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| | | | F-1 | | | |
Annex A: Merger Agreement | | | | | | | |
Annex B: Rule 2.7 Announcement | | | | | | | |
Annex C: Co-operation Agreement | | | | | | | |
Annex D: Form of Articles of Association of
New ARRIS |
| | | | | | |
Annex E: Fairness Opinion of Evercore | | | | | | | |
Annex G: Pace Interim Results | | | | | | | |
| | |
ARRIS
Common Stock |
| |
Pace Ordinary Shares
|
| |
Implied Equivalent Value per
Pace Ordinary Shares(1) |
| |||||||||||||||||||||
| | |
($)
|
| |
(£)
|
| |
($)
|
| |
(£)
|
| |
($)
|
| |||||||||||||||
April 22, 2015
|
| | | $ | 30.54 | | | | | £ | 3.32 | | | | | $ | 4.99(2) | | | | | £ | 4.28 | | | | | $ | 6.44(2) | | |
August 31, 2015
|
| | | $ | 26.42 | | | | | £ | 3.41 | | | | | $ | 5.23(3) | | | | | £ | 3.83 | | | | | $ | 5.88(3) | | |
| | |
Six Months Ended
June 30, |
| |
Years Ended December 31,
|
| ||||||||||||||||||||||||||||||||||||
| | |
2015
|
| |
2014
|
| |
2014
|
| |
2013
|
| |
2012
|
| |
2011
|
| |
2010
|
| |||||||||||||||||||||
| | |
(in thousands, except per share data)
|
| |||||||||||||||||||||||||||||||||||||||
Consolidated Operating Data: | | | | | | | | | |||||||||||||||||||||||||||||||||||
Net sales
|
| | | $ | 2,475,234 | | | | | $ | 2,654,088 | | | | | $ | 5,322,921 | | | | | $ | 3,620,902 | | | | | $ | 1,353,663 | | | | | $ | 1,088,685 | | | | | $ | 1,087,506 | | |
Cost of sales
|
| | | | 1,774,317 | | | | | | 1,887,901 | | | | | | 3,740,425 | | | | | | 2,598,154 | | | | | | 891,086 | | | | | | 678,172 | | | | | | 663,417 | | |
Gross margin
|
| | | | 700,917 | | | | | | 766,187 | | | | | | 1,582,496 | | | | | | 1,022,748 | | | | | | 462,577 | | | | | | 410,513 | | | | | | 424,089 | | |
Selling, general and administrative expenses
|
| | | | 207,534 | | | | | | 211,494 | | | | | | 410,568 | | | | | | 338,252 | | | | | | 161,338 | | | | | | 148,755 | | | | | | 137,694 | | |
Research and development expenses
|
| | | | 268,728 | | | | | | 278,274 | | | | | | 556,575 | | | | | | 425,825 | | | | | | 170,706 | | | | | | 146,519 | | | | | | 140,468 | | |
Amortization of intangible assets
|
| | | | 113,930 | | | | | | 122,736 | | | | | | 236,521 | | | | | | 193,637 | | | | | | 30,294 | | | | | | 33,649 | | | | | | 35,957 | | |
Integration, acquisition, restructuring and other costs
|
| | | | 13,465 | | | | | | 24,020 | | | | | | 37,498 | | | | | | 83,047 | | | | | | 12,968 | | | | | | 7,565 | | | | | | 65 | | |
Impairment of goodwill &
intangibles |
| | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | 88,633 | | | | | | — | | |
Operating (loss) income
|
| | | | 97,260 | | | | | | 129,663 | | | | | | 341,334 | | | | | | (18,013) | | | | | | 87,271 | | | | | | (14,608) | | | | | | 109,905 | | |
Interest expense
|
| | | | 41,821 | | | | | | 34,823 | | | | | | 62,901 | | | | | | 67,888 | | | | | | 17,797 | | | | | | 16,939 | | | | | | 17,965 | | |
Loss (gain) on debt retirement
|
| | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | 19 | | | | | | (373) | | |
Interest income
|
| | | | (1,279) | | | | | | (1,284) | | | | | | (2,590) | | | | | | (2,936) | | | | | | (3,242) | | | | | | (3,154) | | | | | | (1,997) | | |
Loss (gain) on investments and note receivable
|
| | | | 3,119 | | | | | | 4,911 | | | | | | 10,961 | | | | | | 2,698 | | | | | | (1,404) | | | | | | 1,570 | | | | | | (414) | | |
Other expense (income), net
|
| | | | 1,358 | | | | | | 7,247 | | | | | | 30,832 | | | | | | 10,487 | | | | | | (176) | | | | | | (1,471) | | | | | | 94 | | |
Income (loss) before income taxes
|
| | | | 52,241 | | | | | | 83,966 | | | | | | 239,230 | | | | | | (96,150) | | | | | | 74,296 | | | | | | (28,511) | | | | | | 94,630 | | |
Income tax expense (benefit)
|
| | | | 17,973 | | | | | | 4,142 | | | | | | (87,981) | | | | | | (47,390) | | | | | | 20,837 | | | | | | (10,849) | | | | | | 30,502 | | |
Net (loss) income
|
| | | $ | 35,883 | | | | | $ | 79,824 | | | | | $ | 327,211 | | | | | $ | (48,760) | | | | | $ | 53,459 | | | | | $ | (17,662) | | | | | $ | 64,128 | | |
Net (loss) income per common share: | | | | | | | | | |||||||||||||||||||||||||||||||||||
Basic
|
| | | $ | 0.25 | | | | | $ | 0.56 | | | | | $ | 2.27 | | | | | $ | (0.37) | | | | | $ | 0.47 | | | | | $ | (0.15) | | | | | $ | 0.51 | | |
Diluted
|
| | | $ | 0.24 | | | | | $ | 0.54 | | | | | $ | 2.21 | | | | | $ | (0.37) | | | | | $ | 0.46 | | | | | $ | (0.15) | | | | | $ | 0.50 | | |
Selected Balance Sheet Data: | | | | | | | | | |||||||||||||||||||||||||||||||||||
Total assets
|
| | | $ | 4,558,675 | | | | | $ | 4,330,820 | | | | | $ | 4,365,645 | | | | | $ | 4,322,007 | | | | | $ | 1,405,894 | | | | | $ | 1,360,810 | | | | | $ | 1,424,087 | | |
Long-term obligations
|
| | | $ | 1,537,641 | | | | | $ | 1,507,796 | | | | | $ | 1,665,014 | | | | | $ | 1,907,992 | | | | | $ | 74,785 | | | | | $ | 286,749 | | | | | $ | 282,087 | | |
| | |
Years Ended December 31
|
| |||||||||||||||||||||||||||
| | |
2014
|
| |
2013
|
| |
2012
|
| |
2011
|
| |
2010
|
| |||||||||||||||
| | |
(in millions, except per share data)
|
| |||||||||||||||||||||||||||
Consolidated Operating Data: | | | | | | | |||||||||||||||||||||||||
Revenue
|
| | | $ | 2,620.0 | | | | | $ | 2,469.2 | | | | | $ | 2,403.4 | | | | | $ | 2,309.3 | | | | | $ | 2,062.9 | | |
Cost of sales
|
| | | | (2,087.5) | | | | | | (2,021.0) | | | | | | (1,970.4) | | | | | | (1,866.0) | | | | | | (1,667.8) | | |
Gross profit
|
| | | | 532.5 | | | | | | 448.2 | | | | | | 433.0 | | | | | | 443.3 | | | | | | 395.1 | | |
Administrative expenses: | | | | | | | |||||||||||||||||||||||||
Research and development expenditure
|
| | | | (83.7) | | | | | | (87.0) | | | | | | (101.1) | | | | | | (112.7) | | | | | | (68.0) | | |
Amortisation of development expenditure
|
| | | | (45.4) | | | | | | (45.6) | | | | | | (54.3) | | | | | | (47.9) | | | | | | (52.0) | | |
Other administrative expenses:
|
| | | | | | |||||||||||||||||||||||||
Before exceptional costs
|
| | | | (162.3) | | | | | | (122.0) | | | | | | (119.5) | | | | | | (141.3) | | | | | | (114.5) | | |
Exceptional costs
|
| | | | (7.3) | | | | | | (12.2) | | | | | | (12.5) | | | | | | (12.7) | | | | | | (29.5) | | |
Amortisation of other intangibles
|
| | | | (52.9) | | | | | | (42.6) | | | | | | (51.8) | | | | | | (55.7) | | | | | | (18.1) | | |
Total administrative expenses
|
| | | | (351.6) | | | | | | (309.4) | | | | | | (339.2) | | | | | | (370.3) | | | | | | (282.1) | | |
Operating profit
|
| | | | 180.9 | | | | | | 138.8 | | | | | | 93.8 | | | | | | 73.0 | | | | | | 113.0 | | |
Finance income – interest receivable
|
| | | | 2.5 | | | | | | 1.8 | | | | | | 0.5 | | | | | | 0.2 | | | | | | 1.2 | | |
Finance expenses – interest payable
|
| | | | (7.7) | | | | | | (9.8) | | | | | | (14.2) | | | | | | (18.5) | | | | | | (4.0) | | |
Profit before tax
|
| | | | 175.7 | | | | | | 130.8 | | | | | | 80.1 | | | | | | 54.7 | | | | | | 110.2 | | |
Tax charge
|
| | | | (27.7) | | | | | | (34.1) | | | | | | (21.7) | | | | | | (15.9) | | | | | | (32.9) | | |
Profit for the year
|
| | | $ | 148.0 | | | | | $ | 96.7 | | | | | $ | 58.4 | | | | | $ | 38.8 | | | | | $ | 77.3 | | |
Profit attributable to: | | | | | | | |||||||||||||||||||||||||
Equity holders of Pace
|
| | | $ | 148.0 | | | | | $ | 96.7 | | | | | $ | 58.4 | | | | | $ | 38.8 | | | | | $ | 77.3 | | |
Earnings per ordinary share: | | | | | | | |||||||||||||||||||||||||
Basic earnings per ordinary share (cents)
|
| | | | 47.4 | | | | | | 31.2 | | | | | | 19.4 | | | | | | 13.2 | | | | | | 26.4 | | |
Diluted earnings per ordinary share (cents)
|
| | | | 45.6 | | | | | | 29.8 | | | | | | 18.5 | | | | | | 12.5 | | | | | | 25.0 | | |
Selected Balance Sheet Data: | | | | | | | |||||||||||||||||||||||||
Total assets
|
| | | $ | 2,122.2 | | | | | $ | 1,271.1 | | | | | $ | 1,488.1 | | | | | $ | 1,208.6 | | | | | $ | 1,112.6 | | |
Long-term obligations
|
| | | $ | 428.1 | | | | | $ | 116.6 | | | | | $ | 196.5 | | | | | $ | 284.6 | | | | | $ | 378.4 | | |
| | |
As of
June 30, 2015 |
| |||
| | |
(In thousands)
|
| |||
Total assets
|
| | | $ | 7,916,277 | | |
Long-term debt and financing lease obligations
|
| | | $ | 2,314,650 | | |
Total debt, financing lease obligations, and short-term borrowings
|
| | | $ | 2,404,951 | | |
Total stockholders’ equity
|
| | | $ | 3,131,814 | | |
| | |
Six months ended
June 30, 2015 |
| |
Year Ended
December 31, 2014 |
| ||||||
| | |
(In thousands, except per share data)
|
| |||||||||
Net sales
|
| | | $ | 3,553,719 | | | | | $ | 7,944,032 | | |
Net income
|
| | | $ | 48,241 | | | | | $ | 260,930 | | |
Net income per common share – Basic
|
| | | $ | 0.25 | | | | | $ | 1.35 | | |
Net income per common share – Diluted
|
| | | $ | 0.24 | | | | | $ | 1.32 | | |
Weighted average common shares – Basic
|
| | | | 195,068 | | | | | | 193,631 | | |
Weighted average common shares – Diluted
|
| | | | 197,695 | | | | | | 196,935 | | |
Sector
|
| |
Selected
Public Company |
| |
EV/2015E
EBITDA |
| |
EV/2016E
EBITDA |
| ||||||
Cable Infrastructure/Software
|
| | Cisco Systems | | | | | 7.4x | | | | | | 7.2x | | |
Cable Infrastructure/Software
|
| | Ericsson | | | | | 9.3x | | | | | | 8.3x | | |
Cable Infrastructure/Software
|
| | Rovi | | | | | 11.1x | | | | | | 8.6x | | |
Cable Infrastructure/Software
|
| | Harmonic | | | | | 10.4x | | | | | | 9.0x | | |
Cable Infrastructure/Software
|
| | Kudelski | | | | | 12.7x | | | | | | 12.2x | | |
Cable Infrastructure/Software
|
| | SeaChange | | | | | NM | | | | | | NM | | |
Cable Infrastructure/Software
|
| | Vecima Networks | | | | | 6.2x | | | | | | NA | | |
Cable Infrastructure/Software
|
| | Teleste | | | | | 5.7x | | | | | | 5.3x | | |
Set-top Box
|
| | ARRIS | | | | | 7.6x | | | | | | 6.8x | | |
Set-top Box
|
| | Technicolor | | | | | 5.5x | | | | | | 6.5x | | |
Set-top Box
|
| | TiVO | | | | | 6.5x | | | | | | 5.2x | | |
Set-top Box
|
| |
Amino Technologies
|
| | | | 7.1x | | | | | | 6.2x | | |
Set-top Box
|
| | ADB Holdings | | | | | NA | | | | | | NA | | |
Gateway/Other CPE
|
| | Aruba | | | | | 8.4x | | | | | | 7.4x | | |
Gateway/Other CPE
|
| | NETGEAR | | | | | 6.2x | | | | | | 5.8x | | |
Gateway/Other CPE
|
| | D-Link | | | | | NA | | | | | | NA | | |
| | | Reference: | | | | ||||||||||
| | | ARRIS | | | | | 7.6x | | | | | | 6.8x | | |
| | | Pace | | | | | 6.3x | | | | | | 6.1x | | |
Announcement Date
|
| |
Acquirer
|
| |
Target
|
| |
Enterprise
Value (in millions) |
| |
Enterprise
Value/LTM EBITDA |
| ||||||
03/31/14
|
| | Parallax Capital Partners/ StepStone Group |
| | Rovi (DivX and MainConcept) | | | | $ | 75 | | | | | | NA | | |
03/26/14
|
| | Kudelski | | | Conax | | | | $ | 250 | | | | | | 6.2x | | |
02/06/14
|
| | Belden | | | Grass Valley | | | | $ | 220 | | | | | | 8.1x | | |
01/29/14
|
| | TiVo | | | Digitalsmiths | | | | $ | 135 | | | | | | NA | | |
10/23/13
|
| | Pace | | | Aurora Networks(1) | | | | $ | 310 | | | | | | 10.5x | | |
04/08/13
|
| | Ericsson | | | Microsoft Mediaroom | | | | $ | NA | | | | | | NA | | |
02/19/13
|
| | Aurora Networks | | | Harmonic Cable Access Business | | | | $ | 46 | | | | | | NA | | |
12/19/12
|
| | ARRIS | | |
Motorola Mobility Home Business
|
| | | $ | 2,350 | | | | | | 6.0x | | |
12/06/12
|
| | Gores Group | | |
Harris Broadcast Communications
|
| | | $ | 225 | | | | | | NA | | |
03/15/12
|
| | Cisco Systems | | | NDS Group | | | | $ | 5,000 | | | | | | 18.3x | | |
10/11/11
|
| | ARRIS | | | BigBand Networks | | | | $ | 53 | | | | | | NM | | |
12/22/10
|
| | Rovi | | | Sonic Solutions | | | | $ | 720 | | | | | | NM | | |
07/26/10
|
| | Pace | | | 2Wire, Inc. | | | | $ | 420 | | | | | | NA | | |
07/26/10
|
| | Francisco Partners | | | Grass Valley | | | | $ | 100 | | | | | | NM | | |
05/06/10
|
| | Harmonic | | | Omneon | | | | $ | 274 | | | | | | NA | | |
10/05/09
|
| | Kudelski | | | OpenTV (68% Stake) | | | | $ | 102 | | | | | | 7.2x | | |
06/27/08
|
| | Permira Advisers | | | NDS Group (51% Stake) | | | | $ | 2,828 | | | | | | 12.2x | | |
12/19/07
|
| | Pace | | |
Royal Philips Set-Top Box Business
|
| | | $ | 144 | | | | | | NM | | |
10/28/07
|
| | The Gores Group | | | Sagem (Safran Broadband Sub)(2) | | | | $ | 551 | | | | | | 4.0x | | |
09/24/07
|
| | EchoStar | | | Sling Media | | | | $ | 380 | | | | | | NA | | |
09/23/07
|
| | ARRIS | | | C-COR | | | | $ | 609 | | | | | | 17.1x | | |
07/31/07
|
| |
British Sky Broadcasting
|
| | Amstrad | | | | $ | 198 | | | | | | 5.1x | | |
04/23/07
|
| | Motorola | | | Terayon | | | | $ | 119 | | | | | | NM | | |
02/26/07
|
| | Ericsson | | | TANDBERG Television ASA | | | | $ | 1,416 | | | | | | 17.8x | | |
Announcement Date
|
| |
Acquirer
|
| |
Target
|
| |
Enterprise
Value (in millions) |
| |
Enterprise
Value/LTM EBITDA |
| ||||||
02/12/07
|
| | LM Ericsson | | | Entrisphere(3) | | | | $ | 250 | | | | | | NA | | |
12/04/06
|
| | NDS Group | | | Jungo | | | | $ | 108 | | | | | | NA | | |
11/14/06
|
| | Motorola | | | Netopia | | | | $ | 180 | | | | | | NM | | |
01/17/06
|
| | Motorola | | | Kreatel | | | | $ | 108 | | | | | | NA | | |
11/18/05
|
| | Cisco Systems | | | Scientific-Atlanta | | | | $ | 5,278 | | | | | | 12.9x | | |
| | |
1-Day
|
| |
1-Month VWAP
|
| |
3-Month VWAP
|
| |
6-Month VWAP
|
| ||||||||||||
UK Takeover Premia | | | | | | ||||||||||||||||||||
2014
|
| | | | 38.0% | | | | | | 40.8% | | | | | | 38.6% | | | | | | 34.5% | | |
2013
|
| | | | 43.7% | | | | | | 40.5% | | | | | | 41.5% | | | | | | 40.7% | | |
2012
|
| | | | 49.7% | | | | | | 54.3% | | | | | | 57.8% | | | | | | 59.9% | | |
2011
|
| | | | 44.3% | | | | | | 45.2% | | | | | | 47.2% | | | | | | 41.3% | | |
2010
|
| | | | 45.9% | | | | | | 48.9% | | | | | | 53.7% | | | | | | 54.6% | | |
2009
|
| | | | 59.9% | | | | | | 66.9% | | | | | | 82.2% | | | | | | 71.4% | | |
2008
|
| | | | 47.9% | | | | | | 48.4% | | | | | | 45.6% | | | | | | 39.3% | | |
2007
|
| | | | 31.3% | | | | | | 33.8% | | | | | | 34.4% | | | | | | 36.4% | | |
| | |
No. of
Shares(1) |
| |
Value(2)
|
| |
Excise Tax
|
| |
Estimated Tax
Equalization Payment |
| ||||||||||||
Jim Brennan
|
| | | | 141,766 | | | | | $ | 5,316,225 | | | | | $ | 797,434 | | | | | $ | 2,152,318 | | |
Vicki Brewster
|
| | | | 16,701 | | | | | $ | 626,288 | | | | | $ | 93,943 | | | | | $ | 253,558 | | |
Ron Coppock
|
| | | | 195,444 | | | | | $ | 7,329,150 | | | | | $ | 1,099,373 | | | | | $ | 2,967,267 | | |
Patrick Macken
|
| | | | 12,040 | | | | | $ | 451,500 | | | | | $ | 67,725 | | | | | $ | 182,794 | | |
Larry Margolis
|
| | | | 215,336 | | | | | $ | 8,075,100 | | | | | $ | 1,211,265 | | | | | $ | 3,269,271 | | |
Bruce McClelland
|
| | | | 226,481 | | | | | $ | 8,493,038 | | | | | $ | 1,273,956 | | | | | $ | 3,438,477 | | |
David Potts
|
| | | | 253,598 | | | | | $ | 9,509,925 | | | | | $ | 1,426,489 | | | | | $ | 3,850,172 | | |
Larry Robinson
|
| | | | 184,631 | | | | | $ | 6,923,663 | | | | | $ | 1,038,549 | | | | | $ | 2,803,102 | | |
Bob Stanzione
|
| | | | 801,030 | | | | | $ | 30,038,625 | | | | | $ | 4,505,794 | | | | | $ | 12,161,387 | | |
| | | | | 2,047,029 | | | | | $ | 76,763,513 | | | | | $ | 11,514,527 | | | | | $ | 31,078,345 | | |
Executive Officer
|
| |
Shares Subject to
Vesting in 2016(1) |
| |
Shares Subject to
Vesting Beyond 2016(1) |
| |
% of Total Shares
Subject to Vesting Beyond 2016 |
| |||||||||
Jim Brennan
|
| | | | 45,123 | | | | | | 96,643 | | | | | | 68% | | |
Vicki Brewster
|
| | | | 6,777 | | | | | | 9,924 | | | | | | 59% | | |
Ron Coppock
|
| | | | 78,557 | | | | | | 116,887 | | | | | | 60% | | |
Patrick Macken
|
| | | | 3,010 | | | | | | 9,030 | | | | | | 75% | | |
Larry Margolis
|
| | | | 87,701 | | | | | | 127,635 | | | | | | 59% | | |
Bruce McClelland
|
| | | | 92,845 | | | | | | 133,636 | | | | | | 59% | | |
David Potts
|
| | | | 102,627 | | | | | | 150,971 | | | | | | 60% | | |
Larry Robinson
|
| | | | 67,207 | | | | | | 117,424 | | | | | | 64% | | |
Bob Stanzione
|
| | | | 329,418 | | | | | | 471,612 | | | | | | 59% | | |
Executive Officer
|
| |
Potential Tax
Equalization Payment Without Acceleration(1) |
| |
Estimated Tax
Equalization Payment With Acceleration(1) |
| ||||||
Jim Brennan
|
| | | $ | 2,152,318 | | | | | $ | 1,467,251 | | |
Vicki Brewster
|
| | | $ | 253,558 | | | | | $ | 137,095 | | |
Ron Coppock
|
| | | $ | 2,967,267 | | | | | $ | 1,774,596 | | |
Patrick Macken
|
| | | $ | 182,794 | | | | | $ | 137,095 | | |
Larry Margolis
|
| | | $ | 3,269,271 | | | | | $ | 1,290,030 | | |
Bruce McClelland
|
| | | $ | 3,438,477 | | | | | $ | 2,028,880 | | |
David Potts
|
| | | $ | 3,850,172 | | | | | $ | 2,292,070 | | |
Larry Robinson
|
| | | $ | 2,803,162 | | | | | $ | 1,782,747 | | |
Bob Stanzione
|
| | | $ | 12,161,376 | | | | | $ | 4,826,569 | | |
| | | | $ | 31,078,345 | | | | | $ | 15,749,909 | | |
| | |
No. of
Shares |
| |
Value(1)
|
| |
Excise Tax
|
| |
Estimated Tax
Equalization Payment |
| ||||||||||||
Alex Best
|
| | | | 41,950 | | | | | $ | 1,573,125 | | | | | $ | 235,969 | | | | | $ | 636,893 | | |
Tim Bryan(2)
|
| | | | — | | | | | | — | | | | | | — | | | | | | — | | |
Harry Bosco
|
| | | | 72,600 | | | | | $ | 2,722,500 | | | | | $ | 408,375 | | | | | $ | 1,102,227 | | |
Jim Chiddix
|
| | | | 23,400 | | | | | $ | 877,500 | | | | | $ | 131,625 | | | | | $ | 355,263 | | |
Andrew Heller
|
| | | | 10,450 | | | | | $ | 391,875 | | | | | $ | 58,781 | | | | | $ | 158,654 | | |
Jeong Kim
|
| | | | 4,200 | | | | | $ | 157,500 | | | | | $ | 23,625 | | | | | $ | 63,765 | | |
Doreen Toben
|
| | | | 9,400 | | | | | $ | 352,500 | | | | | $ | 52,875 | | | | | $ | 142,713 | | |
Debora Wilson
|
| | | | 14,950 | | | | | $ | 560,625 | | | | | $ | 84,094 | | | | | $ | 226,974 | | |
David Woodle
|
| | | | 53,100 | | | | | $ | 1,991,250 | | | | | $ | 298,688 | | | | | $ | 806,174 | | |
| | | | | 230,050 | | | | | $ | 8,626,875 | | | | | $ | 1,294,031 | | | | | $ | 3,492,662 | | |
Executive Officers
|
| |
Estimated Tax
Equalization Payment |
| |
Shares
Subject to Accelerated Awards |
| |
Shares
Subject to Awards Not Accelerated |
| |
Value of
Accelerated Awards for Purposes of Proposal 2(1) |
| ||||||||||||
Jim Brennan
|
| | | $ | 1,467,251 | | | | | | 45,123 | | | | | | 96,643 | | | | | $ | 1,362,266 | | |
Vicki Brewster
|
| | | $ | 150,671 | | | | | | 6,777 | | | | | | 9,924 | | | | | $ | 204,593 | | |
Ron Coppock
|
| | | $ | 1,774,596 | | | | | | 78,557 | | | | | | 116,887 | | | | | $ | 2,371,643 | | |
Patrick Macken
|
| | | $ | 137,095 | | | | | | 3,010 | | | | | | 9,030 | | | | | $ | 90,872 | | |
Larry Margolis
|
| | | $ | 1,290,030 | | | | | | 130,366 | | | | | | 84,970 | | | | | $ | 3,935,750 | | |
Bruce McClelland
|
| | | $ | 2,028,880 | | | | | | 92,845 | | | | | | 133,636 | | | | | $ | 2,803,003 | | |
David Potts
|
| | | $ | 2,292,070 | | | | | | 102,627 | | | | | | 150,971 | | | | | $ | 3,098,309 | | |
Larry Robinson
|
| | | $ | 1,782,747 | | | | | | 67,207 | | | | | | 117,424 | | | | | $ | 2,028,992 | | |
Bob Stanzione
|
| | | $ | 4,826,569 | | | | | | 483,120 | | | | | | 317,910 | | | | | $ | 14,585,393 | | |
| | | | $ | 15,749,909 | | | | | | 1,009,643 | | | | | | 1,037,394 | | | | | $ | 30,480,820 | | |
Directors
|
| |
Estimated Tax
Equalization Payment |
| |||
Alex Best
|
| | | $ | 636,893 | | |
Tim Bryan
|
| | | | —(1) | | |
Harry Bosco
|
| | | $ | 1,102,227 | | |
Jim Chiddix
|
| | | $ | 355,263 | | |
Andrew Heller
|
| | | $ | 158,654 | | |
Jeong Kim
|
| | | $ | 63,765 | | |
Doreen Toben
|
| | | $ | 142,713 | | |
Debora Wilson
|
| | | $ | 226,974 | | |
David Woodle
|
| | | $ | 806,174 | | |
| | | | $ | 3,492,662 | | |
Name of Beneficial Owner(1)
|
| |
Shares Beneficially
Owned(2) |
| |
Shares that May
be Acquired Within 60 Days |
| |
Total Shares —
Percentage of Class(3) |
| |||||||||||||||
Alex B. Best
|
| | | | 78,432 | | | | | | — | | | | | | 78,432 | | | | | | 0.054% | | |
Harry L. Bosco
|
| | | | 79,200 | | | | | | — | | | | | | 79,200 | | | | | | 0.054% | | |
J. Timothy Bryan(4)
|
| | | | 1,172 | | | | | | — | | | | | | 1,172 | | | | | | 0.001% | | |
James A. Chiddix
|
| | | | 42,800 | | | | | | — | | | | | | 42,800 | | | | | | 0.029% | | |
Andrew T. Heller
|
| | | | 20,900 | | | | | | — | | | | | | 20,900 | | | | | | 0.014% | | |
Dr. Jeong H. Kim
|
| | | | 4,200 | | | | | | — | | | | | | 4,200 | | | | | | 0.003% | | |
Doreen A. Toben
|
| | | | 9,400 | | | | | | — | | | | | | 9,400 | | | | | | 0.006% | | |
Debora J. Wilson
|
| | | | 35,132 | | | | | | — | | | | | | 35,132 | | | | | | 0.024% | | |
David A. Woodle
|
| | | | 65,751 | | | | | | — | | | | | | 65,751 | | | | | | 0.045% | | |
Robert J. Stanzione
|
| | | | 696,419 | | | | | | — | | | | | | 696,419 | | | | | | 0.475% | | |
David B. Potts
|
| | | | 72,498 | | | | | | — | | | | | | 72,498 | | | | | | 0.049% | | |
Lawrence A. Margolis
|
| | | | 449,276 | | | | | | — | | | | | | 449,276 | | | | | | 0.306% | | |
Bruce McClelland
|
| | | | 119,248 | | | | | | — | | | | | | 119,248 | | | | | | 0.081% | | |
Lawrence Robinson
|
| | | | 28,304 | | | | | | — | | | | | | 28,304 | | | | | | 0.019% | | |
All directors and executive officers as a group including the above named persons (18 persons)
|
| | | | 1,768,883 | | | | | | — | | | | | | 1,768,883 | | | | | | 1.207% | | |
Name and Address of Beneficial Owner
|
| |
Amount and
Nature of Beneficial Ownership |
| |
Percent of Class
|
| ||||||
First Pacific Advisors, LLC(1)
|
| | | | 11,007,763 | | | | | | 7.5% | | |
Google, Inc.(2)
|
| | | | 9,703,500 | | | | | | 6.6% | | |
The Vanguard Group, Inc.(3)
|
| | | | 9,376,884 | | | | | | 6.4% | | |
BlackRock, Inc.(4)
|
| | | | 9,057,638 | | | | | | 6.2% | | |
Hotchkis and Wiley Capital Management, LLC(5)
|
| | | | 7,889,818 | | | | | | 5.4% | | |
| | | | | | | | |
Pace
|
| | | ||||||||||||||||||||||||||||||||||||||
| | |
Historical
ARRIS |
| |
Historical
(IFRS) |
| |
Accounting
Policies and Reclassifications (Note 3) |
| |
US GAAP
Adjustments (Note 4) |
| |
Historical
(US GAAP) |
| |
Pro Forma
Adjustments (Note 6) |
| |
New ARRIS
Pro Forma Condensed Combined |
| ||||||||||||||||||||||||||||
ASSETS | | | | | | | | | ||||||||||||||||||||||||||||||||||||||||||
Current assets: | | | | | | | | | ||||||||||||||||||||||||||||||||||||||||||
Cash and cash equivalents
|
| | | $ | 490,939 | | | | | $ | 254,162 | | | | | $ | — | | | | | $ | — | | | | | $ | 254,162 | | | | | $ | (184,432)(a) | | | | | $ | 560,669 | | | |||||||
Short-term investments, at fair value
|
| | | | 128,852 | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | 128,852 | | | |||||||
Total cash, cash equivalents and short-term investments
|
| | | | 619,791 | | | | | | 254,162 | | | | | | — | | | | | | — | | | | | | 254,162 | | | | | | (184,432) | | | | | | 689,521 | | | |||||||
Accounts receivable (net of allowances for doubtful
accounts) |
| | | | 785,869 | | | | | | — | | | | | | 530,069 | | | | | | 21,959 | | | | | | 552,028 | | | | | | — | | | | | | 1,337,897 | | | |||||||
Trade and other receivables
|
| | | | — | | | | | | 582,833 | | | | | | (582,833) | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | |||||||
Other receivables
|
| | | | 11,268 | | | | | | — | | | | | | 41,577 | | | | | | — | | | | | | 41,577 | | | | | | — | | | | | | 52,845 | | | |||||||
Inventories (net of reserves)
|
| | | | 389,556 | | | | | | 237,627 | | | | | | — | | | | | | — | | | | | | 237,627 | | | | | | 34,315 (b) | | | | | | 661,498 | | | |||||||
Prepaid income taxes
|
| | | | 26,413 | | | | | | 6,068 | | | | | | — | | | | | | — | | | | | | 6,068 | | | | | | — | | | | | | 32,481 | | | |||||||
Prepaids
|
| | | | 36,746 | | | | | | — | | | | | | 11,187 | | | | | | — | | | | | | 11,187 | | | | | | — | | | | | | 47,933 | | | |||||||
Current deferred income tax assets
|
| | | | 105,384 | | | | | | — | | | | | | — | | | | | | 29,709 | | | | | | 29,709 | | | | | | — | | | | | | 135,093 | | | |||||||
Other current assets
|
| | | | 108,134 | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | 12,020 (c) | | | | | | 120,154 | | | |||||||
Total current assets
|
| | | | 2,083,161 | | | | | | 1,080,690 | | | | | | — | | | | | | 51,668 | | | | | | 1,132,358 | | | | | | (138,097) | | | | | | 3,077,422 | | | |||||||
Property, plant and equipment (net of accumulated depreciation)
|
| | | | 324,154 | | | | | | 57,813 | | | | | | — | | | | | | — | | | | | | 57,813 | | | | | | 40,558 (d) | | | | | | 422,525 | | | |||||||
Goodwill
|
| | | | 1,017,430 | | | | | | 464,806 | | | | | | — | | | | | | — | | | | | | 464,806 | | | | | | 694,799 (e) | | | | | | 2,177,035 | | | |||||||
Intangible assets (net of accumulated amortization)
|
| | | | 923,837 | | | | | | 272,050 | | | | | | — | | | | | | (87,850) | | | | | | 184,200 | | | | | | 915,800 (f) | | | | | | 2,023,837 | | | |||||||
Investments
|
| | | | 75,381 | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | 75,381 | | | |||||||
Noncurrent deferred income tax assets
|
| | | | 87,291 | | | | | | 27,488 | | | | | | — | | | | | | (21,186) | | | | | | 6,302 | | | | | | — | | | | | | 93,593 | | | |||||||
Other assets
|
| | | | 47,421 | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | (937)(g) | | | | | | 46,484 | | | |||||||
TOTAL ASSETS
|
| | | $ | 4,558,675 | | | | | $ | 1,902,847 | | | | | $ | — | | | | | $ | (57,368) | | | | | $ | 1,845,479 | | | | | $ | 1,512,123 | | | | | $ | 7,916,277 | | | |||||||
LIABILITIES AND STOCKHOLDERS’ EQUITY | | | | | | | | | ||||||||||||||||||||||||||||||||||||||||||
Current liabilities: | | | | | | | | | ||||||||||||||||||||||||||||||||||||||||||
Accounts payable
|
| | | $ | 608,133 | | | | | $ | — | | | | | $ | 559,499 | | | | | $ | — | | | | | $ | 559,499 | | | | | $ | — | | | | | $ | 1,167,632 | | | |||||||
Trade and other payables
|
| | | | — | | | | | | 704,060 | | | | | | (704,060) | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | |||||||
Accrued compensation, benefits and related taxes
|
| | | | 78,333 | | | | | | — | | | | | | 16,962 | | | | | | — | | | | | | 16,962 | | | | | | — | | | | | | 95,295 | | | |||||||
Accrued warranty
|
| | | | 29,176 | | | | | | — | | | | | | 27,200 | | | | | | — | | | | | | 27,200 | | | | | | — | | | | | | 56,376 | | | |||||||
Deferred revenue
|
| | | | 107,632 | | | | | | — | | | | | | 4,016 | | | | | | 25,617 | | | | | | 29,633 | | | | | | (8,289)(h) | | | | | | 128,976 | | | |||||||
Current portion of long-term debt, financing lease obligations,
and short-term borrowings |
| | | | 48,594 | | | | | | 41,362 | | | | | | — | | | | | | 21,959 | | | | | | 63,321 | | | | | | (21,614)(j) | | | | | | 90,301 | | | |||||||
Current income taxes liability
|
| | | | 9,587 | | | | | | 10,728 | | | | | | — | | | | | | (7,184) | | | | | | 3,544 | | | | | | — | | | | | | 13,131 | | | |||||||
Other accrued liabilities
|
| | | | 155,482 | | | | | | 33,483 | | | | | | 96,383 | | | | | | (43,700) | | | | | | 86,166 | | | | | | 26,351 (i) | | | | | | 267,999 | | | |||||||
Total current liabilities
|
| | | | 1,036,937 | | | | | | 789,633 | | | | | | — | | | | | | (3,308) | | | | | | 786,325 | | | | | | (3,552) | | | | | | 1,819,710 | | | |||||||
Long-term debt and financing lease obligations, net of current
portion |
| | | | 1,537,641 | | | | | | 215,115 | | | | | | — | | | | | | — | | | | | | 215,115 | | | | | | 561,894 (j) | | | | | | 2,314,650 | | | |||||||
Accrued pension
|
| | | | 68,865 | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | 68,865 | | | |||||||
Noncurrent income tax liability
|
| | | | 43,586 | | | | | | — | | | | | | — | | | | | | 9,055 | | | | | | 9,055 | | | | | | — | | | | | | 52,641 | | | |||||||
Noncurrent deferred income tax liabilities
|
| | | | 332 | | | | | | 83,930 | | | | | | — | | | | | | (10,957) | | | | | | 72,973 | | | | | | 277,344 (k) | | | | | | 350,649 | | | |||||||
Other noncurrent liabilities
|
| | | | 92,544 | | | | | | 85,404 | | | | | | — | | | | | | — | | | | | | 85,404 | | | | | | — | | | | | | 177,948 | | | |||||||
