pace micro technology plc
report  accounts 2007
mktra2007
pace micro technology plc
victoria road saltaire
bd18 3lf england
tel 44 01274 532000
fax 44 01274 532010
wwwpacemicrocom
bringing 
technology home
pace and               are trademarks andor registered trademarks of pace micro technology plc
registered in england no 1672847
pace micro technology plc report  accounts 2007
3111pace outerspineindd   1 8807   125431 01 pace micro technology plc report  accounts 2007
operating highlights
• signiﬁ cant success in north america with ongoing 
solid performance from emea and apac regions
• volume shipments increased by 77 to 39m settop 
boxes 2006 22m
• growing operator demand for specialist high deﬁ nition 
technology across all main paytv markets
• increased consumer demand for digital tv high deﬁ nition 
and pvr products 
• company restructure and new management team are 
delivering results 
financial highlights
• revenues more than doubled to £3865m 2006 
£1781m
• full year gross margin of 159 2006 180 
with uplift in h2 to 166 h120062007 153
• proﬁ t before tax and exceptional items £61m 
2006 loss £156m
• earnings per share of 30p 2006 loss per share 130p
• net cash position £119m 2006 net borrowings £61m
• on track to deliver against expectations for shortened 
ﬁ nancial year ending 31 december 2007
62 pace micro technology plc report  accounts 2007
3111pace outerspineindd   2 8807   125453 01 highlights
03 letter from the chairman
04 chief executive ofﬁ cer’s review
10 chief financial ofﬁ cer’s review
13 report of the directors
21 remuneration report
27 statement of directors’ responsibilities
28 independent auditors’ report
31 financial statements
37 notes to the financial statements
59 directors secretary and advisors
60 five year record and shareholder information
contents
02 pace micro technology plc report  accounts 2007
3111paceannualreportv10indd   4 8807   132908  
dear shareholder
i am pleased to reﬂ ect on a good year for pace during which the foundations laid in 2006 began to make 
a real difference to the business and we also celebrated the company’s silver jubilee the board set 
management a number of clear measurable objectives in 2006 and they have achieved the majority of 
them through the careful and thorough restructuring of the business and a focus on pace’s core expertise 
of designing and delivering feature rich innovative products for the paytv market
your company is committed to improving margins and has begun this work during the year margins 
improved from 153 in the ﬁ rst half to 166 in the second overall revenues rose to £3865m more 
than doubling the results of the previous year the goal we set of sustainable 20 margins remains a key 
target for 2008 during the year pace also made a major breakthrough in achieving its goals for north 
america over 50 of the revenues reported for 2007 come from north american customers pace made 
excellent progress in this region and in the rest of the world enhancing its reputation as the leading uk 
supplier to global markets
pace is a highly specialised technology innovator and it is the company’s continuous focus on its 
customers that allows it to anticipate product requirements in turn this positions pace to capture early 
market opportunities before its competition to transform technology trends into ﬁ nished products 
the approach pace continues to take is to institutionalise the improvements that have been made 
to date to ensure the business is highly professional organised to take advantage of technology 
change and to be ultra focused on quality execution
management has also worked hard to inspire the company’s key resource its people and i am happy 
to report that we have an extremely committed workforce i would like to thank neil gaydon his 
executive team and all of our employees for their skill effort dedication and teamwork one of the 
fascinating things about this business is its ability to attract highquality worldclass engineers to its 
sites around the world
the board welcomed stuart hall as the new chief financial ofﬁ cer stuart joined us in april 2007 
from iqe plc where he was finance director we were also delighted that david mckinney chief 
operating ofﬁ cer who has been with pace for over one and a half years was appointed to the board 
last october
there still remains a great deal of work to do to build a strong and resilient longterm business within an 
ever challenging and changing marketplace the board is very encouraged by the progress to date and we 
expect the improvements neil and his team are making to continue to deliver positive results the board 
has decided that strengthening the balance sheet is a priority and will therefore not be recommending a 
dividend at this time we will keep the policy under review 
i look forward to reporting back to you at the end of pace’s new shortened ﬁ nancial year which will 
complete on december 31st 2007 if you have comments on any aspect of this letter or indeed any part 
of the annual report i would be delighted to hear from you either by writing to me at pace or by email at 
mikemctighepacemicrocom
yours sincerely
mike mctighe
chairman
24 july 2007
letter from the chairman 
mike mctighe chairman
i am pleased to reﬂ ect on a 
good year for pace during 
which the foundations laid in 
2006 began to make a real 
difference to the business and 
we celebrated the company’s 
silver jubilee 
03 pace micro technology plc report  accounts 2007
3111paceannualreportv10indd   5 8807   132919  
this has been an exciting and challenging year as we took the company back into proﬁ t and grew the north american 
contribution to our business today our north american presence drives over half our revenues most importantly we have 
made fundamental operational improvements to our business and we have begun to see tangible beneﬁ ts across the group 
over the last year we have developed our global position to count more major leading operators as customers than our 
competition making us the leading force in digital tv technology in fact by revenue and market capitalisation we are the uk’s 
largest consumer electronics company 
putting customers first
the customer account team structure and methodology we put in place in 2006 placing customers at the heart of 
our business is delivering improvements from sales to engineering service and support each customer has a team 
focused on their business and technology requirements this new highly targeted philosophy is now stabilising and 
delivering results as well as creating a scalable platform for future growth and development
the pace vision introduced earlier this year  great products to our customers every time  encapsulates our focus 
we are measuring progress against our vision through three critical success factors on margin on time and on 
quality these targets have acted as a catalyst inspiring and empowering our people to improve how we create 
products and deliver them to our customers already our ofﬁ cial independent measure of customer satisfaction has 
shown some of the best results in our history and we expect further improvement
current trading
over the last year the balance of our global shipments has shifted with over 50 of the group’s revenues now coming 
from the north american market the result of our strategy to target the world’s largest paytv operators and our early 
investment in new technology platforms 
this year we have returned to proﬁ t with proﬁ t before tax and exceptional items of £61m 2006 loss £156m 
