PIC Pace

TIDMPIC TIDMARRS

RNS Number : 4479Z

Pace PLC

18 September 2015

Pace plc: Combination and Trading Update

Saltaire, UK, 18 September 2015: Pace plc ("Pace", the "Group"), a leading global developer of technologies and products for PayTV and broadband service providers, today provides the following update.

The recommended combination with ARRIS Group ("ARRIS") continues to progress in-line with expectations and, subject to the satisfaction, or where relevant, waiver, of all relevant conditions, the transaction is expected to close in late 2015:

-- The merger control process is underway in all relevant jurisdictions (Brazil, Colombia, Portugal and the United States), with approval received from the German and South African authorities. In the United States ARRIS and Pace are responding to a second request and currently expect that the review of the Combination will be concluded by or before the middle of December 2015;

-- The Form S-4 Registration Statement is effective and the ARRIS Special Meeting to vote on the Combination is expected to be held on 21 October 2015;

-- The Scheme Circular is expected to be posted to Pace shareholders soon and the Pace General Meeting to vote on the Combination is expected to be held on 22 October 2015.

Ahead of posting the Scheme Circular, Pace provides the following update on trading:

As previously stated, we continue to expect strong revenue growth in H2 2015 vs H1 2015 driven by new product launches and additional demand for existing products. Due to continuing challenging economic conditions in certain regions, phasing delays at major customers in North America and delayed decisions by customers, current forecasts indicate that revenue growth will be slightly lower than previously expected. However, due to an improved product mix, improving supply chain effectiveness and increased operational efficiencies, the Group expects no change to previously communicated profitability and cash flow for the year.

As such, the outlook for the year is as follows:

   --      Revenue for 2015 is now expected to be c. $2.55bn (2014: $2.62bn); 
   --      Adjusted EBITA for 2015 is still expected to be c. $255m (2014: $241.1m); 

-- Free cash flow for 2015 is still expected to be in the range of $185m to $195m (2014: $204.0m).

For further information please contact:

 
 Charles Chichester        Mark Shuttleworth / Chris 
                            Mather 
 Pendomer Communications   Pace plc 
 +44 (0) 203 6035 220      +44 (0) 1274 538 330 
 

Directors' Confirmation on Ordinary Course Profit Forecasts

The Group is currently in an offer period and consequently pursuant to the requirements of Rule 28 of the City Code on Takeovers and Mergers in relation to any repeated ordinary course profit forecast it is required to repeat the profit forecast and include a statement by the directors that it remains valid and provide a confirmation by the directors that the profit forecast has been properly compiled on the basis of the assumptions stated and that the basis of accounting used is consistent with the company's accounting policies.

This profit forecast (the "Profit Forecast") is a repetition of a profit forecast for the year ending 31 December 2015 made in the Group's preliminary results for the year ended 31 December 2014 released on 3 March 2015 and constitutes an "ordinary course profit forecast" for the purposes of Rule 28 of the City Code on Takeovers and Mergers.

Basis of preparation

The Profit Forecast has been prepared on a basis consistent with the Group's accounting policies, which are in accordance with IFRS. These accounting policies are expected to apply for the full year ending 31 December 2015, and were applied in the preparation of the Group's consolidated financial statements for the year ended 31 December 2014 and unaudited interim financial statements for the period ended 30 June 2015.

The Profit Forecast is based on the actual unaudited results for the eight months ended 29 August 2015 and a management forecast for the four months ending 31 December 2015.

The Profit Forecast excludes any costs associated with any combination of Pace plc and ARRIS Group Inc. (the "Combination") or any other associated accounting impact as a direct result of the Combination.

The Profit Forecast has been prepared on the basis that other than delayed decisions by customers due to the Combination, the Combination will have no financial impact on the Group before 31 December 2015.

Principal assumptions

The directors of Pace plc have prepared the Profit Forecast on the basis of the following assumptions:

-- Factors outside the influence or control of the Directors of Pace plc (or other members of the Group's management)

o There will be no material change to existing prevailing global macroeconomic or political conditions;

o There will be no material changes in conditions of markets in which the Group operates;

o The main exchange rates, inflation, tax and interest rates in the Group's principal markets, will remain materially unchanged from prevailing rates;

o Customers will take products in line with forecasts provided by them or in line with forecasts prepared by the Group where no customer provided forecast exists;

o There will be no material events impacting the ability to transport the Group's products to customers;

o There will be no catastrophic disruption to any of the Group's Electronic Manufacturing Services partners or supplies of significant components used by the Group;

o There will be no material change in legislation or regulatory requirements impacting on the Group's operations or its accounting policies;

o There will be no material change to the level of competition experienced by the Group from providers of similar products and services;

o There will be no adverse impact on the Group from consolidation of companies within the end-markets in which Pace operates;

o The announcement of the Combination will not result in any material changes to the Group's obligations to customers;

o The announcement of the Combination will not have any impact, further to that stated in the above update, on the timing of the Group's customers placing new or executing existing orders; and

o The announcement of the Combination will not have any material impact on the Group's ability to negotiate new business.

-- Factors within the influence or control of the Directors of Pace plc (or other members of the Group's management)

o The Group's rate of converting customer demand to revenue will not differ materially from past experience;

o The Group will launch and deliver new products on schedule;

o There will be no unexpected technical issues with the Group's products or process;

o The Group's forecasting accuracy will not differ materially from past experience;

o The announcement of the Combination will not have a material impact on the Group's ability to retain and motivate employees;

o Pricing of products to customers and input pricing for products is consistent with those forecast;

o Operating costs will remain in line with normal trading activity and are managed in line with revenue;

o The Group's accounting policies will be consistently applied in the financial year to 31 December 2015; and

o There will be no material change to the Group's existing operational strategy.

In addition to the factors above, risks relating to the Group's trading are stated in the Risk management and principal risks section of the Pace plc Annual Report and Accounts for the year ended 31 December 2014.

Directors' confirmation

The Directors of Pace plc confirm that the Profit Forecast remains valid and has been properly compiled on the basis of the principal assumptions stated and the basis of accounting is consistent with the Group's accounting policies.

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September 18, 2015 02:00 ET (06:00 GMT)