 
hedging strategy
critical accounting policies
the directors consider that the group has 
the following critical accounting policies 
as they require the use of estimates 
and are subjective in their nature
 — revenue recognition
 — impairment
 — provisions and
 — intangible assets
details of accounting policies and 
estimates can be found within the notes 
to the financial statements
dividend
the board has recommended a 
final dividend of 366 cents per share 
2012 306 cents per share an increase 
of 20 in line with the progressive dividend 
policy introduced in 2009 the full year 
proposed dividend increases 22 to 
549 cents per share 2012 450 cents 
per share the increase reflects the board’s 
confidence in the outlook for the company 
and its improving financial position pace 
will look to continue to pay a progressive 
dividend off this new rebased level
dividends will be paid in sterling equivalent 
to 2192 pence per share this is based 
on an exchange rate of £  1670 being 
the closing rate applicable on 3 march 2014 
the date on which the board resolved 
to recommend the final dividend the 
proposed dividend will be payable on 
4 july 2014 to shareholders on the 
register on 6 june 2014 
roddy murray
chief financial officer
4 march 2014
1picar13frontsmmrindd   20 20032014   122224 annual report and accounts 2013 pace plc 21
strategic report governance financial statements
corporate responsibility
greenhouse gases mandatory reporting 
the table below reports the total greenhouse gas emissions by emission type
global ghg emissions data for period 1 january 2013 – 31 december 2013
emissions from tonnes of co
2
e
combustion of fuel and operation of facilities 683
electricity heat steam and cooling purchased for own use 6669
company’s chosen intensity measurement
1 emissions reported above normalised to per tonne of product
0216 tonnes co
2
e 
 per tonne of product
2 emissions reported above normalised to annual turnover
2978 tonnes co
2
e 
per annual turnover
3 emissions reported above normalised to product settop box
0368 kg co
2
e per 
product settop box
methodology
the company prepares an annual 
responsible business report and in 
2013 independent review and assurance 
with regards to the content of this report 
was provided by atkins in accordance 
with the principles set out in aa1000 
accountability principles standard 2008 
the report covers the following areas
 — environment
 — products
 — facilities
 — supply chain
 — community
 — people
we have reported on all of the emission 
sources required under the companies 
act 2006 strategic report and directors’ 
reports regulations 2013 these 
sources fall within our consolidated 
financial statements we do not have 
responsibility for any sources that are not 
included in our consolidated statements 
we have used the ghg protocol 
corporate accounting and reporting 
standard revised edition data gathered 
to fulfil our requirements under the crc 
energy efficiency scheme and emission 
factors from uk government’s ghg 
conversion factors for company 
reporting 2014 
as this is the first year of defra 
greenhouse gas mandatory reporting a 
comparison year is not required the year 
of 2013 will act as a baseline year for 
future reporting
pace has made excellent progress 
in our ‘responsible business’ 
performance in 2013
the pace responsible business report 
is available online at  
wwwpacecomuniversalresponsiblebusiness
responsible business 
performance summary
pace has made excellent progress 
in our ‘responsible business’ 
performance in 2013
 — total direct co
2
 emissions across 
our sites have reduced by 10 
to 7352 tonnes co
2
e in 2013 
2012 8181 tonnes co
2
e
 — we have again managed to 
demonstrate further reductions in 
the average product co
2
 
emissions average stb 
consumption has reduced by 8 
to 4799 kg co
2
 in 2013 
2012 5199 kg co
2

 — the average weight of a pace 
settop box has reduced for the 
fourth successive year by 6 to 
149kg in 2013 2012 159kg
 — for the first time pace has been 
recognised as a leader in cdp’s 
“ftse 350 climate disclosure 
leadership index” overall score 
91 in 2013 2012 79
 — pace became a full electronic 
industry citizen coalition eicc 
member company during 2013
 — in partnership with ecovadis 
we have conducted an independent 
sustainability assessment of our 
supply chain
1picar13frontsmmrindd   21 20032014   122224 annual report and accounts 2013 pace plc 22
strategic report
continued
corporate responsibility
objectives and targets 
during the year the company set its own responsible business targets and achieved the following outcomes against its chosen measures
activityimpact objective target comment
environment 
– product  
performance
drive product energy 
efficiency improvement
 — all stbs designed in 2013 to exceed a score of 80 
during pace’s design for environment dfe programme
 — seek to reduce average stb emissions in 2013 by 2
 — gateway products establish a baseline with a view 
to defining a strategy for performance improvement
achieved 
achieved
in progress
environment 
– site operations
environment 
– management 
system footprint
drive ‘low carbon’ 
performance improvement 
across our operations scope 
1 and scope 2
increase pace’s ems footprint 
to include key operations
 — achieve a 2 reduction in overall co
2
e emissions 
scope 1 and 2 by december 2013
 — increase pace’s environmental management 
system footprint to include pace brazil and pace 
americas operations
 — maintain iso 14001 in current certified pace sites 
– ensuring no major nonconformances
achieved 
in progress 
 
achieved
supply chain 
performance 
assessment
assess and prioritise our 
supply base sustainability 
performance
 — complete an independent assessment of our supply 
base focusing on environment labour practices and 
human rights fair business practices and sustainable 
procurement with a view to enhancing our current 
strategy to include riskbased prioritised improvements
achieved
community drive improvement in 
community engagement
 — maximise the benefits of supporting local 
community programmes while maintaining 
a focus on stem education
achieved
employees drive improvement in 
employee satisfaction
 — establish baseline performance and define 
an improvement programme that drives 
employee satisfaction
achieved
environment
the company has maintained certification 
to the international management standard 
iso 14001 at its saltaire boca raton 
bangalore paris tempe and san antonio 
sites 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 energy star 
program requirements for stbs and 
meps minimum energy performance 
standard pace is committed to ensure 
that all products are designed to minimise 
energy consumption through its “design 
for environment” programme
supply chain
pace is a member of the electronic industry 
citizen coalition eicc and applies the 
eicc code of conduct in its business
a programme of assessment and 
auditing is maintained at the regular 
business review meetings held with 
the group’s principal suppliers
charitable and community support
the group has an established charitable 
donations committee comprising 
employees based at the group’s premises 
in the uk and the usa the committee 
considers all requests for charitable 
and community project assistance from 
employees 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 the uk france india and the usa 
as well as the charitable and community 
initiatives of group employees
during the year requests for assistance 
satisfying the above criteria received 
financial support amounting to 120189 
in total
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
pace has continued as sponsor of the 
ahead partnership’s education strand of 
business engagement in the uk’s west 
yorkshire region this three year 
commitment has enabled the ahead 
partnership to develop and roll out their 
make the grade business education 
partnership model in west yorkshire
1picar13frontsmmrindd   22 20032014   122224 annual report and accounts 2013 pace plc 23
in addition pace has partnered with 
teach first to support the science 
technology engineering and maths 
stem teachers in yorkshire and the 
humber pace will fund the provision of 
personal development coaches to teach 
first participants in their second year of 
teaching teach first recruits trains and 
supports teachers working in schools 
in low income communities to raise the 
achievement aspirations and access 
to opportunity of children from low 
socioeconomic backgrounds 
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
employees are kept informed of matters 
affecting them as employees and factors 
affecting the performance of the group 
through regular employee meetings
briefings and regular written news 
briefings distributed electronically
diversity and inclusion
the group welcomes applications 
for employment from all sectors of 
the community and promotes 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
we believe that diversity is an essential 
part of how we do business and meet the 
needs of our global customer base we 
operate in 18 countries employing 
c2000 people and working with 
customers and suppliers from a broad 
range of backgrounds and cultures
the charts above show the gender split 
at different levels within the group as at 
31 december 2013
health and safety
each sbu in the group has an established 
health and safety committee made up 
of health and safety representatives the 
designated 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 uk 
government’s “health work wellbeing” 
hww initiative which has been adopted 
and implemented by the company
part of the hww incorporates return 
to work programmes and the group’s 
operations in saltaire pace west and 
pace east france brazil and india have 
adopted similar policies each division 
incorporates where appropriate their 
ergonomic risk assessments the group’s 
businesses in india the uk pace west 
and pace east provide training for first aid 
fire evacuation and fire wardens
pace west undertakes earthquake 
training and pace east undertakes 
hurricane training all of these initiatives 
are backed up by appropriate risk 
assessments “toolbox talks” short 
presentations on specific aspects of 
health and safety are also published 
on the group’s intranet and shared 
between different parts of the group
the number of workplace accidents 
during the year for saltaire was six 
outside the uk there were 16 accidents 
in the pace west and pace east operations 
three in france six in brazil and none in 
india none of these accidents was regarded 
as serious by the relevant local health 
and safety committee
human rights
the group does not have a specific 
human rights policy at present but does 
apply human rights considerations to 
the way it does business for example 
through our practices in relation to equal 
pay the right to form and join trade unions 
and our health and safety supplier and 
anticorruption policies the group will 
continue to review whether a specific 
human rights policy is needed in the future 
over and above our existing policies
  pace west is represented by the 2wire businesses 
and pace east is predominantly our office 
in boca raton florida
board of directors on page 24 and 25 
strategic report governance financial statements
female directors 2
male directors 4
female directors
333
male directors
667
female senior managers 9
male senior managers 82
female 
senior managers
99
male 
senior managers
901
female employees 419
male employees 1431
female 
employees
226
male 
employees
774
board diversity senior management diversity total workforce diversity
1picar13frontsmmrindd   23 20032014   122224 annual report and accounts 2013 pace plc 24
governance
board of directors
allan leighton      
chairman
allan was appointed a nonexecutive director in may 2011 and 
became chairman on 21 june 2011 he is currently president and 
chief executive officer of pandora as chairman of office retail 
group limited matalan and musicmagpiecouk and nonexecutive 
director of bighams limited
previously he has held a wide range of public and private 
company roles including ceo at asda chairman of royal mail 
and lastminutecom and nonexecutive director of british sky 
broadcasting plc dyson applications and scottish power plc
he is patron of breast cancer care and has an honorary 
degree from cranfield university and an honorary fellowship 
at the university of lancaster
mike pulli 
chief executive officer
mike was appointed chief executive officer on 14 december 201 1 after 
nearly eight years as president of pace americas in his role as ceo 
mike is responsible for leading pace’s global strategy as president of 
pace americas mike was responsible for the company’s businesses 
in the usa canada and latin america latam 
mike is also a nonexecutive director of itron nasdaqitri 
a technology company that provides solutions that help utilities 
measure monitor and manage electricity natural gas and water 
having been appointed in january 2014
prior to joining pace in 2004 mike was ceo of broadcasting 
company digital latin america dla previously mike spent eight 
years at motorola in various senior management positions including 
vice president of international operations and served in a variety 
of financial positions at alliedsignal inc mike holds a bachelor’s 
degree in accounting from rider university and an mba from 
farleigh dickinson university
the board
executive directors
 — mike pulli
 — roddy murray
nonexecutive directors
 — allan leighton
 — john grant
 — amanda mesler
 — patricia chapman
pincher
audit  risk 
committee
 — john grant c
 — patricia 
chapman
pincher
 — amanda 
mesler
remuneration 
committee
 — patricia 
chapman
pincher c
 — allan leighton
 — john grant
 — amanda mesler
nomination 
committee
 — allan leighton 
c
 — john grant
 — patricia 
chapman
pincher
 — amanda mesler
  audit  risk committee chairman
  remuneration committee chairman
  nomination committee chairman
  audit  risk committee member
  remuneration committee member
  nomination committee member
1picar13frontsmmrindd   24 20032014   122224 annual report and accounts 2013 pace plc 25
financial statements governance strategic report
roddy murray
chief financial officer
roddy was appointed an executive director on 25 february 2012 
and became chief financial officer on 6 march 2012 
roddy was previously cfo of the bss group plc and cfo of 
moss bros group plc prior to that he held a number of financial 
roles in mackays stores united distillers and british airways 
he qualified as a chartered accountant at the scottish institute 
before joining price waterhouse he holds a bachelor’s degree 
in administration from dundee university
john grant       
nonexecutive director
john was appointed a nonexecutive director in august 2008 
john spent his executive career in a variety of senior international 
roles within the automotive industry and other engineering businesses 
he was chief executive of ascot plc between 1997 and 2000 
prior to that he was group finance director of lucas industries plc 
subsequently lucas varity plc between 1992 and 1996 
he previously held a number of senior positions within ford motor 
company in europe and the usa john is a nonexecutive director 
of melrose plc mhp sa and wolfson microelectronics plc
amanda mesler        nonexecutive director
amanda was appointed a nonexecutive director in september 2012 
she is a us citizen and is also a nonexecutive director of 
ensygnia a technology startup 
previously she was the ceo of business consulting and an 
executive committee member of logica plc prior to joining 
logica amanda was a corporate officer and vp of strategy 
and organisation design for fortune 100 sysco 
prior to this amanda was a senior partner at bearing point consulting 
formerly kpmg consulting working out of houston where she led a 
client portfolio including many leading oil companies and spent time 
as the global leader for energy for eds her early career was with 
ge as the asia pacific market manager
patricia chapmanpincher       
nonexecutive director
pat was appointed a nonexecutive director in february 2005 
and became senior independent director in may 2006 
she has over 35 years’ experience in the communications industry 
from senior roles in multinational internet and telecoms companies 
to participating in technology company startups 
a founding partner and chairman of the cavell group which 
specialises in operational consultancy ip and wireless technologies 
she is also chairman of penzias ltd a board adviser to the british 
standards institute and a ceo mentor with merryck and co pat is 
also a trustee of finding rhythms a charity that works with music 
in prisons
1picar13frontsmmrindd   25 20032014   122225 governance
annual report and accounts 2013 pace plc 26
the board 
the pace plc board is accountable to the 
company’s shareholders for standards of 
governance across the group’s businesses 
certain strategic decisionmaking powers 
and authorities of the company are 
reserved as matters for the board whilst 
daytoday operational decisions are 
managed by the chief executive officer 
the principal matters reserved for the 
board are set out below
 — setting the overall strategic direction 
and oversight of the management 
of the company
 — recommending or declaring dividends
 — approval of the company 
consolidated financial statements
 — approval of major corporate 
transactions and commitments
 — succession planning and 
appointments to the board and senior 
management remuneration 
 — review of the group’s overall corporate 
governance arrangements including 
systems of internal controls and risk 
management and
 — approval of the delegation of authority 
to the chief executive officer and the 
terms of reference of all committees 
of the board
where appropriate matters are 
delegated to a committee which will 
consider them in accordance with its 
terms of reference
details of each committee’s terms of 
reference are available on the pace website 
at wwwpacecom
the board of directors currently 
comprises two 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 24 and 25 the 
chairman allan leighton 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 mike pulli 
are to 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 other than 
the chairman are deemed by the board 
to be independent and the chairman was 
deemed independent on his appointment 
as required by the uk corporate 
governance code in addition the board 
has designated pat chapmanpincher as 
the senior independent director all directors 
have access to the advice and services 
of the general counsel and company 
secretary and are able to take independent 
professional advice at the company’s 
expense in the furtherance of their duties 
if necessary each of the directors submit 
themselves for reelection on an annual 
basis 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 company has in place 
procedures to deal with directors’ conflicts 
of interest and the board is satisfied that 
these procedures operate effectively
the board normally meets at least eight 
times each year it reviews the strategic 
direction of the group and meets with 
other senior executives and employees 
within the group as required during the 
year the chairman holds meetings with 
the nonexecutive directors without the 
executive directors being present on a 
regular basis it is the policy of the board 
to undertake a formal review and 
evaluation of its performance including 
the performance of its committees the 
chairman and individual directors on an 
annual basis this is generally concluded 
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 
will consider appointing an independent 
facilitator for the evaluation process at 
least once every three years and chose 
not to do so in 2013
board committees
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
the audit  risk committee 
is comprised of independent 
designated nonexecutive directors 
pat chapmanpincher amanda mesler 
and john grant who is the chairman 
of the committee john grant was 
previously group finance director 
of a listed business and is considered 
by the board to have the necessary 
recent and relevant financial experience 
for his role as chairman 
details of the role and of the primary 
responsibilities of the audit  risk committee 
are explained on pages 29 to 31
the executive committee is chaired 
by mike pulli 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
framework of corporate governance
1picar13middlemrindd   26 20032014   122231 annual report and accounts 2013 pace plc 27
strategic report governance financial statements
the executive committee comprises 
two executive directors together with 
the senior executives shown in the 
table above
the remuneration committee 
is comprised of allan leighton and 
independent designated nonexecutive 
directors john grant amanda mesler 
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 and wider executive team 
including making recommendations 
regarding the grant of share incentive 
awards 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 where directors do hold 
other external positions these are not 
considered to have any impact on their 
duties for the group 
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 longterm share incentive awards to 
the board the final determinations are 
made by the board as a whole but no 
director plays a part in any discussions 
concerning their own remuneration 
there are no agreements between the 
company and its directors or employees 
providing for compensation for loss of 
office or employment whether through 
resignation purported redundancy or 
otherwise that occurs as a result 
of a takeover bid
the remuneration report of the directors 
to shareholders including the remuneration policy 
of the company is set out on pages 33 to 46
the nomination committee is 
comprised of nonexecutive directors 
pat chapmanpincher john grant 
and amanda mesler and is chaired by 
allan leighton its principal purpose is 
to consider and make recommendations 
to the board regarding the appointment 
of new directors the nomination 
committee meets at least once a year 
or as required 
code compliance
as referred to on page 38 the company 
granted an appointment share award 
to allan leighton on his appointment as 
nonexecutive chairman in 2011 and this 
currently remains unvested save in respect 
of this appointment share award the 
directors believe that the company has 
complied throughout the year with the 
uk corporate governance codes for 
2010 and 2012 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 
controls and that there is an ongoing 
process for identifying evaluating and 
managing the significant risks faced 
by the company 
executive committee
the executive committee comprises the two executive 
directors together with the following senior executives 
who are deemed to be persons discharging managerial 
responsibility under the uk listing rules
 — anthony dixon  general counsel 
and company secretary
 — shane mccarthy president pace international
 — tim o’loughlin president pace americas
in addition the following senior executives attend 
meetings of the executive committee on a regular basis 
 — jon cobb president software  services
 — guy sucharczuk president networks
 — phil baldock senior vice president operations
 — jane johnston group human resources director
1picar13middlemrindd   27 20032014   122231 governance
annual report and accounts 2013 pace plc 28
continued
relations with shareholders
the company has a welldeveloped 
investor relations programme led 
by the chief executive officer and 
chief financial officer and managed 
by the senior vice president of investor 
relations and strategy through this 
programme the company maintains 
regular contact with major shareholders 
to communicate clearly the group’s 
objectives and monitors movements 
in significant shareholdings 
investor roadshows are now held each 
year in the usa as well as in the uk and 
formal investor presentations are made 
twice a year to groups of investment 
fund managers the opportunity for 
shareholders to meet the chairman or 
senior independent director separately 
from the executive directors is available 
on request
all financial and trading announcements 
are published immediately on the 
company’s website including copies 
of the presentations made to analysts 
and investors 
all shareholders are welcome to 
participate at the company’s annual 
general meeting when all the directors 
will normally be available to answer 
questions the results of the annual 
general meeting resolutions including 
details of votes castwithheld are 
published on the company’s website
annual general meeting
the annual general meeting of the 
company will be held on 24 april 2014  
at the offices of the company at salts mill 
victoria road saltaire west yorkshire 
bd18 3lf full details of the business to 
be transacted at the meeting will be set out 
in the notice of annual general meeting 
board and committee meetings attendance
board
audit  risk
committee
remuneration
committee
nominations
committee
total meetings 10 5 2 1
allan leighton 10 1 2 1
mike pulli 10 — — —
roddy murray 10 — — —
john grant 10 5 2 1
mike inglis 3 2 1 —
pat chapmanpincher 10 5 2 1
amanda mesler 10 5 2 1
 retired 24 april 2013
framework of corporate governance
1picar13middlemrindd   28 20032014   122231 annual report and accounts 2013 pace plc 29
strategic report governance financial statements
audit  risk committee report
dear shareholder
i am pleased to introduce this report of 
pace’s audit  risk committee for the 
year ended 31 december 2013 this reflects 
the new provisions of the uk corporate 
governance code the code now in 
effect regarding narrative reporting
the committee’s duties are described 
later in this report and reflect the code’s 
recommendations more broadly the 
committee sees its role as being to ensure 
the integrity of the group’s financial reporting 
and the robustness of its internal controls 
and risk management processes 
in relation to the integrity of financial 
reporting we adopt prudent accounting 
policies and practices with areas of 
judgement being subject to specific 
review by the committee we work 
closely with the company’s external 
auditors to agree areas of risk of potential 
misstatement and to make sure these are 
addressed as part of the audit process
while the ultimate responsibility for 
reviewing and approving the annual 
report and accounts remains with the 
board in view of the new provisions 
in the code regarding financial and 
business reporting the board requested 
that the committee advise on whether it 
considers the annual report and accounts 
taken as a whole to be fair balanced 
and understandable and to provide the 
information necessary for shareholders 
to assess the company’s performance 
business model and strategy
risk management at pace is a board 
responsibility but the audit  risk 
committee is tasked by the board with 
ensuring the risk management process 
is fit for purpose our systems of internal 
control are designed to focus resource 
on the principal risks to the business which 
are summarised within the strategic 
report we have a welldeveloped budget 
process with regular forecast updates 
and board reviews of performance
during the year the committee has been 
assisted by the chief financial officer 
the vice president of group finance 
and in particular the internal auditors 
bdo llp i have also met separately 
with the company’s auditors during 
which meetings i have discussed their 
views on the strength and depth 
of financial reporting and internal control 
processes operating within the group 
set out in the following pages is the 
committee’s report on its activities during 
the year including a description of how 
the committee dealt with those areas of 
financial reporting that require particularly 
careful review and judgement none of 
these areas has proved critical in 
preparing the group’s financial 
statements this year
i hope you will find this report helpful in 
understanding the work of the committee 
yours sincerely
john grant
chairman of the audit  
 risk committee
john grant
chairman of the audit  risk committee
1picar13middlemrindd   29 20032014   122231 governance
annual report and accounts 2013 pace plc 30