on revenues that more than doubled to £3865m 2006 £1781m product execution is getting better quality is 
increasing and margins are improving we expect to see the full beneﬁ ts over the next 12 months as improvements 
pass through the typical settop box development cycle 
regional performance
during the ﬁ rst half of the year we successfully worked through some challenges faced by the entire industry in the 
transition to mpeg4based high deﬁ nition hd platforms which had impacted deliveries of some of our new and 
highly complex settop box products the resolution of these issues combined with changes put in place by the new 
management team is enabling the business to move forward 
americas
the us is the world’s largest market for digital television technology and we saw a sixfold increase in our shipments 
to 12m units from 200000 in 2006 as we commenced new product shipments to directv and comcast two of 
the world’s largest paytv operators for directv we are delivering an mpeg4 hd personal video recorder pvr 
and have order visibility through to mid2008 we are also delivering standard deﬁ nition sd pvr to comcast and 
have committed orders in place for the rest of 2007 at the same time our north american cable customer base has 
expanded to over 30 selling a broad range of sd and hd products 
04 pace micro technology plc report  accounts 2007
chief executive ofﬁ cer’s review
neil gaydon chief executive officer
in my ﬁ rst full year as pace’s ceo 
i am pleased to report that the 
important changes we have 
made to the business are making 
a signiﬁ cant difference to our 
performance 
3111paceannualreportv10indd   6 8807   132926 05 pace micro technology plc report  accounts 2007
as of 1 july 2007 us cable settop boxes must under federal communications commission fcc regulations 
incorporate ‘separable security’ similar to the cardbased conditional access systems used by many european 
paytv operators to meet the new market requirements we have developed a full range of cablecard
tm
 
products it includes sd sd pvr hd hd pvr and analogue options the cablecard
 
boxes are also fully 
opencable
tm
 application platform ocap
tm
 compatible 
ocap is a software layer many operators intend to introduce over the next few years to improve software 
compatibility among various settop box vendors unlike other potential new entrants into the us cable market 
we have the necessary licenses and software assets to sell boxes running today’s applications and ocap 
applications in the future
the cablecard
 
range was launched in june 2007 and all products are now commercially available and 
shipping to multiple customers our ability to launch cablecard
 
products so quickly to multiple operators 
with varying software requirements was enabled by a core asset that took over three years to develop a pace 
middleware called engineware
tm
 the switch to cablecard
 
has infuenced operator buying patterns across the 
market this was anticipated and factored into our forecasts as there will be a lower level of box orders during 
the third calendar quarter of 2007 
overall i am very pleased with the progress that has been made in the americas given the particularly high 
barriers to market entry progress has been both in terms of the breadth and depth of customer relationships 
and the product range which addresses a wide range of customer needs 
emea and apac
pace has achieved longterm strong performance in these markets and this year we enjoyed solid revenue 
and volume growth as additional business was secured with new and existing customers shipments into 
the emea region increased by over 37 from 16m in 2006 to 22m settop boxes with apac shipments 
increasing slightly from 401000 to 432000 units
in emea our customers comprise a large number of the major paytv operators including bskyb sky italia 
viasat and upc in australia and new zealand we work with the majority of signiﬁ cant players foxtel optus 
and sky new zealand we are foxtel’s lead supplier and recently celebrated our one millionth box shipment 
during the year we won new business with the majority of our customers for both basic boxes and sd pvrs with 
an increasing number also ordering hd pvr designs for 2007 and 2008 of the new hd pvr business that has 
been signed digiturk a major t urkish operator will be the ﬁ rst to market toward the end of 2007 the product 
range for digiturk introduced a new technical integration challenge through its use of the irdeto conditional access 
platform and opentv middleware we expect that a number of other paytv operators will want to utilise a similar 
combined solution
we have a proud history of leading new technology developments in these markets and have created a strong 
product range in addition to the growing demand for hd and hd pvr there is a new trend for integrated 
satellite and ip enabled hybrid products and we have showcased our product capability at european trade 
shows during the year the market dynamics remain attractive with the prospect of analogue switchoff in 
some countries and increasing competition between operators in some key markets for subscribers 
chief executive ofﬁ cer’s review
continued
3111paceannualreportv10indd   7 8807   132941 market trends  technology evolution
our strategy is to build long term relationships with the world’s leading paytv operators 
and to identify and make early investments in technologies that will support and drive 
their longterm success consequently we are well placed to serve our markets and deliver 
returns for shareholders
change within our business has positioned us to take full advantage of change within our 
markets we are in the midst of a signiﬁ cant phase of technology evolution with global 
consumer demand for hd and pvr products and services one of the most important market 
drivers hd ﬂ at panel tvs have captured the eye of consumers keen for enhanced picture 
quality and have become a ‘must have’ product 
flat panels are evolving into high quality display devices as it becomes clearer that there is 
little economic or technological logic building advanced settop box functionality into the tv 
due to the different rates of change between tv and settop box technologies according to 
screen digest there will be over 228m homes by 2010 with hdready ﬂ at panel tvs and 
over 200 hd channels hd demand is driving a complete replacement chain from tv camera 
through to encoder and production technology and of course settop boxes 
there is also strong competition between paytv operators and new market entrants such as 
telephone operators providing video services over broadband this adds to the demand for 
hd and pvr services and other new advanced and specialist products as operators use the 
technology to differentiate their product offers to win and retain subscribers 
hd would not be commercially viable in many markets without mpeg4 compression a 
highly complex technology that enables more information to be transmitted in the same 
broadcast space than mpeg2 compression mpeg2 used for the last 12 years can deliver 
two hd channels against four or ﬁ ve using mpeg4 we understand how to turn this into 
easytouse consumer products 
next generation
our early technology investment has enabled some of the world’s largest paytv operators to 
launch and develop new hd services television is evolving into a new world and we are 
constantly working on next generation settop boxes as part of our programme of ‘managed 