Total liabilities
|
| | | | 2,779,905 | | | | | | 1,174,082 | | | | | | — | | | | | | (5,210) | | | | | | 1,168,872 | | | | | | 835,686 | | | | | | 4,784,463 | | | |||||||
Stockholders’ equity: | | | | | | | | | ||||||||||||||||||||||||||||||||||||||||||
Common and ordinary shares
|
| | | | 1,814 | | | | | | 29,528 | | | | | | — | | | | | | — | | | | | | 29,528 | | | | | | (27,786)(l) | | | | | | 3,556 | | | |||||||
Capital in excess of par value
|
| | | | 1,765,804 | | | | | | 196,432 | | | | | | — | | | | | | 1,887 | | | | | | 198,319 | | | | | | 1,187,282 (l) | | | | | | 3,151,405 | | | |||||||
Treasury stock at cost
|
| | | | (331,329) | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | (331,329) | | | |||||||
Retained earnings
|
| | | | 302,525 | | | | | | 595,614 | | | | | | — | | | | | | (54,493) | | | | | | 541,121 | | | | | | (575,420)(l) | | | | | | 268,226 | | | |||||||
Accumulated other comprehensive loss
|
| | | | (12,664) | | | | | | (92,809) | | | | | | — | | | | | | 448 | | | | | | (92,361) | | | | | | 92,361 (l) | | | | | | (12,664) | | | |||||||
Stockholders’ equity attributable to noncontrolling interest
|
| | | | 52,620 | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | 52,620 | | | |||||||
Total stockholders’ equity
|
| | | | 1,778,770 | | | | | | 728,765 | | | | | | — | | | | | | (52,158) | | | | | | 676,607 | | | | | | 676,437 | | | | | | 3,131,814 | | | |||||||
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY
|
| | | $ | 4,558,675 | | | | | $ | 1,902,847 | | | | | $ | — | | | | | $ | (57,368) | | | | | $ | 1,845,479 | | | | | $ | 1,512,123 | | | | | $ | 7,916,277 | | | |||||||
|
| | | | | | | | |
Pace
|
| | | ||||||||||||||||||||||||||||||||||||||
| | |
Historical
ARRIS |
| |
Historical
(IFRS) |
| |
Accounting
Policies and Reclassifications (Note 3) |
| |
US GAAP
Adjustments (Note 4) |
| |
Historical
(US GAAP) |
| |
Pro Forma
Adjustments (Note 6) |
| |
New ARRIS
Pro Forma Condensed Combined |
| ||||||||||||||||||||||||||||
Net sales
|
| | | $ | 2,475,234 | | | | | $ | 1,078,578 | | | | | $ | — | | | | | $ | (93) | | | | | $ | 1,078,485 | | | | | $ | — | | | | | $ | 3,553,719 | | | |||||||
Cost of sales
|
| | | | 1,774,317 | | | | | | 827,856 | | | | | | (870) | | | | | | (800) | | | | | | 826,186 | | | | | | 288(m) | | | | | | 2,600,791 | | | |||||||
Gross margin
|
| | | | 700,917 | | | | | | 250,722 | | | | | | 870 | | | | | | 707 | | | | | | 252,299 | | | | | | (288) | | | | | | 952,958 | | | |||||||
Operating expenses: | | | | | | | | | ||||||||||||||||||||||||||||||||||||||||||
Selling, general and administrative expenses
|
| | | | 207,534 | | | | | | 67,000 | | | | | | (2,067) | | | | | | — | | | | | | 64,933 | | | | | | 270(n) | | | | | | 272,737 | | | |||||||
Research and development expenses
|
| | | | 268,728 | | | | | | 65,730 | | | | | | 1,722 | | | | | | 3,277 | | | | | | 70,729 | | | | | | 299(o) | | | | | | 339,756 | | | |||||||
Amortization of intangible assets
|
| | | | 113,930 | | | | | | 24,342 | | | | | | — | | | | | | — | | | | | | 24,342 | | | | | | 73,851(p) | | | | | | 212,123 | | | |||||||
Integration, acquisition, restructuring and other costs
|
| | | | 13,465 | | | | | | 4,986 | | | | | | — | | | | | | — | | | | | | 4,986 | | | | | | (13,105)(q) | | | | | | 5,346 | | | |||||||
Total operating expenses
|
| | | | 603,657 | | | | | | 162,058 | | | | | | (345) | | | | | | 3,277 | | | | | | 164,990 | | | | | | 61,315 | | | | | | 829,962 | | | |||||||
Operating income
|
| | | | 97,260 | | | | | | 88,664 | | | | | | 1,215 | | | | | | (2,570) | | | | | | 87,309 | | | | | | (61,603) | | | | | | 122,966 | | | |||||||
Other expense (income): | | | | | | | | | ||||||||||||||||||||||||||||||||||||||||||
Interest expense
|
| | | | 41,821 | | | | | | 4,003 | | | | | | — | | | | | | — | | | | | | 4,003 | | | | | | (5,405)(r) | | | | | | 40,419 | | | |||||||
Loss on investments
|
| | | | 3,119 | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | 3,119 | | | |||||||
Loss (gain) on foreign currency
|
| | | | (6,639) | | | | | | — | | | | | | 3,545 | | | | | | — | | | | | | 3,545 | | | | | | — | | | | | | (3,094) | | | |||||||
Interest income
|
| | | | (1,279) | | | | | | (434) | | | | | | — | | | | | | — | | | | | | (434) | | | | | | — | | | | | | (1,713) | | | |||||||
Other expense, net
|
| | | | 7,997 | | | | | | — | | | | | | (2,330) | | | | | | — | | | | | | (2,330) | | | | | | — | | | | | | 5,667 | | | |||||||
Income before income taxes
|
| | | | 52,241 | | | | | | 85,095 | | | | | | — | | | | | | (2,570) | | | | | | 82,525 | | | | | | (56,198) | | | | | | 78,568 | | | |||||||
Income tax expense (benefit)
|
| | | | 17,973 | | | | | | (338) | | | | | | — | | | | | | (1,991) | | | | | | (2,329) | | | | | | 16,298(s) | | | | | | 31,942 | | | |||||||
Consolidated net income
|
| | | | 34,268 | | | | | | 85,433 | | | | | | — | | | | | | (579) | | | | | | 84,854 | | | | | | (72,496) | | | | | | 46,626 | | | |||||||
Net loss attributable to noncontrolling interests
|
| | | | (1,615) | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | (1,615) | | | |||||||
Net income
|
| | | $ | 35,883 | | | | | $ | 85,433 | | | | | $ | — | | | | | $ | (579) | | | | | $ | 84,854 | | | | | $ | (72,496) | | | | | $ | 48,241 | | | |||||||
Net income per common share: | | | | | | | | | ||||||||||||||||||||||||||||||||||||||||||
Basic
|
| | | $ | 0.25 | | | | | $ | 0.27 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | $ | 0.25 | | | |||||||
Diluted
|
| | | $ | 0.24 | | | | | $ | 0.26 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | $ | 0.24 | | | |||||||
Weighted average common shares | | | | | | | | | ||||||||||||||||||||||||||||||||||||||||||
Basic
|
| | | | 145,823 | | | | | | 314,634 | | | | | | | | | | | | | | | | | | | | | | | | 49,245(t) | | | | | | 195,068 | | | |||||||
Diluted
|
| | | | 149,132 | | | | | | 324,867 | | | | | | | | | | | | | | | | | | | | | | | | 48,563(t) | | | | | | 197,695 | | | |||||||
|
| | | | | | | | |
Pace
|
| | | ||||||||||||||||||||||||||||||||||||||
| | |
Historical
ARRIS |
| |
Historical
(IFRS) |
| |
Accounting
Policies and Reclassifications (Note 3) |
| |
US GAAP
Adjustments (Note 4) |
| |
Historical
(US GAAP) |
| |
Pro Forma
Adjustments (Note 6) |
| |
New
ARRIS Pro Forma Condensed Combined |
| ||||||||||||||||||||||||||||
Net sales
|
| | | $ | 5,322,921 | | | | | $ | 2,620,030 | | | | | $ | — | | | | | $ | 1,081 | | | | | $ | 2,621,111 | | | | | $ | — | | | | | $ | 7,944,032 | | | |||||||
Cost of sales
|
| | | | 3,740,425 | | | | | | 2,087,601 | | | | | | (1,497) | | | | | | (7,787) | | | | | | 2,078,317 | | | | | | (96)(m) | | | | | | 5,818,646 | | | |||||||
Gross margin
|
| | | | 1,582,496 | | | | | | 532,429 | | | | | | 1,497 | | | | | | 8,868 | | | | | | 542,794 | | | | | | 96 | | | | | | 2,125,386 | | | |||||||
Operating expenses: | | | | | | | | | ||||||||||||||||||||||||||||||||||||||||||
Selling, general and administrative expenses
|
| | | | 410,568 | | | | | | 161,981 | | | | | | (535) | | | | | | — | | | | | | 161,446 | | | | | | (91)(n) | | | | | | 571,923 | | | |||||||
Research and development expenses
|
| | | | 556,575 | | | | | | 129,316 | | | | | | (4) | | | | | | 20,760 | | | | | | 150,072 | | | | | | (100)(o) | | | | | | 706,547 | | | |||||||
Amortization of intangible assets
|
| | | | 236,521 | | | | | | 52,936 | | | | | | — | | | | | | — | | | | | | 52,936 | | | | | | 143,451 (p) | | | | | | 432,908 | | | |||||||
Integration, acquisition, restructuring and other costs
|
| | | | 37,498 | | | | | | 7,356 | | | | | | — | | | | | | — | | | | | | 7,356 | | | | | | — | | | | | | 44,854 | | | |||||||
Total operating expenses
|
| | | | 1,241,162 | | | | | | 351,589 | | | | | | (539) | | | | | | 20,760 | | | | | | 371,810 | | | | | | 143,260 | | | | | | 1,756,232 | | | |||||||
Operating income
|
| | | | 341,334 | | | | | | 180,840 | | | | | | 2,036 | | | | | | (11,892) | | | | | | 170,984 | | | | | | (143,164) | | | | | | 369,154 | | | |||||||
Other expense (income): | | | | | | | | | ||||||||||||||||||||||||||||||||||||||||||
Interest expense
|
| | | | 62,901 | | | | | | 7,702 | | | | | | — | | | | | | — | | | | | | 7,702 | | | | | | 14,170 (r) | | | | | | 84,773 | | | |||||||
Loss on investments
|
| | | | 10,961 | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | 10,961 | | | |||||||
Loss (gain) on foreign currency
|
| | | | 2,637 | | | | | | — | | | | | | 6,207 | | | | | | — | | | | | | 6,207 | | | | | | — | | | | | | 8,844 | | | |||||||
Interest income
|
| | | | (2,590) | | | | | | (2,542) | | | | | | — | | | | | | — | | | | | | (2,542) | | | | | | — | | | | | | (5,132) | | | |||||||
Other expense, net
|
| | | | 28,195 | | | | | | — | | | | | | (4,171) | | | | | | — | | | | | | (4,171) | | | | | | — | | | | | | 24,024 | | | |||||||
Income before income taxes
|
| | | | 239,230 | | | | | | 175,680 | | | | | | — | | | | | | (11,892) | | | | | | 163,788 | | | | | | (157,334) | | | | | | 245,684 | | | |||||||
Income tax expense (benefit)
|
| | | | (87,981) | | | | | | 27,666 | | | | | | — | | | | | | (558) | | | | | | 27,108 | | | | | | 45,627 (s) | | | | | | (15,246) | | | |||||||
Net income
|
| | | $ | 327,211 | | | | | $ | 148,014 | | | | | | — | | | | | $ | (11,334) | | | | | $ | 136,680 | | | | | $ | (202,961) | | | | | $ | 260,930 | | | |||||||
Net income per common share: | | | | | | | | | ||||||||||||||||||||||||||||||||||||||||||
Basic
|
| | | $ | 2.27 | | | | | $ | 0.47 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | $ | 1.35 | | | |||||||
Diluted
|
| | | $ | 2.21 | | | | | $ | 0.46 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | $ | 1.32 | | | |||||||
Weighted average common shares | | | | | | | | | ||||||||||||||||||||||||||||||||||||||||||
Basic
|
| | | | 144,386 | | | | | | 312,335 | | | | | | | | | | | | | | | | | | | | | | | | 49,245 (t) | | | | | | 193,631 | | | |||||||
Diluted
|
| | | | 148,280 | | | | | | 324,475 | | | | | | | | | | | | | | | | | | | | | | | | 48,655 (t) | | | | | | 196,935 | | | |||||||
|
| | |
U.S. GAAP Adjustment Reference
|
| |
Total U.S.
GAAP Adjustments |
| |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Balance Sheet Line Item
|
| |
(1)
|
| |
(2)
|
| |
(3)
|
| |
(4)
|
| |
(5)
|
| |
(6)
|
| |
(7)
|
| |
(8)
|
| |||||||||||||||||||||||||||||||||||||||
Accounts receivable
|
| | | $ | — | | | | | $ | — | | | | | $ | — | | | | | $ | — | | | | | $ | — | | | | | $ | — | | | | | $ | — | | | | | $ | 21,959 | | | | | $ | 21,959 | | | |||||||||
Current deferred income
taxes |
| | | | — | | | | | | — | | | | | | 1,426 | | | | | | 4,614 | | | | | | 200 | | | | | | 22,953 | | | | | | 516 | | | | | | — | | | | | | 29,709 | | | |||||||||
Intangible assets
|
| | | | (87,850) | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | (87,850) | | | |||||||||
Noncurrent deferred income
taxes |
| | | | — | | | | | | — | | | | | | 582 | | | | | | 3,624 | | | | | | — | | | | | | (25,392) | | | | | | — | | | | | | — | | | | | | (21,186) | | | |||||||||
Total Assets
|
| | | | (87,850) | | | | | | — | | | | | | 2,008 | | | | | | 8,238 | | | | | | 200 | | | | | | (2,439) | | | | | | 516 | | | | | | 21,959 | | | | | | (57,368) | | | |||||||||
Deferred revenue
|
| | | | — | | | | | | — | | | | | | 5,021 | | | | | | 20,596 | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | 25,617 | | | |||||||||
Current portion of long-term debt, financing lease obligations, and short-term borrowings
|
| | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | 21,959 | | | | | | 21,959 | | | |||||||||
Current income taxes liability
|
| | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | (7,605) | | | | | | 421 | | | | | | — | | | | | | — | | | | | | (7,184) | | | |||||||||
Other accrued liabilities
|
| | | | — | | | | | | (43,700) | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | (43,700) | | | |||||||||
Noncurrent income tax
liability |
| | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | 9,055 | | | | | | — | | | | | | — | | | | | | — | | | | | | 9,055 | | | |||||||||
Noncurrent deferred income tax liability
|
| | | | (12,030) | | | | | | 7,238 | | | | | | — | | | | | | — | | | | | | (1,250) | | | | | | (4,683) | | | | | | (232) | | | | | | — | | | | | | (10,957) | | | |||||||||
Total Liabilities
|
| | | | (12,030) | | | | | | (36,462) | | | | | | 5,021 | | | | | | 20,596 | | | | | | 200 | | | | | | (4,262) | | | | | | (232) | | | | | | 21,959 | | | | | | (5,210) | | | |||||||||
Capital in excess of par
|
| | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | 1,887 | | | | | | — | | | | | | 1,887 | | | |||||||||
Retained earnings
|
| | | | (76,268) | | | | | | 36,462 | | | | | | (3,013) | | | | | | (12,358) | | | | | | — | | | | | | 1,823 | | | | | | (1,139) | | | | | | — | | | | | | (54,493) | | | |||||||||
Accumulated other comprehensive loss
|
| | | | 448 | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | 448 | | | |||||||||
Total Liabilities and Equity
|
| | | $ | (87,850) | | | | | $ | — | | | | | $ | 2,008 | | | | | $ | 8,238 | | | | | $ | 200 | | | | | $ | (2,439) | | | | | $ | 516 | | | | | | 21,959 | | | | | $ | (57,368) | | | |||||||||
|
For the year ended December 31, 2014
|
| |
U.S. GAAP Adjustment Reference
|
| |
Total U.S.
GAAP Adjustments |
| ||||||||||||||||||||||||||||||||||||
Statement of Operations Line Item
|
| |
(1)
|
| |
(2)
|
| |
(3)
|
| |
(4)
|
| |
(7)
|
| |||||||||||||||||||||||||||
Net sales
|
| | | $ | — | | | | | $ | — | | | | | $ | 2,670 | | | | | $ | (1,589) | | | | | $ | — | | | | | $ | 1,081 | | | ||||||
Cost of sales
|
| | | | — | | | | | | (7,787) | | | | | | — | | | | | | — | | | | | | — | | | | | | (7,787) | | | ||||||
Research and development expenses
|
| | | | 20,760 | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | 20,760 | | | ||||||
Income tax expense (benefit)
|
| | | | (480) | | | | | | (1,206) | | | | | | 934 | | | | | | (556) | | | | | | 750 | | | | | | (558) | | | ||||||
Net income
|
| | | $ | (20,280) | | | | | $ | 8,993 | | | | | $ | 1,736 | | | | | $ | (1,033) | | | | | $ | (750) | | | | | $ | (11,334) | | | ||||||
|
For the six months ended June 30, 2015
|
| |
U.S. GAAP Adjustment Reference
|
| |
Total U.S.
GAAP Adjustments |
| |||||||||||||||||||||||||||||||||||||||||||
Statement of Operations Line Item
|
| |
(1)
|
| |
(2)
|
| |
(3)
|
| |
(4)
|
| |
(6)
|
| |
(7)
|
| |||||||||||||||||||||||||||||||
Net sales
|
| | | $ | — | | | | | $ | — | | | | | $ | 980 | | | | | $ | (1,073) | | | | | $ | — | | | | | $ | — | | | | | $ | (93) | | | |||||||
Cost of sales
|
| | | | — | | | | | | (800) | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | (800) | | | |||||||
Research and development expenses
|
| | | | 3,277 | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | 3,277 | | | |||||||
Income tax expense (benefit)
|
| | | | 220 | | | | | | 63 | | | | | | 392 | | | | | | (429) | | | | | | (134) | | | | | | (2,103) | | | | | | (1,991) | | | |||||||
Net income
|
| | | $ | (3,497) | | | | | $ | 737 | | | | | $ | 588 | | | | | $ | (644) | | | | | $ | 134 | | | | | $ | 2,103 | | | | | $ | (579) | | | |||||||
|
|
Stock consideration
|
| | | $ | 1,380,491 | | | |
|
Cash consideration
|
| | | | 680,178 | | | |
|
Repayment of Pace indebtedness
|
| | | | 256,477 | | | |
|
Total consideration transferred
|
| | | $ | 2,317,146 | | | |
|
| | |
Number of
Pace shares |
| |
Conversion to
New ARRIS shares |
| |
Cash
consideration(1) |
| |
Stock
consideration(2) |
| |
Total cash
and stock consideration |
| ||||||||||||||||||||
Outstanding shares
|
| | | | 319,922,770 | | | | | | 46,548,763 | | | | | $ | 656,397 | | | | | $ | 1,332,225 | | | | | $ | 1,988,622 | | | |||||
Equity awards
|
| | | | 11,590,641 | | | | | | 1,686,438 | | | | | | 23,781 | | | | | | 48,266 | | | | | | 72,047 | | | |||||
Total
|
| | | | 331,513,411 | | | | | | 48,235,201 | | | | | $ | 680,178 | | | | | $ | 1,380,491 | | | | | $ | 2,060,669 | | | |||||
|
|
Total estimated consideration transferred
|
| | | $ | 2,317,146 | | | |
|
Cash and cash equivalents
|
| | | | 254,162 | | | |
|
Accounts and other receivables
|
| | | | 593,605 | | | |
|
Inventories
|
| | | | 271,942 | | | |
|
Prepaids
|
| | | | 17,255 | | | |
|
Current deferred income tax assets
|
| | | | 29,709 | | | |
|
Property, plant and equipment
|
| | | | 98,371 | | | |
|
Intangible assets
|
| | | | 1,100,000 | | | |
|
Noncurrent deferred income tax assets
|
| | | | 6,302 | | | |
|
Accounts payable and other current liabilities
|
| | | | (603,661) | | | |
|
Deferred revenue
|
| | | | (21,344) | | | |
|
Short-term borrowings
|
| | | | (21,959) | | | |
|
Current income taxes liability
|
| | | | (3,544) | | | |
|
Other accrued liabilities
|
| | | | (118,521) | | | |
|
Other noncurrent liabilities
|
| | | | (444,776) | | | |
|
Net assets acquired
|
| | | | 1,157,541 | | | |
|
Goodwill
|
| | | $ | 1,159,605 | | | |
|
|
Cash portion of Combination consideration(i)
|
| | | $ | (680,178) | | | |
|
Repayment of Pace debt(ii)
|
| | | | (256,477) | | | |
|
Payment for excise and other taxes(iii)
|
| | | | (14,686) | | | |
|
Payment of transaction related expenses(iv)
|
| | | | (33,091) | | | |
|
New ARRIS Term A-1 Loan Facility(v)
|
| | | | 800,000 | | | |
|
Pro forma adjustment to cash and cash equivalents
|
| | | $ | (184,432) | | | |
|
|
Building and leasehold improvements
|
| | | $ | 8,361 | | | |
|
Machinery and equipment
|
| | | | 87,801 | | | |
|
Construction in progress
|
| | | | 2,209 | | | |
|
Total estimated preliminary fair value of property, plant and equipment
|
| | | | 98,371 | | | |
|
Less: Pace book value of property, plant and equipment
|
| | | | (57,813) | | | |
|
Pro forma adjustment to property, plant and equipment
|
| | | $ | 40,558 | | | |
|
|
Consideration transferred
|
| | | $ | 2,317,146 | | | |
|
Less: Fair value of net assets to be acquired
|
| | | | (1,157,541) | | | |
|
Total estimated goodwill
|
| | | | 1,159,605 | | | |
|
Less: Pace book value of goodwill
|
| | | | (464,806) | | | |
|
Pro forma adjustment to goodwill
|
| | | $ | 694,799 | | | |
|
|
Customer contracts and relationships
|
| | | $ | 400,000 | | | |
|
Technology and patents
|
| | | | 650,000 | | | |
|
Other intangibles
|
| | | | 50,000 | | | |
|
Total estimated preliminary fair value of intangible assets
|
| | | | 1,100,000 | | | |
|
Less: Pace book value of intangible assets
|
| | | | (184,200) | | | |
|
Pro forma adjustment to intangible assets
|
| | | $ | 915,800 | | | |
|
|
Proceeds from Term A-1 Loan
|
| | | $ | 800,000 | |
|
Less: Proceeds from Term A-1 Loan to be repaid within one year
|
| | | | (20,000) | |
|
Less: Original issuance discount, excluding $0.3 million to be amortized within one year
|
| | | | (2,991) | |
|
Less: Repayment of Pace historical long-term debt
|
| | | | (215,115) | |
|
Pro forma adjustment to long-term debt
|
| | | $ | 561,894 | |
|
|
Proceeds from Term A-1 Loan to be repaid within one year
|
| | | $ | 20,000 | | | |
|
Less: Original issuance discount to be amortized within one year
|
| | | | (252) | | | |
|
Less: Repayment of Pace historical current portion of long-term debt
|
| | | | (41,362) | | | |
|
Pro forma adjustment to current portion of long-term debt
|
| | | $ | (21,614) | | | |
|
| | |
Adjustment to
Asset Acquired (Liability Assumed) |
| |
Current
Deferred Tax Liability(1) |
| |
Noncurrent
Deferred Tax Liability |
| ||||||||||||
Estimated fair value adjustment of identifiable intangible assets acquired
|
| | | $ | 915,800 | | | | | | — | | | | | $ | 265,582 | | | |||
Estimated fair value adjustment of property, plant and equipment acquired
|
| | | | 40,558 | | | | | | — | | | | | | 11,762 | | | |||
Estimated fair value adjustment of inventory acquired
|
| | | | 34,315 | | | | | | 9,951 | | | | | | — | | | |||
Estimated fair value adjustment of deferred revenue assumed
|
| | | | (8,289) | | | | | | 2,404 | | | | | | — | | | |||
Estimated tax impact of post-combination compensation expense related to the acceleration of restricted stock for ARRIS executives upon completion of the Combination
|
| | | | N/A | | | | | | (1,987) | | | | | | — | | | |||
Estimated tax impact of Combination-related fees and expenses expensed in connection with the Combination
|
| | | | N/A | | | | | | (4,017) | | | | | | — | | | |||
Deferred tax liabilities related to estimated fair value adjustments
|
| | | | | | | | | $ | 6,351 | | | | | $ | 277,344 | | | |||
|
|
Shares from Combination (46,548,763 New ARRIS shares issued at par value of £0.01)
|
| | | $ | 721 | | | |
|
Shares from Pace stock options, deferred shares and performance shares converted into New ARRIS shares (1,686,438 shares issued at par value of £0.01)
|
| | | | 26 | | | |
|
Shares of New ARRIS (181,400,000 shares issued at par value of £0.01)
|
| | | | 995 | | | |
|
Less: Pace historical shares
|
| | | | (29,528) | | | |
|
Pro forma adjustment to shares
|
| | | $ | (27,786) | | | |
|
|
Capital in excess of par from Combination (46,548,763 New ARRIS shares issued at
$28.62, less par value) |
| | | $ | 1,331,505 | | | |
|
Capital in excess of par from Pace stock options, deferred shares and performance shares converted into New ARRIS shares (1,686,438 shares issued at $28.62)
|
| | | | 48,240 | | | |
|
ARRIS unrecognized compensation expense for the acceleration of restricted stock for ARRIS executives upon completion of the Combination
|
| | | | 6,851 | | | |
|
Less: Capital in excess of par of New ARRIS
|
| | | | (995) | | | |
|
Less: Pace historical capital in excess of par
|
| | | | (198,319) | | | |
|
Pro forma adjustment to capital in excess of par
|
| | | $ | 1,187,282 | | | |
|
|
Estimated Combination-related fees and expenses of $30.8 million expected to be incurred upon completion of the Combination, net of tax of $4.0 million
|
| | | $ | (26,769) | | | |
|
Estimated post combination expense of $6.9 million related to the acceleration of restricted stock for ARRIS executives upon completion of the Combination, net of tax of $2.0 million
|
| | | | (4,864) | | | |
|
Estimated post combination expense related to the make whole payment to ARRIS non-employee directors for excise and other taxes upon completion of the Combination
|
| | | | (2,666) | | | |
|
Less: Pace historical retained earnings
|
| | | | (541,121) | | | |
|
Pro forma adjustment to retained earnings
|
| | | $ | (575,420) | | | |
|
Property, plant and equipment
|
| |
Estimated
weighted average useful life (years) |
| |
Preliminary
fair value |
| |
Depreciation
expense for the year ended December 31, 2014 |
| |
Depreciation
expense for the six months ended June 30, 2015 |
| ||||||||||||||||
Buildings and leasehold improvements
|
| | | | 9 | | | | | $ | 8,361 | | | | | $ | 929 | | | | | $ | 465 | | | ||||
Machinery and equipment
|
| | | | 3 – 4 | | | | | | 87,801 | | | | | | 27,784 | | | | | | 13,892 | | | ||||
Construction in progress
|
| | | | — | | | | | | 2,209 | | | | | | — | | | | | | — | | | ||||
Total
|
| | | | | | | | | $ | 98,371 | | | | | | 28,713 | | | | | | 14,357 | | | ||||
Less: Pace historical depreciation expense
|
| | | | | | | | | | | | | | | | (29,000) | | | | | | (13,500) | | | ||||
Pro forma adjustment to depreciation expense
|
| | | | | | | | | | | | | | | $ | (287) | | | | | $ | 857 | | | ||||
|
Intangible assets
|
| |
Estimated
useful life (years) |
| |
Preliminary
fair value |
| |
Amortization
expense for the year ended December 31, 2014 |
| |
Amortization
expense for the six months ended June 30, 2015 |
| ||||||||||||||||
Customer contracts and relationships
|
| | | | 7 | | | | | $ | 400,000 | | | | | $ | 61,538 | | | | | $ | 30,769 | | | ||||
Technology and patents
|
| | | | 6 | | | | | | 650,000 | | | | | | 118,182 | | | | | | 59,091 | | | ||||
Other
|
| | | | 3 | | | | | | 50,000 | | | | | | 16,667 | | | | | | 8,333 | | | ||||
Total
|
| | | | | | | | | $ | 1,100,000 | | | | | | 196,387 | | | | | | 98,193 | | | ||||
Less: Pace historical amortization expense
|
| | | | | | | | | | | | | | | | (52,936) | | | | | | (24,342) | | | ||||
Pro forma adjustment to amortization of intangibles assets
|
| | | | | | | | | | | | | | | $ | 143,451 | | | | | $ | 73,851 | | | ||||
|
Composition of new debt and related interest expense
|
| |
Weighted
Average Interest Rate(2) |
| |
Debt
|
| |
Interest expense
for the year ended December 31, 2014 |
| |
Interest expense
for the six months ended June 30, 2015 |
| ||||||||||||||||
Term A-1 Loan Facility(1)
|
| | | | 2.67% | | | | | $ | 800,000 | | | | | $ | 21,355 | | | | | $ | 10,678 | | | ||||
Amortization of new and existing ARRIS debt issuance costs
|
| | | | | | | | | | | | | | | | 9,552 | | | | | | 4,573 | | | ||||
Total
|
| | | | | | | | | | | | | | | | 30,907 | | | | | | 15,251 | | | ||||
Less: Reversal of Pace historical interest expense
|
| | | | | | | | | | | | | | | | (7,702) | | | | | | (4,003) | | | ||||
Less: Reversal of ARRIS historical amortization of
existing debt issuance costs |
| | | | | | | | | | | | | | | | (9,035) | | | | | | (4,321) | | | ||||
Less: Reversal of ARRIS historical debt issuance costs incurred
|
| | | | | | | | | | | | | | | | — | | | | | | (12,332) | | | ||||
Pro forma adjustment to interest expense
|
| | | | | | | | | | | | | | | $ | 14,170 | | | | | $ | (5,405) | | | ||||
|
| | |
Year ended December 31, 2014
|
| |
Six months ended June 30, 2015
|
|||||||||||||||||||||
| | |
Basic
|
| |
Diluted
|
| |
Basic
|
| |
Diluted
|
|||||||||||||||
New ARRIS shares to be issued to shareholders of Pace
|
| | | | 46,548,763 | | | | | | 46,548,763 | | | | | | 46,548,763 | | | | | | 46,548,763 | ||||
Pace equity awards to be converted into New
ARRIS shares (11,590,641 Pace stock options, deferred shares and performance shares converted to 1,686,438 of New ARRIS shares at a 0.1455 conversion rate) |
| | | | 1,686,438 | | | | | | 1,686,438 | | | | | | 1,686,438 | | | | | | 1,686,438 | ||||
New ARRIS shares to be issued to ARRIS
executives related to the acceleration of restricted stock upon completion of the Combination |
| | | | 1,009,643 | | | | | | 420,203 | | | | | | 1,009,643 | | | | | | 327,583 | ||||
New ARRIS shares to be issued
|
| | | | 49,244,844 | | | | | | 48,655,404 | | | | | | 49,244,844 | | | | | | 48,562,784 | ||||
|
| | |
As of and for the
six months ended June 30, 2015 |
| |
As of and for the
year ended December 31, 2014 |
| ||||||
ARRIS Historical Data per Common Share | | | | ||||||||||
Net income per common share: | | | | ||||||||||
Basic
|
| | | $ | 0.25 | | | | | $ | 2.27 | | |
Diluted
|
| | | $ | 0.24 | | | | | $ | 2.21 | | |
Cash dividends declared per common share
|
| | | $ | — | | | | | $ | — | | |
Book value per common share
|
| | | $ | 12.20 | | | | | $ | 11.71 | | |
Pace Historical Data per Common Share(1) | | | | ||||||||||
Net income per common share: | | | | ||||||||||
Basic
|
| | | $ | 0.27 | | | | | $ | 0.47 | | |
Diluted
|
| | | $ | 0.26 | | | | | $ | 0.46 | | |
Cash dividends declared per common share
|
| | | $ | 0.05 | | | | | $ | 0.06 | | |
Book value per common share
|
| | | $ | 2.32 | | | | | $ | 2.14 | | |
New ARRIS Combined Unaudited Pro Forma Data per Common Share | | | | ||||||||||
Net income per common share: | | | | ||||||||||
Basic
|
| | | $ | 0.25 | | | | | $ | 1.35 | | |
Diluted
|
| | | $ | 0.24 | | | | | $ | 1.32 | | |
Cash dividends declared per common share(2)
|
| | | $ | — | | | | | $ | — | | |
Book value per common share(3)
|
| | | $ | 16.05 | | | | | | N/A | | |
Pace Unaudited Pro Forma Equivalent Data per Common Share(4) | | | | ||||||||||
Net income per common share: | | | | ||||||||||
Basic
|
| | | $ | 0.04 | | | | | $ | 0.20 | | |
Diluted
|
| | | $ | 0.04 | | | | | $ | 0.19 | | |
Cash dividends declared per common share(2)
|
| | | $ | — | | | | | $ | — | | |
Book value per common share(3)
|
| | | $ | 2.34 | | | | | | N/A | | |
| | |
ARRIS Group, Inc.