audit  risk committee report
internal audit
the company’s vice president of 
group finance who has direct access 
to the audit  risk committee primarily 
through the chairman of the committee 
oversees an internal audit function 
provided by external qualified 
auditing professionals
the audit  risk committee 
reviews annually the arrangements 
for internal audit and during the year 
the committee reappointed bdo llp 
bdo to act as internal auditors 
performing an agreed programme of 
internal audits in collaboration with the 
company’s vice president of group 
finance and senior management bdo 
attended and presented their reports 
to each of the audit  risk committee 
meetings during the year
the committee has amongst other 
things considered the quality of reporting 
to the committee and impartiality of the 
internal auditors and has concluded that 
the effectiveness of internal audit during 
the year was satisfactory
external audit
the audit  risk committee 
has satisfied itself that the external 
auditors kpmg audit plc kpmg 
acted independently of the group 
previous appointments of kpmg and 
the extent of other work undertaken 
by it were considered inter alia 
in this regard
it is the committee’s opinion confirmed in 
discussions with kpmg that there were 
no limitations imposed by management 
on kpmg whilst performing their duties 
during the review period
the committee in consultation with the 
group’s executive management agreed 
to the terms of the kpmg engagement 
letter audit plan and budgeted audit fees 
for the 2013 financial year
a formal framework governs the process 
through which the group’s auditors are 
considered to render nonaudit services 
the committee has approved a policy in 
relation to the provision of nonaudit services 
by the external auditors and the nature 
and extent of nonaudit services that the 
external auditors could provide within the 
scope of the policy during the year
details of the external auditors’ total fees 
including nonaudit fees of 100000 paid 
to kpmg during the year are set out in 
note 4 to the financial statements
external audit appointment
the committee reviews and makes 
recommendations with regard to the 
reappointment of the external auditors 
in making these recommendations the 
committee considers auditor effectiveness 
and independence partner rotation and 
any other factors which may impact the 
external auditor’s reappointment 
the external auditors are required to 
rotate the audit partner every five years 
the most recent change occurred in 
the year ended 31 december 2012 and 
therefore partner rotation is due in the 
year ending 31 december 2017 
the current external auditors kpmg 
audit plc were first appointed in 1996 
and the external audit has not been 
formally tendered since then 
having completed the activities outlined 
the committee remains confident that the 
effectiveness and independence of the 
external auditors is not impaired in any 
way there are no contractual restrictions 
on the choice of external auditor kpmg 
audit plc has notified the company that 
as a result of their intention to instigate 
an orderly winddown of the legal entity 
they are not seeking reappointment 
accordingly a resolution proposing 
kpmg llp to be appointed as external 
auditors will be put to shareholders at 
the 2014 annual general meeting 
continued
role and key responsibilities
the terms of reference of the 
committee are reviewed annually 
and are available on the company’s 
website wwwpacecom
the committee’s main 
responsibilities involve
 — monitoring the integrity of the 
financial statements of the 
company and formal announcements 
relating to the company’s financial 
performance and reviewing any 
significant financial reporting 
judgements contained therein
 — reviewing the company’s internal 
financial and operational control 
and risk management systems
 — monitoring the effectiveness of the 
company’s internal audit function 
and reviewing its material findings
 — reviewing accounting policies 
accounting treatments and 
disclosures in the strategic report 
and financial statements ensuring 
that shareholders may understand 
strategic aims and risks of the 
business of the group and that the 
annual report and accounts taken 
as a whole is fair balanced 
and understandable
 — overseeing the company’s 
relationship with its external auditors 
including making recommendations 
as to frequency of tendering for 
audit services the appointment 
or reappointment of the external 
auditors reviewing their terms of 
engagement and monitoring their 
independence and ensuring that 
policy surrounding their engagement 
to provide nonaudit services 
is appropriately applied 
 — monitoring fraud reports and 
reviewing the effectiveness of 
the company’s whistleblowing 
procedures and
 — reporting to the board on how it 
has discharged its responsibilities
1picar13middlemrindd   30 20032014   122231 annual report and accounts 2013 pace plc 31
strategic report governance financial statements
the committee will continue to assess 
the effectiveness and independence of 
the external auditors in doing so the 
committee will consider a formal tender 
process in accordance with provisions 
of the uk corporate governance code 
we will comply with the competition 
commission order relating to the statutory 
audit market for ftse 350 companies 
which is expected to come into effect 
from 1 october 2014
activities of the committee
the main activities of the committee 
during the year are set out below
financial reporting
the committee reviewed and considered 
the following areas in respect of financial 
reporting and the preparation of the 
interim and annual financial statements
 — the appropriateness of accounting 
policies used
 — compliance with external and 
internal financial reporting standards 
and policies
 — significant judgements made
 — disclosures and presentations and
 — whether the annual report 
and accounts are fair balanced 
and understandable
in carrying this out the committee 
considered the work and recommendations 
of the group finance team in addition 
the committee received reports from the 
external auditors setting out their view on 
the accounting treatments and judgements 
included in the financial statements 
the external auditors’ reports are based 
on a full audit of the annual financial 
statements and a highlevel review 
of the interim financial statements
with the support of the external 
auditor the committee assessed 
whether suitable accounting policies 
had been adopted whether management 
had made appropriate estimates and 
judgements and whether the disclosures 
were fair and balanced
the significant judgements considered 
by the committee in areas where there 
was potential risk of material 
misstatement were
 — revenue recognition this represents 
a key area of judgement in the accounts 
due to the complexity of some of the 
group’s revenue streams in particular 
those involving multiple elements the 
committee has discussed with senior 
management the accounting for such 
contracts and may review the accounting 
treatment of all material new contracts 
the committee has concluded that 
the timing of recognition continues 
to be in line with ifrs requirements
 — royalty provisions these are 
considered a significant area of 
judgement due to the complexity 
of the claims made against the group 
and the range of possible outcomes 
of each claim the committee and the 
board receive a semiannual report 
from the general counsel regarding 
royaltiesclaims under negotiation 
as referred to in note 20 to the 
financial statements
 — capitalised development costs 
project development costs are 
capitalised and subsequently amortised 
over their useful life the committee 
considered the basis for selecting such 
costs as relevant development costs and 
the process for identifying the useful life 
the committee also reviews a summary 
of the larger projects by carrying value 
to understand how the costs capitalised 
are covered by future forecast margin 
the committee has concluded that the 
processes for capitalising development 
costs are robust and that the balance 
is recoverable
 — other areas of judgement reviewed 
by the committee but where it was 
concluded that there was not a risk 
of material misstatement included 
warranty provisions classification 
of items as exceptional potential 
impairments of goodwill intangible 
and other fixed assets and treatment 
of tax assets and liabilities
internal controls and risk management
the committee reviews the framework 
of internal controls and the processes 
by which the group’s control environment 
is evaluated 
in this regard the committee 
received reports from internal audit on 
the operation of and issue arising from 
the group’s internal controls and procedures 
external audit has also provided input 
and observations on the internal control 
environment and on any specific control 
issues that occurred during the year 
the committee also reviewed compliance 
activities in relation to internal audit reports 
submitted to the committee in prior years 
and received a report on the status of 
recommendations and actions outstanding 
the committee reviews the group’s 
risk management framework in order 
to ensure it is appropriate and operating 
effectively in doing so the committee 
received reports from the vice president 
of group finance covering 
 — the effectiveness of the risk 
management processes and their 
adoption across the group and
 — a summary of the top risks to the group 
controls identified to mitigate these 
risks and actions planned to reduce 
risks where considered necessary
as part of its agenda the committee 
allowed time for indepth reviews of 
particular risk areas during the year 
the risk areas considered included 
implementation of the anticorruption 
policy information and it security and 
the impact of changes to corporate 
governance rules
1picar13middlemrindd   31 20032014   122231 governance
annual report and accounts 2013 pace plc 32
nomination committee report
committee meetings
the committee will meet at least once 
per year usually in conjunction with 
board meetings 
activities of the committee
during the year the nomination committee 
dealt with a number of matters including 
the retirement of mike inglis from the board 
and succession planning of nonexecutive 
director roles
pace and the committee value the 
aims and objectives of the davies report 
on women on boards and support and 
apply the group diversity policy set out 
on page 23 there is currently onethird 
female representation at board level 
no formal measurable objective has 
been set for female representation 
at board level
the committee is sensitive to the need 
for the nonexecutive directors to remain 
independent from management in order 
to exercise independent oversight and 
effectively challenge management as 
necessary the committee continually 
assesses the independence of the 
nonexecutive directors and has 
determined that all the nonexecutive 
directors are independent none of them 
serve as directors of any companies or 
affiliates in which any other director is a 
director however more importantly each 
of the nonexecutive directors is prepared 
to question and challenge management 
to request more information and to ask 
the difficult question they insist on robust 
responses both within the boardroom 
and sometimes between board meetings 
we value the input we receive from our 
longer serving directors given their deep 
understanding of the group we are 
however focused on planning for the future 
to build a balanced board with the skills 
and experience fit to face the challenges 
that lie ahead the committee recognises 
that in due course longer serving directors 
will step down and therefore it continues 
to search for other suitable nonexecutive 
directors whose experience will align 
with the company’s strategic objectives 
committee responsibilities
the committee is responsible for 
a number of matters relating to the 
composition of the board and its 
committees in particular it is 
responsible for
 — reviewing the structure 
of the board
 — evaluating the balance of skills 
knowledge experience and 
diversity of the board
 — advising the board on any areas 
where further recruitment may 
be appropriate and
 — succession planning for key 
executives at board level 
and below
where necessary and appropriate 
recruitment consultants are used 
to assist the committee in delivering 
its objectives and responsibilities 
the committee leads the process for 
the identification and selection of new 
directors and makes recommendations 
to the board in respect of such 
appointments the committee also 
makes recommendations to the board 
on membership of its committees 
the committee terms of reference 
can be found on the pace website  
wwwpacecom
1picar13middlemrindd   32 20032014   122231 annual report and accounts 2013 pace plc 33
strategic report governance financial statements
remuneration committee report
dear shareholder
i am pleased to present to you our 
2013 directors’ remuneration policy 
“policy” and remuneration report 
we have continued to follow our strategy 
of creating a remuneration framework 
that rewards good performance in 
both the short and long term as we 
believe that this is in the best interests 
of all our stakeholders
this year the new regulations on 
directors’ remuneration take effect for 
pace we have therefore restructured 
our report to comply with the new rules
there are three sections
1 this annual statement
2  the directors’ remuneration policy 
on pages 34 to 40 summarising the 
different elements of remuneration 
how they work and how they link 
to performance and strategy at the 
agm on 24 april 2014 shareholders 
will be asked to approve this policy 
which will then become binding and
3  the annual report on remuneration 
on pages 41 to 46 giving details of 
remuneration earned in the 2013 
financial year this report will be 
subject to an advisory vote by 
shareholders at the agm
in the rest of this statement i summarise 
the committee’s main activities during 
the year more details can be found 
in the policy and annual report
there have been no major changes 
to the policy on remuneration during 
2013 although the committee has 
of course considered the packages 
of the executive directors and confirmed 
that in its opinion these remained 
appropriate aligning with our strategy 
and shareholders’ interests no increases in 
directors’ salaries were awarded in the year 
our remuneration policy recognises that 
pace is an international business with a major 
portion of its customers and employees 
including the chief executive officer based 
in the usa the targets and framework 
for the 2013 bonus and psp awards 
were set in this context with ebita again 
chosen as the primary target but with 
personal objectives and an incentive to 
ensure strong cash management also built 
in to the criteria the committee reviewed 
the vesting of the psp and option awards 
granted in 2010 and concluded that 
no psp or option awards would vest 
in 2013 
mike pulli’s service agreement originally 
put in place in 2003 with subsequent 
amendments on his appointment as ceo 
was also updated and renewed during 
the year to better reflect his position 
as a director of a uk listed company
looking ahead to 2014 and beyond 
the committee has sought to reflect 
developing best practice as a result 
the rules of the company’s performance 
share plan psp and deferred share 
bonus plan dsb for the 2014 award 
cycle to provide for performance outcomes 
are to be adjusted in circumstances of 
financial misstatement misconduct or 
inaccuracies in underlying information 
or assumptions
with a view to incentivising performance 
over the longer term the committee 
would also like the ability to make longterm 
incentive awards under the psp up to 200 
of salary where appropriate the intention is 
that awards would not be awarded at the 
maximum level other than in exceptional 
circumstances shareholder approval to 
amend the psp to increase the current 
limit will be sought as a separate resolution 
at the agm alongside this the committee 
has decided not to seek renewal of the 
executive share option plans when they 
expire in 2015 and going forward the psp 
will be the only longterm incentive plan for 
existing executive directors the uk and 
us sharesave plans have in the past been 
very successful within pace and shareholder 
approval will be sought at the agm 
to renew these plans 
we want to ensure that our remuneration 
framework provides a fair reward for the 
performance delivered and an incentive 
to continue to deliver our strategy and 
develop our business over the long term 
we believe the policy that we are asking 
you to approve does this whilst giving 
the committee the flexibility to respond 
to changes in circumstances and 
commercial pressures facing pace 
in its international markets
pat chapmanpincher
chairman of the
remuneration committee
i am pleased to present 
to you our 2013 directors’ 
remuneration policy and 
remuneration report
pat chapmanpincher
chairman of the remuneration committee
1picar13middlemrindd   33 20032014   122232 governance
annual report and accounts 2013 pace plc 34
continued
remuneration committee report
the committee 
the committee determines the company’s 
policy on the remuneration of executive 
directors the members of the executive 
committee and the chairman the 
committee determines their individual 
remuneration packages
the members of the committee in 2013 
were pat chapmanpincher chairman 
allan leighton john grant mike inglis 
retired 24 april 2013 and amanda mesler 
the composition of the committee is in 
accordance with the corporate governance 
code the committee’s terms of reference 
are on the company’s website
during the year mike pulli and the directors 
of hr jill ezard and jane johnston were 
invited to attend meetings of the committee 
to provide advice to enable it to take 
informed decisions no director was 
present when their own remuneration 
was being discussed kepler associates 
retained by the committee assisted in 
relation to remuneration matters its fees 
were £5850 they provided no other 
services to the company pinsent masons 
llp  legal adviser to the company has 
provided advice on compliance with the 
legislation and regulations
directors’ remuneration policy
introduction
in this section the committee presents the 
policy which will be put to shareholders by 
way of a binding vote at the annual general 
meeting to be held on 24 april 2014 subject 
to shareholder approval this policy will take 
effect from the day following the agm
the intention of the committee is that the 
policy should remain in place for three years
the policies summarised in this section 
are consistent with those that have been 
in place at pace for a number of years 
as now required this policy is broken 
down into a number of sections
 — a future policy table for directors which 
sets out details of the different elements 
of executive directors’ remuneration
 — remuneration policies relating to the 
chairman and nonexecutive directors
 — an illustration of the sensitivity 
of remuneration outcomes under 
this policy in relation to pace’s 
performance and
 — other policies relating to executive 
director remuneration including 
recruitment service contracts 
appointments and terminations
future policy table – executive directors
element
purpose and 
link to strategy operation opportunity
performance 
measures 
and period
base salary
set to reflect 
expected 
contribution 
to delivering 
the company’s 
strategy salaries 
are set in the 
context of 
overall pay
it is the intention of 
the remuneration 
committee to set 
base salaries at a 
competitive level 
after considering 
those paid by 
comparable 
companies 
recognising the 
market value of 
the executive’s role 
skill responsibilities 
performance and 
experience
reviewed annually 
with any change effective 
from 1 january
when setting salary 
the committee takes 
into account the level 
of increase for employees 
more generally market 
data business performance 
external economic factors 
the complexity of the business 
and the role cost and the 
directors’ experience and 
performance
the committee’s policy 
in relation to salary is
 — up to median salary on 
appointment depending 
on the experience and 
background of the new 
executive director
 — on promotion up to the 
median salary for the 
new role and
 — otherwise pay increases 
are set by reference to 
inflation and other pay rises 
generally for employees
the policy maximum is for 
the percentage increase in 
executive directors’ salaries 
not to exceed 10 in any 
year but this is subject to 
an overriding discretion in 
exceptional circumstances 
salary levels and increases will 
be determined with reference 
to market practices and rates 
in the relevant location 
there are no 
performance 
conditions 
although 
individual 
performance 
is considered 
when reviewing 
salaries
1picar13middlemrindd   34 20032014   122232 annual report and accounts 2013 pace plc 35
strategic report governance financial statements
element
purpose and 
link to strategy operation opportunity
performance 
measures 
and period
benefits to provide 
reasonable market 
competitive 
benefits
the committee provides a range 
of benefits to executives in line with 
the pace policy these comprise 
a fully expensed car plus fuel or an 
equivalent cash allowance private 
medical insurance permanent 
health insurance and life insurance 
and may include relocation 
assistance and other benefits 
customarily provided in the 
relevant location where applicable
no more generous than 
the equivalent benefits to 
those provided in 2013 but 
recognising the cash cost
value of providing such 
benefits can vary significantly 
according to the age health 
and location of the individual
none
pension market
competitive 
retirement 
provision 
recruitment and 
retention of high 
calibre executives 
and also supports 
succession 
planning
a cash allowance is paid in lieu 
of pension contributions with 
the committee’s approval an 
executive director may at their 
discretion redirect all or part of 
this allowance into any defined 
contribution pension arrangement 
in their home country including 
401k plans in the usa 
up to 25 of annual 
basic salary
na
relocation to facilitate 
the recruitment 
and relocation 
of executive 
directors
where it is in pace’s interests 
to request that executives work 
in a different country or region 
then it may pay relocation and 
provide benefits and allowances 
to compensate the individual 
for the additional costs involved
the committee has no 
prescribed maximum level 
for the value of relocation 
payments as these can 
vary significantly based 
on the countries and individual 
circumstances involved 
the committee will agree 
relocation payments on 
a case by case basis
na
1picar13middlemrindd   35 20032014   122232 governance
annual report and accounts 2013 pace plc 36
continued
remuneration committee report
element
purpose and 
link to strategy operation opportunity
performance 
measures 
and period
annual bonus to incentivise 
and reward 
performance 
against annual 
financial strategic 
and operational 
goals which are 
consistent with 
the medium to 
longterm strategic 
needs of pace
the award of annual bonus under 
the plan is determined following 
the year end by the committee 
based on performance against 
the targets set at the beginning 
of the year and the committee’s 
assessment of achievement 
of personal objectives
a minimum of onethird of any 
bonus outcome is payable in pace 
shares and all of any enhanced 
bonus award is payable in pace 
shares and automatically deferred 
for a minimum period of two years 
under the group deferred share 
bonus plan
the committee retains the 
power to reduce the bonus 
otherwise payable by up to 
50 based on its assessment 
of the management of pace’s 
cash position during the year 
the committee has reserved 
the power to seek clawback of 
the deferred element of bonuses 
in certain circumstances
normal maximum 150 
of salary
exceptional maximum 225 
of salary
in line with expectations 75 
of salary
threshold 25 of salary
the policy is 
for corporate 
objectives to 
be linked to key 
drivers of value 
creation which 
may include 
ebita eps 
adjusted eps 
or other 
operational 
measures in 
addition the scale 
of annual bonus 
will depend on 
achievement 
of individual 
personal 
objectives 
aligned to the 
objectives of 
the group 
that year
longterm 
incentives
to incentivise 
longterm value 
creation aligning 
the interests of 
executives and 
shareholders 
through the 
delivery of 
awards in shares 
the selected 
performance 
targets support 
the longterm 
strategy of pace 
and aid retention of 
executive directors
the committee can make 
annual sharebased awards 
to executive directors under the 
pace performance share plan 
these can take the form 
of nilcost options or 
conditional awards
clawback provisions are 
included in the plan rules 
and provide the committee with 
the power to adjust unvested 
andor unexercised awards 
in certain circumstances
awards can be settled through 
marketpurchased shares 
treasury shares or new 
issue shares
normal maximum 100 
of salary
exceptional maximum 
subject to shareholder 
approval 200 of salary
as a percentage of maximum 
opportunity the following 
amounts are payable for 
the corresponding levels of 
performance as a percentage 
of the award
minimum 25
maximum 100
other points on the vesting 
schedule may be determined 
at the committee’s discretion 
when the performance 
targets are set
the policy is 
for corporate 
financial 
targets to be 
set measured 
over a minimum 
of three financial 
years and linked 
to the key drivers 
of value creation 
which may 
include ebita 
adjusted 
eps or other 
operational 
measures
directors’ remuneration policy continued
future policy table – executive directors continued
1picar13middlemrindd   36 20032014   122232 annual report and accounts 2013 pace plc 37
strategic report governance financial statements
the principles of the remuneration 
framework for executive directors reflect 
the same principles that apply to the 
broader employee population absolute 
levels and the provision of certain 
components vary by location and grade 
but the overarching themes are consistent 
across the wider group
 — salaries are reviewed annually with 
any increases made on a discretionary 
basis considering factors such as 
those set out in the policy table
 — managers and key employees 
participate in annual bonus plans 
with measures linked to corporate 
divisional andor local performance 
depending on their level including for 
the most senior a compulsory deferral 
of part of annual bonus into shares
 — bonuses are awarded based on 
achievement of adjusted ebita or 
adjusted eps targets approved by 
the committee and set by reference 
to annual budget expectations 
the committee has discretion 
to award enhanced bonus to 
senior executives subject to an 
overall maximum limit to reward 
exceptional corporate performance  
and personal performance
element
purpose and 
link to strategy operation opportunity
performance 
measures 
and period
sharesave and 
us sharesave
to encourage wider 
share ownership 
amongst the 
employees and 
align the interests 
of pace employees 
with those of 
shareholders 
in addition to 
provide a tax 
efficient investment 
vehicle for 
employees
a savingsrelated share 
option plan which is open 
to the majority of the group’s 
uk employees including the 
ukbased executive directors
under the plan grants of share 
options can be made to all 
participants at a discount of 
20 below the market price
in the usa a contributory 
plan is offered with broadly 
comparable awards qualifying 
for us tax benefits
participation limits are by 
reference to those set by the 
relevant tax authorities from 
time to time
none
historic 
commitments
to avoid reneging 
on previous 
agreements
where commitments have been 
given prior to the 2014 agm 
as a matter of policy pace will 
honour those commitments 
in accordance with their terms 
dependent on circumstances dependent on 
circumstances
1picar13middlemrindd   37 20032014   122232 governance
