Pace Micro Technology plc

1

• Pace Micro Technology plc
• Results for the 27 week period ended 4 December
  2004
• 10 January 2005

2
Salient Points

• Shipments increased to 2.1 million set-top boxes
  (2003 1.0 million)
• Turnover 150.5m (2003 110.4m)
• Profit before tax 3.1m (2003 0.8m)
• Gross margin 16.8 (2003 19.1)

3
Salient Points

• Overheads before amortisation of goodwill of
  22.1m (2003 20.2m)
• Net cash position 11.4m (29 May 2004 net cash
  20.4m)
• Tax credit of 4.9m agreed - no cash impact
• Diluted earnings per share 3.6p (2003 0.6p).
  Excluding impact of one-off tax credit 1.4p
  (2003 0.6p) (2003 0.6p).

4
Summary FinancialPerformance
-
(1.5)
Goodwill
(0.2)
(0.2)
(0.5)
Interest
0.1
0.1
0.2
Profit before Tax
3.1
0.8
3.9
5
Balance Sheet
6
Cash Flow
7
Revenue by Geographic Market
80
Revenues by half year
UK 58m US 9.2m EMEA/APAC 83.3m
60
m
40
20
0
UK
US
EMEA/ APAC ROW
8
Gross Margin
9
Overheads
m
SGA
Overall
Engineering
Excluding goodwill and exceptional items
10
Headcount
SGA
Overall
Engineering
Tata Elxsi
11
Business Review
12
Business Highlights

• Record shipments due to increased payTV demand
• Wider geographic spread of customers, with
  shipments to 25 customers
• Managing impact of lower average selling prices
  through
• Long-term customer relationships
• Strong overhead management
• Increased use of outsource partners
• Design improvements

13
Improving Paces competitive position

• Driving competitive position through a
  combination of factors
• 1. Expanding use of outsourcing
• Over 75 software engineers on Pace projects at
  Tata Elxsi
• Introducing hardware outsourcing for low-cost
  ranges
• 2. Consistently upgrading product designs
• Next generation designs with fewer components -
  up to 20
• 3. Lower component costs

14
UK and EMEA
Key customer shipments to Sky Italia KDG Premiere
New contract announced with Premiere
Viasat BSkyB
15
USA Canada
HD shipments growing Continue to develop good
customer relationships, including Time Warner
Cable Comcast Communications Bright House
Networks Videotron Sasktel (Broadband
video) Series of new product launches planned for
2005 Combination HD personal video
recorder Second generation standard and HD
products Revenues market share expected to
increase in H2
16
Asia Pacific
Successful relationship with Foxtel continues Now
field trialling PVR platform Rest of Asia Pacific
still small, but good progress in business
development Targeting other Asia Pacific markets
with New low-cost range Digital broadband
media products PVR
17
New technology developments

• Demand for more sophisticated set-top boxes is
  growing
• Pace is well positioned through its engineering
  expertise to provide growing market requirements
  for
• Personal video recorders (PVR)
• High definition (HD)
• Combination PVR HD
• Advanced codecs (MPEG-4), H.264, Windows 10
• Multiroom
• Mobile payTV devices - PVR2GO
• GPRS wireless return path for satellite products

18
New technology developments

• Market demand for video over telephone lines is
  increasing
• Applying more resources to broadband video
  products
• And incorporating advanced codecs
• And applying expertise in new markets
• Intelligent home

19
Outlook

• Overall we expect
• Revenues and volumes to be ahead of 2003/04
• US to grow materially
• Improving margins in second half