|
| |
Pace plc
|
| ||||||||||||||||||||||||||||||
| | |
High
|
| |
Low
|
| |
Dividends
Declared |
| |
High
|
| |
Low
|
| |
Dividends
Declared |
| ||||||||||||||||||
For the quarterly period ended: | | ||||||||||||||||||||||||||||||||||||
March 31, 2012
|
| | | $ | 12.69 | | | | | $ | 10.46 | | | | | | — | | | | | £ | 0.95 | | | | | £ | 0.69 | | | | | $ | 0.025 | | |
June 30, 2012
|
| | | $ | 13.98 | | | | | $ | 10.89 | | | | | | — | | | | | £ | 1.10 | | | | | £ | 0.68 | | | | | | — | | |
September 30, 2012
|
| | | $ | 14.20 | | | | | $ | 11.80 | | | | | | — | | | | | £ | 1.83 | | | | | £ | 1.03 | | | | | $ | 0.014 | | |
December 31, 2012
|
| | | $ | 15.90 | | | | | $ | 12.40 | | | | | | — | | | | | £ | 2.03 | | | | | £ | 1.59 | | | | | | — | | |
March 31, 2013
|
| | | $ | 17.98 | | | | | $ | 14.61 | | | | | | — | | | | | £ | 2.47 | | | | | £ | 1.85 | | | | | $ | 0.031 | | |
June 30, 2013
|
| | | $ | 17.55 | | | | | $ | 14.07 | | | | | | — | | | | | £ | 2.73 | | | | | £ | 2.24 | | | | | | — | | |
September 30, 2013
|
| | | $ | 17.23 | | | | | $ | 14.15 | | | | | | — | | | | | £ | 3.24 | | | | | £ | 2.43 | | | | | $ | 0.018 | | |
December 31, 2013
|
| | | $ | 24.40 | | | | | $ | 16.34 | | | | | | — | | | | | £ | 3.32 | | | | | £ | 2.48 | | | | | | — | | |
March 31, 2014
|
| | | $ | 31.42 | | | | | $ | 23.38 | | | | | | — | | | | | £ | 4.87 | | | | | £ | 3.01 | | | | | $ | 0.037 | | |
June 30, 2014
|
| | | $ | 34.22 | | | | | $ | 24.76 | | | | | | — | | | | | £ | 4.61 | | | | | £ | 3.28 | | | | | | — | | |
September 30, 2014
|
| | | $ | 35.83 | | | | | $ | 28.22 | | | | | | — | | | | | £ | 3.81 | | | | | £ | 2.86 | | | | | $ | 0.023 | | |
December 31, 2014
|
| | | $ | 30.99 | | | | | $ | 23.71 | | | | | | — | | | | | £ | 3.71 | | | | | £ | 2.84 | | | | | | — | | |
March 31, 2015
|
| | | $ | 31.45 | | | | | $ | 25.64 | | | | | | — | | | | | £ | 3.91 | | | | | £ | 3.14 | | | | | $ | 0.048 | | |
June 30, 2015
|
| | | $ | 37.50 | | | | | $ | 28.57 | | | | | | — | | | | | £ | 4.77 | | | | | £ | 3.28 | | | | | | — | | |
| | |
ARRIS
Common Stock |
| |
Pace Ordinary
Shares |
| |
Implied Equivalent
Value per Pace Ordinary Share |
| |||||||||||||||||||||
| | |
($)
|
| |
(£)
|
| |
($)
|
| |
(£)
|
| |
($)
|
| |||||||||||||||
April 22, 2015
|
| | | $ | 30.54 | | | | | £ | 3.32 | | | | | $ | 4.99(2) | | | | | £ | 4.28 | | | | | $ | 6.44(2) | | |
August 31, 2015
|
| | | $ | 26.42 | | | | | £ | 3.41 | | | | | $ | 5.23(3) | | | | | £ | 3.83 | | | | | $ | 5.88(3) | | |
Provisions
|
| |
Provisions Currently Applicable to ARRIS
|
| |
Provisions to be Applicable to New ARRIS
|
|
Authorized and Outstanding Capital Stock
|
| |
Under ARRIS’ Charter, the authorized capital stock of ARRIS consists of 325 million shares, of which 320 million shares have been designated common stock, each having par value of $0.01, and 5 million shares of which have been designated preferred stock, each having par value of $1.00 per share.
As of September 10, 2015, the Record Date for the Special Meeting, ARRIS had 146,592,391 shares of common stock issued and outstanding and 0 shares of preferred stock issued and outstanding.
|
| | The New ARRIS Board has a standing authorization for five years to allot New ARRIS shares up to an aggregate par amount of £3,262,774 based on the number of ARRIS and Pace shares outstanding as of August 31, 2015 (which is subject to change). The New ARRIS Board may issue any unissued shares on such terms as it may decide, provided that the shares are paid up to at least one quarter of their nominal value and the whole of any premium on it. Any shares may be issued with such preferential rights and privileges as determined by the shareholders at a general meeting. | |
| | |
Under Delaware law, the number of authorized shares of common stock or preferred stock may be increased or reduced (but not below the number of issued shares of common stock or preferred stock, as applicable) through an amendment of ARRIS’ Charter.
Currently, pursuant to ARRIS’ Charter, the Board may, by resolution, from time
|
| | Under English law, the directors of a company may issue new ordinary or preferred shares without shareholder approval once authorized to do so by the articles of association or by an ordinary resolution adopted by the shareholders at a general meeting. The authorization may be granted for a maximum period of five years, at which point it must be renewed | |
Provisions
|
| |
Provisions Currently Applicable to ARRIS
|
| |
Provisions to be Applicable to New ARRIS
|
|
| | | to time issue in one or more series any unissued shares of preferred stock and may fix, or alter in one or more respects from time to time before issuance of such shares, the number and designation of any series, liquidation and dividend rights, preference rights, voting rights, redemption rights, conversion rights, and any other rights and qualifications, limitations or restrictions of, and the terms of any purchase, retirement, or sinking fund which may be provided for, such shares of preferred stock. | | | by the shareholders by an ordinary resolution. The New ARRIS articles of association authorize the Board to allot New ARRIS shares up to an aggregate par amount of £3,262,774 based on the number of ARRIS and Pace shares outstanding as of August 31, 2015 (which is subject to change) without shareholder approval for a period of five years from the date of adoption of the New ARRIS articles of association. | |
Consideration for Shares
|
| |
Under DGCL, shares of stock with par value may be issued for such consideration, having a value not less than the par value, as determined from time to time by the board of directors, or by the stockholders if the certificate of incorporation so provides.
ARRIS’ Charter is silent regarding the consideration for shares.
|
| | The New ARRIS Board may issue any unissued shares on such terms as it may decide, provided that the shares are paid up to at least one quarter of their nominal value and the whole of any premium on it. | |
Consolidation and Division; Subdivision
|
| | Under Delaware law, the outstanding shares of a corporation may be combined into a smaller number of shares or split into a greater number of shares through an amendment to its certificate of incorporation. See the section captioned “— Amendments of Governing Documents.” | | | New ARRIS may, by ordinary resolution, consolidate all or any of its share capital into shares of larger amount than its existing shares, or sub-divide all or any of its existing shares into shares of a smaller amount than its existing shares; and determine that, as between the shares resulting from the sub-division, any of them may have any preference or advantage as compared with the others. | |
Preemption Rights, Share Warrants and Share Options
|
| | The ARRIS Charter does not grant stockholders preemption rights. | | | Under English law, certain statutory preemption rights apply automatically in favor of shareholders where shares are to be issued for cash. However, New ARRIS has opted to disapply these preemption rights in its articles of association in respect of New ARRIS shares up to an aggregate par amount of £3,262,774 based on the number of ARRIS and Pace shares outstanding as of August 31, 2015 (which is subject to change). | |
| | | | | | English law requires this disapplication to be renewed at least every five years by special resolution, and it is the intention of New ARRIS to seek such renewal at least every five years. If the disapplication is not renewed, shares issued for cash must be offered to existing shareholders of New ARRIS on a pro rata basis to their | |
Provisions
|
| |
Provisions Currently Applicable to ARRIS
|
| |
Provisions to be Applicable to New ARRIS
|
|
| | | | | | existing shareholding before the shares may be issued to any new shareholders. | |
| | | | | | Statutory preemption rights do not apply (i) to the issue of new shares issued free of charge to existing shareholders, normally in proportion to the number of old shares already held (also known as a bonus, scrip or capitalization issue), (ii) where shares are issued for non-cash consideration (such as in a stock-for-stock acquisition), (iii) where shares are issued pursuant to an employee stock option or similar equity plan or (iv) to the issue of non-equity shares (that is, shares that have the right to participate only up to a specified amount in any income or capital distribution). | |
Reduction of Share Capital
|
| | Under Delaware law, the authorized capital stock of ARRIS may be increased or decreased through an amendment to its Charter. See “— Amendments of Governing Documents.” | | | New ARRIS may reduce its share capital by special resolution passed at a general meeting. The shareholder resolution approving the share capital reduction is subject to court approval. | |
| | | Under Delaware law, ARRIS, by resolution of the Board, may reduce its capital by reducing or eliminating the capital associated with shares of capital stock that have been retired, by applying some or all of the capital represented by shares purchased, redeemed, converted or exchanged or any capital that has not been allocated to any particular class of its capital stock, or by transferring to surplus capital the capital associated with certain shares of its stock. No reduction of capital may be made unless the assets of ARRIS remaining after the reduction are sufficient to pay any debts for which payment has not otherwise been provided. | | | For further discussion of New ARRIS’ intentions in relation to reducing its share capital and creating distributable reserves see “Creation of Distributable Reserves of New ARRIS” on page 78. | |
Liens on Shares, Calls on Shares and Forfeiture of Shares
|
| | Not applicable. | | | The New ARRIS articles of association provide that New ARRIS will have a first and paramount lien on every share that is not a fully paid up share for an amount equal to the unpaid portion of such share. Subject to the terms of their allotment, directors may call for any unpaid amounts in respect of any shares to be paid, and if payment is not made, the shares may be sold in such manner as the directors determine. New ARRIS will not have a lien on any fully paid New ARRIS shares. | |
Provisions
|
| |
Provisions Currently Applicable to ARRIS
|
| |
Provisions to be Applicable to New ARRIS
|
|
Distributions, Dividends, Repurchases and Redemptions
|
| |
Dividends
Under Delaware law, the Board may declare and pay dividends to the ARRIS stockholders out of surplus or, if there is no surplus, out of net profits for the year in which the dividend is declared or the immediately preceding fiscal year, or both, provided that such payment would not reduce capital below the amount of capital represented by all classes of outstanding stock having a preference as to the distribution of assets upon liquidation. Under Delaware law, dividends upon the preferred stock, to the extent of the preference to which such stocks are entitled, shall be paid ahead of dividends on the remaining class or classes or series of stock. Under Delaware law, dividends may be paid in cash, in shares of ARRIS capital stock, or in other property.
|
| |
Dividends
New ARRIS may pay dividends on its ordinary shares only out of its “distributable profits,” defined as accumulated, realized profits (so far as not previously utilized by distribution or capitalization) less accumulated, realized losses (so far as not previously written off in a reduction or reorganization of capital duly made). Among other things, share capital and share premiums are counted as “undistributable reserves” (which are equal to the excess of the consideration for the issuance of shares over the aggregate par amount of such shares).
In addition, under English law, New ARRIS will not be permitted to make a distribution if, at the time, (i) the amount of its net assets is less than the aggregate of its issued and called-up share capital and undistributable reserves or (ii) to the extent that the distribution will reduce the amount of its net assets to less than such total.
A declaration of dividends to be paid to shareholders may be made by an ordinary resolution of the shareholders.
The New ARRIS articles of association authorize the New ARRIS Board to declare interim dividends if it appears to them that they are justified by the profits of New ARRIS available for distribution to make such payment.
The New ARRIS articles of association provide that dividends may be satisfied wholly or partly by cash or the distribution of specific assets and in particular of fully paid shares or debentures of any another company.
|
|
| | | Repurchases/Redemptions | | | Repurchases/Redemptions | |
| | | Under Delaware law, ARRIS may redeem or repurchase its own shares, except that generally it may not redeem or repurchase those shares if the capital of the corporation is impaired at the time or would become impaired as a result of the redemption or repurchase of such shares. If ARRIS were to designate and issue shares of a series of | | |
The New ARRIS articles of association provide that New ARRIS may purchase its own shares and redeem outstanding redeemable shares.
For further details of New ARRIS’ intentions in relation to repurchases see “Description of New ARRIS Shares” on page 127.
|
|
Provisions
|
| |
Provisions Currently Applicable to ARRIS
|
| |
Provisions to be Applicable to New ARRIS
|
|
| | | preferred stock that is redeemable in accordance with its terms, such terms would govern the redemption of such shares. Shares that have been repurchased but have not been retired may be resold by ARRIS. | | | | |
Uncertificated Shares
|
| | Pursuant to the Bylaws, subject to the DGCL, the Board may provide by resolution or resolutions that some or all of any or all classes or series of the stock of the corporation shall be uncertificated shares. Within a reasonable time after the issuance or transfer of any uncertificated shares, the corporation shall send to the registered owner thereof any written notice prescribed by the DGCL. | | |
The New ARRIS Board has the authority to resolve that a class of shares is to become, or is to cease to be, uncertificated.
Uncertificated shares must be held in uncertificated form and transferred by means of DTC or similar electronic settlement system in accordance with the Uncertificated Securities Regulations 2001.
|
|
Transfer and Registration of Shares
|
| | Pursuant to the Bylaws, upon compliance with provisions restricting the transfer or registration of transfer of shares of stock, if any, transfers or registration of transfers of shares of stock of the corporation shall be made only on the stock ledger of the corporation by the registered holder thereof, or by his attorney thereunto authorized by power of attorney duly executed and filed with the Secretary of the corporation or with a transfer agent or a registrar, if any, and, in the case of shares represented by certificates, on surrender of the certificate or certificates for such shares of stock properly endorsed and the payment of all taxes due thereon. | | |
The New ARRIS articles of association allow shareholders to transfer all or any of their certificated shares by instrument of transfer in writing in any usual form or in any other form approved by the Board. The instrument of transfer must be executed by or on behalf of the transferor and, where the share is not fully paid, by or on behalf of the transferee.
The New ARRIS Board may, in their absolute discretion, refuse to register the transfer of a share in certificated form which is not fully paid. They may also refuse to register a transfer of a share in certificated form (whether fully paid or not) unless the instrument of transfer:
(i)
is delivered to New ARRIS, duly stamped, and (except in the case of a transfer by a financial institution where a certificate has not been issued in respect of the share) is accompanied by the certificate for the share to which it relates and such other evidence as the directors may reasonably require;
(ii)
is in respect of only one class of share; and
(iii)
is in favour of not more than four transferees.
The New ARRIS articles of association allow shareholders to transfer all or any of their uncertificated shares by means of
|
|
Provisions
|
| |
Provisions Currently Applicable to ARRIS
|
| |
Provisions to be Applicable to New ARRIS
|
|
| | | | | |
DTC or similar electronic settlement system in accordance with the Uncertificated Securities Regulations 2001. The transfer may not be in favor of more than four transferees.
The New ARRIS Board may refuse to register a transfer of a share in uncertificated form to a person who is to hold it thereafter in certificated form in any case where New ARRIS is entitled to refuse (or is excepted from the requirement) under the Uncertificated Securities Regulations 2001 to register the transfer.
If the New ARRIS Board refuses to register a transfer of a share, it shall, within two months after the date on which the transfer was lodged with New ARRIS (in the case of a transfer of a share in certificated form) or the date on which the operator-instructor (as defined in the New ARRIS articles of association) was received by New ARRIS (in the case of a transfer of a share in uncertificated form to a person who is to hold it thereafter in certificated form), send to the transferee notice of the refusal together with its reasons for refusal.
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Election of Directors
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Under Delaware law, the board of directors of a corporation shall consist of one or more members, each of whom shall be a natural person. The number of directors shall be fixed by, or in the manner provided in, the bylaws, unless the certificate of incorporation fixes the number of directors, in which case a change in the number of directors shall be made only by amendment of the certificate.
The Bylaws provide that the number of directors constituting the whole ARRIS Board shall be at least one, and the exact number may be fixed from time to time by action of the stockholders or of the directors. Currently the ARRIS Board has ten directors.
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The New ARRIS articles of association provide that, unless otherwise determined by the New ARRIS shareholders, the number of directors shall not be less than two. Neither English law nor the New ARRIS articles of association prescribe a maximum number of directors for New ARRIS.
Under the New ARRIS articles of association, directors shall be elected at each annual general meeting by an ordinary resolution. Each New ARRIS director shall hold office until his successor is elected or until he resigns or is removed.
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| | | Pursuant to the Bylaws, the number of the directors may be increased or decreased by action of the shareholders or of the directors. | | | | |
Provisions
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Provisions Currently Applicable to ARRIS
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Provisions to be Applicable to New ARRIS
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Pursuant to the Bylaws, when there is an uncontested election, each director shall be elected by the vote of the majority of the votes cast with respect to the nominee at any meeting for the election of directors. For these purposes, a majority of votes cast shall mean that the number of votes cast “for” a director’s election exceeds the number of votes cast “against” that director’s election. An incumbent director that fails to receive a majority of the votes cast in an uncontested election shall promptly tender his or her resignation to the Board, subject to acceptance by the Board. The Nominating and Corporate Governance Committee shall consider the resignation and make a recommendation to the Board as to whether to accept or reject the tendered resignation, or whether other action should be taken. The Board must act on the tendered resignation, taking into account the Nominating and Corporate Governance Committee’s recommendation, and publicly disclose its decision regarding the tendered resignation and the rationale behind the decision within 90 days from the date of the certification of the shareholder vote. The Nominating and Corporate Governance Committee in making its recommendation, and the Board in making its decision, may each consider any factors or other information that they consider appropriate and relevant. The director who tenders his or her resignation shall not participate in the recommendation of the Nominating and Corporate Governance Committee or the decision of the Board with respect to his or her resignation.
Pursuant to the Bylaws, a contested election occurs when the secretary of the corporation receives a notice that the shareholder has nominated a person for election to the Board in compliance with the notice requirements for shareholder nominees for director set forth in the corporation’s Corporate Governance Guidelines, and such nomination is not withdrawn on or prior to the tenth day
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Provisions
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Provisions Currently Applicable to ARRIS
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Provisions to be Applicable to New ARRIS
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| | | preceding the date the corporation first mails its notice of meeting to the shareholders. In case of an uncontested election, each director shall be elected by the vote of a plurality of votes cast. | | | | |
Removal of Directors; Vacancies
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Removal of Directors
Pursuant to the Bylaws, any director or the entire Board may be removed, with or without cause, by the holders of a majority of the shares then entitled to vote at an election of directors.
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Removal of Directors
Under English law, shareholders may remove a director without cause by ordinary resolution passed at a general meeting, irrespective of any provisions in the company’s articles of association, provided that at least 28 clear days’ notice of the resolution is given to the company.
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Further, pursuant to the New ARRIS articles of association, New ARRIS shareholders may, by special resolution, remove a director before the expiration of his period of office and may, by ordinary resolution, appoint another person who is willing to act as a director, and is permitted by law to do so, to be a director instead of him.
The New ARRIS articles of association provide that a person ceases to be a director if:
(i)
that person ceases to be a director by virtue of any provision of the Companies Act or is prohibited from being a director by law;
(ii)
a bankruptcy order is made against that person;
(iii)
a composition is made with that person’s creditors generally in satisfaction of that person’s debts; or
(iv)
notification is received by New ARRIS from that person that he is resigning or retiring from his office as director, and such resignation or retirement has taken effect in accordance with its terms.
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Vacancies of the Board of the Directors
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Pursuant to the Bylaws, any director may resign at any time upon written notice to the corporation.
Pursuant to the Bylaws, in the interim between annual meetings of stockholders or of special meetings of
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The New ARRIS articles of association provide that vacancies in the board of directors may be filled by the New ARRIS Board until the next annual meeting.
Shareholders also have a right to propose directors for appointment at a general
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Provisions
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Provisions Currently Applicable to ARRIS
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Provisions to be Applicable to New ARRIS
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| | | stockholders called for the election or removal of directors or for the filling of any vacancy, newly created directorships and any vacancies in the Board may be filled by the majority of the remaining directors then in office, although less than a quorum, or by the sole remaining director. | | | meeting convened by the New ARRIS Board for such purpose or at an annual general meeting, provided the shareholder(s) comply with the relevant procedural requirements. See “Comparison of the Rights of ARRIS Stockholders and New ARRIS Shareholders — Shareholder Proposals”. | |
| | | Pursuant to the Bylaws, directors who are elected at an annual meeting of stockholders, and directors who are elected in the interim to fill vacancies and newly created directorships, shall hold office until the next annual meeting of stockholders and until their successors are elected and qualified or until their earlier resignation or removal. | | | | |
Duties of Directors
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Under Delaware law, a company’s directors are charged with fiduciary duties of care and loyalty. The duty of care requires that directors act in an informed and deliberate manner and inform themselves, prior to making a business decision, of all relevant material information reasonably available to them. The duty of care also requires that directors exercise care in overseeing and investigating the conduct of corporate employees. The duty of loyalty may be summarized as the duty to act in good faith, not out of self-interest, and in a manner which the director reasonably believes to be in the best interests of the corporation and its shareholders. A party challenging the propriety of a decision of a board of directors bears the burden of rebutting the applicability of the presumptions afforded to directors by the “business judgment rule.” If the presumption is not rebutted, the business judgment rule attaches to protect the directors and their decisions. However, notwithstanding the foregoing, Delaware courts may subject directors’ conduct to enhanced scrutiny in respect of, among other matters, defensive actions taken in response to a threat to corporate control and approval of a transaction resulting in a sale of control of the corporation.
Under Delaware law, a shareholder of
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Under English law, directors’ duties are based on statute, common law and equitable principles. In particular there are codified duties as follows:
(i)
to act in accordance with the company’s constitution and only exercise powers for the purposes for which they are conferred;
(ii)
to act in a way he or she considers, in good faith, would be most likely to promote the success of the company for the benefit of its shareholders as a whole;
(iii)
to exercise independent judgment;
(iv)
to exercise reasonable care, skill and diligence;
(v)
to avoid conflicts of interest;
(vi)
not to accept benefits from third parties; and
(vii)
to declare any interest in a proposed transaction or arrangement with the company.
Directors are fiduciaries under English law which, generally, means that they must act in good faith, in the interests of the company not their own self-interest and they must not disclose the company’s secrets or confidential information. A director who is in breach of any of the statutory duties (except the duty of
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Provisions
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Provisions Currently Applicable to ARRIS
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Provisions to be Applicable to New ARRIS
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| | | the board of directors, or a shareholder of any committee designated by the board of directors, shall, in the performance of such shareholder’s duties, be fully protected in relying in good faith upon the records of the corporation and upon such information, opinions, reports or statements presented to the corporation by any of the corporation’s officers or employees, or committees of the board of directors, or by any other person as to matters the shareholder reasonably believes are within such other person’s professional or expert competence and who has been selected with reasonable care by or on behalf of the corporation. | | |
reasonable care and skill), which is not a fiduciary duty is potentially liable to the company for damages, and to restore the company’s property, or to account for any profits made. The transaction in question may also be voidable at the company’s request. The duty to exercise reasonable skill and care is not a fiduciary duty and is treated differently the only remedy is damages.
The general rule under English law is that a company has a right to bring a claim against one of its directors for breach of duty. However, under the Companies Act there is a statutory procedure whereby a shareholder may bring a derivative claim, that is proceedings on behalf of a company, against a director for negligence, default, breach of duty or breach of trust.
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Conflicts of Interest of Directors
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| | Under Delaware law, a contract or transaction in which a director has an interest will not be voidable solely for this reason if (i) the material facts with respect to such interested director’s relationship or interest are disclosed or are known to the board of directors, and the board of directors in good faith authorizes the transaction by the affirmative vote of a majority of the disinterested directors, (ii) the material facts with respect to such interested director’s relationship or interest are disclosed or are known to the shareholders entitled to vote on such transaction, and the transaction is specifically approved in good faith by vote of the majority of shares entitled to vote thereon, or (iii) the transaction is fair to the corporation as of the time it is authorized, approved or ratified. The mere fact that an interested director is present and voting on a transaction in which he or she is interested will not itself make the transaction void. Interested directors may be counted in determining the presence of a quorum at a meeting of the board of directors or of a committee which authorizes the contract or transaction. | | |
Under the New ARRIS articles of association, provided that a director who is in any way (directly or indirectly) interested in an existing or proposed contract, transaction or arrangement with New ARRIS has declared the nature and extent of his interest, the director shall not be accountable to New ARRIS for any benefit which he derives from any such transaction or arrangment.
The New ARRIS Board is empowered to authorize a director in relation to any matter proposed to the New ARRIS Board which otherwise would infringe the director’s duty to avoid conflicts of interests, provided that the authorisation is effective only if (a) any requirement as to the quorum at the meeting at which the matter is considered is met without counting the director in question or any other interested director, and (b) the matter was agreed to without their voting or would have been agreed to if their votes had not been counted.
A director cannot vote and count towards a quorum in respect of any contracts, transactions or proposals in which he has any material interest which is not by virtue of his interests in shares or resolution of the directors granting him authorization.
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Provisions
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Provisions Currently Applicable to ARRIS
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Provisions to be Applicable to New ARRIS
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Indemnification of Officers and Directors
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| | Delaware law permits a corporation to indemnify officers and directors for actions taken in good faith and in a manner they reasonably believed to be in, or not opposed to, the best interests of the corporation, and with respect to any criminal action that they had no reasonable cause to believe was unlawful. | | | Subject to exceptions, English law does not permit a company to exempt a director or certain officers from, or indemnify a director against, liability in connection with any negligence, default, breach of duty or breach of trust by a director in relation to the company. | |
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Pursuant to the Bylaws, ARRIS shall indemnify any person who was or is a party or is threatened to be made a party to any threatened, pending, or completed action, suit or proceeding, whether civil, criminal, administrative, or investigative (other than an action by or in the right of the corporation) by reason of the fact that he or she is or was a director or officer of the corporation, against expenses (including attorneys’ fees), judgments, fines and amounts paid in settlement actually and reasonably incurred by him or her in connection with such action, suit or proceeding if he or she acted in good faith and in a manner he or she reasonably believed to be in or not opposed to the best interests of the corporation, and, with respect to any criminal action or proceeding, had no reasonable cause to believe his or her conduct was unlawful.