annual report and accounts 2013 pace plc 38
directors’ remuneration policy 
continued
future policy table – executive directors 
continued
 — the allemployee plans described 
in the future policy table are offered 
on consistent terms to all qualifying 
employees in the locations where 
the plans operate there is a longterm 
incentive plan the pace international 
performance share plan to incentivise 
key employees but excluding the 
executive directors
 — eligibility for benefits and allowances 
varies by grade and local market 
practice pension provision below 
the board is accrued at a lower rate
remuneration of other employees
when setting the salaries for executive 
directors the committee takes into 
account a number of factors as noted in 
the future policy table and these include 
the broader employment conditions 
within pace more specifically the 
committee reviews budgeted salary 
increases across the group when 
assessing the appropriateness of any 
increases for the executive directors the 
committee also takes account of the 
internal relativities within the senior 
management team and the degree 
of impact of the relevant roles on 
the group’s performance
the committee did not consult with 
employees when preparing the directors’ 
remuneration policy for this report 
shareholder views
the remuneration committee has a 
standard annual agenda item whereby 
the feedback from shareholders and 
investor advisory bodies is presented 
and discussed both before and after 
the agm this feedback is sought and 
collated by the senior vice president of 
investor relations and strategy and the 
company secretary the feedback that 
the committee receives then informs 
discussions for the formulation of future 
policy and remuneration decisions 
thereafter furthermore as appropriate 
the committee will meet with 
shareholders on specific matters
remuneration policy – 
nonexecutive directors 
the board’s policy in relation to 
nonexecutive directors continues to 
be to pay fees that are competitive with 
the fees paid by comparable quoted 
companies nonexecutive directors’ fees 
are determined by the board as a whole 
within the limits set out in the company’s 
articles of association the policy is that 
nonexecutive directors are not eligible 
for performance bonuses or pension 
contributions and do not participate in 
the equity incentive plans nonexecutive 
remuneration is reviewed annually
continued
remuneration committee report
element purpose and link to strategy operation annual opportunity
base fees
to attract and retain high calibre 
individuals by offering market 
competitive fees reflecting 
the time commitment and 
experience that is required
fees are reviewed annually and considered 
against companies of a similar size 
and complexity
when setting fees factors considered include 
market data business performance external 
economic factors the skills required time 
requirements and cost additional fees 
are paid to committee chairmen 
fee levels from 
1 january 2014 are
chairman £162000 and
nonexecutive directors 
£42000
additional fees for 
acting as committee 
chairman £8000
subject to review 
in july 2014
historic 
commitments
chairman’s appointment 
share award made in 2011 
was a oneoff exception to 
the policy that nonexecutive 
directors do not participate 
in pace’s incentive plans 
it is the company’s policy 
to honour preexisting 
commitments in accordance 
with their terms
personal investment of £200000 matched 
by a twoforone share award vesting on 
31 may 2014 338810 shares
share price linked award vesting at latest on 
31 may 2015 600000 shares 25 vesting 
at a share price of 145 pence with full vesting 
at 190 pence and retention conditions until 
earliest 31 may 2016 as disclosed more fully 
in the annual reports for 2011 and 2012
oneoff historic award on 
appointment of chairman
1picar13middlemrindd   38 20032014   122232 annual report and accounts 2013 pace plc 39
strategic report governance financial statements
illustrations of the application of 
pace’s remuneration policy for 2014
in order to illustrate the potential 
opportunity available to the executive 
directors and the sensitivity of pay 
to performance the charts above 
set out pay outcomes for three 
performance levels
 — minimum pay is limited to 
fixed elements of salary pension 
allowance and taxable benefits 
and no vesting under any of the 
longterm incentive plans
 — in line with expectations fixed pay  
plus bonus at the midpoint of the  
range giving 50 of the maximum 
opportunity and longterm incentives 
vest at 50 of the maximum
 — maximum fixed pay plus bonus at the 
maximum point of the range giving 
100 of the maximum opportunity 
and longterm incentives vest at 100 
of the maximum
it is our intention to reward success 
the policy is for a significant proportion 
of executive directors’ total remuneration 
to be capable of being earned from variable 
performancebased incentives through 
annual bonuses and sharebased incentives 
the objective of this policy is to provide 
rewards and incentives for success 
more than half of each executive director’s 
potential remuneration is variable and 
can only be earned by good corporate 
and personal performance reflected in 
achievement of measurable corporate 
and personal objectives
policy on recruitment remuneration
when setting the remuneration package 
for a new executive director the committee 
will apply the same principles as set out 
in the future policy table 
base salary will be set at a level 
appropriate to the role and the experience 
of the director being appointed this may 
include agreement on future increases 
up to a market rate in line with increased 
experience andor responsibilities subject to 
good performance where it is considered 
appropriate a benefit package may be 
agreed consistent with the future 
policy table
normal annual bonus and longterm 
incentive awards for a new executive 
director will be within the maximum levels 
set out in the future policy table but in 
any event the committee would not 
award annual variable pay above four 
times base salary
in relation to external appointments the 
committee may structure an appointment 
package that it considers appropriate to 
recognise awards or benefits that will be 
forfeited on resignation from a previous 
position taking into account timing 
valuation and such other specific matters 
as it considers relevant this may take 
the form of cash andor share awards 
which may be in addition to the normal 
variable remuneration the policy is that 
the maximum payment under any such 
arrangements should be no more than 
the committee considers is required 
to provide reasonable compensation 
to the incoming director 
if the director will be required to relocate 
andor to travel periodically in order to 
take up the position it is the company’s 
policy to allow reasonable relocation 
travel and subsistence payments 
referable to actual costs involved 
where the committee considers it to be 
necessary to secure the appointment and 
so long as the position is consistent with 
the overall policy on total remuneration it 
may vary the remuneration structure andor 
agree bespoke arrangements if necessary 
to facilitate in unusual circumstances the 
recruitment of a director the committee 
will have the flexibility to rely on exemption 
942 of the listing rules the committee 
would only intend to use this to structure 
compensatory awards to facilitate 
recruitment of an executive and not 
to offer a “golden hello” unrelated 
to remuneration lost
in the case of an employee who is 
promoted to the position of director 
it is the company’s policy to honour 
preexisting remuneration commitments 
in accordance with their terms
nonexecutive director appointments 
will be through letters of appointment 
nonexecutive directors’ base fees 
including those of the chairman will 
be set at a competitive market level 
reflecting experience responsibility and 
time commitment fees are reviewed 
annually additional fees may be payable 
for the chairmanship of committees 
and for the additional responsibilities 
of the senior independent director 
22 33
23
777700
777700
salary and benefits
annual bonus
ltip
minimum
in line with 
expectations
maximum 53 777700
mike pulli
22 33
23
salary and benefits
annual bonus
ltip
minimum
in line with 
expectations
maximum 53
roddy murray
£389495
£389495
£389495
1picar13middlemrindd   39 20032014   122232 governance
annual report and accounts 2013 pace plc 40
directors’ remuneration policy 
continued
service contracts
the policy is that executive directors’ 
notice periods should not exceed one 
year each of the executive directors has 
a service contract that is terminable by 
the company on twelve months’ prior 
written notice or by the relevant director 
on not less than six months’ prior written 
notice at the option of the company each 
agreement may be terminated forthwith 
subject to the company paying a sum 
equivalent to twelve months’ salary 
benefits and pension contributions
it is the company’s policy to honour 
its obligations with regard to directors’ 
service agreements and where the 
employment of a director is terminated in 
accordance with the contractual process 
for payment in lieu of notice the executive 
will be paid the sum specified in the 
relevant service agreement as payable
each of the nonexecutive directors is 
appointed under a letter of appointment 
which is terminable at any time by the 
company without contractual notice 
where notice is not given termination 
is generally subject to payment of an 
amount equal to three months’ directors’ 
fees each of the directors has a letter of 
indemnity issued by the company which 
provides an indemnity in respect of 
liabilities incurred in the course of their 
office to the extent permitted by the 
company’s articles of association and 
the provisions of the companies act
exit policy
no service agreement includes 
any provision for the payment of 
compensation upon early termination
if an executive director’s employment is 
to be terminated the committee’s policy 
in respect of the contract of employment 
in the absence of a breach of the service 
agreement by the director is to agree a 
termination package based on the value 
of base salary and contractual pension 
amounts and benefits that would have 
accrued to the director during the 
contractual notice period the policy 
is that as is considered appropriate at 
the time the departing director may work 
or be placed on garden leave for all or part 
of his notice period or receive a payment 
in lieu of notice in accordance with the 
service agreement the committee will 
consider mitigation under the terms of 
the service agreement and generally 
to reduce the termination package to a 
leaving director when appropriate to do 
so having regard to the circumstances 
in addition where the director may be 
entitled to pursue a legal claim pace will 
be entitled to negotiate settlement terms 
financial or otherwise with the director 
that the committee considers to be 
reasonable in all the circumstances 
and in the best interests of the company 
with or without the benefit of legal advice 
and to enter into a settlement agreement 
with the director to effect both the terms 
agreed under the service agreement and 
any additional statutory or other claims
annual bonuses deferred into share 
awards under the company’s deferred 
share bonus plan will normally be retained 
by the director except where performance 
adjustment or clawback or other exceptional 
circumstances apply
the committee will consider whether 
share awards held by the director under 
the company’s performance share plan 
should lapse or vest any determination 
by the committee will be in accordance 
with the rules of the plan in summary 
the plan rules provide that awards can 
vest if employment ends by reason of 
retirement injury disability death or 
change of ownership vesting of awards 
will normally be in accordance with the 
normal performance and vesting cycle 
and be subject to satisfaction of the 
relevant performance conditions any 
awards which vest will normally be time 
prorated the committee will have 
discretion to allow a higher level 
of vesting if appropriate
if employment ends for any other reason 
the plan rules permit the committee to 
exercise its discretion in doing so the 
policy is that it will take account of all 
relevant circumstances in particular 
having regard to the performance of the 
company the director’s performance 
and behaviour towards the company 
during the performance cycle of the 
relevant awards
examples of circumstances in which 
the committee may decide to exercise 
its discretion to permit the vesting or 
increased vesting of longterm incentive 
awards may include continued good 
performance up to and following the giving 
of notice or the change of ownership and 
the director’s approach to the timing of 
departure and handover arrangements 
the committee has confirmed to the 
chief executive officer that in the event 
of termination in good leaver circumstances 
the discretion would be exercised in line 
with the policy and previous practice 
provided shareholder approval of this 
policy is maintained
historic options under the company’s 
share option plans may be exercised 
early within a specified period of leaving 
in specified good leaver circumstances 
or at the committee’s discretion or the 
committee may extend the period for 
exercise in such circumstances the policy 
is that the committee should retain the 
ability to exercise discretion in accordance 
with the rules but that performance 
conditions would be assessed in the 
advance of early exercise options may 
also be exercised in connection with a 
change of control or other corporate events 
and again the policy is that performance 
conditions would be assessed as at the 
date of the early exercise event and the 
committee retains the ability to exercise 
discretion in accordance with the rules
it is the company’s policy to honour 
preexisting award commitments in 
accordance with their terms and the terms 
of the relevant plans where the executive 
director participates in one or more of the 
company’s allemployee share plans his 
awards may vest or be exercisable on 
or following termination where permissible 
in accordance with the rules of the plan
continued
remuneration committee report
1picar13middlemrindd   40 20032014   122232 annual report and accounts 2013 pace plc 41
strategic report governance financial statements
annual report on remuneration 
this report gives details of remuneration earned by the directors in 2013
single total figure of remuneration for each director – audited
 
  salaryfees
000
benefits
000
pension
000
bonus
performance 
measured for 
2013 even 
if deferred
000
longterm 
incentives 
vesting 
in year 
000
total
000
mike pulli
2013 750 18 10 1677 16 2471
2012 750 18 233 1688 352 3041
roddy murray
2013 508 25 76 880 — 1489
2012 415 19 62 868 — 1364
allan leighton 2013 253 — — — — 253
2012 257 — — — — 257
pat chapmanpincher
2013 78 — — — — 78
2012 79 — — — — 79
john grant 2013 78 — — — — 78
2012 79 — — — — 79
mike inglis 2013 16 — — — — 16
2012 67 — — — — 67
amanda mesler 2013 65 — — — — 65
2012 22 — — — — 22
total 2013 1748 43 86 2557 16 4450
2012 1669 37 295 2556 352 4909
 remuneration referable only to the period of the financial year up to retirement from the board
notes to the single total figure 
table – audited
 — taxable benefits comprised of car 
allowance plus medical insurance 
for roddy murray
 — pension contributions for mike pulli 
were partially suspended during the 
year to adjust contributions to reflect 
an overpayment of contributions 
in 2012 he is entitled to a pension 
contributioncash allowance of 
185 of salary
 — bonus for mike pulli was 224 of 
base salary and comprised a normal 
bonus award of 118 of base salary 
of which one third is deferred into 
pace shares for a period of two years 
in addition he received an enhanced 
bonus award of 792000 which is 
deferred into pace shares for a period 
of three years subject to continued 
employment conditions 
 — bonus for roddy murray was 164 
of base salary and comprised a 
normal bonus award of 103 of base 
salary of which one third is deferred 
into pace shares for a period of two 
years in addition he received an 
enhanced bonus award of 330000 
which is deferred into pace shares 
for a period of three years subject to 
continued employment conditions
 — in each case bonus was calculated 
by reference to group adjusted 
ebita generated above the minimum 
target threshold of 187 million and 
the committee’s assessment of the 
executive director’s achievement of 
personal objectives the committee 
exercised its discretion to award 
enhanced bonuses based on the 
group cash management and net 
debt reduction achieved during 
the year
 — longterm incentives vesting in the 
year – in 2013 a us sharesave option 
granted in 2012 vested during the year 
and in 2012 the 2009 psp share award 
and an executive share option with 
a share option price of 750p vested 
during the year share options granted 
in 2010 under the 2005 unapproved 
share option plan and psp awards 
made under the performance share 
plan due to vest in the year did not meet 
the minimum required performance 
targets and lapsed in the year
 — gbp to us dollar exchange rate used 
to calculate remuneration paid in gbp 
2013 06397 2012 06312
1picar13middlemrindd   41 20032014   122232 governance
annual report and accounts 2013 pace plc 42
annual report on 
remuneration continued
statement of implementation 
of remuneration policy in 2014
2014 the directors’ remuneration will be 
in line with the policy
2014 bonus the bonus targets for 
executive directors have been set by 
reference to a range of group adjusted 
ebita and personal performance outcomes 
above 2014 expectations at the start of 
the year targets for executive directors 
to earn a potential enhanced bonus share 
award have been set by reference to cash 
management and personal performance 
target outcomes above current 
2014 expectations 
2014 psp the performance targets 
for the psp awards to be made to the 
executive directors have been set by 
reference to adjusted cumulative eps 
growth over a three year period with 
minimum 25 vesting at 6 per annum 
cumulative growth and 100 vesting 
above 12 per annum cumulative 
growth awards on this basis are 
expected to be made to executive 
directors in 2014
clawback and performance 
adjustment the annual bonus has for 
some years been subject to adjustment 
if cash management targets are not met 
for 2014 bonus deferred bonus and psp 
awards pace has now introduced additional 
clawback and performance adjustment in 
circumstances of misconduct restatement 
of accounts or a mistake in calculating 
the payout
statement of voting at the 2013 
annual general meeting
the voting on the directors’ remuneration 
report at the 2013 agm was as follows
shares
fordiscretionary 9131 204815563
against 869 19497430
withheld 4095228
relative importance of spend on pay
the following table shows the relative 
importance of spend on pay by reference 
to distribution by way of dividend and 
expenditure on research and development 
which is considered appropriate for a 
technology company the values have 
been extracted from the information in 
the financial statements for each year
continued
remuneration committee report
2013
2012
overall expenditure 
on group pay
distribution by way of 
dividend to shareholders
overall spend on pay to directors
expenditure on rd
0 50000000 100000000 150000000 200000000
relative spend on pay
1picar13middlemrindd   42 20032014   122232 annual report and accounts 2013 pace plc 43
strategic report governance financial statements
tsr performance graph
the ftse allshare electronic  electrical equipment index was selected as the most appropriate benchmark index against 
which to compare the company’s performance having regard to the principal activities of the group
five year ceo total emoluments
financial year ceo
single total figure 
of remuneration
annual 
variable element
 of maximum 
including deferred 
element
pspshare options 
vesting outcome
 of maximum
2013 mike pulli 2470632 9938 0
2012 mike pulli 3040179 10000 100
2011 mike pulli 79116 4619 100
2011 neil gaydon 1043130 000 100
2010 neil gaydon 1980900 6000 100
2009 neil gaydon 5495034 10000 100
 prorata from date of appointment 14 december 2011
it is inherent in the methodology for calculating the single figure of remuneration that for a particular year it includes amounts 
that the executive did not actually receive in that year due to deferral or due to retaining options after the date they first became 
exercisable in the december of the 2011 financial year mike pulli replaced neil gaydon as ceo it would be misleading to show 
the full year’s total remuneration for each so time prorating has been applied
 pace plc   ftse all share electronic  electrical equipment
dec 08
350p
300p
250p
200p
150p
100p
50p
0p
dec 10 dec 11 dec 12 dec 13 dec 09
1picar13middlemrindd   43 20032014   122232 governance
annual report and accounts 2013 pace plc 44
annual report on remuneration continued
percentage change in the remuneration of the chief executive compared with the remuneration of employees
salary
2012
salary
2013
salary  
change
bonus
2012
bonus
2013
bonus  
change
taxable
benefits
2012
taxable
benefits
2013
 change 
in benefits
ceo 750000 750000 000 1 688000 1673000 089 18000 18000 —
group 61568 62690 182 7547 7491 074 3059 3669 1994
the ceo’s salary bonus and taxable benefits are compared against the average across the group
statement of directors’ shareholdings and share interests – audited
the committee operates individual shareholding target requirements for executive directors with a requirement subject 
to a discretion of the committee for such executives to retain a portion of any net awards ie after tax and exercise cost of 
newly vested sharebased incentives made after 2009 until the target shareholding level is reached the target shareholding is 
approximately 100 of the executive’s annual salary up to 50 of shares earned but held under the company’s deferred share 
bonus plan are deemed to count towards the ownership target each executive is required to achieve target ownership level 
within a period of five years mike pulli and roddy murray have achieved the required minimum shareholding 
nonexecutive directors are encouraged to build up a meaningful shareholding allan leighton purchased a significant individual 
shareholding on appointment details of the appointment share awards made to him in 2011 as a oneoff exception to policy 
have been fully disclosed in these accounts and in the 2011 and 2012 accounts
executive directors’ share ownership guidelines – audited
shareholding 
requirement
 of 
salaryvalue
shares
owned
1
performance 
shares
2
deferred 
bonus 
shares
3
total 
interest 
in shares value
4
 of salary 
held under
 shareholding
 requirement 
mike pulli 100
750000
 531379 427614 246960 1205953 5670637 756
roddy murray 100
£325000
 100000 — 73551 173551 522040 161 
1 shares owned outright and by connected persons
2 share options where performance conditions had been met at 1 january 2014
3  share awards representing deferred bonus outcome for 2011 and 2012 subject to continued employment conditions but not additional performance 
conditions 50 of dsb award shares only 
4 the valuation was calculated by multiplying the total interest in shares by the average share price over the three months prior to 1 january 2014
directors interests’ in pace plc shares – audited
shares owned
1
performance 
shares
2
deferred 
bonus
3
unvested 
share 
optionsawards
4
vested but 
unexercised
share 
options
5
vested
exercised 
share
options
6
mike pulli 531379 923019 493920 1646734 427614 125674
roddy murray 100000 500103 147101 728801 — —
allan leighton 169405 — — 938810 — —
pat chapmanpincher 15551 — — — — —
john grant 65000 — — — — —
amanda mesler — — — — — —
1 shares owned outright and by connected persons
2 share awards where performance conditions had not been met as at 31 december 2013
 — shares awarded to mike pulli under the performance share plan
 — 181061 share awards vest on 4 april 2014 subject to minimum performance conditions being met 
 — 523519 share awards vest on 14 march 2015 subject to minimum performance conditions being met and 
 — 218439 share awards vest on 21 march 2016 subject to minimum performance conditions being met
continued
remuneration committee report
1picar13middlemrindd   44 20032014   122232 annual report and accounts 2013 pace plc 45
strategic report governance financial statements
 — shares awarded to roddy murray under the performance share plan
 — 358799 share awards vest on 14 march 2015 and will expire on 14 march 2022 subject to minimum performance conditions being met and 
 — 141304 share awards vest on 21 march 2016 and will expire in 21 march 2023 subject to minimum performance conditions being met
  share awards are subject to performance conditions based on cumulative three year adjusted pbt targets for the group for awards made in 2011 
share awards made from 2012 onwards are subject to three year targets based on cumulative adjusted ebita for the group 
3  share awards representing 100 of deferred bonus outcome for 201213 and subject to continued employment conditions but no additional 
performance conditions 
4 share optionsawards where performance conditions had not been met as at 31 december 2013
 — shares granted to mike pulli under the 2005 unapproved share option plan
 — 250000 share options vest on 4 april 2014 with an expiry date of 4 april 2021 and an exercise price of 1535p 
 — 1395275 share options vest on 15 december 2014 with an expiry date of 15 december 2021 and an exercise price of 6975p and
 — 1459 sharesave share options granted to mike pulli vest on 4 june 2014 and will expire on 5 september 2014 
 — shares granted to roddy murray under the 2005 approved and unapproved share option plans
 — 32967 approved share options vest on 14 march 2015 with an expiry date of 14 march 2022 and an exercise price of 910p 
 — 681318 share options vest on 14 march 2015 with an expiry date of 14 march 2022 and an exercise price of 910p and
 — 14516 sharesave share options granted to roddy murray vest on 1 june 2015 and will expire on 30 november 2015
 allan leighton appointment share award made 31 may 2011 as referred to in the remuneration policy – nonexecutive directors
  share options granted under the 2005 approved and unapproved share option plans are subject to performance conditions based on cumulative 
adjusted eps growth of 4 above inflation per annum for 25 to vest cumulative growth of 15 above inflation is required for 100 to vest 
5 share options where performance conditions had been met at 1 january 2014 
 — options granted to mike pulli under the 2005 unapproved share option plan
 — 177614 share options vested on 24 june 2011 with an expiry date of 24 june 2018 and an exercise price of 855p and
 — 250000 share options vested on 11 march 2012 with an expiry date of 11 march 2019 and an exercise price of 750p 
6  120474 deferred share bonus share awards made in 2011 vested on 28 february 2013 and were released on 5 march 2013  
5200 sharesave share options vested on 3 june 2013 and were exercised on 20 august 2013 
awards during 2013 – audited
the tables below show details of the awards to each director during the year
performance shares
date of grant
number of 
shares over 
which awards 
granted
market price 
at date 
of grant face value
 of face 
value that 
would vest 
at threshold 
performance vesting date
mike pulli 21032013 218439 23000p £50240970 25 21032016
roddy murray 21032013 141304 23000p £32499920 25 21032016
the executive directors received performance share plan share awards on 21 march 2013 in the form of a nilcost contingent 
share award to mike pulli and a nilcost option to roddy murray the awards were based on 100 of base salary and valued 
using the average three day midmarket price of an ordinary share in the company at close of business from 6 march 2013 
to 8 march 2013 being the three trading dates following the company results announcement
under normal circumstances the options will not become exercisable until the performance conditions are determined after 
the end of the three year performance period 
