Pace shares surge as it embarks on the next big innovation on TV

As more people opt for larger screens (between 50 and 110 inches) to replicate the cinema experience or an on-pitch view of a Premier League football match, Saltaire-based Pace is working on the technology to support the new service.

4K Ultra HD has four times the resolution of Full HD.

A 4K TV has 8.3 million pixels on the screen, compared with 2.1 million on a Full HD TV, which means that the 4K picture will have up to four times greater detail, depth and sharpness.

Pace’s CEO Mike Pulli said: “People are trying to move to 4K, but now we need the content to get there.

“We are spinning out the platform and there will be a big push.”

He was speaking as Pace, which makes set-top boxes for pay-TV and broadband providers, announced strong results in 2014 and signs of further progress in 2015.

The company’s shares rose eight per cent to 363p on the news of a 34 per cent leap in 2014 profits to £114m as it steps up shipments of set-top boxes and media servers.

Revenue rose 6.1 per cent to £1.7bn.

“These are good, solid results and we have a good, solid outlook,” said Mr Pulli.

“We are seeing progress on our strategic plan which we’ve accomplished a year earlier than expected. We are starting to see growth.”

Analysts at Barclays said: “Pace had pre-announced the very good 2014 results so the key piece of information today is the strong 2015 outlook.

“Pace guides revenues to $2.75bn (£1.78bn) or five per cent year on year growth, as the strong momentum Pace had in 2014 in the US and other geographies is set to continue into 2015.

“Such momentum in our view will be driven by Pace retaining strong Comcast shipments, in addition to a full year of the commercial ramp of Foxtel’s full end-to-end solution in Australia, and larger volumes and geographies at Liberty Global in Europe.”

Pace expects to build on a strong second half in 2014, when it won big orders from US cable operators Comcast and AT&T.

“We launched a lot of key products and won a lot of key customers,” said Mr Pulli, adding that shipments have already begun to meet these orders.

Pace said it expects underlying 2015 earnings of around £166m. Adjusted earnings rose 24.5 per cent to £157m last year.

Pace proposed a final dividend of 4.75 cents (3.09p) per share, taking its total dividend to 7.00 cents (4.55p), up 27.5 per cent.

The company said revenue growth was boosted by its acquisition of Aurora Networks and strong demand for set-top boxes and media servers which helped to offset lower revenue in gateways, although this picked up in the second half of 2014.

Analyst Robert Lamb at Jefferies said: “Pace has completed another solid year. 2014 saw heavy product development which we feel gives a solid platform for 2015.

“Media servers should continue to see strong demand with more wider deployments in Europe. Following a challenging 2014 in gateways, new products should drive a normalisation of revenue levels.”

Mr Pulli said Europe will be a “hot spot” for the group in 2015 following a 10 per cent decline in revenue to £189.3m last year.

In North America revenue rose 6.2 per cent to £1,063.1m and by 4.1 per cent to £242.6m in Latin America. The star performer was “Rest of the World”, which rose 30 per cent to £208m, driven by Asia-Pacific.