Pursuant to the Bylaws, ARRIS shall indemnify any person who was or is a party or is threatened to be made a party to any threatened, pending or completed action or suit by or in the right of the corporation to procure a judgment in its favor by reason of the fact that he or she is or was a director or officer of the corporation against expenses (including attorneys’ fees) actually and reasonably incurred by him or her in connection with the defense or settlement of such action or suit if he or she acted in good faith and in a manner he or she reasonably believed to be in or not opposed to the best interests of the corporation; except that no indemnification shall be made in respect of any claim, issue or matter as to which such person shall have been adjudged to be liable to the corporation unless and only to the extent that the Court of
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The exceptions allow a company to:
(i)
purchase and maintain D&O Insurance against any liability attaching in connection with any negligence, default, breach of duty or breach of trust owed to the company. D&O Insurance generally covers costs incurred in defending allegations and compensatory damages that are awarded. However, D&O Insurance will generally not cover losses incurred in relation to criminal acts, intentional malfeasance or other forms of dishonesty, certain regulatory offences or excluded matters such as environmental fines and clean-up costs. In relation to these matters, D&O Insurance generally only covers defense costs, subject to the obligation of the director or officer to repay the costs if an allegation of criminality, dishonesty or intentional malfeasance is subsequently admitted or found to be true;
(ii)
provide a qualifying third party indemnity provision, or “QTPIP.” This permits a company to indemnify its directors and certain officers (and directors and certain officers of an associated company) in respect of proceedings brought by third parties (covering both legal costs and the amount of any adverse judgment, except for: the legal costs of an unsuccessful defense of criminal proceedings or civil proceedings including proceedings brought by the company itself or an associated company; fines imposed in criminal proceedings; the legal costs of an unsuccessful application for relief; and penalties imposed by regulatory bodies). New ARRIS can therefore
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Provisions
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Provisions Currently Applicable to ARRIS
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Provisions to be Applicable to New ARRIS
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| | | Chancery or the court in which such action or suit was brought shall determine upon application that, despite the adjudication of liability, but in view of all the circumstances of the case, such person is fairly and reasonably entitled to indemnify for such expenses which the Court of chancery or such other court shall deem proper. The determination of whether a director or officer has met the standard of conduct set out above shall be made (i) by the Board by a majority vote of a quorum consisting of directors who were not parties to such action, suit, or proceeding or (ii) if such a quorum is not obtainable, or, even if obtainable a quorum of disinterested directors so directs, by independent legal counsel in a written opinion, or (iii) by the stockholders. To the extent, however, that a director or officer of the corporation has been successful on the merits or otherwise in defense of any action, suit or proceeding described above, or in defense of any claim, issue or matter therein, he or she shall be indemnified against expenses (including attorneys’ fees) actually and reasonably incurred by him or her in connection therewith, without the necessity of authorization in the specific case. |
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indemnify directors and certain officers against such third party actions as such class actions or actions following mergers and acquisitions or share issuances; and
(iii)
provide a qualifying pension scheme indemnity provision, or “QPSIP”. This permits a company to indemnify its directors and certain officers (and certain officers of an associated company) in respect of proceedings in connection with the company’s activities as a corporate trustee of an occupational pension scheme (covering both legal costs and the amount of any adverse judgement, except for: the legal costs of an unsuccessful defense of criminal proceedings, including proceedings brought by the company itself or an associated company; fines imposed in criminal proceedings; and penalties imposed by regulatory bodies). New ARRIS can therefore indemnify directors and certain officers in certain circumstances if New ARRIS acts as a corporate trustee of an occupational pension scheme.
The New ARRIS articles of association include a provision which entitle every director to be indemnified by New ARRIS to any extent permitted by law (including by funding any expenditure incurred or to be incurred by him or her) against any loss or liability incurred in their capacity as a director. Any funds provided to a director to meet any expenditure incurred by him in connection with defending himself or in an investigation of any negligence, default, breach of duty or breach of trust by him or otherwise, must be repaid if (a) the director is convicted in the criminal proceedings, (b) judgment is given against the director in civil proceedings, or (c) the court refuses to grant the director the relief sought.
The New ARRIS articles of association also provides the New ARRIS Board with authority to purchase and maintain insurance at the expense of New ARRIS for the benefit of any person who is or
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Provisions
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Provisions Currently Applicable to ARRIS
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Provisions to be Applicable to New ARRIS
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was at any time a director of the company or any associated company.
In addition to the provisions of the New ARRIS articles of association, it is common to set out the terms of the QTPIP and any QPSIP in the form of a deed of indemnity between the company and the relevant director or officer which essentially indemnifies the director or officer against claims brought by third parties to the fullest extent permitted under English law.
New ARRIS will be required to disclose in its annual directors’ report any QTPIP or QPSIP in force at any point during the relevant financial year or in force when the directors’ report is approved. A copy of the indemnity or, if it is not in writing, a memorandum setting out its terms must be open to inspection during the life of the indemnity and for a period of one year from the date of its termination or expiration. Any shareholder may inspect a directors’ indemnity without charge and is entitled to request, on payment of the prescribed fee, a copy of the provisions.
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Limitation on Director Liability
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Under Delaware law, a corporation may include in its certificate of incorporation a provision that limits or eliminates the personal liability of directors to the corporation and its shareholders for monetary damages for a breach of fiduciary duty as a director. ARRIS’s Charter includes such a provision.
However, a corporation may not limit or eliminate the personal liability of a director for: any breach of the director’s duty of loyalty to the corporation or its shareholders; acts or omissions in bad faith or which involve intentional misconduct or a knowing violation of law; intentional or negligent payments of unlawful dividends or unlawful stock purchases or redemptions; or any transaction in which the director derives an improper personal benefit.
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English law does not permit a company to exempt any director or certain officers from any liability arising from negligence, default, breach of duty or breach of trust against the company. However, despite this prohibition, an English company is permitted to purchase and maintain insurance for a director or executive officer of the company against any such liability. See “Indemnification of Officers and Directors.”
The New ARRIS articles of association provide the New ARRIS Board with authority to purchase and maintain insurance at the expense of New ARRIS for the benefit of any person who is or was at any time a director or other officer or employee of the company or any associated company.
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Board Remuneration
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Pursuant to the Bylaws, the Board shall have the authority to fix the compensation of the members thereof.
ARRIS’ executive compensation is
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Provisions
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Provisions Currently Applicable to ARRIS
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Provisions to be Applicable to New ARRIS
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| | | subject to an annual non-binding advisory “say on pay” vote at each annual shareholders’ meeting. | | | or if shareholders did not approve the previous year’s remuneration report, New ARRIS must submit a (forward-looking) remuneration policy to its shareholders for approval by a simple majority in a binding vote. | |
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New ARRIS will also remain subject to SEC reporting requirements for director and executive officer compensation and shareholder non-binding advisory votes to approve named executive officer compensation.
English law requires, in the case of officers who are also considered directors under English law, that employment agreements with a guaranteed term of more than two years be subject to a prior approval of shareholders at a general meeting.
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Annual Meetings of Shareholders
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| | Under Delaware law, an annual meeting of shareholders is required for the election of directors and for such other proper business as may be conducted thereat. The Delaware Court of Chancery may order a corporation to hold an annual meeting if the corporation has failed to hold an annual meeting for a period of 13 months after its last annual meeting. | | | New ARRIS must hold its annual general meeting within the period of six months beginning with the day following its accounting reference date. The notice of the general meeting must state the time, date and place of the meeting and the general nature of the business to be conducted at the meeting. | |
| | | Under ARRIS’ Bylaws, an annual meeting of the stockholders is held at a time designated by the Board, provided that each annual meeting shall be held on a date within thirteen months after the date of the preceding annual meeting. | | | ||
Forum and Venue
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| | Pursuant to the Bylaws, annual meetings and special meetings shall be held at such place, within or without the State of Delaware, as the directors may, from time to time, fix. Whenever the directors shall fail to fix such place, the meeting shall be held at the registered office of the corporation in the State of Delaware. | | | The New ARRIS articles of association provide that the New ARRIS Board may convene general meetings of the shareholders at any place they so designate. | |
Record Date
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| | Under DGCL, in order that the corporation may determine the stockholders entitled to notice of any meeting of stockholders or any adjournment thereof, the board of directors may fix a record date, which record date shall not precede the date upon which the resolution fixing the | | | The New ARRIS articles of association provide that for the purposes of determining which persons are entitled to attend or vote at a general meeting and how many votes such persons may cast, New ARRIS may specify in the notice convening the meeting a time, being not more than 48 hours before the time fixed | |
Provisions
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Provisions Currently Applicable to ARRIS
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Provisions to be Applicable to New ARRIS
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| | | record date is adopted by the board of directors, and which record date shall not be more than sixty nor less than ten days before the date of such meeting. | | | for the meeting (and for this purpose no account shall be taken of any part of a day that is not a working day), by which a person must be entered on the register of members of New ARRIS in order to have the right to attend or vote at the meeting. | |
| | | Per the Bylaws, in order that the corporation may determine the stockholders entitled to notice of or to vote at any meeting of stockholders or any adjournment thereof, the Board may fix a record date, which record date shall not precede the date upon which the resolution fixing the record date is adopted by the Board, and which record date shall not be more than sixty nor less than ten days before the date of such meeting. If no record date is fixed by the Board, the record date for determining stockholders entitled to notice of or to vote at a meeting of stockholders shall be at the close of business on the day next preceding the day on which notice is given, or, if notice is waived, at the close of business on the day next preceding the day on which the meeting is held. A determination of stockholders of record entitled to notice of or to vote at a meeting of stockholders shall apply to any adjournment of the meeting; provided, however, that the Board may fix a new record date for the adjourned meeting. | | | | |
Notice Provisions
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| | Per the Bylaws, written notice of all meetings shall be given, stating the place, date, and hour of the meeting and stating the place within the city or other municipality or community at which the list of stockholders of the corporation may be examined. The notice of an annual meeting shall state that the meeting is called for the election of directors and for the transaction of other business which may properly come before the meeting, and shall (if any other action which could be taken at a special meeting is to be taken at such annual meeting) state the purpose or purposes. The notice of a special meeting shall in all instances state the purpose or purposes for which the meeting is called. | | |
The New ARRIS articles of association require that notice of an annual general meeting of shareholders must be delivered to the shareholders at least 21 clear days prior to the date of the annual general meeting. Shareholders must be notified of all general meetings (other than annual general meetings) at least 14 clear days prior to the date of the general meeting.
Notice periods for general meetings can be shortened if shareholders holding 95% of the voting rights agree to hold the meeting at short notice. In the case of annual general meetings, all shareholders entitled to attend and vote must agree to the short notice.
“Clear days” means calendar days and excludes (1) the date on which a notice is
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Provisions
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Provisions Currently Applicable to ARRIS
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Provisions to be Applicable to New ARRIS
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| | | Per the Bylaws, a copy of the notice of any meeting shall be given, personally or by mail, not less than ten days nor more than sixty days before the date of the meeting, unless the lapse of the prescribed period of time shall have been waived, and directed to each stockholder at his record address or at such other address which he may have furnished by request in writing to the Secretary of the corporation. Notice by mail shall be deemed to be given when deposited, with postage thereon prepaid, in the United States Mail. Per the Bylaws, if a meeting is adjourned to another time, not more than thirty days hence, and/or to another place, and if an announcement of the adjourned meeting time and/or place is made at the meeting, it shall not be necessary to give notice of the adjourned meeting unless the directors, after adjournment, fix a new record date for the adjourned meeting. Per the Bylaws, notice need not be given to any stockholder who submits a written waiver of notice signed by him before or after the time stated therein. Attendance of a stockholder at a meeting of stockholders shall constitute a waiver of notice of such meeting, except when the stockholder attends the meeting for the express purpose of objecting, at the beginning of the meeting, to the transaction of any business because the meeting is not lawfully called or convened. Neither the business to be transacted at, nor the purpose of, any regular or special meeting of the stockholders need be specified in any written waiver of notice. |
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Calling Special Meetings of Shareholders
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Under Delaware law, special meetings of shareholders may be called by the board of directors and by such other person or persons authorized to do so by the corporation’s certificate of incorporation or bylaws.
Per the Bylaws, annual meetings and special meetings may be called by the
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The New ARRIS articles of association provide that general meetings of shareholders may be called by the Board of New ARRIS.
Pursuant to the Companies Act, one or more shareholders representing at least 5% of the paid up capital of New ARRIS carrying voting rights have the right to
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Provisions
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Provisions Currently Applicable to ARRIS
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Provisions to be Applicable to New ARRIS
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| | | directors or by any officer instructed by the directors to call the meeting. | | | requisition the holding of a general meeting. | |
Adjournment of Shareholder Meetings
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Under the DGCL, when a meeting is adjourned to another time or place, unless the bylaws otherwise require, notice need not be given of the adjourned meeting if the time, place, if any, thereof, and the means of remote communications, if any, by which stockholders and proxy holders may be deemed to be present in person and vote at such adjourned meeting are announced at the meeting at which the adjournment is taken. At the adjourned meeting the corporation may transact any business which might have been transacted at the original meeting. If the adjournment is for more than 30 days, a notice of the adjourned meeting shall be given to each stockholder of record entitled to vote at the meeting. If after the adjournment a new record date for stockholders entitled to vote is fixed for the adjourned meeting, the board of directors shall fix a new record date for notice of such adjourned meeting, and shall give notice of the adjourned meeting to each stockholder of record entitled to vote at such adjourned meeting as of the record date fixed for notice of such adjourned meeting.
Per the Bylaws, if a meeting is adjourned to another time, not more than thirty days hence, and/or to another place, and if an announcement of the adjourned meeting time and/or place is made at the meeting, it shall not be necessary to give notice of the adjourned meeting unless the directors, after adjournment, fix a new record date for the adjourned meeting.
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The New ARRIS articles of association provide that the chairman may adjourn the meeting with the consent of the meeting at which quorum is present.
The chairman also may, without the consent of the meeting, adjourn a meeting before or after it has commenced, if the chairman of the meeting considers that:
(i)
there is not enough room for the number of members and proxies who wish to attend the meeting;
(ii)
the behaviour of anyone present prevents, or is likely to prevent, the orderly conduct of the business of the meeting;
(iii)
an adjournment is necessary to protect the safety of any person attending the meeting;
(iv)
an adjournment is otherwise necessary in order for the business of the meeting to be properly carried out; or
(v)
the facilities at the place at which the chairman of the meeting is presiding, or any place at which persons are participating via electronic means, have become inadequate.
No business shall be transacted at an adjourned meeting other than business which might properly have been transacted at the meeting had the adjournment not taken place.
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Shareholder Proposals
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| | Per the ARRIS Corporate Governance Guidelines, ARRIS’ Nominating and Corporate Governance Committee shall evaluate each shareholder proposal submitted for inclusion in ARRIS’ proxy materials to determine whether the proposal is eligible for inclusion under the Bylaws, Delaware law and the Securities Exchange Commission’s proxy rules and shall recommend to the Board | | |
Pursuant to the Companies Act:
(i)
members of New ARRIS representing at least 5% of the paid-up share capital of a company can require the company to call a general meeting; and
(ii)
members of New ARRIS can require resolutions to be put before an annual general meeting. Such a
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Provisions
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Provisions Currently Applicable to ARRIS
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Provisions to be Applicable to New ARRIS
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| | | whether the company should support or oppose the proposal. In evaluating shareholder proposals, the Committee will take into account the extent of the share holdings and the length of time those shares have been held, without precluding proposals made by smaller, individual shareholders. When appropriate, such consideration could include a meeting of the shareholder and representatives of the Nominating and Corporate Governance Committee. Additionally, any proposal that is approved by a majority of shareholders at any shareholder meeting and not implemented by the Board will be discussed in the next annual proxy statement of the company, which will contain an explanation of the Board’s reason for not implementing the proposal. | | |
request must be made by either:
•
a member or members holding at least 5% of the total voting rights (excluding voting rights attached to any treasury shares) of all the members who have a right to vote on the resolution at the AGM to which the request relates; or
•
at least 100 members with the right to vote on the resolution at the annual general meeting and each holding, on average, at least £100 of paid-up share capital.
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Voting Rights
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Voting, Generally
Per the Bylaws, each share of stock shall entitle the holders thereof to one vote. Directors shall be elected by a plurality of the votes of the shares present in person or represented by proxy at the meeting and entitled to vote on the election of directors. General corporate action shall be authorized by a majority of the votes cast.
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Voting, Generally
All resolutions at an annual general meeting must be decided on a poll.
On a poll every member who is present in person or by proxy is entitled to one vote for every New ARRIS share held by such shareholder.
On a separate general meeting of the holders of any class of shares, all votes will be taken on a poll.
Polls at a general meeting shall be taken when, where and in such manner as the chairman of the meeting directs.
Under the Companies Act and the New ARRIS articles of association, certain matters require “ordinary resolutions,” which must be approved by at least a majority of the votes cast by shareholders, and certain other matters require “special resolutions,” which require the affirmative vote of at least 75% of the votes cast by shareholders.
An ordinary resolution is needed to (among other matters): remove a director; provide, vary or renew a director’s authority to allot shares; and appoint directors (where appointment is by shareholders).
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Provisions
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Provisions Currently Applicable to ARRIS
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Provisions to be Applicable to New ARRIS
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| | | | | | A special resolution is needed to (among other matters): alter a company’s articles of association, exclude statutory preemptive rights on allotment of securities for cash (for up to five years); reduce a company’s share capital; re-register a public company as a private company (or vice versa); and approve a scheme of arrangement. |
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Cumulative voting
Under Delaware law cumulative voting is permitted.
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Cumulative Voting
Cumulative voting is not recognized under English law.
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Shareholder Action by Written Consent
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Under the DGCL, stockholders may, unless the certificate of incorporation otherwise provides, act by written consent to elect directors; provided, however, that, if such consent is less than unanimous, such action by written consent may be in lieu of holding an annual meeting only if all of the directorships to which directors could be elected at an annual meeting held at the effective time of such action are vacant and are filled by such action.
Per the Bylaws, any action required by the DGCL to be taken at any annual or special meeting of stockholders, or any action which may be taken at any annual or special meeting or stockholders, may be taken without a meeting, without prior notice and without a vote, if a consent in writing, setting forth the action so taken, shall be signed by the holders of outstanding stock having not less than the minimum number of votes that would be necessary to authorize or take such action at a meeting at which all shares entitled to vote thereon were present and voted. Prompt notice of the taking of the corporate action without a meeting by less than unanimous written consent shall be given to those stockholders who have not consented in writing.
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| | Under English law, a public limited company’s shareholders cannot pass a resolution by written consent; they can only pass resolutions taken at shareholder meetings. | |
Provisions
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Provisions Currently Applicable to ARRIS
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Provisions to be Applicable to New ARRIS
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Quorum
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| | The Bylaws provide that the holders of a majority of the outstanding shares of stock shall constitute a quorum at a meeting of stockholders for the transaction of any business. The stockholders present may adjourn the meeting despite the absence of a quorum. | | |
Two persons entitled to vote upon the business to be transacted in respect of a majority of the issued shares of New ARRIS, each being a member or a proxy for a member or a duly authorised representative of a corporation which is a member (including for this purpose two persons who are proxies or corporate representatives of the same member), shall be a quorum.
The necessary quorum at a separate meeting of the holders of any class of New ARRIS shares shall be (i) at any such meeting other than an adjourned meeting, two persons entitled to vote upon the business to be transacted in respect of a majority in nominal value of the issued shares of the class in question (excluding any shares of that class held as treasury shares), each being a member or a proxy for a member or a duly authorised representative of a corporation which is a member (including for this purpose two persons who are proxies or corporate representatives of the same member); or (ii) at an adjourned meeting, one person holding shares of the class in question (other than treasury shares) or their proxy.
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Shareholder Approval of Merger or Consolidation
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| | Under DGCL, subject to certain exceptions, the board of directors of each corporation which desires to merge or consolidate shall adopt a resolution approving an agreement of merger or consolidation and declaring its advisability and submit the agreement to the stockholders of each constituent corporation at an annual or special meeting for the purpose of acting on the agreement. The vote of a majority of the outstanding stock of the corporation entitled to vote on the matter shall be required for the adoption of the agreement of merger or consolidation. | | |
As noted above, “ordinary resolutions” must be approved by at least a majority of the votes cast by shareholders.
“Special resolutions” require the affirmative vote of at least 75% of the votes cast at the meeting to be approved. There is no concept of a statutory merger under English law (except where an English company merges with another company based in the European Economic Area).
Under English law and subject to applicable U.S. securities laws and NASDAQ rules and regulations, where New ARRIS proposes to acquire another company, approval of New ARRIS shareholders is not required.
Under English law, where another company proposes to acquire New ARRIS, the requirement for the approval of the shareholders of New ARRIS
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Provisions
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Provisions Currently Applicable to ARRIS
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Provisions to be Applicable to New ARRIS
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| | | | | | depends on the method of acquisition. For example, a merger between New ARRIS and another English public company (as opposed to an acquisition by one company of the other) will require approval of the shareholders of both New ARRIS and the other public company. | |
| | | | | | Under English law, schemes of arrangement are arrangements or compromises between a company and any class of shareholders or creditors, and are used in certain types of reconstructions, amalgamations, capital reorganizations or takeovers (similar to a merger in the U.S.). Such arrangements require the approval of (i) a majority in number of shareholders or creditors (as the case may be) representing 75% in value of the creditors or class of creditors or shareholders or class of shareholders present and voting either in person or by proxy at a special meeting convened by order of the court; and (ii) the English court. Once approved, sanctioned and becoming effective, all shareholders and creditors of the relevant class are bound by the terms of the scheme, and a dissenting shareholder would have no rights comparable to appraisal rights provided under DGCL. | |
| | | | | | The Companies Act also provides that where (i) a takeover offer is made for shares, and (ii) following the offer, the offeror has acquired or contracted to acquire not less than 90% of the shares to which the offer relates, and not less than 90% of the voting rights attached to those shares, the offeror may require the other shareholders who did not accept the offer to transfer their shares on the terms of the offer. In this circumstance, a dissenting shareholder may object to the transfer on the basis that the offeror is not entitled to acquire shares or to specify terms of acquisition different from those in the offer by applying to the court within six weeks of the date on which notice of the transfer was given. In the absence of fraud or oppression, the court is unlikely to order that the acquisition shall not take effect, but it may specify terms of the transfer that it finds appropriate. | |
Provisions
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Provisions Currently Applicable to ARRIS
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Provisions to be Applicable to New ARRIS
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| | | | | | A minority shareholder is also entitled in similar circumstances to require the offeror to acquire his or her shares on the terms of the offer. | |
| | | | | | An English public limited company is potentially subject to the protections afforded by the Takeover Code if, among other factors, a majority of its directors are resident within the UK, the Channel Islands or the Isle of Man. Based upon New ARRIS’ current and intended plans for its directors, it is anticipated that the Takeover Code will not apply to New ARRIS. | |
Related Party Transactions
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The Charter and Bylaws are silent on the matter.
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| | Under English law, certain transactions between a director and a related company of which he or she is a director are prohibited unless approved by the shareholders, such as loans, credit transactions and substantial property transactions. | |
Shareholder Suits
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Generally, ARRIS may be sued under federal securities law, and shareholders may bring derivative litigation against the corporation if the corporation does not enforce its own rights.
Under federal and state procedural rules, a shareholder must make a demand upon the board of directors before bringing a derivative suit unless the demand is excused. An individual also may commence a class action suit on behalf of himself or herself and other similarly situated shareholders where the requirements for maintaining a class action have been met.
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While English law only permits a shareholder to initiate a lawsuit on behalf of the company in limited circumstances, it does permit New ARRIS shareholders (and for these purposes a shareholder includes a person to whom New ARRIS shares have been (a) transferred, but who has not yet been formally registered as a member and (b) transmitted by operation of law) to apply for a court order:
(i)
when New ARRIS affairs are being or have been conducted in a manner unfairly prejudicial to the interests of all or some shareholders, including the shareholder making the claim; or
(ii)
when any act or omission of New ARRIS is or would be so prejudicial.
New ARRIS shareholders (and for these purposes a shareholder includes a person to whom New ARRIS shares have been (a) transferred, but who has not yet been formally registered as a member and (b) transmitted by operation of law) may bring a derivative claim on behalf of New ARRIS in their own name, in respect of a cause of action arising from an act or proposed act or omission involving any:
(i)
negligence;
(ii)
default;
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Provisions
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Provisions Currently Applicable to ARRIS
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Provisions to be Applicable to New ARRIS
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| | | | | | (iii) breach of duty; or (iv) breach of trust, by a director of New ARRIS. |
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Short Swing Profits
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| | Directors and officers of ARRIS are governed by rules under the Exchange Act that may require directors and officer to forfeit to ARRIS any “short swing” profits realized from purchases and sales, as determined under the Exchange Act and the rules thereunder, of ARRIS equity securities. | | | As a company listed on NASDAQ and subject to the Exchange Act, directors and officers of New ARRIS will remain subject to U.S. securities laws, including prohibitions on “short swing” trading. | |
Proxy Statements and Reports
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Proxy Statement Generally
Under the Exchange Act proxy rules, ARRIS must comply with notice and disclosure requirements relating to the solicitation of proxies for shareholder meetings.
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Proxy Statement Generally
The Exchange Act proxy rules will continue to apply to New ARRIS.
English law does not have specific proxy solicitation legislation, but approaches to shareholders may need to comply with the UK Financial Services and Markets Act 2000.
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Voting by Proxy
Per the Bylaws, every stockholder may authorize another person or persons to act for him by proxy in all matters in which a stockholder is entitled to participate, whether by waiving notice of any meeting, voting or participating at a meeting, or expressing consentor dissent without a meeting. Every proxy must be signed by the stockholder or by his attorney-in-fact. No proxy shall be voted or acted upon after three years from its date unless such proxy provides for a longer period. A duly executed proxy shall be irrevocable if it states that it is irrevocable and, if, and only as long as, it is coupled with an interest sufficient in law to support an irrevocable power. A proxy may be irrevocable regardless of whether the interest with which it is coupled is an interest in the stock itself or an interest in the corporation generally.
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Voting by Proxy
The New ARRIS articles of association provide that each New ARRIS shareholder shall at every meeting of shareholders be entitled to vote in person or by proxy for each share held by such shareholder.
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Approval of Auditors
The Charter and Bylaws do not grant ARRIS’ stockholders the right to appoint the company’s auditors;
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Approval of Auditors
Under English law, New ARRIS’ shareholders approve the company’s auditors each year. In addition, the
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Provisions
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Provisions Currently Applicable to ARRIS
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Provisions to be Applicable to New ARRIS
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| | | however, ARRIS typically includes in its proxy statement a shareholder proposal to ratify the appointment of its auditors. | | | company’s annual financial statements, which must, to the satisfaction of the New ARRIS Board, give a “true and fair view” of the assets, liabilities, financial position and profit or loss of New ARRIS and the consolidated group, must be presented to the shareholders at a general meeting but are not required to be approved by the shareholders. | |
Reporting Requirements
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As a U.S. public company ARRIS must file with the SEC, among other reports and notices;
(1)
an Annual Report on Form 10-K within 60 days after the end of a fiscal year;
(2)
a Quarterly Report on Form 10-Q within 40 days after the end of a fiscal quarter ending; and
(3)
Current Reports on Form 8-K upon the occurrence of certain important corporate events. Unless otherwise specified, a report is to be filed or furnished within four business days after occurrence of the event.
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| | Since New ARRIS would be considered a successor issuer to ARRIS and would be listed on NASDAQ, New ARRIS would remain subject to U.S. securities laws, but would not be subject to the reporting obligations of companies listed on the London Stock Exchange or on any other securities exchange other than NASDAQ. | |
Rights of Inspection of Books and Records
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| | Under Delaware law, a shareholder of a Delaware corporation has the right to inspect the corporation’s stock ledger, shareholder lists and other books and records for a purpose reasonably related to the person’s interest as a shareholder. | | |
Generally, the register of members and index of names of New ARRIS shareholders may be inspected at any time (1) for free, by New ARRIS shareholders, and (2) for a fee by any other person.
The inspecting shareholder has to show he or she has a proper purpose in inspecting the register. Documents may be copied for a fee.
The service contracts, if any, of New ARRIS directors (or if a service contract is not in writing, a written memorandum setting out the terms of the contract) can be inspected by shareholders without charge and during business hours. In this and certain other contexts under applicable English law, a “director” includes certain executive officers and a “service contract” includes any contract under which such a director or executive officer undertakes personally to provide services to the company or a subsidiary company, whether in that person’s capacity as a director, an executive officer or otherwise.
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Provisions
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Provisions Currently Applicable to ARRIS
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Provisions to be Applicable to New ARRIS
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| | | | | | The shareholders of New ARRIS may also inspect, without charge and during business hours, the minutes of meetings of the shareholders for the previous 10 years and obtain copies of the minutes for a fee. |
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In addition, the published annual accounts of New ARRIS are required to be available for shareholders at a general meeting and a shareholder is entitled to a copy of these accounts. The accounts must also be made available on New ARRIS website and remain available until the accounts for the next financial year are placed on the website.
Under English law, the shareholders of a company do not have the right to inspect the corporate books of a subsidiary of that company.
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Disclosure of Interests in Shares
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Certain acquisitions of ARRIS shares may require disclosure under the Exchange Act under Schedule 13D. Some acquisitions, however, may qualify for a short-form disclosure on Schedule 13G. Generally, an acquisition of more than a 5% interest in a U.S. publicly-held issuer by
(1)
certain types of persons, including a broker-dealer, a bank, an insurance company, an investment company and an investment adviser, or
(2)
a “passive investor” who is not seeking to acquire or influence control of the issuer so long as the investor owns less than 20% of the class of stock it is acquiring, may be disclosed on a Schedule 13G.
A buyer who files a Schedule 13G must amend it periodically
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The Schedule 13D and Schedule 13G reporting regime will continue to apply to shareholders of New ARRIS as New ARRIS will have its shares registered under Section 12 of the Exchange Act.
In addition, English law provides that a company may, by notice in writing under section 793 of the Companies Act, require a person whom the company knows or reasonably believes to be or to have been within the three preceding years, interested in its issued voting share capital to:
(i)
confirm whether this is or is not the case; and
(ii)
if this is the case, to give further information that it requires relating to his or her interest and any other interest in the company’s shares of which he or she is aware.
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(1)
to report any change in the information previously reported; or
(2)
if it acquires more than 10% of the class of stock and, thereafter, if it undergoes any change in ownership of 5% or more of the class of stock.
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The disclosure must be made within a reasonable period as specified in the relevant notice which may be as short as one or two days.
The New ARRIS articles of association contain provisions which allow New ARRIS to disenfranchise and restrict the rights attaching to shares where the recipient fails to comply with a section 793 notice.
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Provisions
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Provisions Currently Applicable to ARRIS
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Provisions to be Applicable to New ARRIS
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Rights of Dissenting Shareholders
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| | The appraisal rights of ARRIS stockholders are governed by Delaware law. Delaware law provides that appraisal rights are available to dissenting shareholders in connection with certain mergers or consolidations. However, unless a corporation’s certificate of incorporation otherwise provides (which ARRIS’s Charter does not), Delaware law does not provide for appraisal rights if: (1) the shares of the corporation are (a) listed on a national securities exchange or (b) held of record by more than 2,000 shareholders; or (2) the corporation is the surviving corporation and no vote of its shareholders is required for the merger. Notwithstanding the foregoing, Delaware law provides that appraisal rights will be available to the shareholders of a corporation if the shareholders are required by the terms of a merger agreement to accept for such stock anything except: (i) shares of stock of the corporation surviving or resulting from such merger or consolidation, or depository receipts in respect thereof; (ii) shares of stock of any other corporation, or depository receipts in respect thereof; which shares of stock (or depository receipts in respect thereon at the effective date of the merger or consolidation will be either listed on a national securities exchange or held of record by more than 2,000 holders; (iii) cash in lieu of fractional shares or fractional depository receipts; or (iv) any combination of the shares of stock, depository receipts and cash in lieu of fractional shares or fractional depository receipts as described above. Delaware law does not provide appraisal rights to shareholders with respect to the sale of all or substantially all of a corporation’s assets or an amendment to a corporation’s certificate of incorporation, although a corporation’s certificate of incorporation may so provide (which ARRIS’ Charter does not). Delaware law provides, among other procedural requirements for the exercise of the appraisal rights, that a shareholder’s written demand for | | | English law does not provide for appraisal rights similar to those rights under Delaware law. However, English law will provide for dissenter’s rights which permit a shareholder, in the context of a compulsory acquisition of minority shares, to apply to the Court for an order either that the bidder is not entitled to acquire their shares or to specify terms of acquisition different from those in the original offer. | |
Provisions
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Provisions Currently Applicable to ARRIS
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Provisions to be Applicable to New ARRIS
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| | | appraisal of shares must be received before the taking of the vote on the matter giving rise to appraisal rights, when the matter is voted on at a meeting of shareholders. | | | | |
Anti-takeover Measures
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Under Delaware law, certain anti-takeover provisions apply to ARRIS as a publicly-traded company that may have the effect of making it more difficult for a third party to acquire ARRIS. In particular, Section 203 of the DGCL generally prohibits a Delaware corporation from engaging in any of a broad range of business combinations with an interested shareholder for a period of three years following the time that such shareholder became an interested shareholder, unless, among other exceptions, prior to such time the board of directors of the corporation approved either the relevant business combination or the transaction that resulted in such shareholder becoming an interested shareholder.