the level of vesting is dependent on the achievement of the following performance conditions 
cumulative adjusted ebita over three years  of total award shares vesting
673 million 100 
between 673 million and 612 million between 25 and 100 prorata
612 million 25
less than 612 million nil
  ebita adjusted to exclude the amortisation of other intangibles exceptional items and other items that the committee determines to be appropriate 
to ensure it reflects underlying longterm performance
1picar13middlemrindd   45 20032014   122233 governance
annual report and accounts 2013 pace plc 46
annual report on remuneration continued
awards during 2013 – audited continued
deferred share awards – audited
 date of grant
number 
of shares 
over which 
awards 
granted
market price 
at date of grant face value vesting date
mike pulli 21032013 89833 23000p £20661590 29032015
 21032013 221989 23000p £51057470 29032016
311822 £71719060
roddy murray 21032013 47101 23000p £10833230 29032015
 21032013 100000 23000p £23000000 29032016
  147101 £33833230 
the executive directors received deferred share bonus plan awards on 21 march 2013 in the form of a nilcost contingent share 
award to mike pulli and a nilcost option to roddy murray the awards were based on the average three day midmarket price 
of an ordinary share in the company at close of business from 6 march 2013 to 8 march 2013 being the three trading dates 
following the company results announcement the awards in each case are subject to continuing employment conditions 
but no attached performance conditions
under normal circumstances the awards will not become exercisable until the end of the two year vesting period in respect of 
2012 the committee awarded an enhanced bonus to mike pulli taking his overall annual bonus up to the maximum level of 225 
of salary and an enhanced bonus of 100000 shares representing approximately 71 of salary to roddy murray based on the 
cash management performance of the business and net debt reduction during the year each of these enhanced bonus awards 
is deferred into shares for a longer deferred period of three years
savingsrelated share options – audited
date of grant
number of 
shares over 
which option 
granted
market price 
on date of grant face value exercise period
mike pulli 24042013 1459 19720p £2877 04062014 to
 05092014
roddy murray — — — — —
payments to past directors – audited
deferred share bonus awards made to former executive directors which had been granted to them in prior years and disclosed 
previously vested during 2013 pace’s policy where it was agreed that awards would be retained was that 100 of the deferred 
share bonus awards be allowed to vest at the normal vesting date the share price at vesting on 5 march 2013 was 23320p
the respective vesting levels were neil gaydon 148355 deferred share bonus award shares stuart hall 96753 deferred share 
bonus award shares david mckinney 93528 deferred share bonus award shares
pat chapmanpincher
chairman of the remuneration committee
continued
remuneration committee report
1picar13middlemrindd   46 20032014   122233 annual report and accounts 2013 pace plc 47
strategic report governance financial statements
directors’ report
the directors present their report 
together with the audited consolidated 
financial statements for the year ended 
31 december 2013
principal activities
the group’s principal activities are the 
development design and distribution 
of technologies products and services 
for managed subscription television 
telephone and broadband services and 
the provision of engineering design and 
software applications to its customers 
the group also provides related support 
services including systems integration 
and customer care centres 
strategic report
the companies act 2006 requires us 
to present a fair review of the business 
during the year to 31 december 2013 
and of the position of the group at the 
end of the financial year along with a 
description of the principal risks and 
uncertainties faced
the strategic report can be found  
on pages 1 to 23
corporate governance statement
the disclosure and transparency rules 
require certain information to be included 
in a corporate governance statement in 
the directors’ report information that 
fulfils the requirements of the corporate 
governance statement can be found in 
the corporate governance report on 
pages 26 to 28 and is incorporated into 
this directors’ report by reference
disclaimer
the purpose of this annual report and 
accounts is to provide information to the 
members of the company the annual 
report and accounts have been prepared 
for and only for the members of the 
company as a body and no other 
persons the company its directors and 
employees agents or advisers do not 
accept or assume responsibility to any 
other person to whom this document is 
shown or into whose hands it may come 
and any such responsibility or liability 
is expressly disclaimed 
the annual report and accounts contain 
certain forwardlooking statements with 
respect to the operations performance and 
financial condition of the group by their 
nature these statements involve uncertainty 
since future events and circumstances 
can cause results and developments to 
differ materially from those anticipated 
the forwardlooking statements reflect 
knowledge and information available at the 
date of preparation of this annual report 
and accounts and the company undertakes 
no obligation to update these forward
looking statements nothing in this annual 
report and accounts should be construed 
as a profit forecast
financial results 
the consolidated income statement for 
the year is set out on page 54 and the 
results are summarised in the financial 
review on pages 18 to 20 the profit before 
tax was 1308 million 2012 801 million 
and the profit before tax interest exceptional 
items and amortisation of other intangibles 
was 1936 million 2012 1581 million
dividend
the directors recommend the payment of 
a final dividend of 366 cents per ordinary 
share 2012 306 cents to be paid on 
4 july 2014 to shareholders on the register 
at the close of business on 6 june 2014 
an interim dividend of 183 cents per 
ordinary share was paid during the year 
2012 144 cents 
dividends will be paid in sterling 
equivalent to 2192 pence per ordinary 
share this is based on an exchange rate 
of £1670 being the rate applicable 
on 3 march 2014
going concern
the following statement has been included 
in accordance with the listing rules 
based on normal business planning and 
control procedures the directors have a 
reasonable expectation that the company 
and the group have adequate resources 
including committed finance facilities to 
continue in operational existence for the 
foreseeable future for this reason the 
directors continue to adopt the going 
concern basis in preparing the accounts
share capital
details of the company’s share capital 
including changes for the year the rights 
attaching to the ordinary shares and 
restrictions on their transfer are contained 
in note 21 and are incorporated in this 
report by reference
political donations
no political donations were made 
in the year
1picar13middlemrindd   47 20032014   122233 governance
annual report and accounts 2013 pace plc 48
directors
the names of the current directors of 
the company are shown on page 95 and 
all those listed held office throughout the 
year during the year mike inglis retired 
24 april 2013 also held office as a director
all the directors will retire at the forthcoming 
annual general meeting of the company 
and offer themselves for reelection the 
board has determined that all of the 
directors continue to make a very effective 
contribution to the board and demonstrate 
a high level of commitment details of the 
executive directors’ service contracts 
and the nonexecutive directors’ letters 
of appointment are disclosed in the 
remuneration report on page 40 
no director had a significant contract 
other than a service contract or contract 
for services with any member of the group 
at any time during the year further details 
relating to the appointment removal and 
powers of directors are contained in 
note 21 and are incorporated in 
this report by reference 
as at the date of this report indemnities 
which are qualifying third party indemnity 
provisions under the companies act 2006 
are in place under which the company has 
agreed to indemnify the directors of the 
company and the former directors of the 
company who held office during the year 
to the extent permitted by law and by 
the company’s articles of association in 
respect of all liabilities incurred in connection 
with the performance of their duties as a 
director of the company or its subsidiaries 
copies of these indemnities are available for 
review at the company’s registered office
information provided by the company 
pursuant to the disclosure and transparency 
rules is publicly available via the regulatory 
information services and on our website 
wwwpacecom
authority to purchase own shares
at the annual general meeting in 2013 the 
company was authorised by shareholders 
to purchase up to 46707801 of its own 
ordinary shares representing 15 of it 
issued share capital as at march 2013 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 2014 and a resolution to renew it will 
be proposed at that meeting
greenhouse gas emissions
all disclosures concerning the group’s 
greenhouse gas emissions as required 
to be disclosed under the companies act 
2006 strategic report and directors’ 
report regulations 2013 are contained 
in the corporate responsibility report 
forming part of the strategic report 
on pages 21 to 23
significant shareholdings
the company has been notified in accordance with the disclosure and transparency rules of the following interests of 3 
or more in its ordinary share capital 
number of shares
 of issued 
share capital
prudential plc group of companies 35599554 1134
schroders plc 34189630 1089
david hood and related family trusts 16117539 513
old mutual 15859145 505
norges bank 15607286 497
continued
directors’ report
1picar13middlemrindd   48 20032014   122233 annual report and accounts 2013 pace plc 49
strategic report governance financial statements
statement of directors’ 
responsibilities 
the directors are responsible for 
preparing the annual report the directors’ 
remuneration report and the group and 
parent company financial statements 
in accordance with applicable law 
and regulations 
company law requires the directors 
to prepare financial statements for each 
financial year under that law they are 
required to prepare the group financial 
statements in accordance with ifrss as 
adopted by the eu and applicable law 
and have elected to prepare the parent 
company financial statements on the 
same basis 
under company law the directors must 
not approve the financial statements 
unless they are satisfied that they give 
a true and fair view of the state of affairs 
of the group and parent company and 
of their profit or loss for that period in 
preparing each of the group and parent 
company financial statements the 
directors are required to 
 — select suitable accounting policies 
and then apply them consistently 
 — make judgements and estimates 
that are reasonable and prudent 
 — state whether they have been prepared 
in accordance with ifrss as adopted 
by the eu and 
 — prepare the financial statements 
on the going concern basis unless 
it is inappropriate to presume that 
the group and the parent company 
will continue in business 
the directors are responsible for keeping 
adequate accounting records that are 
sufficient to show and explain the company’s 
transactions and disclose with reasonable 
accuracy at any time the financial position 
of the parent company and enable them 
to ensure that its financial statements and 
the directors’ remuneration report comply 
with the companies act 2006 they have 
general responsibility for taking such steps 
as are reasonably open to them to 
safeguard the assets of the group 
and to prevent and detect fraud 
and other irregularities 
under applicable law and regulations 
the directors are also responsible for 
preparing a strategic report directors’ 
report directors’ remuneration report 
and corporate governance statement 
that comply with that law and 
those regulations 
the directors are responsible for the 
maintenance and integrity of the corporate 
and financial information included on the 
company’s website legislation in the uk 
governing the preparation and dissemination 
of financial statements may differ from 
legislation in other jurisdictions
the directors as at the date of this 
report whose names and functions are 
listed in the board of directors on page 24 
confirm that to the best of their knowledge
 — the financial statements which 
have been prepared in accordance 
with the applicable set of accounting 
standards give a true and fair view of 
the assets liabilities financial position 
and profit or loss of the company 
and the undertakings included in the 
consolidation taken as a whole and
 — the strategic report includes a 
fair review of the development and 
performance of the business and 
the position of the company and 
the undertakings included in the 
consolidation taken as a whole 
together with a description of the 
principal risks and uncertainties 
that they face
each of the persons who is a director as 
at the date of this report confirms that
 — so far as the director is aware there is no 
relevant audit information of which the 
company’s auditors are unaware and
 — the director has taken all the steps 
that he or she ought to have taken 
as a director in order to make himself
herself aware of any relevant audit 
information and to establish that 
the company’s auditors are aware 
of that information
this confirmation is given and should 
be interpreted in accordance with the 
provisions of section 418 of the companies 
act 2006 in addition the directors as at 
the date of this report consider that the 
annual report and accounts taken as a 
whole is fair balanced and understandable 
and provides the information necessary 
for shareholders to assess the company’s 
performance business model and strategy
by order of the board
anthony j dixon
company secretary
4 march 2014
1picar13middlemrindd   49 20032014   122233 financial statements
contents
financial statements
51 independent auditors’ report
54 consolidated income statement
55  consolidated statement of comprehensive income
56 consolidated balance sheet
57 company balance sheet
58  statements of changes in shareholders’ equity
59  consolidated statement of cash flows
60 company statement of cash flows
61 notes
95 directors secretary and advisers
96  five year record and shareholder information
annual report and accounts 2013 pace plc 50
1picar13backmrindd   50 20032014   122151 annual report and accounts 2013 pace plc 51
strategic report governance financial statements
to the members of pace plc only
independent auditors’ report
opinions and conclusions arising from our audit
1 our opinion on the financial statements is unmodified 
we have audited the financial statements of pace plc for the year ended 31 december 2013 set out on pages 54 to 94 in our opinion 
 — the financial statements give a true and fair view of the state of the group’s and of the parent company’s affairs 
as at 31 december 2013 and of the group’s profit for the year then ended 
 — the group financial statements have been properly prepared in accordance with international financial reporting standards 
as adopted by the european union ifrss as adopted by the eu
 — the parent company financial statements have been properly prepared in accordance with ifrss as adopted by the eu 
and as applied in accordance with the provisions of the companies act 2006 and
 — the financial statements have been prepared in accordance with the requirements of the companies act 2006 and 
as regards the group financial statements article 4 of the ias regulation 
2 our assessment of risks of material misstatement
in arriving at our audit opinion above on the financial statements the risks of material misstatement that had the greatest effect 
on our audit were as follows 
revenue recognition 24692 million
refer to page 31 audit committee report page 62 accounting policy and pages 68 to 69 financial disclosures
 — the risk – revenue consists of hardware sales software and services on occasion contracted for within a single arrangement 
accounting for arrangements involving multiple elements can be complex as in many cases the total contract value is allocated 
to each identified component on a relative fair value basis and recognised as revenue as the related goods or services are 
delivered the identification of components and allocation and recognition of revenue relating to components is a key area 
of judgement for our audit
 — our response – our audit procedures included among others testing controls relating to the identification of components 
within contracts the allocation of revenue to components and the recognition of revenue for those components we read 
significant new contracts entered into during the year to understand the contractual terms and to corroborate the components 
identified by the group we assessed the group’s allocation of revenue on a relative fair value basis to identified components 
of contracts through analysis of revenue and margins as part of our assessment of amounts recognised as revenue in the 
period we recalculated the deferred revenue balance at the balance sheet date we also considered the adequacy of the 
group’s disclosures in respect of revenue and deferred revenue 
royalty under negotiation provisions 369 million
refer to page 31 audit committee report page 67 accounting policy and page 86 financial disclosures
 — the risk – the group’s products incorporate third party technology due to the complexity of intellectual property rights 
arrangements the group is exposed to the risk of infringement of third party rights potential claims can be submitted many 
years after a product has been deployed and extensive negotiation is commonplace determining whether to recognise a 
provision and the amount of the provision to be recognised requires the group to make judgements and estimates that 
are inherently subjective
 — our response – our audit procedures included among others considering the extent to which the directors’ estimates takes 
into account a balanced assessment of the latest available information on the ongoing claims at the balance sheet date and 
the accuracy and reliability of the sources of that information this included discussing significant claims with the group’s 
inhouse patent expert and legal teams and for the most significant claims making enquiries of the group’s external legal 
adviser we read correspondence between the group and individual claimants we read information published by claimants 
such as press releases highlighting their successes against other parties as part of our assessment of the strength of the 
claimant’s case we considered the group’s historical experience in assessing the level of provision required by comparing 
actual outcomes from previous claims to provisions made we have also considered the adequacy of the group’s disclosures 
in respect of royalty provisions
financial statements
1picar13backmrindd   51 20032014   122151 financial statements
annual report and accounts 2013 pace plc 52
to the members of pace plc only 
continued
independent auditors’ report
opinions and conclusions arising from our audit continued
2 our assessment of risks of material misstatement continued
capitalised development costs 578 million
refer to page 31 audit committee report page 63 accounting policy and pages 73 to 75 financial disclosures
 — the risk – project development costs are required to be capitalised and subsequently amortised over their useful life if they 
meet the criteria of relevant accounting standards which require among other things an assessment of the future outturn of 
the project the group conducts a significant level of development activity the group has to apply judgement in identifying 
projects meeting the criteria for capitalisation under the requirements of accounting standards and to capture accurate time 
and costs information for those projects there is a risk that capitalisation occurs on projects that do not meet the criteria 
that incorrect amounts are allocated to projects or that projects are not as successful as initially anticipated leading 
to overcapitalisation and the need for impairment
 — our response – our audit procedures included among others testing controls over the authorisation of new development 
projects and the monitoring of ongoing development projects we agreed costs assigned to a sample of larger value projects 
to time recorded or to invoices considered the reasonableness of labour rates used and compared the chosen amortisation 
periods to the forecast sales information for each project as part of our assessment of the benefits expected to be generated 
for the group from these projects which is a key factor in determining whether capitalisation is appropriate we considered the 
group’s project cash flow forecasts we assessed the appropriateness of key inputs such as the value and timing of sales by 
reference to our knowledge of the group’s business our experience of the industry and consideration of publicly available 
information such as press releases we have also considered the adequacy of the group’s disclosures in respect of 
development costs
3 our application of materiality and an overview of the scope of our audit
the materiality for the group financial statements as a whole was set at 7500000 this has been determined with reference 
to a benchmark of group profit before taxation of which it is 6 which we consider to be one of the principal considerations 
for members of the company in assessing the financial performance of the group
we agreed with the audit committee to report to it all corrected and uncorrected misstatements we identified through our audit 
with a value in excess of 375000 in addition to other audit misstatements below that threshold that we believe warranted 
reporting on qualitative grounds
audits for group reporting purposes were performed by component auditors at the key reporting components in the following 
locations west coast united states france and brazil and by the group audit team in the following locations united kingdom 
and east coast united states these group procedures covered 100 of total group revenue 96 of group profit before taxation 
and 100 of total group assets the segment disclosures in note 3 set out the individual significance of a specific country
the audits undertaken for group reporting purposes at the key reporting components of the group were all performed 
to materiality levels set by the group audit team these materiality levels were set individually for each component and ranged 
from 35 million to 5 million 
detailed instructions were sent to all the component auditors these instructions covered the significant audit areas that should 
be covered by the component auditors which included the relevant risks of material misstatement detailed above and set out 
the information required to be reported back to the group audit team the group audit team visited the following locations 
united kingdom and east coast united states telephone meetings were also held with the auditors at the locations that 
were not physically visited by the group team 
4 our opinion on other matters prescribed by the companies act 2006 is unmodified 
in our opinion 
 — the part of the directors’ remuneration report to be audited has been properly prepared in accordance with the companies act 2006 
 — the information given in the strategic report and directors’ report for the financial year for which the financial statements 
are prepared is consistent with the financial statements and 
 — the information given in the framework of corporate governance set out on pages 26 to 28 with respect to internal control 
and risk management systems in relation to financial reporting processes and about share capital structures is consistent 
with the financial statements
1picar13backmrindd   52 20032014   122151 annual report and accounts 2013 pace plc 53
strategic report governance financial statements
opinions and conclusions arising from our audit continued
5 we have nothing to report in respect of the matters on which we are required to report by exception 
under isas uk and ireland we are required to report to you if based on the knowledge we acquired during our audit we have 
identified other information in the annual report that contains a material inconsistency with either that knowledge or the financial 
statements a material misstatement of fact or that is otherwise misleading 
in particular we are required to report to you if 
 — we have identified material inconsistencies between the knowledge we acquired during our audit and the directors’ statement 
that they consider that the annual report and financial statements taken as a whole is fair balanced and understandable and 
provides the information necessary for shareholders to assess the group’s performance business model and strategy or
 — the audit committee report does not appropriately address matters communicated by us to the audit committee
under the companies act 2006 we are required to report to you if in our opinion
 — adequate accounting records have not been kept by the parent company or returns adequate for our audit have not been 
received from branches not visited by us or 
 — the parent company financial statements and the part of the directors’ remuneration report to be audited are not 
in agreement with the accounting records and returns or 
 — certain disclosures of directors’ remuneration specified by law are not made or 
 — we have not received all the information and explanations we require for our audit or
 — a corporate governance statement has not been prepared by the company 
under the listing rules we are required to review 
 — the directors’ statement set out on page 47 in relation to going concern and 
 — the part of the framework of corporate governance on pages 26 to 28 relating to the company’s compliance with the nine 
provisions of the 2010 uk corporate governance code specified for our review
we have nothing to report in respect of the above responsibilities
scope of report and responsibilities
as explained more fully in the statement of directors’ responsibilities set out on page 49 the directors are responsible for the 
preparation of the financial statements and for being satisfied that they give a true and fair view a description of the scope of 
an audit of accounts is provided on the financial reporting council’s website at wwwfrcorgukauditscopeukprivate this report 
is made solely to the company’s members as a body and is subject to important explanations and disclaimers regarding our 
responsibilities published on our website at wwwkpmgcomukauditscopeukco2013a which are incorporated into this report 
as if set out in full and should be read to provide an understanding of the purpose of this report the work we have undertaken 
and the basis of our opinions
mike barradell senior statutory auditor 
for and on behalf of kpmg audit plc statutory auditor 
chartered accountants 
1 the embankment
neville street
leeds
ls1 4dw 
4 march 2014
1picar13backmrindd   53 20032014   122151 financial statements
annual report and accounts 2013 pace plc 54
for the year ended 31 december 2013
2013 2012
notes m m
revenue 3 24692 24034
cost of sales 20210 19704
gross profit 4482 4330
administrative expenses
 research and development expenditure 4 1326 1554
 other administrative expenses
  before exceptional costs 4 1220 1195
  exceptional costs 5 122 125
 amortisation of other intangibles 11 426 518
total administrative expenses 3094 3392
operating profit 1388 938
finance income – interest receivable 6 18 05
finance expenses – interest payable 6 98 142
profit before tax 1308 801
tax charge 8 341 217
profit for the year 967 584
profit attributable to
equity holders of the company 967 584
earnings per ordinary share
basic earnings per ordinary share cents 9 312 194
diluted earnings per ordinary share cents 9 298 185
