Digital TV boosts profits at Pace

Pace Technology, the fast-growing satellite receiving equipment manufacturer, is one of four or five companies on a shortlist to supply digital television set-top boxes for BSkyB's planned digital satellite service, it emerged yesterday.

The contract would give Pace an added boost in the digital television market - already responsible for more than half of the company's sales by value.

The news emerged as Pace announced pre-tax profits of pounds 18.2m, up 442 per cent year on year, on the strength of its first foray into the manufacture of set-top boxes for digital television.

It is supplying big broadcasters in Australia, Italy, the Middle East, South Africa, Thailand, the Netherlands and Indonesia. Sales rose by 96 per cent to pounds 196m, with margins staying relatively steady at just over 23 per cent.

Barry Rubery, joint chief executive, said the results were in line with expectations, "and reflect the step change in profits following the launch of our digital product last summer".

He added that Pace's business plan did not include any reliance on digital sales in the UK, and that the introduction of BSkyB's digital satellite service from 1997 would be in addition to expected sales from European and Third World markets.

The company is also in late-stage negotiations with several US cable companies about supplying a digital cable set-top box. This could be introduced in the UK if the cable industry elects to follow BSkyB into the digital market.

Pace is already working on two digital cable field trials in the UK, with two large operators, including Telewest, the market leader.

Mr Rubery said that the company's expansion would be based on finding the right "strategic partners" in different markets, to ensure that Pace incorporated the conditional access technology likely to win consumer favour.

A deal with General Instruments, a leading set-top box manufacturer, has been rumoured, although Mr Rubery declined to comment. A deal with BSkyB would boost Pace's digital roll-out world-wide.