In addition, under ARRIS’ Charter, certain provisions may make it difficult for a third party to acquire ARRIS, including the authorization of “blank check” preferred stock, the terms of which may be established and shares of which may be issued without ARRIS stockholders’ approval.
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Takeover offers and certain other transactions in respect of certain public companies are regulated by the Takeover Code, which is administered by the Takeover Panel, a body consisting of representatives of the City of London financial and professional institutions which oversees the conduct of takeovers. An English public limited company is potentially subject to the protections afforded by the Takeover Code if, among other factors, a majority of its directors are resident within the UK, the Channel Islands or the Isle of Man. Based upon New ARRIS’ current and intended plans for its directors, it is anticipated that the Takeover Code will not apply to New ARRIS.
The New ARRIS articles of association provide the New ARRIS Board with the power to establish a rights plan and to grant rights to subscribe for New ARRIS shares pursuant to a rights plan, where in the opinion of the New ARRIS Board to do so would improve the likelihood that:
•
any process which may result in an (a) acquisition or (b) change of control, over 20% or more of the issued voting shares of New ARRIS (“Change of Control”), is conducted in an orderly manner;
•
all New ARRIS shareholders will be treated equally and fairly and in a similar manner;
•
an optimum price for New ARRIS shares would be received by or on behalf of all New ARRIS shareholders;
•
the success of New ARRIS would be promoted for the benefit of its members as a whole;
•
the long term interests of New ARRIS, its employees, its members and its business would be
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Provisions
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Provisions Currently Applicable to ARRIS
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Provisions to be Applicable to New ARRIS
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safeguarded;
•
New ARRIS would not suffer serious economic harm; or
•
the New ARRIS Board would have additional time to gather relevant information or pursue appropriate strategies,
or all or any of the above.
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The New ARRIS articles of association further provide that the New ARRIS Board may, in accordance with the terms of a rights plan, subject to renewal by shareholder approval at least every five years, determine to (i) allot shares pursuant to the exercise of rights or (ii) exchange rights for shares in New ARRIS, where in the opinion of the New ARRIS Board to do so would improve the likelihood that:
•
the use of abusive tactics by any person in connection with any potential acquisition or Change of Control would be prevented;
•
any potential acquisition or Change of Control which would be unlikely to treat all New ARRIS shareholders equally and fairly and in a similar manner would be prevented;
•
any potential acquisition or Change of Control at a price which would undervalue New ARRIS or its shares would be prevented;
•
any potential acquisition or Change of Control which would not be likely to promote the success of New ARRIS for the benefit of its members as a whole would be prevented;
•
the long term interests of New ARRIS or its members, employees and its business would be safeguarded or both; or
•
New ARRIS would not suffer serious economic harm,
or all or any of the above.
The New ARRIS Board has a standing authorization for five years to allot New
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Provisions
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Provisions Currently Applicable to ARRIS
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Provisions to be Applicable to New ARRIS
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| | | | | | ARRIS shares up to an aggregate par amount of £3,915,329 (based on the number of ARRIS and Pace shares outstanding as of August 31, 2015, which is subject to change) pursuant to a rights plan. Such authority may only be exercised by the New ARRIS Board pursuant to a rights plan, as detailed above, and may not be exercised by the New ARRIS Board for other purposes. | |
| | | | | | Under the Takeover Code, the board of a public UK company is constrained from implementing such defensive measures. However, as discussed above, the foregoing measures are included in the New ARRIS articles of association as the Takeover Code will not apply to New ARRIS and these measures are included commonly in the constituent documents of U.S. companies. | |
Variation of Rights Attaching to a Class or Series of Shares
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| | Under ARRIS’ Charter, the Board may unilaterally set the terms of new classes of preferred shares that may have preference over, and so subordinate the rights of, already issued common stock. | | | Amendments affecting the rights of the holders of any class of shares may, depending on the rights attached to the class and the nature of the amendments, also require the approval by special resolution of the class affected at a separate class meeting. | |
Amendments of Governing Documents
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| | Under Delaware law, a corporation’s certificate of incorporation may be amended only if the board of directors adopts a resolution approving the amendment and declaring its advisability and the holders of a majority of the outstanding stock entitled to vote approve the amendment. If the proposed amendment would adversely affect the rights, powers, par value, or preferences of the holders of either a class of stock or a series of a class of stock, then the holders of either the class of stock or series of stock, as appropriate, shall be entitled to vote as a class. | | |
The provisions in the articles of association of an English public limited company are generally equivalent to the collective provisions in a certificate of incorporation and bylaws of an Delaware corporation.
Under English law, a special resolution of the shareholders is required to amend any provision of the New ARRIS articles of association. The Board does not have the power to amend the New ARRIS articles of association without shareholder approval.
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The Charter provides that from time to time its provisions may be amended, altered or repealed, and other provisions authorized by the laws of the State of Delaware at the time in force may be added or inserted in the manner and at the time prescribed by said laws.
The Bylaws provide that subject to the provisions of the Charter and the
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Provisions
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Provisions Currently Applicable to ARRIS
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Provisions to be Applicable to New ARRIS
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| | | DGCL, the power to amend, alter, or repeal any of its provisions or to adopt new provisions may be exercised by the Board or the stockholders. | | | | |
Enforcement of Civil Liabilities Against Foreign Persons
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| | A judgment for the payment of money rendered by a court in the United States based on civil liability generally would be enforceable elsewhere in the United States. | | |
As a company listed on NASDAQ, New ARRIS and its directors and officers would be subject to U.S. securities laws, and investors could initiate civil lawsuits in the U.S. against New ARRIS for breaches of the U.S. securities laws. Because New ARRIS will be a public limited company incorporated under English law after the effective time of the Merger, investors could experience more difficulty enforcing judgments obtained against New ARRIS in U.S. courts than would currently be the case for U.S. judgments obtained against ARRIS. In addition, it may be more difficult (or impossible) to bring some types of claims against New ARRIS in courts sitting in England than it would be to bring similar claims against at U.S. company in a U.S. court.
A judgment obtained against New ARRIS from a U.S. court will not be recognized by the English courts but an action may be commenced in the English courts for an amount due under a judgment given by the U.S. courts if that judgment is (a) for a debt or definite sum of money; (b) final and conclusive; and (c) not of a penalty or revenue nature. A judgment may be impeached by showing that: (i) the court in question did not, in the circumstances of the case, and in accordance with the English rules of private international law, have jurisdiction to give that judgment; (ii) the judgment was obtained through fraud; (iii) the enforcement of the judgment would be contrary to the public policy of the UK; or (iv) the proceedings in which the judgment was obtained were opposed to the rules of natural justice.
New ARRIS and its directors and officers may be subject to criminal penalties in the U.S. arising from breaches of the U.S. federal securities laws, but may not be subject to criminal penalties in the UK unless the criminal laws of the UK were violated.
A criminal judgment in a U.S. court under U.S. federal securities laws may not be
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Provisions
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Provisions Currently Applicable to ARRIS
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Provisions to be Applicable to New ARRIS
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enforceable in the English courts on public policy grounds and a prosecution brought before the English courts under U.S. federal securities laws might not be permitted on public policy grounds.
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Year Ended 31 December
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2014
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2013
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2012
|
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(dollars in millions)
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Profit before tax
|
| | | | 175.7 | | | | | | 130.8 | | | | | | 80.1 | | |
Exceptional costs(1)
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| | | | 7.3 | | | | | | 12.2 | | | | | | 12.5 | | |
Amortisation of other intangibles
|
| | | | 52.9 | | | | | | 42.6 | | | | | | 51.8 | | |
Net finance expense
|
| | | | 5.2 | | | | | | 8.0 | | | | | | 13.7 | | |
Adjusted EBITA
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| | | | 241.1 | | | | | | 193.6 | | | | | | 158.1 | | |
Depreciation
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| | | | 29.0 | | | | | | 25.0 | | | | | | 21.0 | | |
Adjusted EBITDA
|
| | | | 270.1 | | | | | | 218.6 | | | | | | 179.1 | | |
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Year Ended 31 December
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2014
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2013
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2012
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(dollars in millions)
|
| |||||||||||||||
Pace Americas
|
| | | | 150.2 | | | | | | 152.7 | | | | | | 144.0 | | |
Pace International
|
| | | | 88.3 | | | | | | 82.8 | | | | | | 71.9 | | |
Pace Networks
|
| | | | 47.4 | | | | | | — | | | | | | — | | |
Other(1) | | | | | (44.8) | | | | | | (41.9) | | | | | | (57.8) | | |
Adjusted EBITA
|
| | | | 241.1 | | | | | | 193.6 | | | | | | 158.1 | | |
| | |
Year Ended 31 December
|
| |||||||||||||||
| | |
2014
|
| |
2013
|
| |
2012
|
| |||||||||
| | |
(dollars in millions)
|
| |||||||||||||||
Revenue
|
| | | | 2,620.0 | | | | | | 2,469.2 | | | | | | 2,403.4 | | |
Cost of sales
|
| | | | (2,087.5) | | | | | | (2,021.0) | | | | | | (1,970.4) | | |
Gross profit
|
| | | | 532.5 | | | | | | 448.2 | | | | | | 433.0 | | |
Administrative expenses: | | | | | |||||||||||||||
Research and development expenditure
|
| | | | (83.7) | | | | | | (87.0) | | | | | | (101.1) | | |
Amortisation of development expenditure
|
| | | | (45.4) | | | | | | (45.6) | | | | | | (54.3) | | |
Other administrative expenses:
|
| | | | |||||||||||||||
Before exceptional costs
|
| | | | (162.3) | | | | | | (122.0) | | | | | | (119.5) | | |
Exceptional costs
|
| | | | (7.3) | | | | | | (12.2) | | | | | | (12.5) | | |
Amortisation of other intangibles
|
| | | | (52.9) | | | | | | (42.6) | | | | | | (51.8) | | |
Total administrative expenses
|
| | | | (351.6) | | | | | | (309.4) | | | | | | (339.2) | | |
Operating profit
|
| | | | 180.9 | | | | | | 138.8 | | | | | | 93.8 | | |
Finance income – interest receivable
|
| | | | 2.5 | | | | | | 1.8 | | | | | | 0.5 | | |
Finance expenses – interest payable
|
| | | | (7.7) | | | | | | (9.8) | | | | | | (14.2) | | |
Profit before tax
|
| | | | 175.7 | | | | | | 130.8 | | | | | | 80.1 | | |
Tax charge
|
| | | | (27.7) | | | | | | (34.1) | | | | | | (21.7) | | |
Profit for the year
|
| | | | 148.0 | | | | | | 96.7 | | | | | | 58.4 | | |
| | |
Year Ended 31 December
|
| ||||||||||||||||||
| | |
2014
|
| |
2013
|
| |
2012
|
| ||||||||||||
| | |
(dollars in millions)
|
| ||||||||||||||||||
Net cash flows from operating activities
|
| | | | 274.0 | | | | | | 281.7 | | | | | | 262.2 | | | |||
Net cash flows used in investing activities
|
| | | | (385.0) | | | | | | (72.7) | | | | | | (95.2) | | | |||
Net cash flows from/used in financing activities
|
| | | | 260.1 | | | | | | (250.7) | | | | | | (141.0) | | | |||
Net increase/(decrease) in cash and cash equivalents
|
| | | | 149.1 | | | | | | (41.7) | | | | | | 26.0 | | | |||
|
| | |
Payments due by period
|
| |||||||||||||||||||||||||||
| | |
Total
|
| |
Less than
1 year |
| |
1 – 3 years
|
| |
3 – 5 years
|
| |
More than
5 years |
| |||||||||||||||
| | |
(dollars in millions)
|
| |||||||||||||||||||||||||||
Long-term debt obligations(1)
|
| | | | 279.0 | | | | | | 38.8 | | | | | | 100.7 | | | | | | 139.5 | | | | | | — | | |
Operating lease obligations(2)
|
| | | | 32.4 | | | | | | 8.7 | | | | | | 11.2 | | | | | | 7.2 | | | | | | 5.3 | | |
Purchase obligations(3)
|
| | | | 936.4 | | | | | | 936.4 | | | | | | — | | | | | | — | | | | | | — | | |
Provisions(4) | | | | | 132.1 | | | | | | 31.5 | | | | | | 100.0 | | | | | | 0.6 | | | | | | — | | |
Total | | | | | 1,379.9 | | | | | | 1,015.4 | | | | | | 211.9 | | | | | | 147.3 | | | | | | 5.3 | | |
| | | | | F-2 | | | |
| | | | | F-3 | | | |
| | | | | F-4 | | | |
| | | | | F-5 | | | |
| | | | | F-6 | | | |
| | | | | F-7 | | | |
| | | | | F-8 | | |
| | | | | |
Years Ended December 31
|
| ||||||||||||||||||
| | |
Notes
|
| |
2014
|
| |
2013
|
| |
2012
|
| ||||||||||||
Revenue
|
| |
3
|
| | | | 2,620.0 | | | | | | 2,469.2 | | | | | | 2,403.4 | | | |||
Cost of sales
|
| | | | | | | (2,087.5) | | | | | | (2,021.0) | | | | | | (1,970.4) | | | |||
Gross profit
|
| | | | | | | 532.5 | | | | | | 448.2 | | | | | | 433.0 | | | |||
Administrative expenses: | | | | | | | | | | | | | | | | | | ||||||||
Research and development expenditure
|
| | | | | | | (83.7) | | | | | | (87.0) | | | | | | (101.1) | | | |||
Amortisation of development expenditure
|
| |
10
|
| | | | (45.4) | | | | | | (45.6) | | | | | | (54.3) | | | |||
Other administrative expenses:
|
| | | | | | | | | | | | | | | | | ||||||||
Before exceptional costs
|
| | | | | | | (162.3) | | | | | | (122.0) | | | | | | (119.5) | | | |||
Exceptional costs
|
| |
4
|
| | | | (7.3) | | | | | | (12.2) | | | | | | (12.5) | | | |||
Amortisation of other intangibles
|
| |
10
|
| | | | (52.9) | | | | | | (42.6) | | | | | | (51.8) | | | |||
Total administrative expenses
|
| | | | | | | (351.6) | | | | | | (309.4) | | | | | | (339.2) | | | |||
Operating profit
|
| | | | | | | 180.9 | | | | | | 138.8 | | | | | | 93.8 | | | |||
Finance income – interest receivable
|
| |
5
|
| | | | 2.5 | | | | | | 1.8 | | | | | | 0.5 | | | |||
Finance expenses – interest payable
|
| |
5
|
| | | | (7.7) | | | | | | (9.8) | | | | | | (14.2) | | | |||
Profit before tax
|
| | | | | | | 175.7 | | | | | | 130.8 | | | | | | 80.1 | | | |||
Tax charge
|
| |
7
|
| | | | (27.7) | | | | | | (34.1) | | | | | | (21.7) | | | |||
Profit for the year
|
| | | | | | | 148.0 | | | | | | 96.7 | | | | | | 58.4 | | | |||
Profit attributable to: | | | | | | | | | | | | | | | | | | ||||||||
Equity holders of the Company
|
| | | | | | | 148.0 | | | | | | 96.7 | | | | | | 58.4 | | | |||
Earnings per ordinary share | | | | | | | | | | | | | | | | | | ||||||||
Basic earnings per ordinary share (cents)
|
| |
8
|
| | | | 47.4 | | | | | | 31.2 | | | | | | 19.4 | | | |||
Diluted earnings per ordinary share (cents)
|
| |
8
|
| | | | 45.6 | | | | | | 29.8 | | | | | | 18.5 | | | |||
|
| | |
Years Ended December 31
|
| ||||||||||||||||||
| | |
2014
|
| |
2013
|
| |
2012
|
| ||||||||||||
Profit for the year
|
| | | | 148.0 | | | | | | 96.7 | | | | | | 58.4 | | | |||
Other comprehensive income: | | | | | | | | | | | | | | | | | | | | |||
Items that are or may be subsequently reclassified to profit and loss: | | | | | | | | | | | | | | | | | | | | |||
Exchange differences on translation of foreign operations
|
| | | | (19.7) | | | | | | (4.8) | | | | | | (2.7) | | | |||
Net change in fair value of cash flow hedges transferred to profit or loss, gross of tax
|
| | | | 2.3 | | | | | | (2.7) | | | | | | (11.2) | | | |||
Deferred tax adjustment on above
|
| | | | (0.4) | | | | | | 0.7 | | | | | | 3.0 | | | |||
Effective portion of changes in fair value of cash flow hedges, gross of
tax |
| | | | 2.7 | | | | | | 4.7 | | | | | | 4.9 | | | |||
Deferred tax adjustment on above
|
| | | | (0.4) | | | | | | (1.2) | | | | | | (1.3) | | | |||
Other comprehensive income for the year, net of tax
|
| | | | (15.5) | | | | | | (3.3) | | | | | | (7.3) | | | |||
Total comprehensive income for the year
|
| | | | 132.5 | | | | | | 93.4 | | | | | | 51.1 | | | |||
Attributable to: | | | | | | | | | | | | | | | | | | | | |||
Equity holders of the Company
|
| | | | 132.5 | | | | | | 93.4 | | | | | | 51.1 | | | |||
|
| | | | | | | | |
As Of 31 December
|
| ||||||||||||
| | |
Notes
|
| |
2014
|
| |
2013
|
| ||||||||||||
Assets | | | | | | | | | | | | | | | ||||||||
Non-current assets | | | | | | | | | | | | | | | ||||||||
Property, plant and equipment
|
| | | | 11 | | | | | | 63.2 | | | | | | 60.0 | | | |||
Intangible assets – goodwill
|
| | | | 10 | | | | | | 471.1 | | | | | | 342.6 | | | |||
Intangible assets – other intangibles
|
| | | | 10 | | | | | | 208.2 | | | | | | 123.1 | | | |||
Intangible assets – development expenditure
|
| | | | 10 | | | | | | 85.0 | | | | | | 64.4 | | | |||
Deferred tax assets
|
| | | | 12 | | | | | | 31.2 | | | | | | 21.2 | | | |||
Total non-current assets
|
| | | | | | | | | | 858.7 | | | | | | 611.3 | | | |||
Current assets | | | | | | | | | | | | | | | ||||||||
Inventories
|
| | | | 13 | | | | | | 168.0 | | | | | | 156.8 | | | |||
Trade and other receivables
|
| | | | 14 | | | | | | 909.1 | | | | | | 468.7 | | | |||
Cash and cash equivalents
|
| | | | | | | | | | 182.1 | | | | | | 33.0 | | | |||
Current tax assets
|
| | | | | | | | | | 4.3 | | | | | | 1.3 | | | |||
Total current assets
|
| | | | | | | | | | 1,263.5 | | | | | | 659.8 | | | |||
Total assets
|
| | | | | | | | | | 2,122.2 | | | | | | 1,271.1 | | | |||
Equity | | | | | | | | | | | | | | | ||||||||
Issued capital
|
| | | | 19 | | | | | | 29.1 | | | | | | 29.0 | | | |||
Share premium
|
| | | | 20 | | | | | | 85.1 | | | | | | 83.7 | | | |||
Merger reserve
|
| | | | 21 | | | | | | 109.9 | | | | | | 109.9 | | | |||
Hedging reserve
|
| | | | | | | | | | 4.0 | | | | | | (0.2) | | | |||
Translation reserve
|
| | | | 21 | | | | | | (79.3) | | | | | | (59.6) | | | |||
Retained earnings
|
| | | | 22 | | | | | | 518.3 | | | | | | 384.2 | | | |||
Total equity
|
| | | | | | | | | | 667.1 | | | | | | 547.0 | | | |||
Liabilities | | | | | | | | | | | | | | | ||||||||
Non-current liabilities | | | | | | | | | | | | | | | ||||||||
Deferred tax liabilities
|
| | | | 12 | | | | | | 89.7 | | | | | | 56.3 | | | |||
Provisions
|
| | | | 18 | | | | | | 100.6 | | | | | | 60.3 | | | |||
Borrowings
|
| | | | 16 | | | | | | 237.8 | | | | | | — | | | |||
Total non-current liabilities
|
| | | | | | | | | | 428.1 | | | | | | 116.6 | | | |||
Current liabilities | | | | | | | | | | | | | | | ||||||||
Trade and other payables
|
| | | | 15 | | | | | | 934.6 | | | | | | 567.1 | | | |||
Current tax liabilities
|
| | | | | | | | | | 23.5 | | | | | | 8.5 | | | |||
Provisions
|
| | | | 18 | | | | | | 31.5 | | | | | | 31.9 | | | |||
Borrowings
|
| | | | 16 | | | | | | 37.4 | | | | | | — | | | |||
Total current liabilities
|
| | | | | | | | | | 1,027.0 | | | | | | 607.5 | | | |||
Total liabilities
|
| | | | | | | | | | 1,455.1 | | | | | | 724.1 | | | |||
Total equity and liabilities
|
| | | | | | | | | | 2,122.2 | | | | | | 1,271.1 | | | |||
|
| | |
Share
capital |
| |
Share
premium |
| |
Merger
reserve |
| |
Hedging
reserve |
| |
Translation
reserve |
| |
Retained
earnings |
| |
Total
equity |
| ||||||||||||||||||||||||||||
Balance at January 2012
|
| | | | 28.3 | | | | | | 73.1 | | | | | | 109.9 | | | | | | 2.9 | | | | | | (52.1) | | | | | | 245.0 | | | | | | 407.1 | | | |||||||
Profit for the year
|
| | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | 58.4 | | | | | | 58.4 | | | |||||||
Other comprehensive income
|
| | | | — | | | | | | — | | | | | | — | | | | | | (4.6) | | | | | | (2.7) | | | | | | — | | | | | | (7.3) | | | |||||||
Total comprehensive income for the year
|
| | | | — | | | | | | — | | | | | | — | | | | | | (4.6) | | | | | | (2.7) | | | | | | 58.4 | | | | | | 51.1 | | | |||||||
Transactions with owners: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |||||||
Dividends to equity shareholders
|
| | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | (12.3) | | | | | | (12.3) | | | |||||||
Employee share incentive charges
|
| | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | 7.9 | | | | | | 7.9 | | | |||||||
Issue of shares
|
| | | | 0.4 | | | | | | 5.9 | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | 6.3 | | | |||||||
Balance at December 2012
|
| | | | 28.7 | | | | | | 79.0 | | | | | | 109.9 | | | | | | (1.7) | | | | | | (54.8) | | | | | | 299.0 | | | | | | 460.1 | | | |||||||
Profit for the year
|
| | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | 96.7 | | | | | | 96.7 | | | |||||||
Other comprehensive income
|
| | | | — | | | | | | — | | | | | | — | | | | | | 1.5 | | | | | | (4.8) | | | | | | — | | | | | | (3.3) | | | |||||||
Total comprehensive income for the year
|
| | | | — | | | | | | — | | | | | | — | | | | | | 1.5 | | | | | | (4.8) | | | | | | 96.7 | | | | | | 93.4 | | | |||||||
Transactions with owners: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |||||||
Dividends to equity shareholders
|
| | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | (15.6) | | | | | | (15.6) | | | |||||||
Employee share incentive charges
|
| | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | 4.1 | | | | | | 4.1 | | | |||||||
Issue of shares
|
| | | | 0.3 | | | | | | 4.7 | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | 5.0 | | | |||||||
Balance at December 2013
|
| | | | 29.0 | | | | | | 83.7 | | | | | | 109.9 | | | | | | (0.2) | | | | | | (59.6) | | | | | | 384.2 | | | | | | 547.0 | | | |||||||
Profit for the year
|
| | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | 148.0 | | | | | | 148.0 | | | |||||||
Other comprehensive income
|
| | | | — | | | | | | — | | | | | | — | | | | | | 4.2 | | | | | | (19.7) | | | | | | — | | | | | | (15.5) | | | |||||||
Total comprehensive income for the year
|
| | | | — | | | | | | — | | | | | | — | | | | | | 4.2 | | | | | | (19.7) | | | | | | 148.0 | | | | | | 132.5 | | | |||||||
Transactions with owners: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |||||||
Dividends to equity shareholders
|
| | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | (18.7) | | | | | | (18.7) | | | |||||||
Employee share incentive charges
|
| | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | 6.5 | | | | | | 6.5 | | | |||||||
Issue of shares
|
| | | | 0.1 | | | | | | 1.4 | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | 1.5 | | | |||||||
Purchase of own shares by employee benefit trust
|
| | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | (1.7) | | | | | | (1.7) | | | |||||||
Balance at December 2014
|
| | | | 29.1 | | | | | | 85.1 | | | | | | 109.9 | | | | | | 4.0 | | | | | | (79.3) | | | | | | 518.3 | | | | | | 667.1 | | | |||||||
|
| | |
Years Ended 31 December
|
| ||||||||||||||||||
| | |
2014
|
| |
2013
|
| |
2012
|
| ||||||||||||
Cash flows from operating activities | | | | | | | | | | | | | | | | | | | | |||
Profit before tax
|
| | | | 175.7 | | | | | | 130.8 | | | | | | 80.1 | | | |||
Adjustments for: | | | | | | | | | | | | | | | | | | | | |||
Share-based payments charge
|
| | | | 6.5 | | | | | | 4.1 | | | | | | 7.9 | | | |||
Depreciation of property, plant and equipment
|
| | | | 29.0 | | | | | | 25.0 | | | | | | 21.0 | | | |||
Amortisation of development expenditure
|
| | | | 45.4 | | | | | | 45.6 | | | | | | 54.3 | | | |||
Amortisation of other intangible assets
|
| | | | 52.9 | | | | | | 42.6 | | | | | | 51.8 | | | |||
Loss on sale of property, plant and equipment
|
| | | | 0.1 | | | | | | 0.2 | | | | | | — | | | |||
Net finance expense
|
| | | | 5.2 | | | | | | 8.0 | | | | | | 13.7 | | | |||
Movement in trade and other receivables
|
| | | | (383.4) | | | | | | 85.5 | | | | | | (162.3) | | | |||
Movement in trade and other payables
|
| | | | 329.2 | | | | | | (67.2) | | | | | | 258.5 | | | |||
Movement in inventories
|
| | | | 31.7 | | | | | | 24.2 | | | | | | (33.0) | | | |||
Movement in provisions
|
| | | | (0.7) | | | | | | 14.4 | | | | | | 5.6 | | | |||
Cash generated from operations
|
| | | | 291.6 | | | | | | 313.2 | | | | | | 297.6 | | | |||
Interest paid
|
| | | | (6.1) | | | | | | (7.7) | | | | | | (11.6) | | | |||
Tax paid
|
| | | | (11.5) | | | | | | (23.8) | | | | | | (23.8) | | | |||
Net cash generated from operating activities
|
| | | | 274.0 | | | | | | 281.7 | | | | | | 262.2 | | | |||
Cash flows from investing activities | | | | | | | | | | | | | | | | | | | | |||
Acquisition of subsidiaries, net of cash acquired
|
| | | | (295.3) | | | | | | — | | | | | | (15.7) | | | |||
Purchase of property, plant and equipment
|
| | | | (26.0) | | | | | | (21.6) | | | | | | (22.6) | | | |||
Development expenditure
|
| | | | (66.2) | | | | | | (52.9) | | | | | | (57.4) | | | |||
Interest received
|
| | | | 2.5 | | | | | | 1.8 | | | | | | 0.5 | | | |||
Net cash used in investing activities
|
| | | | (385.0) | | | | | | (72.7) | | | | | | (95.2) | | | |||
Cash flows from financing activities | | | | | | | | | | | | | | | | | | | | |||
Proceeds from external borrowings
|
| | | | 310.0 | | | | | | — | | | | | | — | | | |||
Repayment of external borrowings
|
| | | | (31.0) | | | | | | (240.1) | | | | | | (135.0) | | | |||
Proceeds from issue of share capital
|
| | | | 1.5 | | | | | | 5.0 | | | | | | 6.3 | | | |||
Dividend paid
|
| | | | (18.7) | | | | | | (15.6) | | | | | | (12.3) | | | |||
Purchase of own shares by employee benefit trust
|
| | | | (1.7) | | | | | | — | | | | | | — | | | |||
Net cash generated from/(used in) financing activities
|
| | | | 260.1 | | | | | | (250.7) | | | | | | (141.0) | | | |||
Net change in cash and cash equivalents
|
| | | | 149.1 | | | | | | (41.7) | | | | | | 26.0 | | | |||
Cash and cash equivalents at the start of the year
|