consolidated income statement
1picar13backmrindd   54 20032014   122151 annual report and accounts 2013 pace plc 55
strategic report governance financial statements
financial statements
for the year ended 31 december 2013
consolidated statement of comprehensive income
2013 2012
m m
profit for the year 967 584
other comprehensive income
items that are or may be subsequently reclassified to profit and loss
exchange differences on translating foreign operations 48 27
net change in fair value of cash flow hedges transferred to profit or loss gross of tax 27 112
deferred tax adjustment on above 07 30
effective portion of changes in fair value of cash flow hedges gross of tax 47 49
deferred tax adjustment on above 12 13
other comprehensive income for the year net of tax 33 73
total comprehensive income for the year 934 511
attributable to
equity holders of the company 934 511
1picar13backmrindd   55 20032014   122151 financial statements
annual report and accounts 2013 pace plc 56
at 31 december 2013
2013 2012
notes m m
assets
noncurrent assets
property plant and equipment 12 600 628
intangible assets – goodwill 11 3426 3379
intangible assets – other intangibles 11 1231 1662
intangible assets – development expenditure 11 644 563
deferred tax assets 14 212 374
total noncurrent assets 6113 6606
current assets
inventories 15 1568 1821
trade and other receivables 16 4687 5587
cash and cash equivalents 18 330 747
current tax assets 13 120
total current assets 6598 8275
total assets 12711 14881
equity
issued capital 21 290 287
share premium 22 837 790
merger reserve 23 1099 1099
hedging reserve 02 17
translation reserve 596 548
retained earnings 24 3842 2990
total equity 5470 4601
liabilities
noncurrent liabilities
deferred tax liabilities 14 563 703
provisions 20 603 515
borrowings 18 — 747
total noncurrent liabilities 1166 1965
current liabilities
trade and other payables 17 5671 6318
current tax liabilities 85 107
provisions 20 319 257
borrowings 18 — 1633
total current liabilities 6075 8315
total liabilities 7241 10280
total equity and liabilities 12711 14881
these financial statements were approved by the board of directors on 4 march 2014 and were signed on its behalf by
michael pulli  roddy murray
chief executive officer chief financial officer
consolidated balance sheet
1picar13backmrindd   56 20032014   122152 annual report and accounts 2013 pace plc 57
strategic report governance financial statements
financial statements
at 31 december 2013
company balance sheet
2013 2012
notes m m
assets
noncurrent assets
property plant and equipment 12 348 337
intangible assets – other intangibles 11 109 —
intangible assets – development expenditure 11 578 519
investments in group and other companies 13 4486 4486
loans to group companies 13 3115 1743
deferred tax assets 14 38 50
total noncurrent assets 8674 7135
current assets
inventories 15 209 354
trade and other receivables 16 3496 5969
cash and cash equivalents 110 447
current tax assets — 99
total current assets 3815 6869
total assets 12489 14004
equity
issued capital 21 290 287
share premium 22 837 790
merger reserve 23 1099 1099
hedging reserve 07 07
translation reserve 525 525
retained earnings 24 2949 2456
total equity 4657 4100
liabilities
noncurrent liabilities
deferred tax liabilities 14 96 106
provisions 20 393 317
borrowings 18 — 747
total noncurrent liabilities 489 1170
current liabilities
trade and other payables 17 7047 6954
current tax liabilities 64 26
provisions 20 232 121
borrowings 18 — 1633
total current liabilities 7343 8734
total liabilities 7832 9904
total equity and liabilities 12489 14004
these financial statements were approved by the board of directors on 4 march 2014 and were signed on its behalf by
michael pulli  roddy murray
chief executive officer chief financial officer
pace plc registered number 01672847
1picar13backmrindd   57 20032014   122152 financial statements
annual report and accounts 2013 pace plc 58
for the year ended 31 december 2013
share share merger hedging translation retained total
capital premium reserve reserve reserve earnings equity
group m m m m m m m
balance at january 2012 283 731 1099 29 521 2450 4071
profit for the year — — — — — 584 584
other comprehensive income — — — 46 27 — 73
total comprehensive income for the year — — — 46 27 584 511
transactions with owners
 dividends to equity shareholders — — — — — 123 123
 employee share incentive charges — — — — — 79 79
 issue of shares 04 59 — — — — 63
balance at december 2012 287 790 1099 17 548 2990 4601
profit for the year — — — — — 967 967
other comprehensive income — — — 15 48 — 33
total comprehensive income for the year — — — 15 48 967 934
transactions with owners
 dividends to equity shareholders — — — — — 156 156
 employee share incentive charges — — — — — 41 41
 issue of shares 03 47 — — — — 50
balance at december 2013 290 837 1099 02 596 3842 5470
share share merger hedging translation retained total
capital premium reserve reserve reserve earnings equity
company m m m m m m m
balance at january 2012 283 731 1099 28 525 2358 3974
profit for the year — — — — — 142 142
other comprehensive income — — — 35 — — 35
total comprehensive income for the year — — — 35 — 142 107
transactions with owners
 dividends to equity shareholders — — — — — 123 123
 employee share incentive charges — — — — — 79 79
 issue of shares 04 59 — — — — 63
balance at december 2012 287 790 1099 07 525 2456 4100
profit for the year — — — — — 608 608
other comprehensive income — — — 14 — — 14
total comprehensive income for the year — — — 14 — 608 622
transactions with owners
 dividends to equity shareholders — — — — — 156 156
 employee share incentive charges — — — — — 41 41
 issue of shares 03 47 — — — — 50
balance at december 2013 290 837 1099 07 525 2949 4657
statements of changes in shareholders’ equity
1picar13backmrindd   58 20032014   122152 annual report and accounts 2013 pace plc 59
strategic report governance financial statements
financial statements
for the year ended 31 december 2013
consolidated statement of cash flows
2013 2012
m m
cash flows from operating activities
profit before tax 1308 801
adjustments for
 sharebased payments charge 41 79
 depreciation of property plant and equipment 250 210
 amortisation of development expenditure 456 543
 amortisation of other intangibles 426 518
 loss on sale of property plant and equipment 02 —
 net finance expense 80 137
 movement in trade and other receivables 855 1623
 movement in trade and other payables 672 2585
 movement in inventories 242 330
 movement in provisions 144 56
cash generated from operations 3132 2976
interest paid 77 116
tax paid 238 238
net cash generated from operating activities 2817 2622
cash flows from investing activities
acquisition of subsidiaries net of cash acquired — 157
purchase of property plant and equipment 216 226
development expenditure 529 574
interest received 18 05
net cash used in investing activities 727 952
cash flows from financing activities
repayment of longterm debt 2401 1350
proceeds from issue of share capital 50 63
dividend paid 156 123
net cash used in financing activities 2507 1410
net change in cash and cash equivalents 417 260
cash and cash equivalents at the start of the year 747 487
cash and cash equivalents at the end of the year 330 747
1picar13backmrindd   59 20032014   122152 financial statements
annual report and accounts 2013 pace plc 60
for the year ended 31 december 2013
2013 2012
m m
cash flows from operating activities
profit before tax 764 100
adjustments for
 sharebased payments charge 41 79
 depreciation of property plant and equipment 141 116
 loss on sale of property plant and equipment — —
 amortisation of development expenditure 385 433
 net finance expense 19 63
 movement in trade and other receivables 2456 1668
 movement in trade and other payables 1249 3231
 movement in inventories 146 136
 movement in provisions 189 109
cash generated from operations 2892 2599
interest paid 66 37
tax paid 18 09
net cash generated from operating activities 2808 2553
cash flows from investing activities
acquisition of subsidiaries net of cash acquired — 157
purchase of property plant and equipment 153 158
purchase of intangible noncurrent assets 109 —
development expenditure 444 521
interest received 68 02
net cash used in investing activities 638 834
cash flows from financing activities
repayment of longterm debt 2401 1350
proceeds from issue of share capital 50 63
dividend paid 156 123
net cash used in financing activities 2507 1410
net change in cash and cash equivalents 337 309
cash and cash equivalents at the start of the year 447 138
cash and cash equivalents at the end of the year 110 447
company statement of cash flows
1picar13backmrindd   60 20032014   122152 annual report and accounts 2013 pace plc 61
strategic report governance financial statements
financial statements
notes
1 basis of preparation and business environment
the following accounting policies have been applied consistently in dealing with items that are considered material in relation 
to the financial statements
basis of preparation
the financial statements have been prepared in accordance with applicable accounting standards and under the historical cost 
convention as modified by the revaluation of derivative instruments
international financial reporting standards
the group’s financial statements have been prepared in accordance with international financial reporting standards ifrs as 
endorsed by the european union and international financial reporting interpretations committee ifric interpretations and with 
those parts of the companies act 2006 applicable to companies reporting under ifrs the company’s financial statements have 
been prepared on the same basis and as permitted by section 408 of the companies act 2006 no income statement is presented 
for the company the result of the company for the year is shown in note 25
financial year end
the current year’s financial statements are for the year ended 31 december 2013 and the previous year’s financial statements 
are for the year ended 31 december 2012
going concern
at 31 december 2013 the group was debt free having repaid all instalments on its term loan and revolving credit facility the final 
payment on the term loan which was due for repayment in march 2014 was settled early on 6 january 2014 the group took out 
new borrowing facilities to fund the acquisition of aurora networks inc and to provide working capital the facilities were in the form 
of a 3100 million term loan which is subject to regular repayments over a five year period and a 1500 million revolving credit facility 
these facilities are subject to financial performance covenants which the group currently complies with
the group has prepared a financial and working capital forecast based upon trading assumptions and other shortterm and 
mediumterm plans the group has sensitised these plans for a number of potential scenarios including working capital management 
and revenue reduction and has concluded that the group will continue to meet its financial performance covenants and will have 
adequate working capital available to continue in operational existence for the foreseeable future
basis of consolidation
the group financial statements consolidate those of the company and of its subsidiary undertakings note 13 drawn up to 
31 december 2013 subsidiaries are entities that the company has power over exposure or rights to variable returns and an ability 
to use its power to affect those returns intragroup transactions including sales profits receivables and payables have been 
eliminated on the group consolidation investments in subsidiaries are carried at cost less any impairment loss in the financial 
statements of the company
functional and presentational currency
items included in the financial statements of each of the group’s entities are measured using the currency of the primary economic 
environment in which the entity operates the functional currency the consolidated financial statements are presented in us dollars 
which is the company’s functional and presentational currency
the us dollarpound sterling exchange rate at 31 december 2013 was 164 2012 162
significant judgements key assumptions and estimation uncertainty
the group’s main accounting policies affecting its results of operations and financial condition are set out on pages 62 to 67 
judgements and assumptions have been required by management in applying the group’s accounting policies in many areas 
actual results may differ from the estimates calculated using these judgements and assumptions key areas of estimation 
uncertainty and critical accounting judgements are as follows
warranties
pace provides product warranties for its products although it is difficult to make accurate predictions of potential failure rates or 
the possibility of an epidemic failure as a warranty estimate must be calculated at the outset of a product before field deployment 
data is available these estimates improve during the lifetime of the product in the field
a provision for warranties is recognised when the underlying products are sold the provision is based on historical warranty data 
and a weighting of all possible outcomes against their associated probabilities the level of warranty provision required is reviewed 
on a product by product basis and provisions are adjusted accordingly in the light of actual performance
1picar13backmrindd   61 20032014   122152 financial statements
annual report and accounts 2013 pace plc 62
continued
notes
1 basis of preparation and business environment continued
significant judgements key assumptions and estimation uncertainty continued
royalties
pace’s products incorporate third party technology usually under licence inadvertent actions may expose pace to the risk 
of infringing third party intellectual property rights potential claims can still be submitted many years after a product has been 
deployed any such claims are always vigorously defended
a provision for royalties is recognised where the owners of patents covering technology allegedly used by the group have indicated 
claims for royalties relating to the group’s use including past usage of that technology having taken legal advice the board considers 
that there are defences available that should mitigate the amounts being sought the group will vigorously negotiate or defend all 
claims but in the absence of agreement the amounts provided may prove to be different from the amounts at which the potential 
liabilities are finally settled the provision is based on the latest information available
revenue recognition
some of the group’s sales involve the delivery of more than one product or service multiple components as part of a single 
transaction the amount recognised as revenue for each component is calculated by reference to the fair value of the element 
in relation to the fair value of the arrangement as a whole this requires a degree of management judgement and the fair value 
allocations are by their nature best estimates 
impairment reviews
as is required by international accounting standards the group carries out impairment reviews of its nonfinancial assets on 
an annual basis or when indicators of impairment exist such reviews involve assessing the value in use of an asset or cgu by 
reference to its estimated future cash flows discounted to their present value the judgements in relation to impairment reviews 
relate to the assumptions applied in calculating the value in use and the future performance expectations 
intangible assets – capitalised development costs
the group business includes a significant element of research and development activity under accounting standards principally 
ias 38 ‘intangible assets’ there is a requirement to capitalise and amortise development spend to match costs to expected benefits 
from projects deemed to be commercially viable the application of this policy involves the ongoing consideration by management 
of the forecasted economic benefit from such projects compared to the level of capitalised costs together with the selection 
of amortisation periods appropriate to the life of the associated revenues from the product
2 accounting policies
business combinations
subsidiaries are entities that the company has power over exposure or rights to variable returns and an ability to use its power 
to affect those returns the acquisition date is the date on which control is transferred to the acquirer judgement is applied 
in determining the acquisition date and determining whether control is transferred from one party to another
goodwill
goodwill that arises upon the acquisition of subsidiaries is included in intangible assets
initial measurement
the group measures goodwill as the fair value of the consideration transferred including the recognised amount of any noncontrolling 
interest in the acquiree less the net recognised amount generally fair value of the identifiable assets acquired and liabilities assumed 
all measured as of the acquisition date consideration transferred includes the fair values of the assets transferred liabilities incurred 
by the group to the previous owners of the acquiree and equity interests issued by the group consideration transferred also includes 
the fair value of any contingent consideration and sharebased payment awards of the acquiree that are replaced mandatorily in the 
business combination if a business combination results in the termination of preexisting relationships between the group and 
the acquiree then the lower of the termination amount as contained in the agreement and the value of the offmarket element 
is deducted from the consideration transferred and recognised in other expenses
a contingent liability of the acquiree is assumed in a business combination only if such a liability represents a present obligation 
and arises from a past event and its fair value can be measured reliably
the group measures any noncontrolling interest at its proportionate interest in the identifiable net assets of the acquiree 
transaction costs that the group incurs in connection with a business combination such as finder’s fees legal fees due 
diligence fees and other professional and consulting fees are expensed as incurred
1picar13backmrindd   62 20032014   122152 annual report and accounts 2013 pace plc 63
strategic report governance financial statements
2 accounting policies continued
goodwill continued
subsequent measurement
goodwill is measured at cost less accumulated impairment losses in respect of equity accounted investees the carrying amount 
of goodwill is included in the carrying amount of the investment and an impairment loss on such an investment is not allocated 
to any asset including goodwill that forms part of the carrying amount of the equity accounted investee
as permitted by ifrs 1 ‘firsttime adoption of ifrs’ goodwill arising on acquisitions before 29 may 2004 date of transition to 
adopted ifrs has been frozen at the uk gaap amounts subject to being tested for impairment annually the group performs 
its annual impairment review at the cashgenerating unit level
other intangibles
other intangible assets that are acquired by the group which have finite useful lives are measured at cost less accumulated 
amortisation and accumulated impairment losses
amortisation of other intangibles is done on a straightline basis over the estimated useful economic lives of the particular asset 
categories as follows
customer contracts and relationships  three to ten years
technology and patents   one to ten years
other     three years
research and development expenditure
all ongoing research expenditure is expensed in the period in which it is incurred where a product is technically feasible 
production and sales are intended a market exists and sufficient resources are available to complete the project development 
costs are capitalised and subsequently amortised on a straightline basis over the estimated useful life of the product concerned 
from commercial launch the expenditure capitalised includes the cost of materials direct labour and an appropriate proportion 
of overheads where these conditions are not met development expenditure is recognised as an expense in the period in which 
it is incurred capitalised development expenditure is stated at cost less accumulated amortisation and impairment losses 
the estimated useful lives for development expenditure are estimated to be in a range of between six and 30 months
capitalised development expenditure is not treated as a realised loss for the purpose of determining the company’s distributable 
profits as the costs meet the conditions required to be treated as an asset in accordance with ias 38
the amortisation of capitalised development expenditure is charged to the income statement in research and development 
expenditure within the administrative expenses category
impairment charges
the carrying amounts of the group’s nonfinancial assets other than inventories and deferred tax assets are reviewed at each 
reporting date to determine whether there is any indication of impairment if any such indication exists then the asset’s recoverable 
amount is estimated for goodwill and intangible assets that have indefinite useful lives or that are not yet available for use the 
recoverable amount is estimated each year at the same time an impairment loss is recognised if the carrying amount of an asset 
or its related cashgenerating unit cgu exceeds its estimated recoverable amount
the recoverable amount of an asset or cgu is the greater of its value in use and its fair value less costs to sell in assessing value 
in use the estimated future cash flows are discounted to their present value using a posttax discount rate that reflects current market 
assessments of the time value of money and the risks specific to the asset or cgu for the purpose of impairment testing cgus 
to which goodwill has been allocated are aggregated so that the level at which impairment testing is performed reflects the lowest 
level at which goodwill is monitored for internal reporting purposes goodwill acquired in a business combination is allocated 
to groups of cgus that are expected to benefit from the synergies of the combination
the group’s corporate assets do not generate separate cash inflows and are utilised by more than one cgu corporate assets 
are allocated to cgus on a reasonable and consistent basis and tested for impairment as part of the testing of the cgu to which 
the corporate asset is allocated impairment losses are recognised in profit or loss any impairment losses recognised in respect 
of cgus are allocated first to reduce the carrying amount of any goodwill allocated to the cgu and then to reduce the carrying 
amounts of the assets in the cgu on a prorata basis
1picar13backmrindd   63 20032014   122152 financial statements
annual report and accounts 2013 pace plc 64
continued
notes
2 accounting policies continued
impairment charges continued
an impairment loss in respect of goodwill is not reversed in respect of other assets impairment losses recognised in prior periods 
are assessed at each reporting date for any indications that the loss has decreased or no longer exists an impairment loss is reversed 
if there has been a change in the estimates used to determine the recoverable amount an impairment loss is reversed only to the 
extent that the asset’s carrying amount does not exceed the carrying amount that would have been determined net of depreciation 
or amortisation if no impairment loss had been recognised
exceptional items
items that are significant by virtue of their size or nature and that are considered nonrecurring are classified as exceptional 
operating items such items which include for instance the costs of opening or closing premises costs of significant restructuring 
and profits and losses made on the disposal of properties are included within the appropriate consolidated income statement category 
albeit analysed as a separate line within that category and are highlighted separately in the notes to the financial statements 
exceptional operating items are excluded from the profit measures used by the board to monitor underlying performance
revenue recognition
revenue comprises the value of sales of goods and services to third party customers occurring in the period stated exclusive 
of value added tax and net of trade discounts and rebates
revenue on the sale of goods is recognised when substantially all of the risks and rewards in the product have passed to the 
customer and substantially all of the group’s work is completed which is usually upon delivery to the customer or hisher agent
revenue in respect of services rendered including engineering consultancy and support and software services is recognised 
over the period over which they are performed in relation to the level of work undertaken project milestones achieved and any 
future obligations remaining
when a single sales transaction requires the delivery of more than one product or service multiple components the revenue 
recognition criteria are applied to the separately identifiable components a component is considered to be separately identifiable 
if the product or service delivered has standalone value to that customer and the fair value associated with the product or service 
can be measured reliably the amount recognised as revenue for each component is the fair value of the element in relation to the 
fair value of the arrangement as a whole this requires a degree of management judgement and the fair value allocations are by their 
nature best estimates the timing and amount of revenue recognition can vary depending on what assessments have been made 
where there is no separate selling price of an element management determines fair value based on equivalent available products
the group does not recognise revenue before delivery has occurred the risks and rewards of ownership have been transferred 
to the customer the amount of revenue can be measured reliably and collection of the related receivable is reasonably assured 
the determination of whether the amount of revenue can be measured reliably or whether receivables are collectible is 
inherently judgemental
finance income and finance costs
finance income comprises interest income on funds invested and dividend income interest income is recognised as it accrues 
in profit or loss using the effective interest method finance costs comprise interest expense on borrowings and impairment losses 
recognised on financial assets borrowing costs that are not directly attributable to the acquisition construction or production of a 
qualifying asset are recognised in profit or loss using the effective interest method foreign currency gains and losses are reported 
on a net basis
government grants
grants in respect of specific research and development projects are credited to research and development costs within the income 
statement or against the capitalised development expenditure as appropriate to match to the project’s related expenditure
cash and cash equivalents
cash and cash equivalents comprise cash balances and call deposits the company considers all highly liquid investments with 
original maturity dates of three months or less to be cash equivalents bank overdrafts that are repayable on demand and form an 
integral part of the group’s cash management system are included as a component of cash and cash equivalents for the purpose 
of the statement of cash flows
allowance for doubtful debts
trade receivables are assessed individually for impairment or collectively where the receivables are not individually significant 
where necessary provisions for doubtful debts are recorded in the income statement 
1picar13backmrindd   64 20032014   122152 annual report and accounts 2013 pace plc 65
strategic report governance financial statements
2 accounting policies continued
inventory
inventory is stated at the lower of cost and net realisable value cost is determined on a firstinfirstout basis and includes appropriate 
transport and handling costs but excludes royalties due only on ultimate sale where necessary provision is made for obsolete 
slowmoving and defective inventory
property plant and equipment
the cost of items of property plant and equipment is its purchase cost together with any incidental costs of acquisition
depreciation is calculated so as to write off on a straightline basis over the expected useful economic lives of the asset concerned 