innovation’ we have identiﬁ ed several key trends requiring solutions we are now working on
for many of our paytv customers pvr is a core element of their service offering as it helps 
retain customers by improving the consumer tv experience allowing them to watch what 
they want when they want the logical conclusion of digital recording capability is the 
desire to move content around the home known as multiroom technology developing this 
concept has not been easy and we have been working with operators for a number of years 
to devise a solution that works not only technologically but also economically with the right 
business model many of our customers believe wireless will provide the ultimate solution 
and while a robust secure technology is yet to be established we are investing in research 
that will put us in a leading position
06 pace micro technology plc report  accounts 2007
3111paceannualreportv10indd   8 8807   132944 chief executive ofﬁ cer’s review 
continued
another signiﬁ cant gap in the market is the ability to provide interactive digital services in apartment blocks and 
other ‘gated’ communities again pace has invested in the trend ahead of the market and later this year we will 
move into ﬁ eld trials for our multidwelling technology 
wherever possible we seek to register our intellectual property and today have over 100 granted patents with another 
200 applications pending 
operational improvements
some important operational improvements have been made to ensure our customers beneﬁ t from a worldclass 
manufacturing and operating strategy 
we have consolidated our global manufacturing locations with the major facilities now being centres of excellence 
in asia paciﬁ c and have made operating efﬁ ciencies and improvements in delivery performance at the same time 
we have maintained ﬂ exibility and options within our operating model to ensure we mitigate and manage business 
risk we have excellent relationships with our manufacturing partners and will continue to develop our operating 
model to satisfy customer needs
working with our strategic commodity partners we have implemented signiﬁ cant improvements to sourcing 
qualiﬁ cation availability and supply of critical components where appropriate we have qualiﬁ ed multiple sources 
for critical commodities and implemented speciﬁ c commercial strategies to ensure we do not run unnecessary 
shortage risks in the supply chain
through greater collaboration between our engineering and supply chain teams we have taken a more focused 
approach and developed a proven methodology to address all elements of product cost this is enabling us to 
provide customers with world class competitively priced products 
we have also continued to work closely with selected design partners in collaborative design manufacture cdm 
projects the cdm partners we have selected complement our own expertise and give us greater ﬂ exibility in 
meeting customer requirements in addition we have developed our offshore design capability at the pace ofﬁ ce in 
bangalore india 
these strategies are providing beneﬁ ts in ﬂ exibility responsiveness and efﬁ ciencies allowing a rapid response to 
our customers’ needs 
investing in our people
alongside organisational and process improvements we have also invested in the performance of our people 
our initial focus has been on building leadership skills developing individuals who have the capability to make a 
direct and signiﬁ cant difference to our progress this work has involved the executive team and a new grouping 
within pace the leadership group this group comprises senior managers from across the business empowered 
to drive performance against our strategic goals with the support of a tailored development programme
07 pace micro technology plc report  accounts 2007
3111paceannualreportv10indd   9 8807   132950 08 pace micro technology plc report  accounts 2007
at pace all of our employees including the leadership group are incentivised through reward schemes that are both 
meaningful and attainable at the heart of how we reward people is a new performance management scheme that assesses 
individuals both in terms of their success against agreed deliverables and how they work within our behaviours framework 
behaviours were introduced during our restructure to help establish a new framework and philosophy around working 
with each other on a daytoday basis at pace we have six behaviour themes including customer focus and teamwork 
and they have been embedded into our performance management scheme
we have also developed our communications programme i believe it is vitally important our people are well informed 
and have the information and understanding they need to be effective in their roles the latest development is my 
monthly chief executive update where employees from across the group’s ofﬁ ces worldwide come together for a regular 
update on performance against our on margin on time and on quality critical success factors 
community and the environment
at pace we have chosen to support local community groups based around our global ofﬁ ces through the work of our 
charitable donations committee and employees in this way we can support a wide range of smaller organisations that 
are making a difference around where we work and the majority of our employees live we intend to develop our activity 
in this area
over the last year we have supported adopt a family a charity based close to our us ofﬁ ce which helps impoverished 
local children and their families the pace americas team raised funds which were matched by the company through 
recycling their ofﬁ ce waste and reselling used test disk drives to support several projects including an after school project 
for homeless children elsewhere i personally supported the ﬁ rst ever bradford rotary club technology tournament 
which brought together schoolchildren to promote just how much fun engineering and technology can be meanwhile 
our people in france became involved in the restos du coeur organisation which distributes food packages and hot 
meals to the needy
3111paceannualreportv10indd   10 8807   133002 09 pace micro technology plc report  accounts 2007
chief executive ofﬁ cer’s review 
continued
looking to the environment the focus on the high technology sector has never been so great building on the 
introduction and implementation of the rohs directive on hazardous materials pace is well prepared and fully 
compliant with the weee directive regulating the environmentally sound disposal of electrical goods not only is 
the sector facing regulatory pressure but there is an increasing global spotlight on climate change and energy use 
we welcome these challenges and recognise our responsibility goes beyond just compliance with regulations 
as leaders in our sector we have continued to engage with government and trade bodies to ensure we remain 
at the forefront of new environmental developments although we can be pleased with our performance to 
date we should not become complacent the sector must respond positively to forthcoming regulation and our 
customers’ demands for energy efﬁ cient and environmentally sustainable products pace will continue to be an 
industry leader on these issues
the pace difference
digital television is a growing market and we are working with some of the world’s largest and most successful 
operators to capitalise on it our products and technological skills enable our customers to deliver new and 