| | | | 33.0 | | | | | | 74.7 | | | | | | 48.7 | | | |||
Cash and cash equivalents at the end of the year
|
| | | | 182.1 | | | | | | 33.0 | | | | | | 74.7 | | | |||
|
| Customer contracts and relationships | | | three to ten years | |
| Technology and patents | | | one to ten years | |
| Other | | | three years | |
| Long leasehold properties | | | Period of lease | |
| Short leasehold properties | | | Period of lease | |
| Plant and machinery | | | One to ten years | |
| Motor vehicles | | | Four years | |
Year ended 31 December 2014 (in millions of dollars) |
| |
Pace
Americas |
| |
Pace
International |
| |
Pace
Networks |
| |
Other
|
| |
Total
|
| ||||||||||||||||||||
Segmental income statement | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |||||
Revenue
|
| | | | 1,561.6 | | | | | | 793.8 | | | | | | 264.6 | | | | | | — | | | | | | 2,620.0 | | | |||||
Adjusted EBITA
|
| | | | 150.2 | | | | | | 88.3 | | | | | | 47.4 | | | | | | (44.8) | | | | | | 241.1 | | | |||||
Exceptional costs
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | | (7.3) | | | |||||
Amortisation of other intangibles
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | | (52.9) | | | |||||
Net interest payable
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | | (5.2) | | | |||||
Tax charge
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | | (27.7) | | | |||||
Profit for the year
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | | 148.0 | | | |||||
|
Year ended 31 December 2013 (restated) (in millions of dollars) |
| |
Pace
Americas |
| |
Pace
International |
| |
Pace
Networks |
| |
Other
|
| |
Total
|
| ||||||||||||||||||||
Segmental income statement | | | | | | | ||||||||||||||||||||||||||||||
Revenue
|
| | | | 1,680.2 | | | | | | 789.0 | | | | | | — | | | | | | — | | | | | | 2,469.2 | | | |||||
Adjusted EBITA
|
| | | | 152.7 | | | | | | 82.8 | | | | | | — | | | | | | (41.9) | | | | | | 193.6 | | | |||||
Exceptional costs
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | | (12.2) | | | |||||
Amortisation of other intangibles
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | | (42.6) | | | |||||
Net interest payable
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | | (8.0) | | | |||||
Tax charge
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | | (34.1) | | | |||||
Profit for the year
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | | 96.7 | | | |||||
|
Year ended 31 December 2012 (restated) (in millions of dollars) |
| |
Pace
Americas |
| |
Pace
International |
| |
Pace
Networks |
| |
Other
|
| |
Total
|
| ||||||||||||||||||||
Segmental income statement | | | | | | | ||||||||||||||||||||||||||||||
Revenue
|
| | | | 1,442.1 | | | | | | 961.3 | | | | | | — | | | | | | — | | | | | | 2,403.4 | | | |||||
Adjusted EBITA
|
| | | | 144.0 | | | | | | 71.9 | | | | | | — | | | | | | (57.8) | | | | | | 158.1 | | | |||||
Exceptional costs
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | | (12.5) | | | |||||
Amortisation of other intangibles
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | | (51.8) | | | |||||
Net interest payable
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | | (13.7) | | | |||||
Tax charge
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | | (21.7) | | | |||||
Profit for the year
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | | 58.4 | | | |||||
|
Revenue by destination (in millions of dollars) |
| |
2014
|
| |
2013
|
| |
2012
|
| ||||||||||||
Europe
|
| | | | 291.2 | | | | | | 323.9 | | | | | | 402.4 | | | |||
North America
|
| | | | 1,635.6 | | | | | | 1,540.5 | | | | | | 1317.6 | | | |||
– of which USA
|
| | | | 1,536.6 | | | | | | 1,524.4 | | | | | | 1,308.5 | | | |||
Latin America
|
| | | | 373.2 | | | | | | 358.4 | | | | | | 374.4 | | | |||
– of which Brazil
|
| | | | 287.8 | | | | | | 277.8 | | | | | | 301.6 | | | |||
Rest of World
|
| | | | 320.0 | | | | | | 246.4 | | | | | | 309.0 | | | |||
| | | | | 2,620.0 | | | | | | 2,469.2 | | | | | | 2403.4 | | | |||
|
Non-current assets (in millions of dollars) |
| |
2014
|
| |
2013
|
| ||||||||
UK
|
| | | | 124.9 | | | | | | 136.5 | | | ||
Europe – all France
|
| | | | 117.1 | | | | | | 127.5 | | | ||
Latin America
|
| | | | 5.3 | | | | | | 2.7 | | | ||
North America – all USA
|
| | | | 558.3 | | | | | | 321.8 | | | ||
Rest of World
|
| | | | 21.9 | | | | | | 1.6 | | | ||
| | | | | 827.5 | | | | | | 590.1 | | | ||
|
(in millions of dollars)
|
| |
2014
|
| |
2013
|
| |
2012
|
| ||||||||||||
Set-top boxes & Media Servers
|
| | | | 2,003.5 | | | | | | 1,979.6 | | | | | | 1,826.0 | | | |||
Gateways
|
| | | | 239.7 | | | | | | 375.8 | | | | | | 469.4 | | | |||
Software & Services
|
| | | | 112.2 | | | | | | 113.8 | | | | | | 108.0 | | | |||
Networks
|
| | | | 264.6 | | | | | | — | | | | | | — | | | |||
| | | | | 2,620.0 | | | | | | 2,469.2 | | | | | | 2,403.4 | | | |||
|
(in millions of dollars)
|
| |
2014
|
| |
2013
|
| |
2012
|
| ||||||||||||
Acquisition and integration costs
|
| | | | 5.8 | | | | | | 6.9 | | | | | | — | | | |||
Restructuring and reorganisation costs
|
| | | | 1.5 | | | | | | 4.2 | | | | | | 7.6 | | | |||
Aborted acquisition costs
|
| | | | — | | | | | | 1.1 | | | | | | 3.5 | | | |||
Directors’ loss of office
|
| | | | — | | | | | | — | | | | | | 1.4 | | | |||
| | | | | 7.3 | | | | | | 12.2 | | | | | | 12.5 | | | |||
|
(in millions of dollars)
|
| |
2014
|
| |
2013
|
| |
2012
|
| ||||||||||||
Finance income – interest on bank deposits
|
| | | | 2.5 | | | | | | 1.8 | | | | | | 0.5 | | | |||
Finance costs | | | | | ||||||||||||||||||
Bank borrowings
|
| | | | (7.3) | | | | | | (8.9) | | | | | | (10.7) | | | |||
Other finance costs
|
| | | | (0.4) | | | | | | (0.9) | | | | | | (3.5) | | | |||
| | | | | (7.7) | | | | | | (9.8) | | | | | | (14.2) | | | |||
|
Group (in millions of dollars) |
| |
2014
|
| |
2013
|
| |
2012
|
| ||||||||||||
Wages and salaries
|
| | | | 143.8 | | | | | | 116.0 | | | | | | 122.5 | | | |||
Social security costs
|
| | | | 17.5 | | | | | | 17.6 | | | | | | 18.1 | | | |||
Other pension costs
|
| | | | 5.8 | | | | | | 4.6 | | | | | | 5.9 | | | |||
Share-based payments (Note 24)
|
| | | | 6.5 | | | | | | 4.1 | | | | | | 7.9 | | | |||
| | | | | 173.6 | | | | | | 142.3 | | | | | | 154.4 | | | |||
|
(in millions of dollars)
|
| |
2014
|
| |
2013
|
| |
2012
|
| ||||||||||||
Current tax charge | | | | | | | | | | | | | | | | | | | | |||
Charge for the year
|
| | | | 31.9 | | | | | | 29.7 | | | | | | 21.0 | | | |||
Adjustment in respect of prior years
|
| | | | (4.1) | | | | | | 2.7 | | | | | | (3.7) | | | |||
Total current tax charge
|
| | | | 27.8 | | | | | | 32.4 | | | | | | 17.3 | | | |||
Deferred tax charge/(credit) | | | | | | | | | | | | | | | | | | | | |||
Origination and reversal of temporary differences in the current year (Note 12)
|
| | | | (1.9) | | | | | | 2.7 | | | | | | — | | | |||
Impact of change in tax rate
|
| | | | — | | | | | | (1.0) | | | | | | (0.3) | | | |||
Adjustment in respect of prior years
|
| | | | 1.8 | | | | | | — | | | | | | 4.7 | | | |||
Total deferred tax charge/(credit)
|
| | | | (0.1) | | | | | | 1.7 | | | | | | 4.4 | | | |||
Total tax charge
|
| | | | 27.7 | | | | | | 34.1 | | | | | | 21.7 | | | |||
|
(in millions of dollars)
|
| |
2014
|
| |
2013
|
| |
2012
|
| ||||||||||||
Profit before tax
|
| | | | 175.7 | | | | | | 130.8 | | | | | | 80.1 | | | |||
Tax using UK statutory tax rate at 2014: 21.5%; 2013: 23.25%;
2012: 24.5% |
| | | | 37.8 | | | | | | 30.4 | | | | | | 19.6 | | | |||
Effects of: | | | | | ||||||||||||||||||
Permanent adjustments
|
| | | | (0.1) | | | | | | — | | | | | | — | | | |||
Expenses not deductible for tax purposes
|
| | | | — | | | | | | 5.3 | | | | | | 11.7 | | | |||
Controlled foreign companies UK tax charge
|
| | | | 0.8 | | | | | | — | | | | | | — | | | |||
Adjustment to temporary differences
|
| | | | (15.0) | | | | | | — | | | | | | — | | | |||
Research and development tax credit
|
| | | | (3.9) | | | | | | (1.9) | | | | | | (6.3) | | | |||
Overseas current year tax not at 2014: 21.5%; 2013: 23.25%; 2012: 24.5%
|
| | | | 6.8 | | | | | | (7.0) | | | | | | (3.4) | | | |||
Losses not recognised for current or deferred tax
|
| | | | 3.6 | | | | | | 5.6 | | | | | | (0.6) | | | |||
Impact of change in tax rate
|
| | | | — | | | | | | (1.0) | | | | | | (0.3) | | | |||
Adjustments to tax charge in respect of previous years
|
| | | | (2.3) | | | | | | 2.7 | | | | | | 1.0 | | | |||
Total tax charge
|
| | | | 27.7 | | | | | | 34.1 | | | | | | 21.7 | | | |||
|
| | |
2014
|
| |
2013
|
| |
2012
|
| ||||||||||||
Basic earnings per ordinary share
|
| | | | 47.4c | | | | | | 31.2c | | | | | | 19.4c | | | |||
Diluted earnings per ordinary share
|
| | | | 45.6c | | | | | | 29.8c | | | | | | 18.5c | | | |||
Adjusted basic earnings per ordinary share
|
| | | | 63.6c | | | | | | 44.3c | | | | | | 35.1c | | | |||
Adjusted diluted earnings per ordinary share
|
| | | | 61.2c | | | | | | 42.2c | | | | | | 33.4c | | | |||
|
Number of shares (million)
|
| |
2014
|
| |
2013
|
| |
2012
|
| ||||||||||||
Weighted average number of ordinary shares in issue during the year
|
| | | | 312.3 | | | | | | 309.7 | | | | | | 300.3 | | | |||
Dilutive effect of options outstanding
|
| | | | 12.2 | | | | | | 15.3 | | | | | | 15.1 | | | |||
Diluted weighted average number of ordinary shares in issue during the year
|
| | | | 324.5 | | | | | | 325.0 | | | | | | 315.4 | | | |||
|
(in millions of dollars)
|
| |
2014
|
| |
2013
|
| |
2012
|
| ||||||||||||
Profit after tax
|
| | | | 148.0 | | | | | | 96.7 | | | | | | 58.4 | | | |||
Amortisation of other intangibles
|
| | | | 52.9 | | | | | | 42.6 | | | | | | 51.8 | | | |||
Tax effect of above
|
| | | | (8.4) | | | | | | (11.1) | | | | | | (14.0) | | | |||
Exceptional costs
|
| | | | 7.3 | | | | | | 12.2 | | | | | | 12.5 | | | |||
Tax effect of above
|
| | | | (1.2) | | | | | | (3.2) | | | | | | (3.4) | | | |||
Adjusted profit after tax
|
| | | | 198.6 | | | | | | 137.2 | | | | | | 105.3 | | | |||
|
| | |
2014
|
| |
2013
|
| |
2012
|
| |||||||||||||||||||||||||||||||||
| | |
Per share
|
| |
$m
|
| |
Per share
|
| |
$m
|
| |
Per share
|
| |
$m
|
| ||||||||||||||||||||||||
Final dividend for the prior period
|
| | | | 3.66c | | | | | | 11.7 | | | | | | 3.06c | | | | | | 9.5 | | | | | | 2.50c | | | | | | 7.5 | | | ||||||
Interim dividend for the current period
|
| | | | 2.25c | | | | | | 7.0 | | | | | | 1.83c | | | | | | 6.1 | | | | | | 1.44c | | | | | | 4.8 | | | ||||||
| | | | | 5.91c | | | | | | 18.7 | | | | | | 4.89c | | | | | | 15.6 | | | | | | 3.94c | | | | | | 12.3 | | | ||||||
|
(in millions of dollars)
|
| |
Goodwill
|
| |
Development
expenditure |
| |
Customer
contracts and relationships |
| |
Technology
and patents |
| |
Other
|
| |
Other
intangibles |
| ||||||||||||||||||||||||
Cost | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | ||||||
At 31 December 2012
|
| | | | 337.9 | | | | | | 266.9 | | | | | | 164.3 | | | | | | 131.8 | | | | | | 10.9 | | | | | | 307.0 | | | ||||||
Exchange adjustments
|
| | | | 4.7 | | | | | | 0.5 | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | ||||||
Additions | | | | | — | | | | | | 52.9 | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | ||||||
At 31 December 2013
|
| | | | 342.6 | | | | | | 320.3 | | | | | | 164.3 | | | | | | 131.8 | | | | | | 10.9 | | | | | | 307.0 | | | ||||||
Exchange adjustments
|
| | | | (13.2) | | | | | | 0.2 | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | ||||||
Acquisitions | | | | | 141.7 | | | | | | — | | | | | | 30.0 | | | | | | 108.0 | | | | | | — | | | | | | 138.0 | | | ||||||
Additions | | | | | — | | | | | | 66.2 | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | ||||||
Disposals | | | | | — | | | | | | (218.9) | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | ||||||
At 31 December 2014
|
| | | | 471.1 | | | | | | 167.8 | | | | | | 194.3 | | | | | | 239.8 | | | | | | 10.9 | | | | | | 445.0 | | | ||||||
Amortisation | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | ||||||
At 31 December 2012
|
| | | | — | | | | | | 210.6 | | | | | | 60.9 | | | | | | 73.3 | | | | | | 6.6 | | | | | | 140.8 | | | ||||||
Exchange adjustments
|
| | | | — | | | | | | (0.3) | | | | | | 0.2 | | | | | | 0.3 | | | | | | — | | | | | | 0.5 | | | ||||||
Provided in the year
|
| | | | — | | | | | | 45.6 | | | | | | 19.8 | | | | | | 21.7 | | | | | | 1.1 | | | | | | 42.6 | | | ||||||
At 31 December 2013
|
| | | | — | | | | | | 255.9 | | | | | | 80.9 | | | | | | 95.3 | | | | | | 7.7 | | | | | | 183.9 | | | ||||||
Exchange adjustments
|
| | | | — | | | | | | 0.4 | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | ||||||
Provided in the year
|
| | | | — | | | | | | 45.4 | | | | | | 14.9 | | | | | | 37.9 | | | | | | 0.1 | | | | | | 52.9 | | | ||||||
Disposals | | | | | — | | | | | | (218.9) | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | ||||||
At 31 December 2014
|
| | | | — | | | | | | 82.8 | | | | | | 95.8 | | | | | | 133.2 | | | | | | 7.8 | | | | | | 236.8 | | | ||||||
Net book value at 31 December 2013
|
| | | | 342.6 | | | | | | 64.4 | | | | | | 83.4 | | | | | | 36.5 | | | | | | 3.2 | | | | | | 123.1 | | | ||||||
Net book value at 31 December 2014
|
| | | | 471.1 | | | | | | 85.0 | | | | | | 98.5 | | | | | | 106.6 | | | | | | 3.1 | | | | | | 208.2 | | | ||||||
|
(in millions of dollars)
|
| |
Short
leasehold land and buildings |
| |
Plant,
machinery and motor vehicles |
| |
Total
|
| ||||||||||||
Cost | | | | | | | | | | | | | | | | | | | | |||
At 31 December 2012
|
| | | | 38.4 | | | | | | 140.0 | | | | | | 178.4 | | | |||
Exchange adjustments
|
| | | | 0.2 | | | | | | (0.1) | | | | | | 0.1 | | | |||
Additions | | | | | 1.4 | | | | | | 20.2 | | | | | | 21.6 | | | |||
Disposals | | | | | (0.4) | | | | | | (1.9) | | | | | | (2.3) | | | |||
At 31 December 2013
|
| | | | 39.6 | | | | | | 158.2 | | | | | | 197.8 | | | |||
Exchange adjustments
|
| | | | (0.2) | | | | | | (2.6) | | | | | | (2.8) | | | |||
Acquisitions | | | | | 2.4 | | | | | | 22.5 | | | | | | 24.9 | | | |||
Additions | | | | | 1.1 | | | | | | 24.9 | | | | | | 26.0 | | | |||
Disposals | | | | | (0.2) | | | | | | (0.1) | | | | | | (0.3) | | | |||
At 31 December 2014
|
| | | | 42.7 | | | | | | 202.9 | | | | | | 245.6 | | | |||
Depreciation | | | | | | | | | | | | | | | | | | | | |||
At 31 December 2012
|
| | | | 20.3 | | | | | | 95.3 | | | | | | 115.6 | | | |||
Exchange adjustments
|
| | | | (0.2) | | | | | | (0.5) | | | | | | (0.7) | | | |||
Provided in the year
|
| | | | 5.4 | | | | | | 19.6 | | | | | | 25.0 | | | |||
Disposals | | | | | (0.4) | | | | | | (1.7) | | | | | | (2.1) | | | |||
At 31 December 2013
|
| | | | 25.1 | | | | | | 112.7 | | | | | | 137.8 | | | |||
Exchange adjustments
|
| | | | — | | | | | | (2.2) | | | | | | (2.2) | | | |||
Acquisitions | | | | | 1.7 | | | | | | 16.3 | | | | | | 18.0 | | | |||
Provided in the year
|
| | | | 5.4 | | | | | | 23.6 | | | | | | 29.0 | | | |||
Disposals | | | | | (0.1) | | | | | | (0.1) | | | | | | (0.2) | | | |||
At 31 December 2014
|
| | | | 32.1 | | | | | | 150.3 | | | | | | 182.4 | | | |||
Net book value at 31 December 2013
|
| | | | 14.5 | | | | | | 45.5 | | | | | | 60.0 | | | |||
Net book value at 31 December 2014
|
| | | | 10.6 | | | | | | 52.6 | | | | | | 63.2 | | | |||
|
(in millions of dollars)
|
| |
Property,
plant and equipment |
| |
Trading
losses |
| |
Intangibles
|
| |
Short-term
timing differences |
| |
Total
|
| ||||||||||||||||||||
Recognised assets/(liabilities) | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |||||
At 31 December 2012
|
| | | | 1.2 | | | | | | 29.9 | | | | | | (68.8) | | | | | | 4.8 | | | | | | (32.9) | | | |||||
Credited/(charged) to income statement
|
| | | | (1.9) | | | | | | (15.7) | | | | | | 13.9 | | | | | | 2.0 | | | | | | (1.7) | | | |||||
Credited/(charged) to statement of comprehensive income
|
| | | | — | | | | | | — | | | | | | — | | | | | | (0.5) | | | | | | (0.5) | | | |||||
At 31 December 2013
|
| | | | (0.7) | | | | | | 14.2 | | | | | | (54.9) | | | | | | 6.3 | | | | | | (35.1) | | | |||||
Shown as deferred tax assets
|
| | | | 0.7 | | | | | | 14.2 | | | | | | — | | | | | | 6.3 | | | | | | 21.2 | | | |||||
Shown as deferred tax liabilities
|
| | | | (1.4) | | | | | | — | | | | | | (54.9) | | | | | | — | | | | | | (56.3) | | | |||||
Credited/(charged) to income statement
|
| | | | (2.3) | | | | | | (4.7) | | | | | | 18.0 | | | | | | (10.9) | | | | | | 0.1 | | | |||||
Acquisition | | | | | — | | | | | | — | | | | | | (48.3) | | | | | | 25.6 | | | | | | (22.7) | | | |||||
Credited/(charged) to statement of comprehensive income
|
| | | | — | | | | | | — | | | | | | — | | | | | | (0.8) | | | | | | (0.8) | | | |||||
At 31 December 2014
|
| | | | (3.0) | | | | | | 9.5 | | | | | | (85.2) | | | | | | 20.2 | | | | | | (58.5) | | | |||||
Shown as deferred tax assets
|
| | | | — | | | | | | 9.5 | | | | | | — | | | | | | 21.7 | | | | | | 31.2 | | | |||||
Shown as deferred tax liabilities
|
| | | | (3.0) | | | | | | — | | | | | | (85.2) | | | | | | (1.5) | | | | | | (89.7) | | | |||||
|
(in millions of dollars)
|
| |
2014
|
| |
2013
|
| ||||||||
Raw materials and consumable stores
|
| | | | 38.3 | | | | | | 17.9 | | | ||
Finished goods
|
| | | | 129.7 | | | | | | 138.9 | | | ||
| | | | | 168.0 | | | | | | 156.8 | | | ||
|
(in millions of dollars)
|
| |
2014
|
| |
2013
|
| ||||||||
Trade receivables
|
| | | | 843.2 | | | | | | 422.7 | | | ||
Other receivables
|
| | | | 57.0 | | | | | | 36.9 | | | ||
Prepayments and accrued income
|
| | | | 8.9 | | | | | | 9.1 | | | ||
| | | | | 909.1 | | | | | | 468.7 | | | ||
|
(in millions of dollars)
|
| |
2014
|
| |
2013
|
| ||||||||
Trade payables
|
| | | | 825.4 | | | | | | 473.4 | | | ||
Social security and other taxes
|
| | | | 3.2 | | | | | | 2.9 | | | ||
Other payables
|
| | | | 19.1 | | | | | | 15.0 | | | ||
Accruals and deferred revenue
|
| | | | 86.9 | | | | | | 75.8 | | | ||
| | | | | 934.6 | | | | | | 567.1 | | | ||
|
Group (in millions of dollars) |
| |
2014
|
| |
2013
|
| ||||||||
Non-current liabilities | | | | | | | | | | | | | | ||
Bank term loans
|
| | | | 237.8 | | | | | | — | | | ||
Current liabilities | | | | | | | | | | | | | | ||
Bank term loans
|
| | | | 37.4 | | | | | | — | | | ||
Bank revolving credit facility
|
| | | | — | | | | | | — | | | ||
| | | | | 37.4 | | | | | | — | | | ||
|
Currency (in millions of dollars) |
| |
Floating
rate |
| |
Interest
free |
| |
Total
|
| ||||||||||||
At 31 December 2014: | | | | | | | | | | | | | | | | | | | | |||
Sterling
|
| | | | 7.9 | | | | | | (1.0) | | | | | | 6.9 | | | |||
US Dollar
|
| | | | (152.7) | | | | | | 18.1 | | | | | | (134.6) | | | |||
Euro
|
| | | | 2.4 | | | | | | 1.0 | | | | | | 3.4 | | | |||
Other
|
| | | | 11.3 | | | | | | 19.9 | | | | | | 31.2 | | | |||
Total
|
| | | | (131.1) | | | | | | 38.0 | | | | | | (93.1) | | | |||
At 31 December 2013: | | | | | | | | | | | | | | | | | | | | |||
Sterling | | | | | 7.5 | | | | | | (0.2) | | | | | | 7.3 | | | |||
US Dollar
|
| | | | (26.0) | | | | | | 31.0 | | | | | | 5.0 | | | |||
Euro | | | | | 1.7 | | | | | | 2.8 | | | | | | 4.5 | | | |||
Other | | | | | 11.1 | | | | | | 5.1 | | | | | | 16.2 | | | |||
Total | | | | | (5.7) | | | | | | 38.7 | | | | | | 33.0 | | | |||
|
| | |
Net foreign currency monetary assets/(liabilities)
|
| ||||||||||||||||||||||||||||||||
| | |
Sterling
|
| |
US Dollar
|
| |
Euro
|
| |
Other
|
| |
Total
|
| ||||||||||||||||||||
At 31 December 2014: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |||||
Sterling
|
| | | | — | | | | | | 1.9 | | | | | | 1.7 | | | | | | — | | | | | | 3.6 | | | |||||
US Dollar
|
| | | | 8.0 | | | | | | — | | | | | | 28.3 | | | | | | 20.0 | | | | | | 56.3 | | | |||||
Euro
|
| | | | — | | | | | | 1.4 | | | | | | — | | | | | | (0.1) | | | | | | 1.3 | | | |||||
Other
|
| | | | 0.1 | | | | | | 1.7 | | | | | | — | | | | | | — | | | | | | 1.8 | | | |||||
Total
|
| | | | 8.1 | | | | | | 5.0 | | | | | | 30.0 | | | | | | 19.9 | | | | | | 63.0 | | | |||||
At 31 December 2013: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |||||
Sterling | | | | | — | | | | | | 2.5 | | | | | | 1.1 | | | | | | — | | | | | | 3.6 | | | |||||
US Dollar
|
| | | | 3.5 | | | | | | — | | | | | | 15.8 | | | | | | 15.1 | | | | | | 34.4 | | | |||||
Euro | | | | | — | | | | | | (3.4) | | | | | | — | | | | | | — | | | | | | (3.4) | | | |||||
Other | | | | | 0.4 | | | | | | (2.1) | | | | | | — | | | | | | — | | | | | | (1.7) | | | |||||
Total | | | | | 3.9 | | | | | | (3.0) | | | | | | 16.9 | | | | | | 15.1 | | | | | | 32.9 | | | |||||
|
| | |
Sell currency
|
| |
Buy currency
|
| |
Principal
amount |
| |
Average
rate |
| |
Maturity
|
| ||||
At 31 December 2014
|
| |
US Dollar
|
| |
GBP
|
| | | $ | 32.1m | | | |
0.62
|
| |
Jan-15 – Dec-15
|
| |
| | |
Euro
|
| |
US Dollar
|
| | | $ | 60.1m | | | |
1.32
|
| |
Jan-15 – Jun-15
|
| |
| | |
US Dollar
|
| |
SA Rand
|
| | | $ | 6.6m | | | |
0.09
|
| |
Jan-15
|
| |
At 31 December 2013
|
| |
US Dollar
|
| |
GBP
|
| | | $ | 28.6m | | | |
0.64
|
| |
Jan 14 – Mar 14
|
| |
| | |
Euro
|
| |
US Dollar
|
| | | $ | 98.3m | | | |
1.35
|
| |
Jan 14 – Oct 14
|
| |
| | |
US Dollar
|
| |
Euro
|
| | | $ | 13.8m | | | |
0.72
|
| |
Jan 14
|
| |
| | |
SA Rand
|
| |
US Dollar
|
| | | $ | 3.8m | | | |
0.10
|
| |
Jan 14 – Feb 14
|
| |
|
Carrying amount (in millions of dollars) |
| |
2014
|
| |
2013
|
| ||||||||
Trade receivables
|
| | | | 843.2 | | | | | | 422.7 | | | ||
Cash and cash equivalents
|
| | | | 182.1 | | | | | | 33.0 | | | ||
Forward exchange contracts used for hedging | | | | | | | | | | | | | | ||
Assets | | | | | 5.3 | | | | | | 2.2 | | | ||
| | | | | 1,030.6 | | | | | | 457.9 | | | ||
|
Carrying amount (in millions of dollars) |
| |
2014
|
| |
2013
|
| ||||||||
Domestic | | | | | 195.3 | | | | | | 121.9 | | | ||
Euro-zone countries
|
| | | | 15.8 | | | | | | 9.7 | | | ||
United States
|
| | | | 530.2 | | | | | | 227.7 | | | ||
Other regions
|
| | | | 101.9 | | | | | | 63.4 | | | ||
| | | | | 843.2 | | | | | | 422.7 | | | ||
|
(in millions of dollars)
|
| |
Carrying
amount |
| |
Contractual
cash flows |
| |
6 months
or less |
| |
6 – 12
months |
| |
1 – 2
years |
| |
2 – 3
years |
| |
3 – 4
years |
| |
4 – 5
years |
| ||||||||||||||||||||||||||||||||
At 31 December 2014: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | ||||||||
Non-derivative financial liabilities | | | | | | | | | | ||||||||||||||||||||||||||||||||||||||||||||||||
Trade and other payables within one year
|
| | | | 934.6 | | | | | | (934.6) | | | | | | (934.6) | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | ||||||||
External borrowings
|
| | | | 275.2 | | | | | | (279.0) | | | | | | (19.4) | | | | | | (19.4) | | | | | | (46.5) | | | | | | (54.2) | | | | | | (62.0) | | | | | | (77.5) | | | ||||||||
Derivative financial liabilities | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | ||||||||
Forward exchange contracts used for hedging | | | | | | | | | | ||||||||||||||||||||||||||||||||||||||||||||||||
Outflow | | | | | — | | | | | | (98.4) | | | | | | (90.5) | | | | | | (7.9) | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | ||||||||
Inflow | | | | | 4.4 | | | | | | 102.8 | | | | | | 95.0 | | | | | | 7.8 | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | ||||||||
Total
|
| | | | 1,214.2 | | | | | | (1,209.2) | | | | | | (949.5) | | | | | | (19.5) | | | | | | (46.5) | | | | | | (54.2) | | | | | | (62.0) | | | | | | (77.5) | | | ||||||||
At 31 December 2013: | | | | | | | | | | ||||||||||||||||||||||||||||||||||||||||||||||||
Non-derivative financial liabilities | | | | | | | | | | ||||||||||||||||||||||||||||||||||||||||||||||||
Trade and other payables within one year
|
| | | | 567.1 | | | | | | (567.1) | | | | | | (567.1) | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | ||||||||
External borrowings
|
| | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | ||||||||
Derivative financial liabilities | | | | | | | | | | ||||||||||||||||||||||||||||||||||||||||||||||||
Forward exchange contracts used for hedging | | | | | | | | | | ||||||||||||||||||||||||||||||||||||||||||||||||
Outflow | | | | | — | | | | | | (145.1) | | | | | | (95.2) | | | | | | (49.9) | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | ||||||||
Inflow | | | | | 0.5 | | | | | | 145.4 | | | | | | 96.0 | | | | | | 49.4 | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | ||||||||
Total | | | | | 567.6 | | | | | | (566.8) | | | | | | (566.3) | | | | | | (0.5) | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | ||||||||
|
| | |
Carrying amount
|
| |
Fair value
|
| |||||||||||||||||||||||||||||||||||||||||||
| | |
Fair value –
hedging instrument |
| |
Loans and
receivables |
| |
Other
financial liabilities |
| |
Total
|
| |
Level 1
|
| |
Level 2
|
| |
Level 3
|
| ||||||||||||||||||||||||||||
| | |
$m
|
| |
$m
|
| |
$m
|
| |
$m
|
| |
$m
|
| |
$m
|
| |
$m
|
| ||||||||||||||||||||||||||||
At 31 December 2014: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |||||||
Financial assets measured at fair value | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |||||||
Forward exchange contracts used for hedging
|
| | | | 5.3 | | | | | | — | | | | | | — | | | | | | 5.3 | | | | | | — | | | | | | 5.3 | | | | | | — | | | |||||||
Financial assets not measured at fair value | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |||||||
Trade receivables
|
| | | | — | | | | | | 843.2 | | | | | | — | | | | | | 843.2 | | | | | | — | | | | | | — | | | | | | — | | | |||||||
Cash and cash equivalents
|
| | | | — | | | | | | 182.1 | | | | | | — | | | | | | 182.1 | | | | | | — | | | | | | — | | | | | | — | | | |||||||
Financial liabilities measured at fair value | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |||||||
Forward exchange contracts used for hedging
|
| | | | (0.9) | | | | | | — | | | | | | — | | | | | | (0.9) | | | | | | — | | | | | | (0.9) | | | | | | — | | | |||||||
Financial liabilities not measured at fair value
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |||||||
Borrowings | | | | | — | | | | | | (275.2) | | | | | | — | | | | | | (275.2) | | | | | | — | | | | | | — | | | | | | — | | | |||||||
Trade payables
|
| | | | — | | | | | | — | | | | | | (825.4) | | | | | | (825.4) | | | | | | — | | | | | | — | | | | | | — | | | |||||||
| | | | | 4.4 | | | | | | 750.1 | | | | | | (825.4) | | | | | | (70.9) | | | | | | — | | | | | | 4.4 | | | | | | — | | | |||||||
At 31 December 2013: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |||||||
Financial assets measured at fair value | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |||||||
Forward exchange contracts used for hedging
|
| | | | 0.5 | | | | | | — | | | | | | — | | | | | | 0.5 | | | | | | — | | | | | | 0.5 | | | | | | — | | | |||||||
Financial assets not measured at fair value | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |||||||
Trade receivables
|
| | | | — | | | | | | 422.7 | | | | | | — | | | | | | 422.7 | | | | | | — | | | | | | — | | | | | | — | | | |||||||
Cash and cash equivalents
|
| | | | — | | | | | | 33.0 | | | | | | — | | | | | | 33.0 | | | | | | — | | | | | | — | | | | | | — | | | |||||||
Financial liabilities not measured at fair value
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |||||||
Borrowings | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | |||||||
Trade payables
|
| | | | — | | | | | | — | | | | | | (473.4) | | | | | | (473.4) | | | | | | — | | | | | | — | | | | | | — | | | |||||||
| | | | | 0.5 | | | | | | 455.7 | | | | | | (473.4) | | | | | | (17.2) | | | | | | — | | | | | | 0.5 | | | | | | — | | | |||||||
|
| | |
Average rate
|
| |
Spot rate
|
| ||||||||||||||||||||||||||||||||||||
| | |
2014
|
| |
2013
|
| |
2012
|
| |
2014
|
| |
2013
|
| |
2012
|
| ||||||||||||||||||||||||
Euro | | | | | 1.33 | | | | | | 1.33 | | | | | | 1.28 | | | | | | 1.23 | | | | | | 1.37 | | | | | | 1.32 | | | ||||||