the cost of property plant and equipment less any estimated residual values which are adjusted if appropriate at each balance 
sheet date the principal economic lives used for this purpose are
long leasehold properties  period of lease
short leasehold properties  period of lease
plant and machinery  one to ten years
motor vehicles   four years
provision is made against the carrying value of items of property plant and equipment where an impairment in value is deemed 
to have occurred
leased assets
leases in terms of which the group assumes substantially all the risks and rewards of ownership are classified as finance leases 
assets held under finance leases and hire purchase contracts are capitalised in the balance sheet and depreciated over their expected 
useful lives the interest element of leasing payments represents a constant proportion of the capital balance outstanding 
and is charged to the income statement over the period of the lease
all other leases are regarded as operating leases and the payments made under them are charged to the income statement 
on a straightline basis over the lease term
foreign currency
transactions in foreign currencies are translated to the respective functional currencies of group entities at the foreign exchange 
rate ruling at the date of the transaction monetary assets and liabilities denominated in foreign currencies at the balance sheet date 
are retranslated to the functional currency at the foreign exchange rate ruling at that date foreign exchange differences arising on 
translation are recognised in the income statement nonmonetary assets and liabilities that are measured in terms of historical 
cost in a foreign currency are translated using the exchange rate at the date of the transaction nonmonetary assets and liabilities 
denominated in foreign currencies that are stated at fair value are retranslated to the functional currency at foreign exchange rates 
ruling at the dates the fair value was determined
the assets and liabilities of foreign operations including goodwill and fair value adjustments arising on consolidation are translated 
to the group’s presentational currency at foreign exchange rates ruling at the balance sheet date the revenues and expenses 
of foreign operations are translated at an average rate for the year where this rate approximates to the foreign exchange rates ruling 
at the dates of the transactions exchange differences arising from this translation of foreign operations are taken directly to the 
translation reserve when a foreign operation is disposed of such that control is lost the cumulative amount in the translation 
reserve is reclassified to the income statement as part of the gain or loss on disposal
derivative financial instruments
the group uses derivative financial instruments usually forward foreign exchange contracts to hedge its exposure to foreign 
exchange risks arising from operational financing and investment activities in accordance with its treasury policy the group does 
not hold or issue derivative financial instruments for trading purposes the directors have determined that the instruments qualify 
for cash flow hedge accounting
derivative financial instruments are classified as cash flow hedges when they hedge the group’s exposure to variability in cash flows 
that are either attributable to a particular risk associated with a recognised asset or liability or a highly probable forecast transaction
derivatives are reviewed quarterly for effectiveness where a derivative financial instrument is designated as a hedge of the 
variability in cash flows of a recognised asset or liability or highly probable forecast transaction the effective part of any gain 
or loss on the movement in fair value of the derivative financial instrument is recognised directly in equity
1picar13backmrindd   65 20032014   122152 financial statements
annual report and accounts 2013 pace plc 66
continued
notes
2 accounting policies continued
derivative financial instruments continued
the gain or loss on any ineffective part of the hedge is immediately recognised in the income statement within finance incomecosts 
if a hedge of a forecast transaction subsequently results in the recognition of a financial asset or liability the associated cumulative 
gains or losses that were recognised directly in equity are reclassified into the income statement when the transaction occurs
trade receivables
trade receivables are recognised initially at fair value and subsequently measured at amortised cost using the effective interest 
method less provision for impairment a provision for impairment of trade receivables is established when there is objective 
evidence that the group will not be able to collect all amounts due according to the original terms of the receivable 
trade payables
trade payables are recognised initially at fair value and subsequently measured at amortised cost using the effective interest method
taxes
current tax including uk corporation tax and foreign tax is provided at amounts expected to be paid or recovered using the tax 
rates that have been enacted or substantively enacted by the balance sheet date
deferred tax is provided using the balance sheet liability method providing where relevant for temporary differences between the 
carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for taxation purposes deferred tax 
is measured using the tax rates that have been enacted or substantively enacted by the balance sheet date and are expected 
to apply when the asset is realised or the liability settled 
a net deferred tax asset is recognised only when it is probable that sufficient taxable profits will be available in the foreseeable 
future from which the reversal of the temporary differences can be deducted
sharebased payments
the grant date fair value of sharebased payment awards granted to employees is recognised as an employee expense with a 
corresponding increase in equity over the period that the employees unconditionally become entitled to the awards the amount 
recognised as an expense is adjusted to reflect the number of awards for which the related service and nonmarket vesting conditions 
are expected to be met such that the amount ultimately recognised as an expense is based on the number of awards that meet 
the related service and nonmarket performance conditions at the vesting date for sharebased payment awards with nonvesting 
conditions the grant date fair value of the sharebased payment is measured to reflect such conditions and there is no trueup 
for differences between expected and actual outcomes
the fair value of the amount payable to employees in respect of share appreciation rights which are settled in cash is recognised as 
an expense with a corresponding increase in liabilities over the period that the employees unconditionally become entitled to payment 
the liability is remeasured at each reporting date and at settlement date any changes in the fair value of the liability are recognised 
as personnel expenses in profit or loss
employee share ownership plans
the material assets liabilities income and costs of the pace plc employee benefits trust are treated as being those of the company 
until such time as the company’s own shares vest unconditionally with employees the consideration paid for the shares is deducted 
in arriving at equity
employee benefits
obligations for contributions to defined contribution pension plans are recognised as an expense in the income statement as incurred 
the group has no defined benefit arrangements in place
interestbearing borrowings
interestbearing borrowings are recognised initially at fair value less attributable transaction costs subsequent to initial recognition 
interestbearing borrowings are stated at amortised cost using the effective interest method less any impairment losses
equity instruments
equity instruments issued by the company are recorded at the proceeds received net of direct issue costs
1picar13backmrindd   66 20032014   122152 annual report and accounts 2013 pace plc 67
strategic report governance financial statements
2 accounting policies continued
dividends payable
distributions to equity holders are disclosed as a component of the movement in shareholders’ equity a liability is recorded for a 
final dividend when the dividend is approved by the company’s shareholders and for an interim dividend when the dividend is paid
provisions
a provision is recognised in the balance sheet when the group has a present legal or constructive obligation as a result of a past 
event and it is probable that an outflow of economic benefits will be required to settle the obligation
a royalties
a provision for royalties is recognised where the owners of patents covering technology allegedly used by the group have 
indicated claims for royalties relating to the group’s use including past usage of that technology the provision is based 
on the latest information available 
b warranties
a provision for warranties is recognised when the underlying products or services are sold the provision is based on historical 
warranty data and a weighting of all possible outcomes against their associated probabilities the level of warranty provision 
required is reviewed on a product by product basis and provisions are adjusted accordingly in the light of actual performance
c restructuring
a provision for restructuring is recognised when the group has approved a detailed and formal restructuring plan and the 
restructuring has either commenced or has been announced publicly provisions are not recognised for future operating losses
d onerous contracts
a provision for onerous contracts is recognised when the expected benefits to be derived by the group from a contract are lower 
than the unavoidable cost of meeting its obligations under the contract
changes in accounting policy and disclosures
a new and amended standards adopted by the group
the group has adopted the following new standards and amendments to standards including any consequential amendments to other 
standards with a date of initial application of 1 january 2013
 — ‘disclosures – offsetting financial assets and financial liabilities’ amendments to ifrs 7 the amendment has had no 
material impact on the group 
 — ifrs 10 ‘consolidated financial statements 2011’ as a result of ifrs 10 2011 the group has changed its accounting policy 
for determining whether it has control over and consequently whether it consolidates its investee ifrs 10 2011 introduces a 
new control model that focuses on whether the group has power over an investee exposure or rights to variable returns from 
its involvement with the investee and ability to use its power to affect those returns in accordance with the transitional provisions 
of ifrs 10 2011 the group reassessed the control conclusion for its investees at 1 january 2013 and concluded that the new 
standard had not caused a material change to its previous accounting treatment 
 — ifrs 13 ‘fair value measurement’ ifrs 13 establishes a single framework for measuring fair value and making disclosures 
about fair value measurements when such measurements are required or permitted by other ifrss it unifies the definition of fair 
value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market 
participants at the measurement date it replaces and expands the disclosure requirements about fair value measurements 
in other ifrss including ifrs 7 as a result the group has included additional disclosures in this regard 
 — ‘presentation of items of other comprehensive income’ amendments to ias 1 as a result of the amendments to ias 1 the 
group has modified the presentation of items of oci in its statement of profit or loss and oci to present separately items that 
would be reclassified to profit or loss from those that would not be comparative information has been represented accordingly
b new standards amendments and interpretations issued but not effective for the financial year beginning 1 january 2013 and not early 
adopted
there are no ifrs or ifric interpretations that are not yet effective that would be expected to have a material impact on the group
1picar13backmrindd   67 20032014   122152 financial statements
annual report and accounts 2013 pace plc 68
continued
notes
3 segmental analysis
in accordance with ifrs 8 ‘operating segments’ the chief operating decisionmaker codm has been identified as the board 
of directors which reviews internal monthly management reports budget and forecast information to evaluate the performance 
of the business and make decisions
the group determines operating segments on the basis of sbu areas being the basis on which the group manages 
its worldwide interests
the group has the following reportable segments
 — pace americas
 — pace international and
 — other
other includes central and unallocated costs and other immaterial sbus which are operating segments that are allowed 
to be aggregated under ifrs 8
performance is measured based on segmental adjusted ebita as included in the internal management information which is reviewed 
by the codm adjusted ebita is used to measure performance as management believes that such information is the most relevant 
in evaluating the results of certain segments relative to other entities that operate within these industries 
revenues disclosed below materially represent revenues to external customers and pricing is determined on an arm’s length 
basis there are no material intersegment transactions
the tables below present the segmental information
pace pace
americas international other total
year ended 31 december 2013 m m m m
segmental income statement
revenue 16795 7812 85 24692
adjusted ebita 1527 835 426 1936
exceptional items 122
amortisation of other intangibles 426
interest 80
tax 341
profit for the year 967
pace pace
americas international other total
year ended 31 december 2012 m m m m
segmental income statement
revenue 14419 9536 79 24034
adjusted ebita 1440 723 582 1581
exceptional items 125
amortisation of other intangibles 518
interest 137
tax 217
profit for the year 584
1picar13backmrindd   68 20032014   122152 annual report and accounts 2013 pace plc 69
strategic report governance financial statements
3 segmental analysis continued
major customers
transactions with the group’s three largest customers represented 57 2012 49 of the group’s total revenues and are disclosed 
within the pace americas reporting segment
geographical analysis
in presenting information on the basis of geographical segments segment revenue is based on the geographical location of customers
2013 2012
revenue by destination m m
europe 3239 4024
north america 15405 13176
latin america 3584 3744
rest of world 2464 3090
24692 24034
segment assets are based on the geographical location of the assets the split of noncurrent assets by location is as follows
2013 2012
noncurrent assets m m
uk 1365 1344
europe 1275 1247
latin america 27 35
north america 3218 3598
rest of world 16 08
5901 6232
noncurrent assets relate to property plant and equipment and intangible assets and as required under ifrs 8 exclude deferred 
tax assets financial instruments and postemployment benefit assets
the group has three main revenue streams being settop boxes  media servers gateways and software  services these revenue 
streams arise in each operating segment and are not defined by geographical locations 
the following table provides an analysis of the group’s revenue streams according to those classifications
2013 2012
m m
settop boxes  media servers 19796 18260
gateways 3758 4694
software  services 1138 1080
24692 24034
1picar13backmrindd   69 20032014   122152 financial statements
annual report and accounts 2013 pace plc 70
continued
notes
4 expenses and auditors’ remuneration
2013 2012
m m
auditors’ remuneration
audit of these financial statements 04 04
amounts receivable by the company’s auditors and its associates in respect of
audit of financial statements of subsidiaries of the company 02 02
taxation compliance services — 01
audit related assurance services — 01
other assurance services 01 —
depreciation of plant property and equipment
owned 250 210
other operating lease rentals
land and buildings 82 81
loss on disposal of plant property and equipment 02 —
net foreign exchange losses recognised within operating profit 42 19
research and development expenditure recognised as an expense 1326 1554
5 exceptional items
2013 2012
m m
acquisition costs 69 —
restructuring and reorganisation costs 42 76
aborted acquisition costs 11 35
directors’ loss of office — 14
122 125
acquisition costs in 2013 relate to professional service fees in respect of the acquisition of aurora networks inc on 6 january 2014 
restructuring and reorganisation costs in 2013 and 2012 relate to different restructuring programmes within the group and represent 
the costs of redundancy and associated professional fees aborted acquisition costs in 2013 and 2012 relate to professional services 
fees in respect of aborted acquisitions
6 finance incomecosts
2013 2012
m m
finance income – interest on bank deposits 18 05
finance costs
bank borrowings 89 107
other finance costs 09 35
98 142
1picar13backmrindd   70 20032014   122152 annual report and accounts 2013 pace plc 71
strategic report governance financial statements
7 staff numbers and costs
the average numbers of persons including directors employed by the group during the year analysed by category 
were as follows
group 2013 2012
research and development 896 1018
administration 221 269
sales and marketing 42 66
manufacturing and operations 892 952
2051 2305
the total number of persons including directors employed by the group at 31 december 2013 was 1947 2012 2152 
the aggregate payroll costs of these persons were as follows
2013 2012
group m m
wages and salaries 1160 1225
social security costs 176 181
other pension costs 46 59
sharebased payments note 27 41 79
redundancy costs — —
1423 1544
remuneration of directors
the remuneration share options and pension entitlements of the directors are disclosed in the remuneration report on pages 33 to 46
8 taxation
2013 2012
m m
current tax charge
charge for the year 297 210
adjustment in respect of prior years 27 37
total current tax charge 324 173
deferred tax chargecredit
origination and reversal of timing differences in the current year note 14 27 —
impact of change in tax rate 10 03
adjustment in respect of prior years — 47
total deferred tax charge 17 44
total tax charge 341 217
1picar13backmrindd   71 20032014   122153 financial statements
annual report and accounts 2013 pace plc 72
continued
notes
8 taxation continued
reconciliation of effective tax rate to uk statutory rate of 2325 2012 245
2013 2012
m m
profit before tax 1308 801
tax using uk statutory tax rate at 2325 2012 245 304 196
effects of
expenses not deductible for tax purposes 53 117
research and development tax credit 19 63
overseas tax not at 2325 2012 245 70 34
losses not recognised for current or deferred tax 56 06
impact of change in tax rate 10 03
adjustments to tax charge in respect of previous years 27 10
total tax charge 341 217
the uk finance bill 2013 which includes the reduction in the uk corporation tax rate to 21 with effect from 1 april 2014 and  
to 20 from 1 april 2015 was substantively enacted on 2 july 2013 as a result uk deferred tax has been calculated on the rates 
substantively enacted at the balance sheet date
9 earnings per ordinary share
2013 2012
basic earnings per ordinary share 312c 194c
diluted earnings per ordinary share 298c 185c
adjusted basic earnings per ordinary share 443c 351c
adjusted diluted earnings per ordinary share 422c 334c
the calculation of basic earnings per share is based on a profit after tax of 967 million 2012 584 million divided by the weighted 
average number of ordinary shares in issue of 309740316 2012 300344669 excluding shares held by the employee benefit trust
2013 2012
number of shares million
weighted average number of ordinary shares in issue during the year 3097 3003
dilutive effect of options outstanding 153 151
diluted weighted average number of ordinary shares in issue during the year 3250 3154
diluted earnings per ordinary share varies from basic earnings per ordinary share due to the effect of the notional exercise 
of outstanding share options
to better reflect underlying performance adjusted earnings per share is also calculated adjusting profit after tax to remove 
amortisation of other intangibles and exceptional items post tax the earnings amount is calculated as follows
2013 2012
m m
profit after tax 967 584
amortisation charge 426 518
tax effect of above 111 140 
exceptional items 122 125
tax effect of above 32 34 
adjusted profit after tax 1372 1053
the group’s effective tax rate of 261 2012 271 has been used to calculate the tax effect of adjusted items 
1picar13backmrindd   72 20032014   122153 annual report and accounts 2013 pace plc 73
strategic report governance financial statements
10 dividend per ordinary share 
2013 2012
per share m per share m
2012 final paid 5 july 2013 306c 95 250c 75
2013 interim paid 6 december 2013 183c 61 144c 48
489c 156 394c 123
in addition the directors are proposing a final dividend for 2013 of 366 cents per ordinary share this will be payable on 4 july 2014 
to shareholders on the register at 6 june 2014 subject to approval by shareholders at the forthcoming annual general meeting 
and has not been included as a liability in these financial statements
11 intangible assets 
customer
contracts technology
development and and other
goodwill expenditure relationships patents other intangibles
group m m m m m m
cost
at 31 december 2011 3356 2099 1643 1318 109 3070
exchange adjustments 23 04 — — — —
additions — 574 — — — —
at 31 december 2012 3379 2669 1643 1318 109 3070
exchange adjustments 47 05 — — — —
additions — 529 — — — —
at 31 december 2013 3426 3203 1643 1318 109 3070
amortisation
at 31 december 2011 — 1560 393 450 47 890
exchange adjustments — 03 — — — —
provided in the year — 543 216 283 19 518
at 31 december 2012 — 2106 609 733 66 1408
exchange adjustments — 03 02 03 — 05
provided in the year — 456 198 217 11 426
at 31 december 2013 — 2559 809 953 77 1839
net book value at 31 december 2012 3379 563 1034 585 43 1662
net book value at 31 december 2013 3426 644 834 365 32 1231
1picar13backmrindd   73 20032014   122153 financial statements
annual report and accounts 2013 pace plc 74
continued
notes
11 intangible assets continued
goodwill
all goodwill has arisen from business combinations and relates to the following acquisitions
 — xcom multimedia communications sa now pace europe sas in february 2001
 — the stb and connectivity solutions business of royal philips electronics pace france in april 2008
 — bewan systems sa bewan in april 2010
 — 2wire inc 2wire in october 2010 and
 — latens systems limited latens in november 2010
the carrying amount of goodwill is allocated across strategic business units which are groups of cashgenerating units cgus 
as follows
 — 1247 million within pace international
 — 1861 million within pace americas and
 — 318 million within latens
these cgus are independent sources of income streams and represent the lowest level within the group at which the associated 
goodwill is monitored for management purposes the group tests goodwill annually for impairment or more frequently if there 
are indications that goodwill might be impaired
the recoverable amount of cgus is determined from value in use calculations these calculations use cash flow projections based 
on the following year’s budget and the group’s three year plan these forecasts have been approved by the board and have an 
appropriate longterm growth rate of 1 2012 1 applied to them
to prepare value in use calculations the cash flow forecasts are discounted back to present value using an appropriate marketbased 
discount rate the posttax discount rate used to calculate the value in use was 1033 2012 1014
the key assumptions in the value in use calculations are those regarding discount rates sales growth rates and expected changes 
to selling prices and direct costs sales growth selling prices and direct costs are built up within the budget and three year plan 
on a product by product basis utilising the knowledge and expertise of operational staff the anticipated launch dates for new 
products the achievable prices and direct costs to be incurred are therefore highly judgemental the directors estimate 
discount rates using posttax rates that reflect current market assessments of the time value of money for the group
the directors have reviewed the recoverable amounts of the cgus and have also considered the following reasonable changes 
in the assumptions
 — movements in the pretax discount rate of up to an additional 10 and
 — reductions in cash flows of up to 10 million per annum
the directors consider that there is sufficient headroom within the value in use calculations at 31 december 2013
1picar13backmrindd   74 20032014   122153 annual report and accounts 2013 pace plc 75
strategic report governance financial statements
11 intangible assets continued
other intangibles
other intangibles relate to trademarks and licence agreements customer contracts and relationships recognised as part 
of the acquisition of pace france 2wire bewan and latens
development
expenditure
other intangibles –
technology
company m m
cost
at 31 december 2011 1471 —
additions 521 —
transfer 72 —
at 31 december 2012 2064 —
additions 444 109
at 31 december 2013 2508 109
amortisation
at 31 december 2011 1112 —
provided in the year 433 —
at 31 december 2012 1545 —
provided in the year 385 —
at 31 december 2013 1930 —
net book value at 31 december 2012 519 —
net book value at 31 december 2013 578 109
additions to other intangibles in the year relate to technology purchased from pace france
1picar13backmrindd   75 20032014   122153 financial statements
annual report and accounts 2013 pace plc 76
continued
notes
12 property plant and equipment
short leasehold plant machinery and
land and buildings motor vehicles total
group m m m
cost
at 31 december 2011 366 1211 1577
exchange adjustments 04 08 12
additions 22 204 226
disposals — 07 07
at 31 december 2012 384 1400 1784
exchange adjustments 02 01 01
additions 14 202 216
disposals 04 19 23
at 31 december 2013 396 1582 1978
depreciation
at 31 december 2011 161 786 947
exchange adjustments 02 04 06
provided in the year 40 170 210
disposals — 07 07
at 31 december 2012 203 953 1156
exchange adjustments 02 05 07
provided in the year 54 196 250
disposals 04 17 21
at 31 december 2013 251 1127 1378
net book value at 31 december 2012 181 447 628
net book value at 31 december 2013 145 455 600
1picar13backmrindd   76 20032014   122153 annual report and accounts 2013 pace plc 77
strategic report governance financial statements
12 property plant and equipment continued
short leasehold plant machinery
land and buildings and motor vehicles total
company m m m
cost
at 31 december 2011 233 611 844
additions 20 138 158
disposals — 02 02
at 31 december 2012 253 747 1000
additions 11 142 153
disposals — 07 07
at 31 december 2013 264 882 1146
depreciation
at 31 december 2011 133 416 549
provided in the year 31 85 116
disposals — 02 02
at 31 december 2012 164 499 663
provided in the year 34 107 141
disposals — 06 06
at 31 december 2013 198 600 798
net book value at 31 december 2012 89 248 337
net book value at 31 december 2013 66 282 348
13 investments in and loans to group and other companies
shares in
intragroup group
loans undertakings
company m m
cost
at 31 december 2011 1997 4486
transfer to current assets 163 —
at 31 december 2012 1834 4486
additions 1500 —
transfer to current assets 128 —
at 31 december 2013 3206 4486
impairment
at 31 december 2011 31 december 2012 and 31 december 2013 91 —
net book value at 31 december 2012 1743 4486
net book value at 31 december 2013 3115 4486
during the year the company issued a 1500 million loan to pace americas holdings inc to contribute to their investment 
in pace americas inc
1picar13backmrindd   77 20032014   122153 financial statements
annual report and accounts 2013 pace plc 78
continued
notes
13 investments in and loans to group and other companies continued
at 31 december 2013 the company had a beneficial interest in the equity of the following subsidiary undertakings
directly 
nature of owned by percentage country of
