Peter Morgan, chairman, who announced flat pre-tax profits of pounds 18m for the year to May, said: "There is a delay of the digital wonderland, but it's no less certain to arrive."
He added that business had slowed in the second half of the year as a slight increase in the number of people buying digital set-top boxes failed to compensate for a decline in sales of analogue boxes. Pace makes the decoders and receivers needed to unscramble satellite, cable and digital terrestrial television signals.
Mr Morgan also admitted that, despite winning a contract to develop set- top boxes for British Interactive Broadcasting, the interactive television company recently formed by BSkyB, BT, Matsushita and Midland Bank, Pace had not yet been informed how many boxes it would have to supply.
Pace said it had been hampered by consumers who had decided to wait until the launch of digital services instead of buying analogue boxes. Meanwhile, the company had suffered from a lower than expected subscriber take-up in countries where digital television was already up and running.
Analogue box sales were pounds 32m in the second half of the year, down from pounds 53m in the first half. Digital box sales only accounted for sales worth pounds 70m in the second half, marginally up on pounds 65m in the first half.
The lower than anticipated demand led to 29 redundancies this year out of a workforce of 1,000.
Shares in Pace closed down 9.5p at 53.5p.