Net TV 'to overtake PC'

Malcolm Miller and John Dyson show off some Pace products

Television set-top box maker Pace Micro Technology has seen its profits leap as a result of the enthusiastic take-up of digital services in the UK.

It said the UK was the fastest growing market in the world for digital television, prompted by competition between satellite, terrestrial and cable broadcasters.

During the year it sold more than two million digital decoder boxes - up 146% on the previous year.

The group predicted that by the end of this year there would be more UK homes "connected to the outside world" by digital television than by personal computer.

In the UK, which accounts for 92% of its business, it supplies BSkyB, CWC, Kingston Communications, NTL, OnDigital and Telewest.

Video on demand

Its overseas business is expected to grow as a result of its orders from Time Warner Cable and Comcast Cable Communications.

Pace Micro predicted the market would stay strong - this year it expects a total of 20 million digital set-top boxes to be installed around the world.

It expects this figure to have leapt to 80 million by 2005.

Chief Executive Malcolm Miller said Pace supplied half the decoders in Britain.

It calls its products "digital home gateways" to reflect plans to turn them into the main channel for a whole array of digital services - television, video on demand and internet.

For the year to 3 June it reported a leap in pre-tax profits to £24m from £15.1m last time. Turnover was £377.6m, up from £182.8m.

Shareholders in the group will be paid a total dividend of 0.9p, up from 0.75p last time.

But despite the upbeat results, Pace shares, which have outperformed their sector by 40% this year, plunged 7% to 906.5p by lunchtime.

Analysts said the fall was due to the announcement that two directors were selling off £120m worth of shares, or 6% of the company.