Sterling | | | | | 1.65 | | | | | | 1.56 | | | | | | 1.58 | | | | | | 1.56 | | | | | | 1.64 | | | | | | 1.62 | | | ||||||
|
(in millions of dollars)
|
| |
Royalties
under negotiation |
| |
Warranties
|
| |
Other
|
| |
Total
|
| ||||||||||||||||
At 31 December 2012
|
| | | | 27.5 | | | | | | 40.0 | | | | | | 9.7 | | | | | | 77.2 | | | ||||
Charge for the year
|
| | | | 9.8 | | | | | | 24.7 | | | | | | 14.4 | | | | | | 48.9 | | | ||||
Utilised | | | | | (1.4) | | | | | | (24.9) | | | | | | (10.5) | | | | | | (36.8) | | | ||||
Transfer | | | | | — | | | | | | 0.1 | | | | | | — | | | | | | 0.1 | | | ||||
Exchange adjustments
|
| | | | 1.0 | | | | | | 0.2 | | | | | | 1.6 | | | | | | 2.8 | | | ||||
At 31 December 2013
|
| | | | 36.9 | | | | | | 40.1 | | | | | | 15.2 | | | | | | 92.2 | | | ||||
Due within one year
|
| | | | — | | | | | | 20.0 | | | | | | 11.9 | | | | | | 31.9 | | | ||||
Due after one year
|
| | | | 36.9 | | | | | | 20.1 | | | | | | 3.3 | | | | | | 60.3 | | | ||||
Acquisitions | | | | | — | | | | | | 4.7 | | | | | | 35.9 | | | | | | 40.6 | | | ||||
Charge for the year
|
| | | | 15.7 | | | | | | 34.5 | | | | | | 6.4 | | | | | | 56.6 | | | ||||
Utilised | | | | | (7.1) | | | | | | (15.2) | | | | | | (33.8) | | | | | | (56.1) | | | ||||
Transfer | | | | | 4.7 | | | | | | (3.5) | | | | | | — | | | | | | 1.2 | | | ||||
Unused amounts reversed
|
| | | | — | | | | | | — | | | | | | (0.7) | | | | | | (0.7) | | | ||||
Exchange adjustments
|
| | | | (0.3) | | | | | | (1.1) | | | | | | (0.3) | | | | | | (1.7) | | | ||||
At 31 December 2014
|
| | | | 49.9 | | | | | | 59.5 | | | | | | 22.7 | | | | | | 132.1 | | | ||||
Due within one year
|
| | | | — | | | | | | 21.7 | | | | | | 9.8 | | | | | | 31.5 | | | ||||
Due after one year
|
| | | | 49.9 | | | | | | 37.8 | | | | | | 12.9 | | | | | | 100.6 | | | ||||
|
| | |
2014
|
| |
2013
|
| ||||||||||||||||||||||
| | |
Number
|
| |
$m
|
| |
Number
|
| |
$m
|
| ||||||||||||||||
Allocated, called up and fully paid | | | | | | | | | | | | | | | | | | | | | | | | | | ||||
Ordinary shares of 5 pence each
|
| | | | 315,067,925 | | | | | | 29.1 | | | | | | 313,942,223 | | | | | | 29.0 | | | ||||
|
| | |
Number
|
| |
Nominal
value $000 |
| |
Consideration
$000 |
| ||||||||||||
Employee share option plan (62.0 pence)
|
| | | | 12,902 | | | | | | 1 | | | | | | 13 | | | |||
Employee share option plan (128.0 pence)
|
| | | | 204,827 | | | | | | 17 | | | | | | 432 | | | |||
Employee share option plan (192.0 pence)
|
| | | | 468 | | | | | | — | | | | | | 1 | | | |||
Employee share option plan (197.0 pence)
|
| | | | 203,934 | | | | | | 17 | | | | | | 662 | | | |||
Employee share option plan (85.5 pence)
|
| | | | 127,261 | | | | | | 10 | | | | | | 179 | | | |||
Employee share option plan (51.0 pence)
|
| | | | 80,000 | | | | | | 7 | | | | | | 67 | | | |||
Employee share option plan (58.75 pence)
|
| | | | 75,000 | | | | | | 6 | | | | | | 73 | | | |||
Employee share option plan (75.0 pence)
|
| | | | 62,500 | | | | | | 5 | | | | | | 77 | | | |||
Employee share option plan (97.75 pence)
|
| | | | 20,000 | | | | | | 2 | | | | | | 32 | | | |||
Employee performance option plan (5.0 pence)
|
| | | | 338,810 | | | | | | 28 | | | | | | — | | | |||
| | | | | 1,125,702 | | | | | | 93 | | | | | | 1,536 | | | |||
|
| | |
Number
|
| |
Nominal
value $000 |
| |
Consideration
$000 |
| ||||||||||||
Employee share option plan (58.0 pence)
|
| | | | 539,128 | | | | | | 39 | | | | | | 402 | | | |||
Employee share option plan (62.0 pence)
|
| | | | 41,601 | | | | | | 3 | | | | | | 34 | | | |||
Employee share option plan (128.0 pence)
|
| | | | 27,475 | | | | | | 2 | | | | | | 47 | | | |||
Employee share option plan (154.0 pence)
|
| | | | 125,016 | | | | | | 10 | | | | | | 263 | | | |||
Employee share option plan (199.25 pence)
|
| | | | 501,882 | | | | | | 36 | | | | | | 1,374 | | | |||
Employee share option plan (69.50 pence)
|
| | | | 50,000 | | | | | | 4 | | | | | | 46 | | | |||
Employee share option plan (85.5 pence)
|
| | | | 1,087,178 | | | | | | 82 | | | | | | 1,232 | | | |||
Employee share option plan (51.0 pence)
|
| | | | 114,988 | | | | | | 9 | | | | | | 75 | | | |||
Employee share option plan (58.75 pence)
|
| | | | 188,829 | | | | | | 15 | | | | | | 143 | | | |||
Employee share option plan (75.0 pence)
|
| | | | 1,111,266 | | | | | | 84 | | | | | | 1,096 | | | |||
Employee share option plan (97.75 pence)
|
| | | | 100,000 | | | | | | 8 | | | | | | 131 | | | |||
Employee share option plan (47.0 pence)
|
| | | | 200,000 | | | | | | 16 | | | | | | 118 | | | |||
Employee performance option plan (5.0 pence)
|
| | | | 12,552 | | | | | | 1 | | | | | | — | | | |||
| | | | | 4,099,915 | | | | | | 309 | | | | | | 4,961 | | | |||
|
(in millions of dollars)
|
| | ||||||
At 31 December 2012
|
| | | | 79.0 | | | |
Premium on allotments
|
| | | | 4.7 | | | |
At 31 December 2013
|
| | | | 83.7 | | | |
Premium on allotments
|
| | | | 1.4 | | | |
At 31 December 2014
|
| | |
|
85.1
|
| | |
|
(in millions of dollars)
|
| | ||||||
At 31 December 2013 and 31 December 2014
|
| | | | 109.9 | | | |
|
(in millions of dollars)
|
| | ||||||
At 31 December 2012
|
| | | | (54.8) | | | |
Exchange difference on translating foreign operations
|
| | | | (4.8) | | | |
At 31 December 2013
|
| | | | 59.6 | | | |
Exchange differences on translating foreign operations
|
| | | | 19.7 | | | |
At 31 December 2014
|
| | | | 79.3 | | | |
|
(in millions of dollars)
|
| | ||||||
At 31 December 2012
|
| | | | 299.0 | | | |
Profit for the year
|
| | | | 96.7 | | | |
Dividends to equity shareholders
|
| | | | (15.6) | | | |
Employee share incentive schemes
|
| | | | 4.1 | | | |
At 31 December 2013
|
| | | | 384.2 | | | |
Profit for the year
|
| | | | 148.0 | | | |
Dividends to equity shareholders
|
| | | | (18.7) | | | |
Employee share incentive charges
|
| | | | 6.5 | | | |
Movement in employee share trusts
|
| | | | (1.7) | | | |
At 31 December 2014
|
| | | | 518.3 | | | |
|
| | |
2014
|
| |
2013
|
| ||||||||
Contracted but not provided for (in millions of dollars)
|
| | | | 1.8 | | | | | | 0.7 | | | ||
|
| | |
Number of ordinary shares
subject to option |
| |
Options agreed to be satisfied by the
Pace Employee Benefit Trust |
| ||||||||||||||||||||||
| | |
2014
|
| |
2013
|
| |
2014
|
| |
2013
|
| ||||||||||||||||
Share option plans
|
| | | | 4,682,008 | | | | | | 6,754,903 | | | | | | 1,750,829 | | | | | | 3,567,404 | | | ||||
LTIPs and share awards
|
| | | | 9,622,154 | | | | | | 10,971,458 | | | | | | 9,622,154 | | | | | | 10,971,458 | | | ||||
Total dilutive share awards
|
| | | | 14,304,162 | | | | | | 17,726,361 | | | | | | 11,372,983 | | | | | | 14,538,862 | | | ||||
Contingent share awards
|
| | | | 600,000 | | | | | | 938,810 | | | | | | — | | | | | | — | | | ||||
Total share awards
|
| | | | 14,904,162 | | | | | | 18,665,171 | | | | | | 11,372,983 | | | | | | 14,538,862 | | | ||||
|
2014
|
| |
Share option plans
|
| |
LTIPs and share awards
|
| |
Total
|
| ||||||||||||||||||||||||||
| | |
Number
|
| |
WAEP
|
| |
Number
|
| |
WAEP
|
| |
Number
|
| ||||||||||||||||||||
Outstanding at 1 January 2014
|
| | | | 6,754,903 | | | | | | 156.4c | | | | | | 10,971,458 | | | | | | — | | | | | | 17,726,361 | | | |||||
Granted during the year
|
| | | | 761,548 | | | | | | 570.3c | | | | | | 3,766,760 | | | | | | — | | | | | | 4,528,308 | | | |||||
Exercised during the year
|
| | | | (786,892) | | | | | | 195.4c | | | | | | (814,916) | | | | | | — | | | | | | (1,601,808) | | | |||||
Forfeited during the year
|
| | | | (2,047,551) | | | | | | 199.4c | | | | | | (4,301,148) | | | | | | — | | | | | | (6,348,699) | | | |||||
Outstanding at 31 December 2014
|
| | | | 4,682,008 | | | | | | 200.1c | | | | | | 9,622,154 | | | | | | — | | | | | | 14,304,162 | | | |||||
Exercisable at 31 December 2014
|
| | | | 629,276 | | | | | | 119.9c | | | | | | 27,070 | | | | | | — | | | | | | 656,346 | | | |||||
|
2013
|
| |
Share option plans
|
| |
LTIPs and share awards
|
| |
Total
|
| ||||||||||||||||||||||||||
| | |
Number
|
| |
WAEP
|
| |
Number
|
| |
WAEP
|
| |
Number
|
| ||||||||||||||||||||
Outstanding at 1 January 2013
|
| | | | 12,725,189 | | | | | | 171.1c | | | | | | 12,939,859 | | | | | | — | | | | | | 25,665,048 | | | |||||
Granted during the year
|
| | | | 481,326 | | | | | | 310.8c | | | | | | 3,533,720 | | | | | | — | | | | | | 4,015,046 | | | |||||
Exercised during the year
|
| | | | (4,205,363) | | | | | | 147.2c | | | | | | (1,605,107) | | | | | | — | | | | | | (5,810,470) | | | |||||
Forfeited during the year
|
| | | | (2,246,249) | | | | | | 300.2c | | | | | | (3,897,014) | | | | | | — | | | | | | (6,143,263) | | | |||||
Outstanding at 31 December 2013
|
| | | | 6,754,903 | | | | | | 156.4c | | | | | | 10,971,458 | | | | | | — | | | | | | 17,726,361 | | | |||||
Exercisable at 31 December 2013
|
| | | | 1,018,297 | | | | | | 122.6c | | | | | | 394,437 | | | | | | — | | | | | | 1,412,734 | | | |||||
|
Range of exercise prices (pence)
|
| |
Number at
31 December 2014 |
| |
Weighted
average remaining contractual life months |
| |
Weighted
average exercise price |
| ||||||||||||
58.75 pence – 75 pence
|
| | | | 3,179,803 | | | | | | 78.64 | | | | | | 111c | | | |||
85.5 pence – 91.75 pence
|
| | | | 391,775 | | | | | | 62.29 | | | | | | 145c | | | |||
135.5 pence – 197 pence
|
| | | | 366,574 | | | | | | 96.97 | | | | | | 281c | | | |||
338 pence – 356 pence
|
| | | | 743,856 | | | | | | 113.0 | | | | | | 570c | | | |||
| | | | | 4,682,008 | | | | | | 84.17 | | | | | | 200c | | | |||
|
Range of exercise prices (pence)
|
| |
Number at
31 December 2013 |
| |
Weighted
average remaining contractual life months |
| |
Weighted
average exercise price |
| ||||||||||||
47 pence – 75 pence
|
| | | | 3,696,010 | | | | | | 63.24 | | | | | | 109c | | | |||
85.5 pence – 97.75 pence
|
| | | | 1,271,581 | | | | | | 84.89 | | | | | | 146c | | | |||
128 pence – 208 pence
|
| | | | 1,781,312 | | | | | | 85.20 | | | | | | 261c | | | |||
| | | | | 6,754,903 | | | | | | 73.12 | | | | | | 157c | | | |||
|
| | |
2014
|
| |
2013
|
| ||||||||
Average share price (cents)
|
| | | | 561.0c | | | | | | 432.0c | | | ||
Weighted average exercise price (cents)
|
| | | | 570.3c | | | | | | 310.8c | | | ||
Expected volatility (%)
|
| | | | 50% | | | | | | 50% | | | ||
Option life (years)
|
| | | | 10 | | | | | | 10 | | | ||
Dividend yield (%)
|
| | | | 1.4% | | | | | | 1.4% | | | ||
Risk free interest rate (%)
|
| | | | 5.0% | | | | | | 5.0% | | | ||
|
(in millions of dollars)
|
| |
2014
|
| |
2013
|
| ||||||||
Land and buildings | | | | ||||||||||||
Within one year
|
| | | | 8.7 | | | | | | 9.2 | | | ||
Between two and five years
|
| | | | 18.4 | | | | | | 19.9 | | | ||
In five years or more
|
| | | | 5.3 | | | | | | 3.4 | | | ||
| | | | | 32.4 | | | | | | 32.5 | | | ||
|
(in millions of dollars)
|
| |
2014
|
| |
2013
|
| |
2012
|
| ||||||||||||
Short term benefits
|
| | | | 2.0 | | | | | | 2.8 | | | | | | 2.8 | | | |||
Post-employment benefits
|
| | | | 0.2 | | | | | | 0.1 | | | | | | 0.1 | | | |||
Share-based payments
|
| | | | 1.2 | | | | | | 1.2 | | | | | | 1.5 | | | |||
Termination payments
|
| | | | — | | | | | | — | | | | | | 1.1 | | | |||
| | | | | 3.4 | | | | | | 4.1 | | | | | | 5.5 | | | |||
|
(in millions of dollars)
|
| | ||||||
Purchase consideration: | | | ||||||
Headline consideration
|
| | | | 310.0 | | | |
Cash paid for tax benefits
|
| | | | 13.0 | | | |
Working capital adjustment and other consideration
|
| | | | 0.5 | | | |
Total Cash Consideration
|
| | | | 323.5 | | | |
Fair value of assets acquired (see below)
|
| | | | (181.8) | | | |
Goodwill | | | | | 141.7 | | | |
Other intangible assets: | | | ||||||
Current and Next Generation Technology
|
| | | | 108.0 | | | |
Customer Relationships
|
| | | | 30.0 | | | |
| | | | | 138.0 | | | |
|
(in millions of dollars)
|
| |
Book
Value |
| |
Fair Value
Adjustment |
| |
Fair Value
|
| ||||||||||||
Property, plant and equipment
|
| | | | 6.9 | | | | | | — | | | | | | 6.9 | | | |||
Other intangible assets
|
| | | | — | | | | | | 138.0 | | | | | | 138.0 | | | |||
Deferred tax assets
|
| | | | 19.7 | | | | | | 7.5 | | | | | | 27.2 | | | |||
Inventories
|
| | | | 62.9 | | | | | | (20.0) | | | | | | 42.9 | | | |||
Trade and other receivables
|
| | | | 55.7 | | | | | | — | | | | | | 55.7 | | | |||
Cash and cash equivalents
|
| | | | 32.6 | | | | | | — | | | | | | 32.6 | | | |||
Deferred tax liabilities
|
| | | | (1.6) | | | | | | (48.3) | | | | | | (49.9) | | | |||
Trade and other payables
|
| | | | (31.0) | | | | | | — | | | | | | (31.0) | | | |||
Provisions
|
| | | | (40.6) | | | | | | — | | | | | | (40.6) | | | |||
Net assets acquired
|
| | | | 104.6 | | | | | | 77.2 | | | | | | 181.8 | | | |||
|
| | | | ARRIS GROUP, INC. | |
| | | |
By:
/s/ Lawrence A. Margolis
Name: Lawrence A. Margolis
Title: Executive Vice President, Law & Administration, and Secretary |
|
| | | | ARCHIE ACQ LIMITED | |
| | | |
By:
/s/ Lawrence A. Margolis
Name: Lawrence A. Margolis
Title: Director |
|
| | | | ARCHIE U.S. HOLDINGS LLC | |
| | | |
By:
/s/ Lawrence A. Margolis
Name: Lawrence A. Margolis
Title: President |
|
| | | | ARCHIE U.S. MERGER LLC | |
| | | |
By:
/s/ Lawrence A. Margolis
Name: Lawrence A. Margolis
Title: President |
|
| FOR IMMEDIATE RELEASE | | |
22 APRIL 2015
|
|
| FOR IMMEDIATE RELEASE | | |
22 APRIL 2015
|
|
Name
|
| |
Number of Pace Shares
|
| |
Percentage of Pace Shares in
issue (at 21 April 2015) |
| ||||||
Mike Pulli
|
| | | | 611,317 | | | | | | 0.19% | | |
Allan Leighton
|
| | | | 346,081 | | | | | | 0.11% | | |
Pat Chapman-Pincher
|
| | | | 15,551 | | | | | | 0.00% | | |
John Grant
|
| | | | 65,000 | | | | | | 0.02% | | |
Mike Inglis
|
| | | | 25,344 | | | | | | 0.01% | | |
TOTAL
|
| | | | 1,063,293 | | | | | | 0.34% | | |
| “2014 Adjusted EBITDA” | | | Pace operating profit before exceptional costs, amortisation of other intangibles and depreciation for the year ended 31 December 2014 | |
| “ARRIS” | | | ARRIS Group, Inc., of 3871 Lakefield Drive, Suwanee, Georgia, USA | |
| “ARRIS Board” | | | the board of directors of ARRIS | |
| “ARRIS Group” | | | ARRIS and its subsidiaries | |
| “ARRIS Merger” | | | the merger, immediately following the consummation of the Merger, of US Merger Sub with and into ARRIS | |
| “ARRIS Merger Effective Date” | | | the date on which the ARRIS Merger becomes effective | |
| “ARRIS Proxy Statement” | | | the proxy statement relating to the matters to be submitted to the ARRIS Stockholders at the ARRIS Stockholders Meeting | |
| “ARRIS Shares” | | | the common shares of ARRIS | |
| “ARRIS Stockholders” | | | the holders of the ARRIS Shares | |
| “ARRIS Stockholders Meeting” | | | a special meeting of the ARRIS Stockholders for the purpose of duly adopting the US Merger Agreement | |
| “Business Day” | | | a day (other than a Saturday or Sunday) on which banks are open for general business in London | |
| “CADE” | | | Brazil’s Council for Economic Defence | |
| “Code” or “Takeover Code” | | | the City Code on Takeovers and Mergers | |
| “Combined Group” | | | the combined group following the Transaction, consisting of the ARRIS Group, the New ARRIS Group and the Pace Group | |
| “Companies Act” | | | the UK Companies Act 2006, as amended | |
| “Conditions” | | | the conditions to the implementation of the Merger (including the Scheme) which are set out in Appendix I to this Announcement and to be set out in the Scheme Circular | |
| “Co-operation Agreement” | | | the agreement dated 22 April 2015 between New ARRIS, ARRIS and Pace and relating, among other things, to the implementation of the Merger | |
| “Court” | | | the High Court of Justice in England and Wales | |
| “Court Meeting” | | | the meeting(s) of Scheme Shareholders to be convened by an order of the Court under section 896 of the Companies Act, notice of which will be set out in the Scheme Circular, to consider and if | |
| | | | thought fit approve the Scheme (with or without amendment) including any adjournment thereof | |
| “CREST” | | | the relevant system (as defined in the Uncertificated Securities Regulations 2001 (SI 2001/3755)) in respect of which Euroclear UK & Ireland Ltd is the operator | |
| “Dealing Disclosure” | | | an announcement pursuant to Rule 8 of the Code containing details of dealings in interests in relevant securities of a party to an offer | |
| “Effective” | | |
in the context of the Merger:
(i)
if the Merger is implemented by way of Scheme, means the Scheme having become effective pursuant to its terms; or
(ii)
if the Merger is implemented by way of an Offer, such offer having become or been declared unconditional in all respects in accordance with its terms
|
|
| “Effective Date” | | | the date on which the Merger becomes Effective | |
| “Evercore” | | | Evercore Partners International LLP | |
| “Existing ARRIS Facility” | | | the US$2,175,000,000 facility agreement entered into between, among others, ARRIS and Bank of America, N.A. and the lenders as described therein, dated 17 April 2013 | |
| “Form S-4” | | | a registration statement on Form S-4 (of which the ARRIS Proxy Statement will form a part) with respect to the issuance of New ARRIS Shares to be delivered to ARRIS Stockholders in respect of the ARRIS Merger | |
| “General Meeting” | | | the general meeting of Pace Shareholders to be convened in connection with the Merger, notice of which will be set out in the Scheme Circular, to consider and if thought fit approve various matters in connection with the implementation of the Scheme, including any adjournment thereof | |
| “IFRS” | | | International Financial Reporting Standards | |
| “Jefferies” | | | Jefferies International Limited | |
| “J.P. Morgan Cazenove” | | | J.P. Morgan Limited (which conducts its UK investment banking business as J.P. Morgan Cazenove) | |
| “Latest Practicable Date” | | | 21 April 2015, being the latest practicable date prior to the release of this Announcement | |
| “London Stock Exchange” | | | London Stock Exchange plc | |
| “Merger” | | | the direct or indirect acquisition of the entire issued and to be issued share capital of Pace, excluding any Treasury Shares, by New ARRIS to be implemented | |
| | | | by way of the Scheme or (should New ARRIS so elect, subject to the consent of the Panel (where necessary)) and subject to the provisions of the Co-Operation Agreement by way of an Offer | |
| “Merger Control Authority” | | | any national, supra-national or regional, government or governmental, quasi-governmental, statutory, regulatory or investigative body or court, in any jurisdiction, responsible for the review and/or approval of mergers, acquisitions, concentrations, joint ventures, or any other similar matter | |
| “NASDAQ” | | | The NASDAQ Stock Market | |
| “New ARRIS” | | | Archie ACQ Limited of 22 Bedford Row, London WC1R 4JS | |
| “New ARRIS Board” | | | the board of directors of New ARRIS | |
| “New ARRIS Facility” | | | the facility agreement entered into between, among others, ARRIS, New ARRIS and Bank of America, N.A., dated on or about 22 April 2015 | |
| “New ARRIS Group” | | | ARRIS, New ARRIS, and their respective subsidiary undertakings | |
| “New ARRIS Shares” | | | the new ordinary shares in New ARRIS, to be allotted pursuant to the Scheme (or, if applicable, the Offer) or the ARRIS Merger, as the context requires | |
| “Offer” | | | the implementation of the Merger by means of a takeover offer as defined in section 974 of the Companies Act in circumstances described in this Announcement, rather than by means of the Scheme | |
| “Official List” | | | the official list maintained by the UK Listing Authority pursuant to Part 6 of the Financial Services and Markets Act 2000 | |
| “Opening Position Disclosure” | | | an announcement pursuant to Rule 8 of the Code containing details of interests or short positions in, or rights to subscribe for, any relevant securities of a party to an offer | |
| “Overseas Shareholders” | | | Pace Shareholders who are resident in, ordinarily resident in, or citizens of, jurisdictions outside the United Kingdom | |
| “Pace” | | | Pace plc of Victoria Road, Saltaire, BD18 3LF, United Kingdom | |
| “Pace Board” | | | the board of directors of Pace | |
| “Pace Directors” | | | the directors of Pace | |
| “Pace Group” | | | Pace and its subsidiary undertakings | |
| “Pace Shareholders” | | | holders of Pace Shares | |
| “Pace Shares” | | | ordinary shares of 5 pence each in the capital of Pace | |
| “Pace Share Schemes” | | |
the following share incentive plans operated by Pace:
(i)
Sharesave Plan (UK Plan);
(ii)
US Sharesave Plan;
(iii)
Approved Discretionary Share Option Plan 2005;
(iv)
Unapproved Share Option Plan 2005;
(v)
Performance Share Plan;
(vi)
International Performance Share Plan;
(vii)
Deferred Share Plan; and
(viii)
Chairman’s Appointment Share Award
|
|
| “Panel” or “Takeover Panel” | | | the Panel on Takeovers and Mergers | |
| “Permitted Dividend” | | | the proposed final dividend for 2014 of 4.75 cents, payable by Pace on 3 July 2015 to Pace Shareholders on the register on 5 June 2015 | |
| “Regulatory Conditions” | | | the Conditions set out in paragraphs (b) to (j) of Appendix I | |
| “Regulatory Information Service” | | | a primary information provider which has been approved by the Financial Conduct Authority to disseminate regulated information | |
| “Relevant Authority” | | | any government or governmental, quasi-governmental, supranational, statutory, administrative or regulatory body, authority, court, trade agency, association, institution, environmental body or Merger Control Authority | |
| “Scheme” or “Scheme of Arrangement” | | | the scheme of arrangement proposed to be made under Part 26 of the Companies Act between Pace and the Scheme Shareholders, with or subject to any modification, addition or condition approved or imposed by the Court | |
| “Scheme Circular” | | | the document to be sent to Pace Shareholders setting out, amongst other things, the Scheme and notices convening the Court Meeting and the General Meeting, and including the particulars required by section 897 of the Companies Act | |
| “Scheme Court Hearing” | | | the hearing of the Court to sanction the Scheme | |
| “Scheme Court Order” | | | the order of the Court sanctioning the Scheme under section 899 of the Companies Act | |
| “Scheme Record Time” | | | the time and date specified in the Scheme Circular by reference to which the Scheme will be binding on holders of Pace Shares at such time | |
| “Scheme Shareholders” | | | holders of Scheme Shares at the relevant time | |
| “Scheme Shares” | | |
the Pace Shares:
(i)
in issue at the date of the Scheme Circular and which remain in issue at the Scheme Record Time;
(ii)
(if any) issued after the date of the Scheme Circular but before the Voting Record Time and which remain in issue at the Scheme Record Time; and
(iii)
(if any) issued at or after the Voting Record Time but at or before the Scheme Record Time on terms that the holder thereof shall be bound by the Scheme or in respect of which the original or any subsequent holders thereof are, or have agreed in writing to be, bound by the Scheme and, in each case, which remain in issue at the Scheme Record Time
excluding, in any case, any Pace Shares held by or on behalf of New ARRIS or the New ARRIS Group at the Scheme Record Time
|
|
| “SEC” | | | the US Securities and Exchange Commission | |
| “Securities Act” | | | the US Securities Act of 1933, as amended | |
| “Transaction” | | |
the proposed acquisition by New ARRIS of the entire issued and to be issued share capital of each of ARRIS and Pace to be implemented by:
(i)
in the case of ARRIS, the ARRIS Merger; and
(ii)
in the case of Pace, the Merger
|
|
| “Treasury Shares” | | | shares held as treasury shares as defined in section 724(5) of the Companies Act | |
| “UK” or “United Kingdom” | | | the United Kingdom of Great Britain and Northern Ireland | |
| “US Holdco” | | | ARCHIE U.S. Holdings LLC of Corporation Service Company, 2711 Centerville Road, Suite 400, City of Wilmington, County of Newcastle, Delaware 19808 | |
| “US Merger Agreement” | | | the agreement and plan of merger dated 22 April 2015 between US Holdco, US Merger Sub, New ARRIS and ARRIS pursuant to which US Merger Sub shall merge with and into ARRIS | |
| “US Merger Sub” | | | ARCHIE U.S. Merger Sub, LLC of Corporation Service Company, 2711 Centerville Road, Suite 400, City of Wilmington, County of Newcastle, Delaware 19808 | |
| “Voting Record Time” | | | the time and date specified in the Scheme Circular by reference to which entitlement to vote at the Court Meeting will be determined, expected to be 6.00pm (London time (BST)) on the day which is two days before the date of the Court Meeting or if the Court Meeting is adjourned, 6.00pm (London time (BST)) on the day which is two days before such adjourned meeting | |
| “Wider ARRIS Group” | | | any member of the ARRIS Group or any associated undertaking or any company of which 20 per cent. or more of the voting capital is held by the New ARRIS Group or any partnership, joint venture, firm or company in which any member of the ARRIS Group may be interested | |
| “Wider New ARRIS Group” | | | any member of the New ARRIS Group or any associated undertaking or any company of which 20 per cent. or more of the voting capital is held by the New ARRIS Group or any partnership, joint venture, firm or company in which any member of the New ARRIS Group may be interested | |
| “Wider Pace Group” | | | any member of the Pace Group or any associated undertaking or any company of which 20 per cent. or more of the voting capital is held by the Pace Group or any partnership, joint venture, firm or company in which any member of the Pace Group may be interested | |
| | |
Page
|
| |||
| | | | C-3 | | | |
| | | | C-9 | | | |
| | | | C-12 | | | |
| | | | C-14 | | | |
| | | | C-15 | | | |
| | | | C-16 | | | |
| | | | C-16 | | | |
| | | | C-17 | | | |
| | | | C-17 | | | |
| | | | C-18 | | | |
| | | | C-18 | | | |
| | | | C-18 | | | |
| | | | C-19 | | | |
| | | | C-19 | | | |
| | | | C-20 | | | |
| | | | C-21 | | | |
| | | | C-22 | | |
|
Plan
|
| |
Approved
|
| |
Unapproved
|
| |
PSP
|
| |
IPSP
|
| |
DSB
|
| |
UK
Sharesave |
| |
US
Sharesave |
| |
AL
Appointment Award |
| |
Total
Award Shares |
| |||||||||||||||||||||||||||
|
Total Existing Awards
|
| | | | 55,832 | | | | | | 2,465,689 | | | | | | 2,704,162 | | | | | | 3,576,887 | | | | | | 1,577,798 | | | | | | 1,496,731 | | | | | | 419,813 | | | | | | 600,000 | | | | | | 12,896,912 | | |
|
Plan
|
| |
PSP
|
| |
IPSP*
|
| |
DSB
|
| |
Total Award
Shares |
| ||||||||||||
|
Total 2015 Share Awards
|
| | | | 701,325 | | | | | | 1,657,500 | | | | | | 769,085 | | | | | | 3,127,910 | | |
|
UK Sharesave
|
| | | | 275 pence | | | | |
|
446,025
|
| |
|
US Sharesave
|
| | | | 284.07 pence* | | | | |
|
243,164
|
| |
|
|
| |
|
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83. | | | Expenses | | | |
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H1 2015
$m |
| |
H1 2014
$m |
| |
FY 2014
$m |
| |||||||||
STB and Media Servers
|
| | | | 748.4 | | | | | | 893.9 | | | | | | 2,003.5 | | |
Gateways
|
| | | | 105.2 | | | | | | 77.1 | | | | | | 239.7 | | |
Software and Services
|
| | | | 51.9 | | | | | | 54.4 | | | | | | 112.2 | | |
Networks
|
| | | | 173.1 | | | | | | 113.5 | | | | | | 264.6 | | |
Total
|
| | | | 1,078.6 | | | | | | 1,138.9 | | | | | | 2,620.0 | | |
| | |
H1 2015
$m |
| |
H1 2014
$m |
| |
FY 2014
$m |
| |||||||||
North America
|
| | | | 704.9 | | | | | | 699.0 | | | | | | 1,635.6 | | |
Latin America
|
| | | | 155.9 | | | | | | 185.8 | | | | | | 373.2 | | |
Europe
|
| | | | 100.8 | | | | | | 117.1 | | | | | | 291.2 | | |