exciting television services at a price and quality that make paytv attractive to consumers 
the complexity of the products we develop the longterm customer relationships the deep understanding of 
their networks and business models create high barriers to market entry as we continue to drive innovation 
and focus on worldclass execution i believe we can retain our leadership position and deliver great products 
to our customer every time 
outlook 
i am pleased that this year we have already shown signiﬁ cant improvements against our key metrics and achieved 
our shortterm goals for the business in north america going forward senior management is working with a highly 
motivated and accountable organisation one that is focused on delivering and innovating leading products for our 
customers through this focus on our strategy and structure we are better placed to address our key company 
targets of margin performance product execution technology innovation and operational excellence 
while signiﬁ cant progress has been made we are not complacent as there remains much to do given that this 
is a highly competitive and difﬁ cult market for all suppliers to predict pace is working hard to deliver against our 
critical success factors in an effort to try and deliver a more predictable business within this market 
i am pleased with the progress we have made over the last year and i am conﬁ dent that pace is on track to meet 
expectations for the shortened ﬁ nancial year ending 31 december 2007 
neil gaydon
chief executive ofﬁ cer
24 july 2007
3111paceannualreportv10indd   11 9807   104629 10 pace micro technology plc report  accounts 2007
central to growth is our ongoing ability to invest in research and development to create the new products and 
services that meet the needs of our paytv customers and keep us ahead of our competitors we are working to 
ensure that we have strong ﬁ nancial controls in place and are particularly focused on delivering working capital 
and cash ﬂ ow improvements
trading in the period
our concentration on delivery and customers has started to show improved results shipments increased by 77 
to 39m settop boxes 2006 22m and revenues more than doubled to £3865m 2006 £1781m average 
selling prices have risen from £81 to £100 reﬂ ecting the growing demand for higher speciﬁ cation products such as 
hd pvr a demand pace has been able to meet due to our ongoing early investment in new technology
while gross margin improved from 153 in the ﬁ rst half to 166 in the second half the full year outcome was 
159 2006 180 as expected this was a feature of some high volume products in particular for the us 
market with lower margins in addition the full beneﬁ t of the improvements we have made to product design and 
operations have not impacted some of the older and less costefﬁ cient designs still in production 
overheads
overheads excluding restructuring costs and the impact of ias38 were £557m 2006 £556m rd spend 
before capitalisation of development expenditure in line with ias38 was £313m 2006 £287m as pace 
continued to invest in higher speciﬁ cation products such as hd pvr the ias38 adjustment was a net credit of 
£24m 2006 net credit £73m as the delays in launching certain products in 2006 have been resolved during 
2007 
at the yearend our total headcount was 599 2006 631 which includes 390 people in engineering 2006 371 
but excludes the 118 outsourced engineers working in our pace india ofﬁ ce in bangalore that are subcontracted 
from tata elxsi 2006 101
proﬁ t before tax and retained proﬁ t
proﬁ t before tax and exceptional charges was £61m 2006 loss of £156m exceptional costs were £12m 
2006 £119m representing the remaining costs of the 2006 restructuring and organisational changes 
the interest charge was £22m 2006 credit £06m due to the increased borrowing position during the year and 
the tax credit was £18m 2006 charge £13m reﬂ ecting an increased recognition of deferred tax asset relating 
to brought forward tax losses
retained proﬁ t for the year was £68m 2006 loss £288m 
chief financial ofﬁ cer’s review
stuart hall chief financial officer
i joined the company in april 2007 and am very pleased to be 
part of pace as we continue in our development as a worldclass 
technology company 
3111paceannualreportv10indd   12 9807   104635 11 pace micro technology plc report  accounts 2007
taxation
the group has accumulated uk tax losses of approximately £42m of which 
£64m ie £21m at a 30 tax rate are recognised as deferred tax assets and 
£59m remains unrecognised ie £21m at a 28 tax rate
we will start to incur a normal uk tax charge and will start to pay uk tax again once 
available tax losses are utilised in addition to the uk where all of the commercial 
risk in our product strategy is taken we have an exposure to us french and other 
overseas jurisdictions total tax charge in both years of £02m
cash ﬂ ow and banking facilities
the net working capital position improved in the year by £133m 2006 worsened 
£13m due to a combination of inventory reduction £95m 2006 increase 
£247m debtor increase £102m 2006 decrease £95m and creditor increase 
£140m 2006 increase £138m inventory reduced principally as products 
developed in the previous ﬁ nancial year were delivered to customers debtors 
increased due to turnover more than doubling however debtor days improved slightly 
to 46 days 2006 48 days 
during the year the group negotiated a new asset based lending facility of £35m 
secured principally against debtors the group ﬁ nished the period with a signiﬁ cant 
improvement in its net cash position at £119m 2006 net borrowings £61m due 
mainly to the return to proﬁ tability within the period and the reduction in inventory 
levels following the resolution of delayed product approval in the prior year
balance sheet
non current assets
property plant and equipment levels show a decrease from £77m to £65m 
principally from a reduction in requirements given further extensions of the 
outsourcing model with our manufacturing partners
intangible assets represent capitalised development expenditure as required under 
ias38 and represent 44 of our annual spend on research and development 
2006 41
current assets and current liabilities
as noted above the net working capital position has changed in the period following 
the increased level of trading and proﬁ tability together with the reduction in inventory 
levels following the approvals of products in the period
provisions within one year relate entirely to the appropriate element of warranty 
provisions held
chief financial ofﬁ cer’s review
continued
3111paceannualreportv10indd   13 8807   133043 noncurrent liabilities
noncurrent liabilities represent royalties where the position 
is essentially unchanged and warranty provisions in respect 
of product warranties where the remaining warranty period 
exceeds 12 months
foreign exchange
while an increasing proportion of income has been received 
in the period in us dollars from sales into the us a signiﬁ cant 
proportion of our income is still received in sterling or euros 
the majority of our production costs are designated in us 
dollars we have a policy of hedging progressively against 
movements in the value of foreign currencies in respect of 
speciﬁ c cash receipts and payments expected over the next 
6 months 
yearend rates used in the accounts are 198£1 2006 
186£1 and €146£1 2006 €146£1 
business environment
note 1 to the financial statements contains a review of 