operations note a holding incorporation
pace advanced consumer electronics limited dormant 1 100 uk
pace asia pacific limited support 1 100 hong kong
pace distribution gmbh dormant 1 100 germany
pace distribution overseas limited holding company 1 100 uk
pace micro technology limited trading 1 100 uk
pace australia pty limited support 1 100 australia
pace americas limited holding company 4 100 uk
pace americas holdings inc holding 1 100 usa
pace americas investments llc holding 9 100 usa
pace americas llc trading 11 100 usa
pace usa llc trading 10 100 usa
pace europe sas support 4 100 france
pace micro technology gmbh support 1 100 germany
pace micro technology india private limited support 1 100 india
pace overseas distribution limited trading 4 100 uk
pace france sas trading 1 100 france
pace belgium nv dormant 3 100 belgium
pace asia home networks sdn bhd support 3 100 malaysia
pace software  services limited trading 1 100 uk
pace brasil – industria electronica 
e comercio ltda trading 14 100 brazil
pace iberia sl trading 3 100 spain
stb anchor mexicana sa de cv trading 13 100 mexico
pace china operations support 2 100 china
pace operations south africa 
propriety limited trading 6 100 south africa
latens systems limited trading 1 100 uk
latens services limited trading 8 100 uk
latens systems llc trading 8 100 usa
latens systems india private limited support 8 100 india
latens systems israel limited support 8 100 israel
2wire inc trading 11 100 usa
2wire asia pacific limited dormant 7 100 hong kong
2wire bc limited support 7 100 canada
2wire international limited dormant 7 100 uk
kenati technologies inc holding 7 100 usa
2wire singapore pte limited support 7 100 singapore
2wire development center private limited support 12 100 india
pace netherlands nv support 1 100 holland
pace east trading limited trading 1 100 uk
pace international finance limited trading 3 100 uk
pace international luxembourg sarl holding company 1 100 luxembourg
1picar13backmrindd   78 20032014   122153 annual report and accounts 2013 pace plc 79
strategic report governance financial statements
13 investments in and loans to group and other companies continued
note a
directly owned by
1 pace plc 8 latens systems limited
2 pace asia pacific limited 9 pace americas holdings inc
3 pace france sas 10 pace americas llc
4 pace distribution overseas limited 11 pace americas investments llc
5 pace americas limited 12 kenati technologies inc
6 pace overseas distribution limited 13 pace usa inc 98 pace france sas 2
7 2wire inc 14 pace international finance limited
each of the subsidiary undertakings listed above has been consolidated in the group’s financial statements
each of the subsidiary undertakings listed above has a financial year end of 31 december with the exception of pace micro technology 
india private limited latens systems india private limited and 2wire development center private limited 31 march
the class of share capital held is ordinary with the exception of pace distribution overseas limited where there is preference 
share capital in addition to ordinary share capital
14 deferred tax assetsliabilities
the movements in deferred tax assets and liabilities during the year are shown below
property shortterm
plant and trading timing
equipment losses intangibles differences total
group m m m m m
recognised assetsliabilities
at 31 december 2011 07 381 942 283 285
creditedcharged to income statement 19 82 254 235 44
at 31 december 2012 12 299 688 48 329
creditedcharged to income statement 19 157 139 20 17
creditedcharged to statement of comprehensive income — — — 05 05
at 31 december 2013 07 142 549 63 351
shown as deferred tax assets 07 142 — 63 212
shown as deferred tax liabilities 14 — 549 — 563
property shortterm
plant and trading timing
equipment losses intangibles differences total
company m m m m m
recognised assetsliabilities
at 31 december 2011 08 — 58 14 36
creditedcharged to income statement 19 — 48 09 20
at 31 december 2012 27 — 106 23 56
creditedcharged to income statement 21 — 10 14 03
creditedcharged to statement of comprehensive income — — — 05 05
at 31 december 2013 06 — 96 32 58
shown as deferred tax assets 06 — — 32 38
shown as deferred tax liabilities — — 96 — 96 
no deferred tax asset has been recognised on unused tax losses outside the uk of 86 million 2012 33 million as it is not 
considered probable that sufficient taxable profit will be available against which the tax losses can be utilised
1picar13backmrindd   79 20032014   122153 financial statements
annual report and accounts 2013 pace plc 80
continued
notes
15 inventories 
group company
2013 2012 2013 2012
m m m m
raw materials and consumable stores 179 228 57 80
finished goods 1389 1593 152 274
1568 1821 209 354
16 trade and other receivables
group company
2013 2012 2013 2012
m m m m
trade receivables 4227 5141 1132 1154
amounts owed by subsidiary undertakings — — 2132 4538
other receivables 369 352 194 232
prepayments and accrued income 91 94 38 45
4687 5587 3496 5969
17 trade and other payables
group company
2013 2012 2013 2012
m m m m
trade payables 4734 5473 4068 4752
amounts payable to subsidiary undertakings — — 2459 1778
social security and other taxes 29 24 10 06
other payables 150 164 74 62
accruals 758 657 436 356
5671 6318 7047 6954
18 interestbearing loans and borrowings
the carrying value of the yearend borrowings position is as follows
2013 2012
group and company m m
noncurrent liabilities
bank term loans — 747
current liabilities
bank term loans — 732
bank revolving credit facility — 901
— 1633
the face value of the borrowings was nil 2012 75 million in respect of the bank term loans within noncurrent liabilities 
nil 2012 75 million in respect of the bank term loans within current liabilities and nil 2012 901 million in respect of the 
bank revolving credit facility
the difference between the face value amounts and the amounts in the previous table is nil 2012 03 million in noncurrent 
liabilities and nil 2012 18 million in current liabilities which represented facility arrangement fees and accrued interest costs
1picar13backmrindd   80 20032014   122153 annual report and accounts 2013 pace plc 81
strategic report governance financial statements
18 interestbearing loans and borrowings continued
reconciliation of net cash flow to movement in net debt
2013 2012
m m
cash and cash equivalents at end of year 330 747
current borrowings — 1633
noncurrent borrowings — 747
closing net debt 330 1633
19 derivatives and other financial instruments
shortterm debtors and creditors that meet the definition of a financial asset or liability respectively have been excluded from all 
the following analysis other than the currency risk exposures 
this note provides information about the contractual terms of the group and company’s interestbearing loans and borrowings
a interest rate risk profile of cashbank overdrafts
floating rate interest free total
currency m m m
at 31 december 2013
sterling 75 02 73
us dollar 260 310 50
euro 17 28 45
other 111 51 162
total 57 387 330
at 31 december 2012
sterling 239 74 313
us dollar 2729 457 2272
euro 71 40 111
other 119 96 215
total 2300 667 1633
the interest rates on sterling us dollar euro and other floating rate financial assets are linked to the relevant bank base rates
1picar13backmrindd   81 20032014   122153 financial statements
annual report and accounts 2013 pace plc 82
continued
notes
19 derivatives and other financial instruments continued
b currency exposures
the table below shows the group’s currency exposures that give rise to the net currency gains and losses recognised in the 
income statement such exposures comprise the monetary assets and monetary liabilities of the group which are not denominated 
in the operating or functional currency of the operating unit involved
net foreign currency monetary assetsliabilities
sterling us dollar euro other total
m m m m m
functional currency of group operation
at 31 december 2013
sterling — 25 11 — 36
us dollar 35 — 158 151 344
euro — 34 — — 34
other 04 21 — — 17
total 39 30 169 151 329
at 31 december 2012
sterling — 12 28 — 40
us dollar 296 — 358 12 666
euro 03 139 — 01 143
other 10 84 01 — 75
total 303 211 385 11 488
c gains and losses on currency derivatives
the majority of the group’s production costs are denominated in us dollars the group endeavours to obtain as much of its 
income as possible in us dollars the group’s policy is to hedge forward progressively against movements in the value of foreign 
currencies in respect of cash receipts and payments expected from transactions over the next twelve months
outstanding currency derivatives
sell buy principal average
currency currency amount rate maturity
at 31 december 2013 us dollar gbp 286m 064 jan 14 – mar 14
euro us dollar 983m 135 jan 14 – oct 14
us dollar euro 138m 072 jan 14
sa rand us dollar 38m 010 jan 14 – feb 14
at 31 december 2012 us dollar gbp 204m 063 mar 13 – aug 13
euro us dollar 999m 129 jan 13 – dec 13
us dollar euro 39m 076 jan 13
the group’s derivatives contracts qualify for hedge accounting and have a fair value at the balance sheet date of 05 million 
2012 13 million
1picar13backmrindd   82 20032014   122153 annual report and accounts 2013 pace plc 83
strategic report governance financial statements
19 derivatives and other financial instruments continued
d credit risk
the group’s credit risk is primarily attributable to its trade debtors credit risk is managed by monitoring the aggregate amount 
and duration of exposure to any one customer depending upon their credit rating the group does not require collateral in respect 
of financial assets there were no significant impairments in the periods under review
exposure to credit risk
the carrying amount of financial assets represents the maximum credit exposure the maximum exposure to credit risk 
at the reporting date was
2013 2012
carrying amount m m
trade receivables 4227 5141
cash and cash equivalents 330 747
forward exchange contracts used for hedging
assets 22 04
4579 5892
the maximum exposure to credit risk for receivables at the reporting date by geographic region was
2013 2012
carrying amount m m
domestic 1219 1216
eurozone countries 97 240
united states 2277 2932
other regions 634 753
4227 5141
the credit risk on liquid funds is limited because counterparties are banks with high credit ratings at each balance sheet date 
there was no significant concentration of credit risk other than those customers with revenues in excess of 10 of the group’s 
total revenues as explained in note 3
of the trade receivables at 31 december 2013 92 were within terms 2012 92 of the balance 5 were less than 30 days 
past due with the remaining amounts over 30 days due 2012 7 less than 30 days past due there were no material bad debts 
provisions deemed necessary against such balances in the current or preceding years
e liquidity risk
the group manages liquidity risk by maintaining adequate cash balances and banking facilities continuously monitoring forecast 
and actual cash flows and matching the maturity profiles of financial assets and liabilities
1picar13backmrindd   83 20032014   122153 financial statements
annual report and accounts 2013 pace plc 84
continued
notes
19 derivatives and other financial instruments continued
e liquidity risk continued
the following are the contractual maturities of financial liabilities including estimated interest payments and excluding the impact 
of netting arrangements
carrying contractual 6 months 6–12 1–2 2–3 3–4
amount cash flows or less months years years years
m m m m m m m
at 31 december 2013
nonderivative financial liabilities
trade and other payables within one year 5671 5671 5671 — — — —
external borrowings — — — — — — —
derivative financial liabilities
forward exchange contracts used for hedging
outflow — 1451 952 499 — — —
inflow 05 1454 960 494 — — —
total 5676 5668 5663 05 — — — 
at 31 december 2012
nonderivative financial liabilities
trade and other payables within one year 6318 6318 6318 — — — —
external borrowings 2380 2478 403 399 1676 — —
derivative financial liabilities
forward exchange contracts used for hedging
outflow 13 1241 827 414 — — —
inflow — 1228 817 411 — — —
total 8685 8809 6731 402 1676 — —
it is not expected that the cash flows included in the maturity analysis could occur significantly earlier or at significantly different amounts
the directors have considered the periods in which the cash flows associated with derivatives that are cash flow hedges are expected 
to occur together with the timing of impact on profit or loss and have determined that the timings are as disclosed in the above table
f sensitivity analysis
in managing interest rate and currency risks the group aims to reduce the impact of shortterm fluctuations on the group’s earnings 
the directors consider that a change of 100 basis points in interest rates during a twelve month period would have a nil impact 
on cash flows 2012 08 million 
the group’s key foreign exchange exposures are in respect of the euro and sterling a 1 strengthening in the us dollar against 
these would have an adverse impact of 10 million 2012 02 million on the profit reported in the year ended 31 december 2013 
and an adverse impact of 58 million 2012 47 million on equity
g capital management
capital risk management
the group and company manage their capital being the net assets base to ensure their ability to continue as a going concern 
and to maintain an optimal capital structure to reduce the cost of capital the capital structure of the group and company comprises 
equity attributable to equity holders of pace plc consisting of issued ordinary share capital reserves and retained earnings 
as disclosed in notes 21 22 and 24 and cash and cash equivalents and borrowings as disclosed in note 18
the group and company maintain or adjust their capital structure through the payment of dividends to shareholders through the 
progressive dividend policy introduced in 2009 issue of new shares and buyback of existing shares and issuing new borrowings 
or repaying existing borrowings
note 21 to the financial statements provide details regarding the company’s share capital and movements in the period 
there were no breaches of any requirements with regard to any relevant conditions imposed by either the ukla or the company’s 
articles of association during the periods under review
1picar13backmrindd   84 20032014   122154 annual report and accounts 2013 pace plc 85
strategic report governance financial statements
19 derivatives and other financial instruments continued
g capital management continued
capital risk management continued
details of the company’s facilities are given in note 18 the facilities have been subject to certain financial performance covenants 
there have been no breaches of these covenants in the period under review
h fair value
fair value versus carrying amounts
the following table shows the carrying amounts and fair values of financial assets and financial liabilities including their levels 
in the fair value hierarchy 
carrying amount fair value
fair value 
– hedging 
instrument
loans and 
receivables
other 
financial 
liabilities total level 1 level 2 level 3
m m m m m m m
at 31 december 2013
financial assets measured at fair value
forward exchange contracts used for hedging 05 — — 05 — 05 —
financial assets not measured at fair value
trade and other receivables — 4227 — 4227 — — —
cash and cash equivalents — 330 — 330 — — —
financial liabilities not measured at fair value
borrowings — — — — — — —
trade payables — — 4734 4734 — — — 
05 4557 4734 172 — 05 —
at 31 december 2012
financial assets not measured at fair value
trade and other receivables — 5141 — 5141 — — —
cash and cash equivalents — 747 — 747 — — —
financial liabilities measured at fair value
forward exchange contracts used for hedging 13 — — 13 — 13 —
financial liabilities not measured at fair value
borrowings — — 2401 2401 — — —
trade payables — — 5473 5473 — — — 
13 5888 7874 1999 — 13 —
fair value hierarchy
the group’s financial instruments namely forward exchange contracts have been determined to represent level 2 instruments 
characterised by the existence of quoted prices unadjusted in active markets for identical assets or liabilities fair values are 
calculated by reference to valuations provided by financial institutions
i exchange rates
the following significant exchange rates applied during the year
average rate spot rate
2013 2012 2013 2012
euro 133 128 137 132
sterling 156 158 164 162
1picar13backmrindd   85 20032014   122154 financial statements
annual report and accounts 2013 pace plc 86
continued
notes
20 provisions
royalties
under negotiation warranties other total
group m m m m
at 31 december 2011 208 358 304 870
net charge for the year 85 210 52 347
utilised 24 189 263 476
transfer — 16 — 16
exchange adjustments 06 05 04 15
at 31 december 2012 275 400 97 772
net charge for the year 98 247 144 489
utilised 14 249 105 368
transfer — 01 — 01
exchange adjustments 10 02 16 28
at 31 december 2013 369 401 152 922
due within one year — 200 119 319
due after one year 369 201 33 603
royalties
under negotiation warranties other total
company m m m m
at 31 december 2011 141 184 157 482
net charge for the year 56 132 40 228
utilised 18 92 157 267
exchange adjustments — 05 — 05 
at 31 december 2012 179 219 40 438
net charge for the year 78 151 104 333
utilised 12 90 43 145
transfer 06 07 — 01
at 31 december 2013 251 273 101 625
due within one year — 131 101 232
due after one year 251 142 — 393
royalties under negotiation
the owners of patents covering technology allegedly used by the group have indicated claims for royalties relating to the group’s 
use including past usage of that technology negotiations over these liabilities continue for long periods of time the directors have 
made provision for the potential royalties payable based on the latest information available having taken legal advice the board 
considers that there are defences available that should mitigate the amounts being sought the group will vigorously negotiate 
or defend all claims but in the absence of agreement the amounts provided may prove to be different from the amounts at which 
the potential liabilities are finally settled
given the nature of the claims it is not possible to be more specific with regard to the timing of outflows
the directors consider that to disclose the amounts unused following the negotiation of royalty claims during the year would be 
seriously prejudicial to other royalty claims under negotiation in litigation or dispute accordingly the directors have aggregated 
amounts released unused with additional provisions made in order to arrive at the net charge for the year
other provisions
other provisions mainly relate to retirement and exceptional restructuring provisions within the group along with professional fees 
to be incurred in relation to the aurora acquisition and certain other provisions
1picar13backmrindd   86 20032014   122154 annual report and accounts 2013 pace plc 87
strategic report governance financial statements
20 provisions continued
warranties
pace provides product warranties for its stbs and gateways from the point of sale and a provision for warranties is recognised 
when the underlying products are sold the provision is based on historical warranty data principally historical failure rates and 
related cost of repair information and a weighting of all possible outcomes against their associated probabilities the level of warranty 
provision required is reviewed on a product by product basis and provisions are adjusted accordingly in the light of actual performance
although it is difficult to make accurate predictions of potential failure rates or the possibility of an epidemic failure as a warranty 
estimate must be calculated at the outset of product shipment before field deployment data is available these estimates improve 
during the lifetime of the product in the field
the directors consider that to disclose the amounts unused following the settlement of warranty claims during the year would be 
seriously prejudicial to other claims under negotiation accordingly the directors have aggregated amounts released unused with 
additional provisions made in order to arrive at the net charge for the year
it is expected that the expenditure with regard to warranties will be incurred within five years of the balance sheet date
21 share capital
2013 2012
number m number m
authorised
ordinary shares of 5 pence each 500000000 388 500000000 388
allocated called up and fully paid
ordinary shares of 5 pence each 313942223 290 309842308 287
the ordinary share capital of pace plc is designated in sterling
during the year the company also allotted ordinary shares as follows
nominal value consideration
number 000 000
employee share option plan 580 pence 539128 39 402
employee share option plan 620 pence 41601 3 34
employee share option plan 1280 pence 27475 2 47
employee share option plan 1540 pence 125016 10 263
employee share option plan 19925 pence 501882 36 1374
employee share option plan 6950 pence 50000 4 46
employee share option plan 855 pence 1087178 82 1232
employee share option plan 510 pence 114988 9 75
employee share option plan 5875 pence 188829 15 143
employee share option plan 750 pence 1111266 84 1096
employee share option plan 9775 pence 100000 8 131
employee share option plan 470 pence 200000 16 118
employee performance option plan 50 pence 12552 1 —
4099915 309 4961
there are no special rights or obligations attaching to the ordinary shares and there are no shares in the company with special 
rights with regard to control of the company the articles of association of the company may be amended by special resolution 
of the company’s shareholders
the company’s articles of association provide that the company may refuse to transfer shares in the following customary circumstances 
where the share is not a fully paid share where the company has a lien where the share transfer has not been duly stamped with 
correct amount of stamp duty where the transfer is in favour of more than four joint transferees where the share is a certified share 
and is not accompanied by the relevant share certificates and such other evidence as the board of directors may reasonably require 
to prove the title of the transferor or where the instrument of transfer is in respect of more than one class of share these restrictions 
are in addition to any which are applicable to all uk listed companies imposed by law or regulation
1picar13backmrindd   87 20032014   122154 financial statements
annual report and accounts 2013 pace plc 88
continued
notes
21 share capital continued
the notice of the annual general meeting specifies deadlines for exercising voting rights and appointing a proxy or proxies to vote 
in relation to resolutions to be passed at the annual general meeting all proxy votes are counted and numbers for against or withheld 
in relation to each resolution are announced at the annual general meeting and published on the company’s website after the meeting
at the annual general meeting to be held on 24 april 2014 shareholders will be asked to renew the directors’ power to allot 
shares and buy back shares in the company and to renew the disapplication of preemption rights 
the company is not aware of any agreements between shareholders which may result in restrictions on the transfer of securities 
andor on voting rights
there are no significant agreements to which the company is a party that may take effect alter or terminate upon a change 
of controls following a takeover bid other than in relation to i employee share plans and ii the company’s borrowings which 
would become repayable on a takeover being completed
the company’s articles of association provide that i all directors must stand for election at the first annual general meeting after 
having been appointed to the board and ii at each annual general meeting onethird of the directors who are subject to retirement 
by rotation must retire from office and may seek reelection the articles set out the procedure for determining the identity of the 
directors to retire at a particular annual general meeting
shares in the company are held in the pace plc employee benefit trust the trust for the purpose of satisfying awards made under 
the company’s employees’ share plans the trustees of the trust may exercise the voting rights attaching to shares held in the trust 
in respect of which the beneficial interest has not vested in any beneficiary provided that they are satisfied that to do so is in the 
beneficiaries’ interests the trustees have waived their right to vote in respect of any such shares held above 5
the company has granted options which are subsisting including directors’ options and contingent share awards in respect 
of the following presently unissued ordinary shares of 5 pence each
price per share
number of ordinary shares subject to option exercise period pence
223880 1 june 2014 to 30 november 2014 1280
1215181 1 june 2015 to 30 november 2015 620
194322 june 2014 to september 2014 1970
225129 1 june 2016 to 30 november 2016 1920
150000 2 october 2009 to 1 october 2016 5875
20000 1 november 2010 to 31 october 2017 9775
324038 24 june 2011 to 23 june 2018 855
44259 24 june 2012 to 23 june 2014 855
400000 11 march 2012 to 10 march 2019 750
48471 17 march 2014 to 16 march 2021 1658
100000 23 april 2015 to 22 april 2022 705
50000 19 june 2016 to 18 june 2022 9175
24999 19 june 2015 to 18 june 2022 9175
100000 26 july 2015 to 25 july 2022 1355
55554 11 october 2015 to 10 october 2022 1600
11666 11 march 2016 to 10 march 2023 2294
338810 31 may 2014 – contingent share award 50
600000 31 may 2015 – contingent share award 50
4126309 
the pace plc employee benefits trust has granted options over existing shares to satisfy certain options details of these additional 
options are shown in note 24
1picar13backmrindd   88 20032014   122154 annual report and accounts 2013 pace plc 89
strategic report governance financial statements
22 share premium account
group and company m
at 31 december 2012 790
premium on allotments 47
at 31 december 2013 837
the shares allotted during the year are listed in note 21
23 merger reserve
group and company m
at 31 december 2012 and 31 december 2013 1099
the merger reserve was created upon the acquisition of the stb and connectivity solutions business of royal philips electronics
24 retained earnings
group m
at 31 december 2012 2990
retained profit for the year 967
dividends to equity shareholders 156
employee share incentive charges 41
at 31 december 2013 3842
company m
at 31 december 2012 2456
retained profit for the year 608
dividends to equity shareholders 156
employee share incentive charges 41
at 31 december 2013 2949
own shares held
at 31 december 2013 the pace plc employee benefit trust held 2692189 2012 4414363 shares in the company which cost 
103 million 2012 122 million these shares are held to satisfy options granted to employees
the amounts arising on settlement of share options from the employee share trust represent cash receipts from the exercise 
of relevant share options
the pace plc employee benefit trust has agreed to satisfy options and contingent share awards granted to employees including 
directors’ options over ordinary shares of 5 pence each as follows
price per share
number or ordinary shares subject to option exercise period pence
80000 17 august 2005 to 16 august 2014 510
922290 4 april 2014 to 3 april 2021 1535
1750829 march 2015 to 15 december 2021 698
814285 14 march 2015 to 13 march 2022 910
3567404 
1picar13backmrindd   89 20032014   122154 financial statements
annual report and accounts 2013 pace plc 90
continued
notes
24 retained earnings continued
own shares held continued
the pace plc employee benefit trust has agreed to satisfy share awards made to employees under the international performance 
share plan performance share plan and deferred share bonus and share award plans as follows
number or ordinary shares subject to option exercise period
151284 26 february 2012 to 25 february 2020
2636263 4 april 2014 to 3 april 2021
9041 18 march 2012 to 17 march 2014
234112 28 february 2013 to 27 february 2021
456004 29 february 2014 to 28 february 2022
4063160 14 march 2015 to 14 march 2022
22745 26 july 2015 to 25 july 2022
759383 21 march 2016 to 20 march 2023
1375925 21 march 2016 to 21 march 2023
407323 29 march 2015 to 21 march 2023