Rest of World(2)
|
| | | | 117.0 | | | | | | 137.0 | | | | | | 320.0 | | |
Total
|
| | | | 1,078.6 | | | | | | 1,138.9 | | | | | | 2,620.0 | | |
| | |
H1 2015
$m |
| |
H1 2014
$m |
| |
FY2014
$m |
| |||||||||
Revenue
|
| | | | 1,078.6 | | | | | | 1,138.9 | | | | | | 2,620.0 | | |
Gross profit
|
| | | | 250.7 | | | | | | 245.8 | | | | | | 532.5 | | |
Gross margin %
|
| | | | 23.2% | | | | | | 21.6% | | | | | | 20.3% | | |
Adjusted administrative expenses*
|
| | | | (132.7) | | | | | | (139.5) | | | | | | (291.4) | | |
Adjusted EBITA*
|
| | | | 118.0 | | | | | | 106.3 | | | | | | 241.1 | | |
Operating margin**
|
| | | | 10.9% | | | | | | 9.3% | | | | | | 9.2% | | |
Exceptional costs
|
| | | | (5.0) | | | | | | (3.5) | | | | | | (7.3) | | |
Amortisation of other intangible assets
|
| | | | (24.3) | | | | | | (27.7) | | | | | | (52.9) | | |
Net finance expense
|
| | | | (3.6) | | | | | | (3.1) | | | | | | (5.2) | | |
Profit before tax
|
| | | | 85.1 | | | | | | 72.0 | | | | | | 175.7 | | |
Tax credit / (charge)
|
| | | | 0.3 | | | | | | (16.6) | | | | | | (27.7) | | |
Profit after tax
|
| | | | 85.4 | | | | | | 55.4 | | | | | | 148.0 | | |
| | |
H1 2015
$m |
| |
H1 2014
$m |
| |
FY2014
$m |
| |||||||||
Total administrative expenses
|
| | | | 162.0 | | | | | | 170.7 | | | | | | 351.6 | | |
Exceptional costs
|
| | | | (5.0) | | | | | | (3.5) | | | | | | (7.3) | | |
Amortisation of other intangible assets
|
| | | | (24.3) | | | | | | (27.7) | | | | | | (52.9) | | |
Adjusted administrative expenses
|
| | | | 132.7 | | | | | | 139.5 | | | | | | 291.4 | | |
IAS 38 credit / charge:
|
| | | | |||||||||||||||
Capitalisation
|
| | | | 27.3 | | | | | | 34.1 | | | | | | 66.2 | | |
Amortisation
|
| | | | (24.0) | | | | | | (19.7) | | | | | | (45.4) | | |
Underlying operating costs
|
| | | | 136.0 | | | | | | 153.9 | | | | | | 312.2 | | |
| | |
H1 2015
$m |
| |
H1 2014
$m |
| |
FY 2014
$m |
| |||||||||
Revenue | | | | | |||||||||||||||
Pace Americas
|
| | | | 638.2 | | | | | | 675.7 | | | | | | 1,561.6 | | |
Pace International
|
| | | | 267.3 | | | | | | 348.2 | | | | | | 793.8 | | |
Pace Networks
|
| | | | 173.1 | | | | | | 115.0 | | | | | | 264.6 | | |
Other
|
| | | | — | | | | | | — | | | | | | — | | |
Total revenue
|
| | | | 1,078.6 | | | | | | 1,138.9 | | | | | | 2,620.0 | | |
Adjusted EBITA | | | | | |||||||||||||||
Pace Americas
|
| | | | 74.1 | | | | | | 62.6 | | | | | | 150.2 | | |
Pace International
|
| | | | 24.7 | | | | | | 49.0 | | | | | | 88.3 | | |
Pace Networks
|
| | | | 45.3 | | | | | | 16.2 | | | | | | 47.4 | | |
Other
|
| | | | (26.1) | | | | | | (21.5) | | | | | | (44.8) | | |
Total adjusted EBITA
|
| | | | 118.0 | | | | | | 106.3 | | | | | | 241.1 | | |
| | |
H1 2015
$m |
| |
H1 2014
$m |
| |
FY2014
$m |
| |||||||||
Adjusted basic earnings per ordinary share (cents)
|
| | | | 28.4 | | | | | | 25.5 | | | | | | 63.6 | | |
Adjusted diluted earnings per ordinary share (cents)
|
| | | | 27.5 | | | | | | 24.4 | | | | | | 61.2 | | |
| | |
H1 2015
$m |
| |
H1 2014
$m |
| |
FY2014
$m |
| |||||||||
Profit after tax
|
| | | | 85.4 | | | | | | 55.4 | | | | | | 148.0 | | |
Amortisation of other intangible assets
|
| | | | 24.3 | | | | | | 27.7 | | | | | | 52.9 | | |
Tax effect of above
|
| | | | (5.3) | | | | | | (6.4) | | | | | | (8.4) | | |
Exceptional costs
|
| | | | 5.0 | | | | | | 3.5 | | | | | | 7.3 | | |
Tax effect of above
|
| | | | (1.1) | | | | | | (0.8) | | | | | | (1.2) | | |
Adjustment to current tax charge in respect of prior periods
|
| | | | (18.8) | | | | | | — | | | | | | — | | |
Adjusted profit after tax
|
| | | | 89.5 | | | | | | 79.4 | | | | | | 198.6 | | |
| | |
H1 2015
$m |
| |
H1 2014
$m |
| |
FY2014
$m |
| |||||||||
Cash generated from operations
|
| | | | 145.4 | | | | | | 140.8 | | | | | | 291.6 | | |
Tax paid
|
| | | | (12.1) | | | | | | (2.8) | | | | | | (11.5) | | |
Purchase of property, plant and equipment
|
| | | | (9.2) | | | | | | (12.5) | | | | | | (26.0) | | |
Development expenditure
|
| | | | (27.3) | | | | | | (34.3) | | | | | | (66.2) | | |
Net interest paid
|
| | | | (2.9) | | | | | | (2.0) | | | | | | (3.6) | | |
Other acquisition related cash flows
|
| | | | — | | | | | | 19.7 | | | | | | 19.7 | | |
Free cash flow
|
| | | | 93.9 | | | | | | 108.9 | | | | | | 204.0 | | |
| | |
Notes
|
| |
6 months ended
30 June 2015 $m |
| |
6 months ended
30 June 2014 $m |
| |
Year ended
31 December 2014 $m |
| ||||||||||||
Revenue
|
| | | | 2 | | | | | | 1,078.6 | | | | | | 1,138.9 | | | | | | 2,620.0 | | |
Cost of sales
|
| | | | | | | | | | (827.9) | | | | | | (893.1) | | | | | | (2,087.5) | | |
Gross profit
|
| | | | | | | | | | 250.7 | | | | | | 245.8 | | | | | | 532.5 | | |
Administrative expenses: | | | | | | ||||||||||||||||||||
Research and development expenditure
|
| | | | | | | | | | (41.7) | | | | | | (46.4) | | | | | | (83.7) | | |
Amortisation of development expenditure
|
| | | | | | | | | | (24.0) | | | | | | (19.4) | | | | | | (45.4) | | |
Other administrative expenses
|
| | | | | ||||||||||||||||||||
Before exceptional costs
|
| | | | | | | | | | (67.0) | | | | | | (73.7) | | | | | | (162.3) | | |
Exceptional costs
|
| | | | 4 | | | | | | (5.0) | | | | | | (3.5) | | | | | | (7.3) | | |
Amortisation of other intangible assets
|
| | | | | | | | | | (24.3) | | | | | | (27.7) | | | | | | (52.9) | | |
Total administrative expenses
|
| | | | | | | | | | (162.0) | | | | | | (170.7) | | | | | | (351.6) | | |
Operating profit
|
| | | | | | | | | | 88.7 | | | | | | 75.1 | | | | | | 180.9 | | |
Finance income – interest receivable
|
| | | | | | | | | | 0.4 | | | | | | 1.1 | | | | | | 2.5 | | |
Finance expenses – interest payable
|
| | | | | | | | | | (4.0) | | | | | | (4.2) | | | | | | (7.7) | | |
Profit before tax
|
| | | | | | | | | | 85.1 | | | | | | 72.0 | | | | | | 175.7 | | |
Tax credit / (charge)
|
| | | | 3 | | | | | | 0.3 | | | | | | (16.6) | | | | | | (27.7) | | |
Profit for the period
|
| | | | 2 | | | | | | 85.4 | | | | | | 55.4 | | | | | | 148.0 | | |
Profit attributable to: | | | | | | ||||||||||||||||||||
Equity holders of the Company
|
| | | | | | | | | | 85.4 | | | | | | 55.4 | | | | | | 148.0 | | |
Basic earnings per ordinary share (cents)
|
| | | | 5 | | | | | | 27.1 | | | | | | 17.8 | | | | | | 47.4 | | |
Diluted earnings per ordinary share (cents)
|
| | | | 5 | | | | | | 26.3 | | | | | | 17.0 | | | | | | 45.6 | | |
| | |
6 months ended
30 June 2015 $m |
| |
6 months ended
30 June 2014 $m |
| |
Year ended
31 December 2014 $m |
| |||||||||
Profit for the period
|
| | | | 85.4 | | | | | | 55.4 | | | | | | 148.0 | | |
Other comprehensive income: | | | | | |||||||||||||||
Items that are or may be subsequently reclassified to profit or
loss: |
| | | | |||||||||||||||
Exchange differences on translation of foreign operations
|
| | | | (13.9) | | | | | | 6.4 | | | | | | (19.7) | | |
Net change in fair value of cash flow hedges transferred to profit or loss, gross of tax
|
| | | | (8.6) | | | | | | 1.5 | | | | | | 2.3 | | |
Deferred tax adjustment on above
|
| | | | 1.9 | | | | | | (0.3) | | | | | | (0.4) | | |
Effective portion of changes in fair value of cash flow hedges, gross of tax
|
| | | | 3.8 | | | | | | (0.1) | | | | | | 2.7 | | |
Deferred tax adjustment on above
|
| | | | (0.8) | | | | | | — | | | | | | (0.4) | | |
Other comprehensive income for the period, net of tax
|
| | | | (17.6) | | | | | | 7.5 | | | | | | (15.5) | | |
Total comprehensive income for the period
|
| | | | 67.8 | | | | | | 62.9 | | | | | | 132.5 | | |
Attributable to: | | | | | |||||||||||||||
Equity holders of the Company
|
| | | | 67.8 | | | | | | 62.9 | | | | | | 132.5 | | |
| | |
Notes
|
| |
30 June 2015
$m |
| |
30 June 2014
$m |
| |
31 December 2014
$m |
| ||||||||||||||||
ASSETS | | | | | | ||||||||||||||||||||||||
Non-Current Assets | | | | | | ||||||||||||||||||||||||
Property, plant and equipment
|
| | | | | | | | | | 57.8 | | | | | | 65.0 | | | | | | 63.2 | | | ||||
Intangible assets – goodwill
|
| | | | 6 | | | | | | 464.8 | | | | | | 489.4 | | | | | | 471.1 | | | ||||
Intangible assets – other intangibles
|
| | | | 6 | | | | | | 184.2 | | | | | | 233.4 | | | | | | 208.2 | | | ||||
Intangible assets – development expenditure
|
| | | | 6 | | | | | | 87.8 | | | | | | 79.3 | | | | | | 85.0 | | | ||||
Deferred tax assets
|
| | | | | | | | | | 27.5 | | | | | | 42.9 | | | | | | 31.2 | | | ||||
Total Non-Current Assets
|
| | | | | | | | | | 822.1 | | | | | | 910.0 | | | | | | 858.7 | | | ||||
Current Assets | | | | | | ||||||||||||||||||||||||
Inventories
|
| | | | 7 | | | | | | 237.6 | | | | | | 166.3 | | | | | | 168.0 | | | ||||
Trade and other receivables
|
| | | | 8 | | | | | | 582.8 | | | | | | 549.4 | | | | | | 909.1 | | | ||||
Cash and cash equivalents
|
| | | | | | | | | | 254.2 | | | | | | 122.4 | | | | | | 182.1 | | | ||||
Current tax assets
|
| | | | | | | | | | 6.1 | | | | | | 4.2 | | | | | | 4.3 | | | ||||
Total Current Assets
|
| | | | | | | | | | 1,080.7 | | | | | | 842.3 | | | | | | 1,263.5 | | | ||||
Total Assets
|
| | | | | | | | | | 1,902.8 | | | | | | 1,752.3 | | | | | | 2,122.2 | | | ||||
EQUITY | | | | | | ||||||||||||||||||||||||
Issued capital
|
| | | | | | | | | | 29.5 | | | | | | 29.1 | | | | | | 29.1 | | | ||||
Share premium
|
| | | | | | | | | | 86.6 | | | | | | 84.6 | | | | | | 85.1 | | | ||||
Merger reserve
|
| | | | | | | | | | 109.9 | | | | | | 109.9 | | | | | | 109.9 | | | ||||
Hedging reserve
|
| | | | | | | | | | 0.3 | | | | | | 0.9 | | | | | | 4.0 | | | ||||
Translation reserve
|
| | | | | | | | | | (93.2) | | | | | | (53.2) | | | | | | (79.3) | | | ||||
Retained earnings
|
| | | | | | | | | | 595.6 | | | | | | 430.6 | | | | | | 518.3 | | | ||||
Total Equity
|
| | | | | | | | | | 728.7 | | | | | | 601.9 | | | | | | 667.1 | | | ||||
LIABILITIES | | | | | | ||||||||||||||||||||||||
Non-Current Liabilities | | | | | | ||||||||||||||||||||||||
Deferred tax liabilities
|
| | | | | | | | | | 83.9 | | | | | | 96.4 | | | | | | 89.7 | | | ||||
Provisions
|
| | | | 11 | | | | | | 85.6 | | | | | | 83.7 | | | | | | 100.6 | | | ||||
Borrowings
|
| | | | 12 | | | | | | 215.1 | | | | | | 256.7 | | | | | | 237.8 | | | ||||
Total Non-Current Liabilities
|
| | | | | | | | | | 384.6 | | | | | | 436.8 | | | | | | 428.1 | | | ||||
Current Liabilities | | | | | | ||||||||||||||||||||||||
Trade and other payables
|
| | | | 9 | | | | | | 704.1 | | | | | | 615.5 | | | | | | 934.6 | | | ||||
Current tax liabilities
|
| | | | | | | | | | 10.7 | | | | | | 30.9 | | | | | | 23.5 | | | ||||
Provisions
|
| | | | 11 | | | | | | 33.3 | | | | | | 33.9 | | | | | | 31.5 | | | ||||
Borrowings
|
| | | | 12 | | | | | | 41.4 | | | | | | 33.3 | | | | | | 37.4 | | | ||||
Total Current Liabilities
|
| | | | | | | | | | 789.5 | | | | | | 713.6 | | | | | | 1,027.0 | | | ||||
Total Liabilities
|
| | | | | | | | | | 1,174.1 | | | | | | 1,150.4 | | | | | | 1,455.1 | | | ||||
Total Equity and Liabilities
|
| | | | | | | | | | 1,902.8 | | | | | | 1,752.3 | | | | | | 2,122.2 | | | ||||
|
| | |
Share
capital $m |
| |
Share
premium $m |
| |
Merger
reserve $m |
| |
Hedging
Reserve $m |
| |
Translation
reserve $m |
| |
Retained
earnings $m |
| |
Total
equity $m |
| ||||||||||||||||||||||||||||
Balance at January 2014
|
| | | | 29.0 | | | | | | 83.7 | | | | | | 109.9 | | | | | | (0.2) | | | | | | (59.6) | | | | | | 384.2 | | | | | | 547.0 | | | |||||||
Profit for the period
|
| | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | 55.4 | | | | | | 55.4 | | | |||||||
Other comprehensive income
|
| | | | — | | | | | | — | | | | | | — | | | | | | 1.1 | | | | | | 6.4 | | | | | | — | | | | | | 7.5 | | | |||||||
Total comprehensive income for the period
ended June 2014 |
| | | | — | | | | | | — | | | | | | — | | | | | | 1.1 | | | | | | 6.4 | | | | | | 55.4 | | | | | | 62.9 | | | |||||||
Transactions with owners: | | | | | | | | | ||||||||||||||||||||||||||||||||||||||||||
Dividends to equity shareholders
|
| | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | (11.7) | | | | | | (11.7) | | | |||||||
Employee share incentive charges
|
| | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | 2.7 | | | | | | 2.7 | | | |||||||
Issue of shares
|
| | | | 0.1 | | | | | | 0.9 | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | 1.0 | | | |||||||
Balance at June 2014
|
| | | | 29.1 | | | | | | 84.6 | | | | | | 109.9 | | | | | | 0.9 | | | | | | (53.2) | | | | | | 430.6 | | | | | | 601.9 | | | |||||||
Profit for the period
|
| | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | 92.6 | | | | | | 92.6 | | | |||||||
Other comprehensive income
|
| | | | — | | | | | | — | | | | | | — | | | | | | 3.1 | | | | | | (26.1) | | | | | | — | | | | | | (23.0) | | | |||||||
Total comprehensive income for the period
ended December 2014 |
| | | | — | | | | | | — | | | | | | — | | | | | | 3.1 | | | | | | (26.1) | | | | | | 92.6 | | | | | | 69.6 | | | |||||||
Transactions with owners: | | | | | | | | | ||||||||||||||||||||||||||||||||||||||||||
Dividends to equity shareholders
|
| | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | (7.0) | | | | | | (7.0) | | | |||||||
Employee share incentive charges
|
| | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | 3.8 | | | | | | 3.8 | | | |||||||
Issue of shares
|
| | | | — | | | | | | 0.5 | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | 0.5 | | | |||||||
Purchase of own shares by employee benefit trust
|
| | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | (1.7) | | | | | | (1.7) | | | |||||||
Balance at December 2014
|
| | | | 29.1 | | | | | | 85.1 | | | | | | 109.9 | | | | | | 4.0 | | | | | | (79.3) | | | | | | 518.3 | | | | | | 667.1 | | | |||||||
Profit for the period
|
| | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | 85.4 | | | | | | 85.4 | | | |||||||
Other comprehensive income
|
| | | | — | | | | | | — | | | | | | — | | | | | | (3.7) | | | | | | (13.9) | | | | | | — | | | | | | (17.6) | | | |||||||
Total comprehensive income for the period
ended June 2015 |
| | | | — | | | | | | — | | | | | | — | | | | | | (3.7) | | | | | | (13.9) | | | | | | 85.4 | | | | | | 67.8 | | | |||||||
Transactions with owners: | | | | | | | | | ||||||||||||||||||||||||||||||||||||||||||
Dividends to equity shareholders
|
| | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | (15.1) | | | | | | (15.1) | | | |||||||
Employee share incentive charges
|
| | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | 5.0 | | | | | | 5.0 | | | |||||||
Tax credit relating to share option schemes
|
| | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | 2.0 | | | | | | 2.0 | | | |||||||
Issue of shares
|
| | | | 0.4 | | | | | | 1.5 | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | 1.9 | | | |||||||
Balance at June 2015
|
| | | | 29.5 | | | | | | 86.6 | | | | | | 109.9 | | | | | | 0.3 | | | | | | (93.2) | | | | | | 595.6 | | | | | | 728.7 | | | |||||||
|
| | |
6 months ended
30 June 2015 $m |
| |
6 months ended
30 June 2014 $m |
| |
Year ended
31 December 2014 $m |
| ||||||||||||
Cash flows from operating activities | | | | | ||||||||||||||||||
Profit before tax
|
| | | | 85.1 | | | | | | 72.0 | | | | | | 175.7 | | | |||
Adjustments for: | | | | | ||||||||||||||||||
Share based payments charge
|
| | | | 5.0 | | | | | | 2.7 | | | | | | 6.5 | | | |||
Depreciation of property, plant and equipment
|
| | | | 13.5 | | | | | | 14.4 | | | | | | 29.0 | | | |||
Amortisation of development expenditure
|
| | | | 24.0 | | | | | | 19.4 | | | | | | 45.4 | | | |||
Amortisation of other intangible assets
|
| | | | 24.3 | | | | | | 27.7 | | | | | | 52.9 | | | |||
Loss on sale of property, plant and equipment
|
| | | | — | | | | | | — | | | | | | 0.1 | | | |||
Net finance expense
|
| | | | 3.6 | | | | | | 3.1 | | | | | | 5.2 | | | |||
Movement in trade and other receivables
|
| | | | 301.6 | | | | | | (18.6) | | | | | | (383.4) | | | |||
Movement in trade and other payables
|
| | | | (231.8) | | | | | | 1.9 | | | | | | 329.2 | | | |||
Movement in inventories
|
| | | | (75.3) | | | | | | 33.4 | | | | | | 31.7 | | | |||
Movement in provisions
|
| | | | (4.6) | | | | | | (15.2) | | | | | | (0.7) | | | |||
Cash generated from operations
|
| | | | 145.4 | | | | | | 140.8 | | | | | | 291.6 | | | |||
Interest paid
|
| | | | (3.3) | | | | | | (3.1) | | | | | | (6.1) | | | |||
Tax paid
|
| | | | (12.1) | | | | | | (2.8) | | | | | | (11.5) | | | |||
Net cash generated from operating activities
|
| | | | 130.0 | | | | | | 134.9 | | | | | | 274.0 | | | |||
Cash flows from investing activities | | | | | ||||||||||||||||||
Acquisition of subsidiaries, net of cash acquired
|
| | | | (4.3) | | | | | | (295.3) | | | | | | (295.3) | | | |||
Purchase of property, plant and equipment
|
| | | | (9.2) | | | | | | (12.5) | | | | | | (26.0) | | | |||
Development expenditure
|
| | | | (27.3) | | | | | | (34.3) | | | | | | (66.2) | | | |||
Interest received
|
| | | | 0.4 | | | | | | 1.1 | | | | | | 2.5 | | | |||
Net cash used in investing activities
|
| | | | (40.4) | | | | | | (341.0) | | | | | | (385.0) | | | |||
Cash flows from financing activities | | | | | ||||||||||||||||||
Proceeds from external borrowings
|
| | | | — | | | | | | 310.0 | | | | | | 310.0 | | | |||
Repayment of external borrowings
|
| | | | (19.4) | | | | | | (15.5) | | | | | | (31.0) | | | |||
Proceeds from issue of share capital
|
| | | | 1.9 | | | | | | 1.0 | | | | | | 1.5 | | | |||
Dividend paid
|
| | | | — | | | | | | — | | | | | | (18.7) | | | |||
Purchase of own shares by employee benefit trust
|
| | | | — | | | | | | — | | | | | | (1.7) | | | |||
Net cash (used in) / generated from financing activities
|
| | | | (17.5) | | | | | | 295.5 | | | | | | 260.1 | | | |||
Net change in cash and cash equivalents
|
| | | | 72.1 | | | | | | 89.4 | | | | | | 149.1 | | | |||
Cash and cash equivalents at the start of the period
|
| | | | 182.1 | | | | | | 33.0 | | | | | | 33.0 | | | |||
Cash and cash equivalents at the end of the period
|
| | | | 254.2 | | | | | | 122.4 | | | | | | 182.1 | | | |||
|
6 months ended 30 June 2015
|
| |
Pace
Americas $m |
| |
Pace
International $m |
| |
Pace
Networks $m |
| |
Other
$m |
| |
Total
$m |
| ||||||||||||||||||||
Segmental income statement | | | | | | | ||||||||||||||||||||||||||||||
Revenues
|
| | | | 638.2 | | | | | | 267.3 | | | | | | 173.1 | | | | | | — | | | | | | 1,078.6 | | | |||||
Adjusted EBITA
|
| | | | 74.1 | | | | | | 24.7 | | | | | | 45.3 | | | | | | (26.1) | | | | | | 118.0 | | | |||||
Exceptional costs
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | | (5.0) | | | |||||
Amortisation of other intangible assets
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | | (24.3) | | | |||||
Net interest payable
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | | (3.6) | | | |||||
Tax credit
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | | 0.3 | | | |||||
Profit for the period
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | | 85.4 | | | |||||
|
6 months ended 30 June 2014
|
| |
Pace
Americas $m |
| |
Pace
International $m |
| |
Pace
Networks $m |
| |
Other
$m |
| |
Total
$m |
| ||||||||||||||||||||
Segmental income statement | | | | | | | ||||||||||||||||||||||||||||||
Revenues
|
| | | | 675.7 | | | | | | 348.2 | | | | | | 115.0 | | | | | | — | | | | | | 1,138.9 | | | |||||
Adjusted EBITA
|
| | | | 62.6 | | | | | | 49.0 | | | | | | 16.2 | | | | | | (21.5) | | | | | | 106.3 | | | |||||
Exceptional costs
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | | (3.5) | | | |||||
Amortisation of other intangible assets
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | | (27.7) | | | |||||
Net interest payable
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | | (3.1) | | | |||||
Tax charge
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | | (16.6) | | | |||||
Profit for the period
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | | 55.4 | | | |||||
|
Year ended 31 December 2014
|
| |
Pace
Americas $m |
| |
Pace
International $m |
| |
Pace
Networks $m |
| |
Other
$m |
| |
Total
$m |
| ||||||||||||||||||||
Segmental income statement | | | | | | | ||||||||||||||||||||||||||||||
Revenues
|
| | | | 1,561.6 | | | | | | 793.8 | | | | | | 264.6 | | | | | | — | | | | | | 2,620.0 | | | |||||
Adjusted EBITA
|
| | | | 150.2 | | | | | | 88.3 | | | | | | 47.4 | | | | | | (44.8) | | | | | | 241.1 | | | |||||
Exceptional costs
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | | (7.3) | | | |||||
Amortisation of other intangible assets
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | | (52.9) | | | |||||
Net interest payable
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | | (5.2) | | | |||||
Tax charge
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | | (27.7) | | | |||||
Profit for the period
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | | 148.0 | | | |||||
|
Revenue by destination
|
| |
6 months ended
30 June 2015 $m |
| |
6 months ended
30 June 2014 $m |
| |
Year ended
31 December 2014 $m |
| ||||||||||||
North America
|
| | | | 704.9 | | | | | | 699.0 | | | | | | 1,635.6 | | | |||
Latin America
|
| | | | 155.9 | | | | | | 185.8 | | | | | | 373.2 | | | |||
Europe
|
| | | | 100.8 | | | | | | 117.1 | | | | | | 291.2 | | | |||
Rest of World
|
| | | | 117.0 | | | | | | 137.0 | | | | | | 320.0 | | | |||
| | | | | 1,078.6 | | | | | | 1,138.9 | | | | | | 2,620.0 | | | |||
|
| | |
6 months ended
30 June 2015 $m |
| |
6 months ended
30 June 2014 $m |
| |
Year ended
31 December 2014 $m |
| ||||||||||||
Set-top boxes and Media Servers
|
| | | | 748.4 | | | | | | 893.9 | | | | | | 2,003.5 | | | |||
Gateways
|
| | | | 105.2 | | | | | | 77.1 | | | | | | 239.7 | | | |||
Software and Services
|
| | | | 51.9 | | | | | | 54.4 | | | | | | 112.2 | | | |||
Networks
|
| | | | 173.1 | | | | | | 113.5 | | | | | | 264.6 | | | |||
| | | | | 1,078.6 | | | | | | 1,138.9 | | | | | | 2,620.0 | | | |||
|
| | |
6 months ended
30 June 2015 $m |
| |
6 months ended
30 June 2014 $m |
| |
Year ended
31 December 2014 $m |
| ||||||||||||
Current tax charge | | | | | ||||||||||||||||||
Charge for the period
|
| | | | 13.8 | | | | | | 19.2 | | | | | | 31.9 | | | |||
Adjustment in respect of prior periods
|
| | | | (10.7) | | | | | | — | | | | | | (4.1) | | | |||
Total current tax charge
|
| | | | 3.1 | | | | | | 19.2 | | | | | | 27.8 | | | |||
Deferred tax charge / (credit) | | | | | ||||||||||||||||||
Origination and reversal of temporary differences in the current period
|
| | | | 4.7 | | | | | | (2.6) | | | | | | (1.9) | | | |||
Adjustment in respect of prior periods
|
| | | | (8.1) | | | | | | — | | | | | | 1.8 | | | |||
Total deferred tax charge / (credit)
|
| | | | (3.4) | | | | | | (2.6) | | | | | | (0.1) | | | |||
Total tax charge / (credit)
|
| | | | (0.3) | | | | | | 16.6 | | | | | | 27.7 | | | |||
|
| | |
6 months ended
30 June 2015 $m |
| |
6 months ended
30 June 2014 $m |
| |
Year ended
31 December 2014 $m |
| ||||||||||||
ARRIS Group combination costs
|
| | | | 2.8 | | | | | | — | | | | | | — | | | |||
Restructuring and reorganisation costs
|
| | | | 1.3 | | | | | | 0.7 | | | | | | 1.5 | | | |||
Aborted acquisition costs
|
| | | | 0.9 | | | | | | — | | | | | | — | | | |||
Acquisition and integration costs
|
| | | | — | | | | | | 2.8 | | | | | | 5.8 | | | |||
| | | | | 5.0 | | | | | | 3.5 | | | | | | 7.3 | | | |||
|
| | |
Goodwill
$m |
| |
Development
Expenditure $m |
| |
Customer
contracts and relationships $m |
| |
Technology
and patents $m |
| |
Other
$m |
| |
Other
intangibles $m |
| ||||||||||||||||||||||||
Cost | | | | | | | | ||||||||||||||||||||||||||||||||||||
At 31 December 2014
|
| | | | 471.1 | | | | | | 167.8 | | | | | | 194.3 | | | | | | 239.8 | | | | | | 10.9 | | | | | | 445.0 | | | ||||||
Additions
|
| | | | — | | | | | | 27.3 | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | ||||||
Exchange adjustments
|
| | | | (6.3) | | | | | | (0.5) | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | ||||||
At 30 June 2015
|
| | | | 464.8 | | | | | | 194.6 | | | | | | 194.3 | | | | | | 239.8 | | | | | | 10.9 | | | | | | 445.0 | | | ||||||
Amortisation | | | | | | | | ||||||||||||||||||||||||||||||||||||
At 31 December 2014
|
| | | | — | | | | | | 82.8 | | | | | | 95.8 | | | | | | 133.2 | | | | | | 7.8 | | | | | | 236.8 | | | ||||||
Provided in the period
|
| | | | — | | | | | | 24.0 | | | | | | 7.4 | | | | | | 16.8 | | | | | | 0.1 | | | | | | 24.3 | | | ||||||
Exchange adjustments
|
| | | | — | | | | | | — | | | | | | (0.2) | | | | | | (0.1) | | | | | | — | | | | | | (0.3) | | | ||||||
At 30 June 2015
|
| | | | — | | | | | | 106.8 | | | | | | 103.0 | | | | | | 149.9 | | | | | | 7.9 | | | | | | 260.8 | | | ||||||
Net book value at 31 December 2014
|
| | | | 471.1 | | | | | | 85.0 | | | | | | 98.5 | | | | | | 106.6 | | | | | | 3.1 | | | | | | 208.2 | | | ||||||
Net book value at 30 June 2015
|
| | | | 464.8 | | | | | | 87.8 | | | | | | 91.3 | | | | | | 89.9 | | | | | | 3.0 | | | | | | 184.2 | | | ||||||
|
| | |
As at
30 June 2015 $m |
| |
As at
30 June 2014 $m |
| |
As at
31 December 2014 $m |
| ||||||||||||
Raw materials and consumable stores
|
| | | | 37.7 | | | | | | 24.7 | | | | | | 38.3 | | | |||
Work-in-progress
|
| | | | 1.0 | | | | | | 4.0 | | | | | | — | | | |||
Finished goods
|
| | | | 198.9 | | | | | | 137.6 | | | | | | 129.7 | | | |||
| | | | | 237.6 | | | | | | 166.3 | | | | | | 168.0 | | | |||
|
| | |
As at
30 June 2015 $m |
| |
As at
30 June 2014 $m |
| |
As at
31 December 2014 $m |
| ||||||||||||
Trade receivables
|
| | | | 530.1 | | | | | | 513.0 | | | | | | 843.2 | | | |||
Other receivables
|
| | | | 41.5 | | | | | | 26.3 | | | | | | 57.0 | | | |||
Prepayments and accrued income
|
| | | | 11.2 | | | | | | 10.1 | | | | | | 8.9 | | | |||
| | | | | 582.8 | | | | | | 549.4 | | | | | | 909.1 | | | |||
|
| | |
As at
30 June 2015 $m |
| |
As at
30 June 2014 $m |
| |
As at
31 December 2014 $m |
| ||||||||||||
Trade payables
|
| | | | 615.4 | | | | | | 508.9 | | | | | | 825.4 | | | |||
Social security and other taxes
|
| | | | 5.8 | | | | | | 3.0 | | | | | | 3.2 | | | |||
Other payables
|
| | | | 12.1 | | | | | | 12.3 | | | | | | 19.1 | | | |||
Accruals and deferred income
|
| | | | 70.8 | | | | | | 91.3 | | | | | | 86.9 | | | |||
| | | | | 704.1 | | | | | | 615.5 | | | | | | 934.6 | | | |||
|
| | |
Royalties under
negotiation $m |
| |
Warranties
$m |
| |
Other
$m |
| |
Total
$m |
| ||||||||||||||||
At 31 December 2014
|
| | | | 49.9 | | | | | | 59.5 | | | | | | 22.7 | | | | | | 132.1 | | | ||||
Charge for the period
|
| | | | 4.1 | | | | | | 16.0 | | | | | | — | | | | | | 20.1 | | | ||||
Utilised
|
| | | | (3.8) | | | | | | (11.5) | | | | | | (13.1) | | | | | | (28.4) | | | ||||
Transfer
|
| | | | — | | | | | | 0.6 | | | | | | (0.7) | | | | | | (0.1) | | | ||||
Unused amounts reversed
|
| | | | (1.4) | | | | | | (1.4) | | | | | | (0.1) | | | | | | (2.9) | | | ||||
Exchange adjustments
|
| | | | (0.9) | | | | | | (0.8) | | | | | | (0.2) | | | | | | (1.9) | | | ||||
At 30 June 2015
|
| | | | 47.9 | | | | | | 62.4 | | | | | | 8.6 | | | | | | 118.9 | | | ||||
Due within one year
|
| | | | — | | | | | | 27.1 | | | | | | 6.2 | | | | | | 33.3 | | | ||||
Due after more than one year
|
| | | | 47.9 | | | | | | 35.3 | | | | | | 2.4 | | | | | | 85.6 | | | ||||
|
| | |
As at
30 June 2015 $m |
| |
As at
30 June 2014 $m |
| |
As at
31 December 2014 $m |
| ||||||||||||
Non-current liabilities | | | | | ||||||||||||||||||
Bank term loans
|
| | | | 215.1 | | | | | | 256.7 | | | | | | 237.8 | | | |||
Total
|
| | | | 215.1 | | | | | | 256.7 | | | | | | 237.8 | | | |||
Current liabilities | | | | | ||||||||||||||||||
Bank term loans
|
| | | | 41.4 | | | | | | 33.3 | | | | | | 37.4 | | | |||
Bank revolving credit facility
|
| | | | — | | | | | | — | | | | | | — | | | |||
Total
|
| | | | 41.4 | | | | | | 33.3 | | | | | | 37.4 | | | |||
|