Picking up the Pace of recovery

Pace, the Yorkshire-based maker of TV set-top boxes, appears to have made a plausible case for recovery after a year blighted by supply chain problems and a management clear out.

The stock had risen 11% by 10:16 despite the firm revealing a significant drop in organic revenues and profit before tax in 2011.

Total revenues for the year were $2.3bn, up 12% on 2010 due to the effect of previous acquisitions but organic revenues were down 7.1%

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Earnings before interest, tax and amortisation (EBITA) were $141.4m, equivalent to 6.1% of revenues and down 1.7% on 2010. Profit before tax was down to $54.7m, compared to $110m in 2010.

Pace was badly affected by the flooding in Thailand last year which restricted the supply of hard disk drives, costing Pace around $36m.

The firm also admits its inventory control was weak during the year, while its European division seriously impacted performance, with revenues down 19% compared to 2010.

The group's new Chief Executive, Mike Pulli, says the problems of last year have now been addressed and believes a continued focus on "on operational improvement and efficiency is already starting to deliver tangible results".

This morning's share price rise seems to indicate the market is taking him at his word.

BS