the business environment in which pace operates and the 
signiﬁ cant accounting judgements key assumptions and 
estimation uncertainties
next year we will report on our shortened ﬁ nancial year 
which will close on 31 december 2007 the change will 
enable us to more closely align our business reporting cycle 
with those of our principal customers and suppliers which 
will beneﬁ t us in the future
stuart hall
chief financial ofﬁ cer
24 july 2007
12 pace micro technology plc report  accounts 2007
3111paceannualreportv10indd   14 9807   104647 13 pace micro technology plc report  accounts 2007
report of the directors
report of the directors 
the directors present their report to shareholders on pages 13 to 20 together with the audited financial statements for the 52 week
period ended 2 june 2007 prior year 52 weeks ended 3 june 2006
principal activities 
the group’s principal activities are the development design and distribution of digital receivers and receiver decoders for the reception
of digital television and the receptiontransmission of interactive services telephony and highspeed data the group also provides
engineering design support services and software applications to its settop box customers each of these services may be delivered
over satellite cable terrestrial and ip network transmission systems
business review and financial results 
the information that fulfils the requirements of the business review including a review of the group’s activities developments and
the financial results for the year including the key financial performance indicators relevant to the business of the company principally
revenue gross margin  profit before tax and cash can be found in the chief executive officer’s review and the chief financial
officer’s review on pages 4 to 12 furthermore an overview of the group’s strategy and the key risks and uncertainties together with
their management is set out in the “business environment” section in note 1 to the financial statements the aforementioned
information is incorporated in this report by reference
the consolidated income statement for the 52 weeks ended 2 june 2007 is set out on page 31 the profit before tax was £49 million
2006 loss £275 million 
dividend 
no interim dividend was paid during the year the directors do not recommend the payment of a final dividend 2006 nil
share capital 
changes in the company’s share capital during the year ended 2 june 2007 are set out in note 19 to the financial statements
significant shareholdings 
the company has been notified of the following significant shareholdings as at 23 july 2007
number  of issued
of shares share capital
david hood and related family trusts 44486957 1908
gartmore investment management 31817332 1364
robert fleming and related family trusts 8880178 381
legal  general investment management limited 8315156 356
directors 
the names of the current directors of the company are shown below other than as described below in respect of david mckinney
and stuart hall all those listed held office throughout the year
mike mctighe 
mike aged 53 was appointed a nonexecutive director in june 2001 and became chairman on 1 may 2006 he is currently
chairman of a number of private equitybacked companies and in addition is a director of london metal exchange holdings ltd and
a nonexecutive director of alliance  leicester plc mike also advises a number of private equity partnerships previously he was
chairman  ceo of carrier1 international sa and before that executive director  chief executive global operations of cable 
wireless plc prior to these experiences mike spent 5 years with philips of the netherlands 5 years with motorola and 10 years
with ge
 63107 pace ra 1361 qk7ra 1361  8807  1433  page 13 pace micro technology plc report  accounts 2007 14
neil gaydon
neil aged 47 was appointed chief executive officer in april 2006 he was appointed to the board in june 2002 as worldwide sales
and marketing director he has been with the company since 1995 and as president pace americas spearheaded the development
of the company’s us business between 1999 and december 2003 prior to this he was regional sales director emea and head of
new business development and product marketing for the company he is a board member of bradford city of film
pat chapmanpincher 
pat aged 60 was appointed a nonexecutive director in february 2005 and became senior independent director in may 2006 she
has over 30 years’ experience in the communications industry from senior roles in multinational internet and telecoms companies to
participating in technology company startups a founding partner of the cavell group which specialises in operational consultancy
ip and wireless technologies she is also chairman of rapid mobile ltd a nonexecutive director of stepstone asa and a nonexecutive
director of friends of the earth 
rob fleming 
rob aged 51 joined the company in 1983 and became operations director in 1984 with responsibility for production and
distribution with effect from february 1999 he assumed responsibility for the engineering function within the group and became a
nonexecutive director of the company in may 2001 he is chief executive of the franklyn group limited a care property group
and a board member of bradford urc
marten fraser 
marten aged 61 was appointed a nonexecutive director in february 2005 a chartered accountant he was previously senior partner
at pricewaterhousecoopers nottingham where he worked in the audit and business advisory services department and prior to this
he was the partner in charge of the east midlands practice of price waterhouse
stuart hall
stuart aged 40 was appointed chief financial officer and joined the board on 2 april 2007 before joining the company he was
group finance director of iqe plc and prior to that finance director of energis squared limited and director of performance
management for energis goup plc he has also been finance director at wbf ltd part of the adare printing group plc carnography
plc and race electronics he qualified as a chartered accountant with bdo binder hamlyn
david mckinney
david aged 46 was appointed chief operating officer in april 2006 and joined the board on 24 october 2006 he has been with
the company since november 2005 joining as director of engineering and operations with responsibility for operations engineering
test and quality strategy previously david held a number of senior management and operational roles in technology and telecoms
companies including motorola and philips
during the year david brocksom also held office as a director retiring from the board on 2 february 2007
pat chapmanpincher and marten fraser will retire by rotation at the annual general meeting of the company and offer themselves
for reelection stuart hall and david mckinney having been appointed by the board subsequent to the last annual general meeting
will hold office until the forthcoming annual general meeting and will then offer themselves for election at that meeting details of the
executive directors’ service contracts and the nonexecutive directors’ letters of appointment are disclosed on page 23
payment to suppliers 
it is the policy of the group to agree terms and conditions for its business transactions with suppliers which are varied from time to
time payment is made in accordance with those terms subject to the other terms and conditions being met by the supplier the group
does not follow any code or standard on payment practice creditor days at the end of the year for the group were 65 days 2006
