Profile: Stuart Hall, CFO of PACE

After a hard day at the coalface of the finance function or in the hallowed
halls of a City practice, it’s a fair bet that you’ll want to watch your
favourite TV channel.

Chances are the set-top box which allows you access ­ and also the high
definition source that may nestle close to it ­ were made at PACE’s Yorkshire
headquarters, under the watchful financial gaze of CFO Stuart Hall. He joined
the fast-moving company 15 months ago and hasn’t sat still.

PACE, once UK’s largest consumer electronics business, and now the third
biggest set-top box maker, has just doubled the size of its operations. The
company turned over almost £400m in seven months, but has set it sights on
reaching £800m after acquiring the set-top box division of Dutch company
Philips. But this is just tip of the digital iceberg.

The company decided to change its year-end from May to December in 2007. At
one stage it faced the prospect of turning out three external statements in just
two months and dealing with two outside audits while trying to rubber-stamp a
massive acquisition ­ a ‘horrible potential process,’ says Hall.

PACE ended up going for broke and set about doing all seven months’ reporting
by the end of January. ‘Bearing in mind we had to do the due diligence for the
Philips deal, to do the interims for the six months to November and the full
year to the end of December, and get it all audited and published by the end of
January was a fantastic result. I’m actually the same age in two sets of annual
reports, so I like to think that I’ve found the secret to eternal life,’ he

Hall’s mindset says that a month-end can be done pretty quickly with the
right processes in place and ‘a year-end is just a bit of a tougher month-end’.
Of course, there are other factors that have to be addressed. ‘You have a load
of auditors inconveniencing you, and that’s a bit of a problem.’

PACE seems to have all its ducks in a row, but this doesn’t stop its FD being
riled at how the accounting firms his company deals with look to protect
themselves from the threat of litigation. ‘The most disappointing thing is the
over-regulation,’ says Hall. He reckons accounting firms’ worry that they will
be hauled over the coals means they have become incredibly difficult to deal

‘They are the ones with most disclaimers, the largest engagement letter, the
hardest person to engage, those who accept no responsibility for anything they
do and charge the biggest fees. It used to be the lawyers, but not any more,’ he

He stresses that advisers that have worked with PACE have done a good job
[KPMG audits the company]. But Hall says that with all of the rules and
regulations that are supposed to be there for support, ‘the accountants don’t
take responsibility for anything. Forget the liability caps ­ they’re not liable
for anything. There’s no point having the caps if they’re not liable in the
first place.’

PACE posted revenues of £386m in the seven months to 31 December compared
with £250m for the previous financial year, helped by takings of £62m in the
final month of 2007. Its main base is in the UK, with 450 staff, with operations
in France, the US and India.

Half its revenues are now generated in the US and France, but the effective
corporate tax rate is 33% in France and higher in the US so PACE, unlike some
disgruntled companies, favours the UK’s tax regime from a tax planning point of

It has taken a major effort to get PACE into its current position, but its FD
is no stranger to hard graft. He’s right to say he trained to become an
accountant in a ‘very, very unusual way’. He left school at 16 and had a
succession of summer jobs, one of which brought him into contact with
accountants. After talking to an audit partner of BDO Binder Hamlyn, the firm
offered a foundation course in accountancy which he thought would be a
springboard into banking or finance.

‘I sort of fell into it really and I had no real desire to become an
accountant.’ But after his three-year foundation course he was blocked from
taking the fast-track because the ICAEW refused to budge from its strict

‘It was a bit frustrating because I was forced to do another four years of
articles because I was ineligible for the conversion course. I passed my P1s
first time but had to wait two and a half years years to take my P2s. Being as
flexible as the ICAEW are, bless them, they said “no, you can’t take them
early”. I ended up doing seven years’ qualifying at accountancy firms compared
with the standard three.’

Practice wasn’t for Hall but it gave him an invaluable insight into the
workings of public companies. His interest has always been in how companies make
money and how to make the numbers really reflect the company, rather than a just
a back office set of accounting. ‘Practice wasn’t my bag of tricks, I just
wanted to get my hands on a business.’

In one of life’s strange twists of fate, the first company he joined at 24
was the manufacturer that made PACE’s set-top boxes.

Within four months he was promoted to FC from financial accountant. ‘It was
one of those “just get on with it” situations. You’ve really got to learn on the

Only a year later Hall made the step up to FD and set about righting the
parlous state of the finance function and the business. He put the whole
company, its operations and how they dovetailed under the microscope, and ended
up overhauling the business process.

‘It’s what I call “stating the bleeding obvious,” but it’s not obvious to
It’s about how you relate the numbers to the activity, rather than just numbers
for numbers’ sake.’

He joined PACE 15 months ago and has stuck to the same philosophy. ‘That sort
of outlook is how I look at any business,’ he says. ‘I tell my people I don’t
want to see them for half the time. They should be out in the business, not just
producing numbers. They’ve got to be out there. If they don’t understand the
business how can they prepare the numbers?’

Despite cutting his teeth in accountancy at Binder Hamlyn, Hall’s response to
the question of hiring a mid-tier auditor is an emphatic ‘no’. This, he says, is
down to the number of services PACE requires and the geographical spread of its

The company needs a lot of tax advice because of its dealings in Asia,
Malaysia, Turkey and South Africa. ‘We need worldwide coverage from our advisers
to do that. There’s a big difference between a truly worldwide firm and a firm
that says it has offices around the world.’

Hall believes the modern FD’s job has changed beyond all recognition. ‘The
modern FD role is very strange [compared to days gone by]. It’s about bringing
the numbers to life rather than just accounting and doing the old school and
telling everyone how crap
and over-budget they are,’ he says in typically direct style.

With the popularity of high definition hardware and personal video recording,
such as Sky Plus, still in the fledgeling stages, Hall believes the only way is
up for PACE.

‘PVR still hasn’t taken off properly so it’s a huge market. Analogue
switch-off is coming, so it’s a great opportunity. PACE will never be a company
where you get it right and then play golf three times a week. Electronics is
very fast moving. You have to continually innovate.’

Hall’s view on . . .

IFRS and standard setters

‘The standards that are coming in now are more business related and relevant.
The issue is that the standard setters are trying to simplify things and they
are not. They are trying to standardise things but they’re actually opening up
more doors because they’re moving towards the valuation model ­ there’s a 100
different ways of valuing something, so in a way it brings in more

Deferred tax rules

‘It’s apparently there to help smooth the tax charge. When PACE made a loss
in 2006, we got a tax charge and we made a profit in which we got a tax credit ­
how do you explain that? The standard was brought into equalise out timings and
movements but I don’t think it’s achieved that.’


‘My one pet hate is the segmental reporting. One problem of being a public
company which is stand-alone and autonomous is the amount of disclosures and the
potential harm that can do your business.’


‘Reading a set of accounts is very tough going and getting to the key point
is far too difficult. The average investor has no chance unless they stick to
the original P&L. At the end of the day it’s about revenues, margins,
overhead and profit and cashflow. I
don’t understand some of the information that’s supposed to come in and help.
And if I don’t get it, the average investor has got no chance.’

Related reading