771989 29 march 2016 to 21 march 2023
9229 1 may 2015 to 21 march 2023
75000 1 may 2016 to 21 march 2023
10971458 
25 profit for the year
the parent company has taken advantage of section 408 of the companies act 2006 and has not included its own income statement 
in these financial statements the group profit includes a parent company profit after tax of 608 million 2012 profit after tax 
of 142 million
26 capital commitments
2013 2012
group and company m m
contracted but not provided for 07 11
1picar13backmrindd   90 20032014   122154 annual report and accounts 2013 pace plc 91
strategic report governance financial statements
27 employee benefits
pension plans
the group contributes to several defined contribution group personal pension plans which all uk executive directors 
and employees are entitled to join the total expense relating to these plans in the current year was 46 million 2012 59 million 
at 31 december 2013 contributions of nil 2012 nil were outstanding
sharebased payments 
details of the company’s share option plans are included in notes 21 and 24 and the directors’ remuneration report 
the number and weighted average exercise price of share options is as follows
weighted weighted
average average
exercise number exercise number
price of options price of options
2013 2013 2012 2012
outstanding at the beginning of the period 1711c 12725189 1656c 18203949
granted during the period 3108c 481326 1217c 3194644
forfeited during the period 3002c 2246249 2059c 3747162
exercised during the period 1472c 4205363 1206c 4926242
outstanding at the end of the period 1564c 6754903 1711c 12725189
exercisable at the end of the period 1226c 1018297 1466c 4090597
of the share options exercised during the year 118000 were issued by the pace plc employee benefit trust 2012 130000
outstanding options were as follows
weighted average
remaining
number at contractual life weighted average
range of exercise prices pence 31 december 2013 months exercise price
47 pence – 75 pence 3696010 6324 109c
855 pence – 9775 pence 1277581 8489 146c
128 pence – 208 pence 1781312 8520 261c
6754903 7312 157c
the weighted average exercise price of options granted in the period was 3108 cents 2012 1217 cents
the weighted average fair value at the measurement date of options granted in the year was 420 cents 2012 571 cents
the weighted average exercise price at the date of exercise for options exercised in the year was 1472 cents 2012 1206 cents
the weighted average share price during the year was 4313 cents 2012 2028 cents 
1picar13backmrindd   91 20032014   122154 financial statements
annual report and accounts 2013 pace plc 92
continued
notes
27 employee benefits continued
sharebased payments continued
the fair value of services received in return for share options granted are measured by reference to the fair value of share options 
granted the estimate of the fair value of the services received is measured based on a blackscholes model the following table 
gives the assumptions applied to the options granted in the respective periods shown expectations of early exercise are incorporated 
into the model where appropriate
2013 2012
average share price cents 4320c 2023c
weighted average exercise price cents 1564c 1720c
expected volatility  50 50
option life years 10 10
dividend yield  14 14
risk free interest rate  50 50
the expected volatility is based on the historic volatility calculated based on the weighted average remaining life of the share options 
adjusted for any expected changes to future volatility due to publicly available information
the charge for sharebased payments is 41 million 2012 79 million which is comprised entirely of equity settled transactions
28 leasing commitments 
total amounts payable under noncancellable operating lease rentals are as follows 
group company
2013 2012 2013 2012
m m m m
land and buildings
within one year 92 86 11 11
between two and five years 199 235 11 23
in five years or more 34 62 — —
325 383 22 34
1picar13backmrindd   92 20032014   122154 annual report and accounts 2013 pace plc 93
strategic report governance financial statements
29 related parties
identity of related parties 
the group has a related party relationship with its subsidiaries and with its directors
transactions with subsidiaries 
the main transactions between the company and its subsidiaries consist mainly of payments by the company for distribution 
engineering and administrative support services provided by pace americas inc pace france 2wire inc and pace micro technology 
india private limited total transactions of 13963 million were made in the year 2012 12246 million
the amounts due to and from these subsidiaries are shown within notes 16 and 17
transactions with key management personnel 
key management of the group is through the executive directors of the company the main transactions with these individuals 
are disclosed in the directors’ remuneration report on pages 33 to 46
of the sharebased payments charge of 41 million 2012 79 million made in the period 298 2012 19 relates to options 
granted to the executive directors
30 free cash flow and cash investment in acquisitions
2013 2012
m m
free cash flow
cash generated from operations 3132 2976
tax paid 238 238
purchase of property plant and equipment 216 226
development expenditure 529 574
net interest paid 59 111
free cash flow 2090 1827
2013 2012
m m
cash investment in acquisitions in the year
acquisition of subsidiaries net of cash acquired — 157
cash investment in acquisitions in the year — 157
1picar13backmrindd   93 20032014   122154 financial statements
annual report and accounts 2013 pace plc 94
continued
notes
31 post balance sheet events 
on 6 january 2014 the group acquired 100 of the share capital of aurora networks inc a group of companies leading the development 
and manufacture of advanced nextgeneration optical transport and access network solutions for broadband networks that support 
the convergence of video data and voice applications for a cash consideration of 3271 million prior to the acquisition the group 
had no interest in the acquiree and an explanation of the rationale for the acquisition is set out on page 7
details of the net assets acquired and goodwill are as follows
on acquisition
m
purchase consideration
headline consideration 3100
cash paid for tax benefits 130
working capital adjustment 41
total cash consideration 3271
fair value of assets acquired see below 1019
goodwill 2252
there was no contingent consideration as part of the acquisition
goodwill and other intangibles mainly relate to acquired technologies customer relationships the assembled workforce and 
expected synergies with the wider pace group due to the proximity of the acquisition to the year end the information provided 
is provisional and other intangibles have not yet been calculated as separate from goodwill
the assets and liabilities arising from the acquisition provisionally determined are as follows
fair value
m
property plant and equipment 72
deferred tax assets 112
inventories 621
trade and other receivables 390
cash and cash equivalents 316
current tax assets 109
deferred tax liabilities 16
other noncurrent liabilities 63
provisions 46
trade and other payables 461
current tax liabilities 15
net assets acquired 1019
1picar13backmrindd   94 20032014   122154 annual report and accounts 2013 pace plc 95
strategic report governance financial statements
directors
all of victoria road saltaire bd18 3lf england
allan leighton  nonexecutive chairman
mike pulli   chief executive officer
roddy murray  chief financial officer
patricia chapmanpincher nonexecutive director
john grant  nonexecutive director
amanda mesler  nonexecutive director
company secretary
anthony dixon
registered and head office
victoria road 
saltaire bd18 3lf 
england
registered number
01672847
auditors
kpmg audit plc
1 the embankment 
neville street 
leeds ls1 4dw
registrars
capita asset services
the registry 
34 beckenham road 
beckenham 
kent br3 4tu
stockbrokers
jefferies hoare govett
vintners place 
68 upper thames street 
london ec4v 3bj
jp morgan cazenove
25 bank street 
canary wharf 
london e14 5jp
directors secretary and advisers
1picar13backmrindd   95 20032014   122154 financial statements
annual report and accounts 2013 pace plc 96
five year record and shareholder information
five year record
year year year year year
ended ended ended ended ended
31 31 31 31 31
december december december december december
2013 2012 2011 2010 2009
m m m m m
revenue 24692 24034 23093 20629 17796
profit before tax 1308 801 547 1102 1098
adjusted ebita 1936 1581 1414 1606 1200
profit after tax 967 584 388 773 808
basic eps 312c 194c 132c 264c 278c
basic adjusted eps 443c 351c 297c 371c 303c
total equity 5470 4601 4071 3759 3159
shareholder information
annual general meeting 
the company’s annual general meeting will be held on 24 april 2014 at the company’s head office victoria road saltaire 
west yorkshire bd18 3lf 
capita registrars
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1picar13backmrindd   96 20032014   122154 0picar13covermrindd   99 20032014   122358 pace plc
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pace plc annual report and accounts 2013
0picar13covermrindd   100 20032014   122358


Summary:
 annual report and accounts 2013 pace plc 05
strategic report governance financial statements
chief executive officer’s review
mike pulli
chief executive officer
we have delivered a strong 
set of financial results 
made good progress 
on our strategic plan and 
created a platform for 
continued improvement
2013 has been a year of further recovery 
and expansion for pace we have delivered 
a strong set of financial results made good 
progress on our strategic plan and created 
a platform for continued improvement in 
operating performance over the next 
few years
key highlights of the year
the strategic review we undertook in 2011 
highlighted that we operate in sustainable 
and profitable markets where we have 
differentiated capabilities however the 
group must execute on its three primary 
objectives to take advantage of the 
opportunities for improving both the level 
and quality of its earnings we remain 
focused on these objectives and have 
made good progress both in delivering 
strong results in 2013 building on the 
recovery made in 2012 and paving the 
way for improvement in 2014 and beyond
this progress is reflected in 2013 revenues 
of 24692 million up 27 on 2012 and 
adjusted ebita of 1936 million up 225 
on 2012 equivalent to 78 of revenues 
up 12ppt on 2012
in addition to the various organic 
developments pace has undertaken 
over the past two years the acquisition of 
aurora is a key step in the evolution of pace 
and enhances our strategy to grow a broader 
platform across hardware software 
 services
strategic plan
transform core economics
continued focus on efficiency has delivered 
further sustainable overhead savings and 
the transformation and rationalisation of our 
supply chain was completed delivering 
significant benefits in 2013 and beyond
 — underlying operating expenses 
excluding the impact of ias 38 
accounting reduced by 162 million 
58 in 2013 this was due to further 
efficiency programmes across the 
business and the impact of a full year’s 
runrate of the changes implemented 
in 2012 whilst reducing the overall 
operating expenses pace has continued 
to invest further in software  services 
and other growth opportunities 
 — the transition to a consolidated 
electronics manufacturing services 
ems partner footprint was completed 
in the year all new products are being 
developed through this model and the 
financial and operational benefits are 
now being realised and will drive 2014 
profitability further supply chain 
transformation activities are underway 
that will deliver value in 2014 and beyond
summary 
 — increased operating 
profits through topline 
growth improved gross 
margins and increased 
operational efficiency
 — strong cash flow generation 
2090 million free cash flow 
108 of adjusted ebita and 
sustainable cash flow business 
model in place
 — announced highly 
accretive acquisition of 
aurora networks inc a leading 
provider of optical transport and 
access network solutions
 — the board is confident that 
the company will make 
further progress in 2014
 — revenues expected 
to be c 27 billion
 — operating margin expected 
to be c 85
 — strong cash flow will 
continue and pace expects 
to generate at least 
185 million of free  
cash flow
business model on page 10 and 11 
1picar13frontsmmrindd   5 20032014   122221 annual report and accounts 2013 pace plc 06
strategic report
continued
chief executive officer’s review
strategic plan continued
transform core economics continued
 — cash generation was strong 
throughout the year free cash flow was 
2090 million 2012 1827 million 
due to further realignment of working 
capital and tight management of capital 
expenditure this enabled pace to repay 
its debt in full prior to the end of the 
financial year
8
 and achieve a net 
cash position of 330 million at 
31 december 2013 net debt at 
31 december 2012 1633 million
the various components of the 
transform core economics stream of the 
strategic plan are now well embedded 
across the company and are delivering 
significant financial and operational benefits 
however the company believes significant 
opportunities remain for further improvement 
and will pursue areas of inefficiency and 
relentlessly strive to continually improve 
operating effectiveness across all areas 
of the business
paytv hardware leadership
pace was reconfirmed as the market 
leader in paytv hardware global number 
one in settop boxes
9
 media servers
10
 
and telco
11
 gateways
 — stb and media server revenues 
were up 84 to 19796 million in 
2013 2012 18260 million driven 
largely by the high demand for media 
servers in h1 2013 in north america 
and a number of new deployments 
in h2 2013
 — the move to media servers and 
whole home solutions is continuing 
at speed across the globe demand 
from customers in north america 
was strong with media servers now 
comprising over 28 of shipments 
in that market 2012 14 in the year 
pace announced a large number 
of media server wins beyond north 
america with the first international 
deployment at get tv in norway and 
a number of deployments planned in 
2014 including liberty global foxtel 
and telenet we have a strong media 
server pipeline and anticipate increased 
demand across the globe in 2014 
and beyond
 — iptv is a segment in which pace has 
previously been underrepresented 
in 2013 pace began shipping 
mediaroom enabled digital video 
recorders dvrs and stbs to att 
and centurylink two of the largest 
telecommunications providers 
in north america and telefonica 
in brazil and chile
 — demand for traditional stbs remains 
strong in the year pace achieved next 
generation hardware wins at a number 
of longstanding tier one customers 
and announced a multiproduct deal 
with charter communications a major 
cable operator in north america that 
pace had not previously supplied 
product to
 — gateway revenues were down 
199 to 3758 million in 2013 
2012 4694 million as the impact 
of expected dual sourcing at a major 
customer was only partially offset 
by new wins at customers such 
as gvt and mts
pace was confirmed as the market leader 
in paytv hardware and global number 
one in settop boxes media servers 
and telco gateways
8 a new five year 150 million revolving credit facility plus a five year term loan of 310 million to finance the acquisition of aurora networks inc was put in place on 6 january 2014
9  by volume 2012 ihs screen digest settop box market monitor h1 2013
10  by volume 2012 ihs research multimedia home gateways the future of the digital home
11  by value 2012 infonetics broadband cpe and subscribers report 4q 2012
1picar13frontsmmrindd   6 20032014   122221 annual report and accounts 2013 pace plc 07
strategic report governance financial statements
widen out in software services 
and integrated solutions
pace achieved a number of key wins 
and deployments across all areas of our 
software  services offerings and has 
a strong pipeline into 2014 revenues in 
this area increased 54 to 1138 million 
in 2013 2012 1080 million 
 — the pace elements software platform 
continues to gain significant traction as 
part of an advanced integrated solution 
with a number of wins in the year 
deliveries underway for wins achieved 
in 2013 at foxtel and other customers 
and deployments at customers such 
as telefonica vivo sky new zealand 
altibox and elisa the elements platform 
is currently being used by 33 million 
subscribers which are expected 
to increase in 2014 
 — pace elements is also a key part of 
our integrated solutions for emerging 
markets we have a number of operators 
deployed with this solution pace 
hardware software and latens 
conditional access system in india 
and have an encouraging pipeline 
in southern asia central and eastern 
europe and cis
 — the pace eco service management 
suite continues to evolve with a number 
of new modules launched in the year 
to provide increased functionality and 
wins at customers such as telstra 
telmex and bell aliant these wins 
build on a strong global customer 
footprint that includes att and bskyb 
the eco platform is currently supporting 
our customers to manage over 30 million 
devices across the world
 — the latens softwarebased 
conditional access and digital rights 
management drm business made 
good headway with a 52 growth in 
the number of subscribers the product 
is deployed to in 2013 on both pace 
and other vendors’ hardware and 
wins at a number of customers 
including telenet
12  ebitda calculated as income from operations plus depreciation and amortisation us gaap as reported
aurora acquisition
the acquisition of aurora networks inc for a headline consideration 
of 310 million on a debt and cash free basis plus a further 
13 million relating to tax benefits to be recovered over the three 
years post acquisition was announced on 23 october 2013 and 
completed on 6 january 2014 the headline consideration represents 
a historic evebitda
12
 multiple of 105x before synergies and 82x after 
expected annual runrate synergies based on the results of aurora 
for the twelve months to 31 march 2013
what does aurora do
aurora is a leading developer and manufacturer of advanced 
nextgeneration optical transport and access network solutions for 
broadband networks that support the convergence of video data 
and voice applications with a leading presence in products that are 
increasingly important for cable operators as they fulfil consumers’ 
constant demand for everincreasing bandwidth the acquisition 
further strengthens pace’s relationships with its customers 
what does aurora bring to pace
 — positions pace to support operators’ and consumers’ constant 
demand for costeffective delivery of everincreasing bandwidth
 — highly profitable and growing business with bluechip customer 
base and marketleading positions serving over 200 customers in 
50 countries including all of the top ten cable operators in the us
 — strong management team that has delivered 30 straight quarters 
of profitability
 — creates deeper and more embedded relationships with key customers
 — crosssell opportunity across customer footprints
 — further widens pace out beyond paytv customer premise 
equipment cpe
how is the integration going
aurora is now operating as a standalone strategic business unit sbu 
retaining the aurora brand and managing a separate pl to retain 
focus and accountability for business performance whilst leveraging 
pace group common services as such revenue and adjusted ebita 
contribution for aurora networks will be broken out as a separate 
sbu in subsequent statutory reports the integration of aurora into 
the pace structure is progressing well based on current progress 
the company is confident that the integration of aurora will be complete 
by the end of q2 2014 and is highly confident that the expected 
synergies stated at the point of the acquisition will be achieved 
4 million realised in 2014 at a cost of 4 million and 8 million 
runrate saving realised in 2015 at no additional cost
a further update on integration and aurora trading will be provided in 
the q1 2014 interim management statement on thursday 24 april 2014
full details are available on 
wwwpacecominvestors
1picar13frontsmmrindd   7 20032014   122223 annual report and accounts 2013 pace plc 08
continued
strategic report
chief executive officer’s review
business performance
pace has a broad global footprint within 
which individual markets are at varying 
stages of development overall the markets 
in which pace operates have remained 
strong during the year with paytv 
continuing to show varying levels of 
subscriber and average revenue per 
user arpu growth despite perceived 
disruptive threats from new overthetop 
ott market entrants and economic 
uncertainty in emerging markets on a 
global basis digital paytv subscribers 
are expected to grow at c28 compound 
annual growth rate cagr between 2014 
and 2017
13

north america
north america is the largest most 
advanced and most profitable market for 
digital paytv and broadband technology 
in the world with over 112 million paytv 
subscribers and close to 104 million 
broadband connections
14
 we believe 
the digital paytv market in north america 
will remain flat in terms of the number 
of subscribers for the foreseeable future 
with gross subscriber acquisition being 
offset by customer churn between the 
various paytv offerings
pace is the only vendor to all of the 
largest operators in each of the cable 
satellite and telco markets serving 
comcast directv and att respectively 
in each case pace supplies its most 
advanced inhome technology in addition 
pace also serves a large number of other 
cable and telco operators in both 
the usa and canada
total revenues in north america 
increased by 169 to 15405 million 
in 2013 2012 13176 million driven 
largely by strong demand from directv 
and comcast for media server products 
in h1 2013 and new wins in h2 2013 
these confirmed pace’s continued position 
of technological leadership in our sector 
and we remain confident about the longterm 
strength of the market for our products 
in north america
gateway revenues decreased by 
223 to 3486 million reflecting a 
strong comparative period in 2012 and 
the dual sourcing of supply by a major 
customer the company believes overall 
market demand remains strong for high 
performance residential gateways from 
telcos and internet service providers isps 
to effectively deliver high quality 
tripleplay services
software  services revenues in 
north america decreased by 189 to 
681 million reflecting a decreased call 
volume in the customer care business 
the software  services revenue in 
north america is primarily comprised of 
customer care eco service management 
software and professional services
latin america
the latam market is a large diverse and 
fast growing market within which pace 
serves satellite cable iptv and hybrid 
operators across the region with brazil 
mexico and argentina the key markets
the overall market has expanded 
significantly over the last few years and 
continues to display strong subscriber 
growth with a predicted 10 cagr from 
2014 to 2017
15
 this growth is led by a 
number of factors including greenfield 
markets deregulation in brazil the 2014 
world cup and 2016 olympics in brazil 
and a number of growing paytv operators 
in the region demand for paytv is strong 
at all levels of technology standard 
definition sd to support analogue to 
digital transition high definition hd 
continues to grow to meet growing 
consumer expectations and operators 
are starting to develop highend personal 
the markets in which pace operates 
have remained strong during the 
year with paytv continuing to show 
subscriber and arpu growth
13 14 and 15 ihs television intelligence service 2014
1picar13frontsmmrindd   8 20032014   122223 annual report and accounts 2013 pace plc 09
strategic report governance financial statements
video recorders pvrs and media 
servers for rollout in 2014 and beyond
pace revenue in latam decreased by 43 
to 3584 million 2012 3744 million 
due to a reduction in demand from a key 
customer pace continues to have a diverse 
business in latam pace provides product 
to eight of the ten largest paytv providers 
in the region and has made good progress 
in widening out the solutions provided in 
this market in 2013 pace achieved its first 
deployments of the following products 
gateway solutions at gvt integrated 
solution of pace elements and pace 
hardware with vivo telefonica and eco 
service management at ondigital in brazil 
the company expects to make further 
progress with these solutions and remains 
confident that latam offers strong revenues 
and profitability and is strategically well 
positioned in key markets and customers 
in the region
europe
europe remains a fragmented and highly 
customer specific territory for pace 
revenues in europe were down by 195 
to 3239 million 2012 4024 million 
however sustainable improvements in 
product mix ensured that the company 
generated the same profit on the lower 
revenue base the decrease in revenue 
was mainly due to a reduced win rate of 
new products in 2011 which adversely 
affected revenue in 2012 and 2013 sales 
performance is improving and we have 
achieved key wins in new and existing 
customers which we expect will lead 
to growth in h2 2014 
singledigit growth is predicted in the 
underlying european market
16
 however 
we expect significant growth in the media 
server segment of the market as operators 
in europe follow the innovation of north 
american operators pace launched its first 
media server outside of north america at 
get tv in norway and has been awarded 
media server contracts with a number 
of operators including liberty global
in addition the group is seeing 
increasing demand from operators for 
integrated solutions incorporating pace 
hardware and software assets that can 
be quickly deployed and that enable 
the operator to innovate and differentiate 
in highly competitive markets pace is 
focused on developing opportunities 
in this area of the market and has 
a number of projects underway
rest of world
rest of world covers a diverse range of 
markets which are developing at different 
rates the highly developed markets in 
australia new zealand and south east 
asia the “fast following” markets in the 
middle east and africa and the fast 
growing indian market revenues in rest 
of world are down 203 to 2464 million 
2012 3090 million this decrease was 
due to reduced demand from a number 
of large customers as they prepared for 
new product launches in h2 2013 and 
2014 however despite the reduced 
revenue profitability increased in the 
year reflecting improved product mix
india is a key growth market for pace 
as the country experiences large paytv 
subscriber growth and the transition from 
analogue to digital progresses in the cable 
sector during the year pace secured 
deals with a number of operators for 
its integrated solution for cable which 
combines stb hardware elements 
software platform and latens 
conditional access system
the company remains confident that 
these markets will provide significant 
growth opportunities both at the high end 
of the market with hd pvr and media 
server products and also as the uptake 
of paytv and digitisation continues in 
emerging greenfield markets allowing 
pace to increase its footprint with new 
customers through software and 
integrated solutions
board changes
mike inglis retired from his role as a 
nonexecutive director at the annual 
general meeting on 24 april 2013
2014 outlook
considerable progress has been made 
in delivering on our strategy in 2013 but 
there remains further opportunity in 2014 
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 27 billion
 — operating margin for 2014 is expected 
to be c 85 and
 — strong cash flow will continue and 
pace expects to generate at least 
185 million of free cash flow
mike pulli
chief executive officer
4 march 2014
16  ihs television intelligence service 2014
our 2013 strategic report 
from page 1 to page 23 
has been reviewed and 
approved by the board of 
directors on 4 march 2014
1picar13frontsmmrindd   9 20032014   122223