69 days and for the company were 65 days 2006 68 days
report of the directors continued
 63107 pace ra 1361 qk7ra 1361  8807  1433  page 14 15 pace micro technology plc report  accounts 2007
research and development
the directors regard it as fundamental to the future success of the group to engage in a substantial ongoing programme of research
and development of new products spending £313 million in the year 2006 £287m and charging £289 million 2006 £214m
before exceptional items to the income statement during the year following the treatment under ias38
donations 
during the year the group donated £40800 2006 £40000 to charitable causes no political donations were made further details
of the charitable and communityrelated activities of the group are given on page 19 
corporate governance 
the directors believe that the company has complied throughout the year with the combined code on corporate governance dated
june 2003 as revised and adopted by the financial reporting council the board confirms that it has established the necessary
procedures designed to maintain a sound system of internal control and that there is an ongoing process for identifying evaluating and
managing the significant risks faced by the company
board of directors 
the group is controlled through the board of directors which comprises three executive and four nonexecutive directors who bring
a wide range of skills and experience to the board biographical details of all directors are to be found on pages 13 and 14 the
chairman mike mctighe is mainly responsible for the running of the board ensuring together with the company secretary that it
receives timely and clear information appropriate to enable it to discharge its duties the responsibilities of the chief executive officer
neil gaydon focus on running the group’s business and implementing group strategy the chief executive officer is assisted in
managing the business on a daytoday basis by the executive committee as further described below all the nonexecutive directors
are deemed by the board to be independent apart from rob fleming who was previously an executive director of the company in
addition the board has designated pat chapmanpincher as the senior independent director all directors have access to the advice
and services of the company secretary and are able to take independent professional advice at the company’s expense in the
furtherance of their duties if necessary all directors in accordance with the combined code submit themselves for reelection at least
once every three years new directors receive a programme of tailored induction on joining the board and all directors are offered the
opportunity to continually update their skills and knowledge by attending external training events 
the board has a formal schedule of matters specifically reserved to it and normally meets monthly it is responsible for overall group
strategy acquisition and divestment policy approval of major capital expenditure projects and consideration of significant financing
matters it reviews the strategic direction of the group and conducts formal strategy reviews together with other senior executives
within the group at least once a year the chairman holds meetings with the nonexecutive directors without the executive directors
being present at least twice during the year 
each year the board undertakes a formal review and evaluation of its performance including the performance of its committees and
individual directors this is conducted by written feedback in standardised form from each director to the chairman or the senior
independent director in the case of appraisal of the chairman
the board has established the following committees each of which has written terms of reference specifying its authority and duties
and copies of which are publicly available on the company’s website wwwpacemicrocom 


Summary:
  
this has been an exciting and challenging year as we took the company back into proﬁ t and grew the north american 
contribution to our business today our north american presence drives over half our revenues most importantly we have 
made fundamental operational improvements to our business and we have begun to see tangible beneﬁ ts across the group 
over the last year we have developed our global position to count more major leading operators as customers than our 
competition making us the leading force in digital tv technology in fact by revenue and market capitalisation we are the uk’s 
largest consumer electronics company 
putting customers first
the customer account team structure and methodology we put in place in 2006 placing customers at the heart of 
our business is delivering improvements from sales to engineering service and support each customer has a team 
focused on their business and technology requirements this new highly targeted philosophy is now stabilising and 
delivering results as well as creating a scalable platform for future growth and development
the pace vision introduced earlier this year  great products to our customers every time  encapsulates our focus 
we are measuring progress against our vision through three critical success factors on margin on time and on 
quality these targets have acted as a catalyst inspiring and empowering our people to improve how we create 
products and deliver them to our customers already our ofﬁ cial independent measure of customer satisfaction has 
shown some of the best results in our history and we expect further improvement
current trading
over the last year the balance of our global shipments has shifted with over 50 of the group’s revenues now coming 
from the north american market the result of our strategy to target the world’s largest paytv operators and our early 
investment in new technology platforms 
this year we have returned to proﬁ t with proﬁ t before tax and exceptional items of £61m 2006 loss £156m 
on revenues that more than doubled to £3865m 2006 £1781m product execution is getting better quality is 
increasing and margins are improving we expect to see the full beneﬁ ts over the next 12 months as improvements 
pass through the typical settop box development cycle 
regional performance
during the ﬁ rst half of the year we successfully worked through some challenges faced by the entire industry in the 
transition to mpeg4based high deﬁ nition hd platforms which had impacted deliveries of some of our new and 
highly complex settop box products the resolution of these issues combined with changes put in place by the new 
management team is enabling the business to move forward 
americas
the us is the world’s largest market for digital television technology and we saw a sixfold increase in our shipments 
to 12m units from 200000 in 2006 as we commenced new product shipments to directv and comcast two of 
the world’s largest paytv operators for directv we are delivering an mpeg4 hd personal video recorder pvr 
and have order visibility through to mid2008 we are also delivering standard deﬁ nition sd pvr to comcast and 
have committed orders in place for the rest of 2007 at the same time our north american cable customer base has 
expanded to over 30 selling a broad range of sd and hd products 
04 pace micro technology plc report  accounts 2007
chief executive ofﬁ cer’s review
neil gaydon chief executive officer
in my ﬁ rst full year as pace’s ceo 
i am pleased to report that the 
important changes we have 
made to the business are making 
a signiﬁ cant difference to our 
performance 
3111paceannualreportv10indd   6 8807   132926 05 pace micro technology plc report  accounts 2007
as of 1 july 2007 us cable settop boxes must under federal communications commission fcc regulations 
incorporate ‘separable security’ similar to the cardbased conditional access systems used by many european 
paytv operators to meet the new market requirements we have developed a full range of cablecard
tm
 
products it includes sd sd pvr hd hd pvr and analogue options the cablecard
 
boxes are also fully 
opencable
tm
 application platform ocap
tm
 compatible 
ocap is a software layer many operators intend to introduce over the next few years to improve software 
compatibility among various settop box vendors unlike other potential new entrants into the us cable market 
we have the necessary licenses and software assets to sell boxes running today’s applications and ocap 
applications in the future
the cablecard
 
range was launched in june 2007 and all products are now commercially available and 
shipping to multiple customers our ability to launch cablecard
 
products so quickly to multiple operators 
with varying software requirements was enabled by a core asset that took over three years to develop a pace 
middleware called engineware
tm
 the switch to cablecard
 
has infuenced operator buying patterns across the 
market this was anticipated and factored into our forecasts as there will be a lower level of box orders during 
the third calendar quarter of 2007 
overall i am very pleased with the progress that has been made in the americas given the particularly high 
barriers to market entry progress has been both in terms of the breadth and depth of customer relationships 
and the product range which addresses a wide range of customer needs 
emea and apac
pace has achieved longterm strong performance in these markets and this year we enjoyed solid revenue 
and volume growth as additional business was secured with new and existing customers shipments into 
the emea region increased by over 37 from 16m in 2006 to 22m settop boxes with apac shipments 
increasing slightly from 401000 to 432000 units
in emea our customers comprise a large number of the major paytv operators including bskyb sky italia 
viasat and upc in australia and new zealand we work with the majority of signiﬁ cant players foxtel optus 
and sky new zealand we are foxtel’s lead supplier and recently celebrated our one millionth box shipment 
during the year we won new business with the majority of our customers for both basic boxes and sd pvrs with 
an increasing number also ordering hd pvr designs for 2007 and 2008 of the new hd pvr business that has 
been signed digiturk a major t urkish operator will be the ﬁ rst to market toward the end of 2007 the product 
range for digiturk introduced a new technical integration challenge through its use of the irdeto conditional access 
platform and opentv middleware we expect that a number of other paytv operators will want to utilise a similar 
combined solution
we have a proud history of leading new technology developments in these markets and have created a strong 
product range in addition to the growing demand for hd and hd pvr there is a new trend for integrated 
satellite and ip enabled hybrid products and we have showcased our product capability at european trade 
shows during the year the market dynamics remain attractive with the prospect of analogue switchoff in 
some countries and increasing competition between operators in some key markets for subscribers 
chief executive ofﬁ cer’s review
continued
3111paceannualreportv10indd   7 8807   132941 market trends  technology evolution
our strategy is to build long term relationships with the world’s leading paytv operators 
and to identify and make early investments in technologies that will support and drive 
their longterm success consequently we are well placed to serve our markets and deliver 
returns for shareholders
change within our business has positioned us to take full advantage of change within our 
markets we are in the midst of a signiﬁ cant phase of technology evolution with global 
consumer demand for hd and pvr products and services one of the most important market 
drivers hd ﬂ at panel tvs have captured the eye of consumers keen for enhanced picture 
quality and have become a ‘must have’ product 
flat panels are evolving into high quality display devices as it becomes clearer that there is 
little economic or technological logic building advanced settop box functionality into the tv 
due to the different rates of change between tv and settop box technologies according to 
screen digest there will be over 228m homes by 2010 with hdready ﬂ at panel tvs and 
over 200 hd channels hd demand is driving a complete replacement chain from tv camera 
through to encoder and production technology and of course settop boxes 
there is also strong competition between paytv operators and new market entrants such as 
telephone operators providing video services over broadband this adds to the demand for 
hd and pvr services and other new advanced and specialist products as operators use the 
technology to differentiate their product offers to win and retain subscribers 
hd would not be commercially viable in many markets without mpeg4 compression a 
highly complex technology that enables more information to be transmitted in the same 
broadcast space than mpeg2 compression mpeg2 used for the last 12 years can deliver 
two hd channels against four or ﬁ ve using mpeg4 we understand how to turn this into 
easytouse consumer products 
next generation
our early technology investment has enabled some of the world’s largest paytv operators to 
launch and develop new hd services television is evolving into a new world and we are 
constantly working on next generation settop boxes as part of our programme of ‘managed 
innovation’ we have identiﬁ ed several key trends requiring solutions we are now working on
for many of our paytv customers pvr is a core element of their service offering as it helps 
retain customers by improving the consumer tv experience allowing them to watch what 
they want when they want the logical conclusion of digital recording capability is the 
desire to move content around the home known as multiroom technology developing this 
concept has not been easy and we have been working with operators for a number of years 
to devise a solution that works not only technologically but also economically with the right 
business model many of our customers believe wireless will provide the ultimate solution 
and while a robust secure technology is yet to be established we are investing in research 
that will put us in a leading position
06 pace micro technology plc report  accounts 2007
3111paceannualreportv10indd   8 8807   132944 chief executive ofﬁ cer’s review 
continued
another signiﬁ cant gap in the market is the ability to provide interactive digital services in apartment blocks and 
other ‘gated’ communities again pace has invested in the trend ahead of the market and later this year we will 
move into ﬁ eld trials for our multidwelling technology 
wherever possible we seek to register our intellectual property and today have over 100 granted patents with another 
200 applications pending 
operational improvements
some important operational improvements have been made to ensure our customers beneﬁ t from a worldclass 
manufacturing and operating strategy 
we have consolidated our global manufacturing locations with the major facilities now being centres of excellence 
in asia paciﬁ c and have made operating efﬁ ciencies and improvements in delivery performance at the same time 
we have maintained ﬂ exibility and options within our operating model to ensure we mitigate and manage business 
risk we have excellent relationships with our manufacturing partners and will continue to develop our operating 
model to satisfy customer needs
working with our strategic commodity partners we have implemented signiﬁ cant improvements to sourcing 
qualiﬁ cation availability and supply of critical components where appropriate we have qualiﬁ ed multiple sources 
for critical commodities and implemented speciﬁ c commercial strategies to ensure we do not run unnecessary 
shortage risks in the supply chain
through greater collaboration between our engineering and supply chain teams we have taken a more focused 
approach and developed a proven methodology to address all elements of product cost this is enabling us to 
provide customers with world class competitively priced products 
we have also continued to work closely with selected design partners in collaborative design manufacture cdm 
projects the cdm partners we have selected complement our own expertise and give us greater ﬂ exibility in 
meeting customer requirements in addition we have developed our offshore design capability at the pace ofﬁ ce in 
bangalore india 
these strategies are providing beneﬁ ts in ﬂ exibility responsiveness and efﬁ ciencies allowing a rapid response to 
our customers’ needs 
investing in our people
alongside organisational and process improvements we have also invested in the performance of our people 
our initial focus has been on building leadership skills developing individuals who have the capability to make a 
direct and signiﬁ cant difference to our progress this work has involved the executive team and a new grouping 
within pace the leadership group this group comprises senior managers from across the business empowered 
to drive performance against our strategic goals with the support of a tailored development programme
07 pace micro technology plc report  accounts 2007
3111paceannualreportv10indd   9 8807   132950 08 pace micro technology plc report  accounts 2007
at pace all of our employees including the leadership group are incentivised through reward schemes that are both 
meaningful and attainable at the heart of how we reward people is a new performance management scheme that assesses 
individuals both in terms of their success against agreed deliverables and how they work within our behaviours framework 
behaviours were introduced during our restructure to help establish a new framework and philosophy around working 
with each other on a daytoday basis at pace we have six behaviour themes including customer focus and teamwork 
and they have been embedded into our performance management scheme
we have also developed our communications programme i believe it is vitally important our people are well informed 
and have the information and understanding they need to be effective in their roles the latest development is my 
monthly chief executive update where employees from across the group’s ofﬁ ces worldwide come together for a regular 
update on performance against our on margin on time and on quality critical success factors 
community and the environment
at pace we have chosen to support local community groups based around our global ofﬁ ces through the work of our 
charitable donations committee and employees in this way we can support a wide range of smaller organisations that 
are making a difference around where we work and the majority of our employees live we intend to develop our activity 
in this area
over the last year we have supported adopt a family a charity based close to our us ofﬁ ce which helps impoverished 
local children and their families the pace americas team raised funds which were matched by the company through 
recycling their ofﬁ ce waste and reselling used test disk drives to support several projects including an after school project 
for homeless children elsewhere i personally supported the ﬁ rst ever bradford rotary club technology tournament 
which brought together schoolchildren to promote just how much fun engineering and technology can be meanwhile 
our people in france became involved in the restos du coeur organisation which distributes food packages and hot 
meals to the needy
3111paceannualreportv10indd   10 8807   133002 09 pace micro technology plc report  accounts 2007
chief executive ofﬁ cer’s review 
continued
looking to the environment the focus on the high technology sector has never been so great building on the 
introduction and implementation of the rohs directive on hazardous materials pace is well prepared and fully 
compliant with the weee directive regulating the environmentally sound disposal of electrical goods not only is 
the sector facing regulatory pressure but there is an increasing global spotlight on climate change and energy use 
we welcome these challenges and recognise our responsibility goes beyond just compliance with regulations 
as leaders in our sector we have continued to engage with government and trade bodies to ensure we remain 
at the forefront of new environmental developments although we can be pleased with our performance to 
date we should not become complacent the sector must respond positively to forthcoming regulation and our 
customers’ demands for energy efﬁ cient and environmentally sustainable products pace will continue to be an 
industry leader on these issues
the pace difference
digital television is a growing market and we are working with some of the world’s largest and most successful 
operators to capitalise on it our products and technological skills enable our customers to deliver new and 
exciting television services at a price and quality that make paytv attractive to consumers 
the complexity of the products we develop the longterm customer relationships the deep understanding of 
their networks and business models create high barriers to market entry as we continue to drive innovation 
and focus on worldclass execution i believe we can retain our leadership position and deliver great products 
to our customer every time 
outlook 
i am pleased that this year we have already shown signiﬁ cant improvements against our key metrics and achieved 
our shortterm goals for the business in north america going forward senior management is working with a highly 
motivated and accountable organisation one that is focused on delivering and innovating leading products for our 
customers through this focus on our strategy and structure we are better placed to address our key company 
targets of margin performance product execution technology innovation and operational excellence 
while signiﬁ cant progress has been made we are not complacent as there remains much to do given that this 
is a highly competitive and difﬁ cult market for all suppliers to predict pace is working hard to deliver against our 
critical success factors in an effort to try and deliver a more predictable business within this market 
i am pleased with the progress we have made over the last year and i am conﬁ dent that pace is on track to meet 
expectations for the shortened ﬁ nancial year ending 31 december 2007 
neil gaydon
chief executive ofﬁ cer
24 july 2007
3111paceannualreportv10indd   11 9807   104629