Pace hit by digital collapse

Troubled TV set-top boxes maker Pace Micro Technology today revealed that it swung from pre-tax profits of £38.1 million to losses of £29.5 million in the year to 1 June after taking exceptional charges of £39.9 million. The exceptional items included a provision of £17.5 million because the Pace Employee Benefits Trust is unable to repay a loan from the company to buy shares to fulfil employee options.

It also included a £17.5 million write-off against the remaining value of the group's investment in Vega-Stream, a digital internet protocol voice system, and £4.9 million to cover the cost of cutting staff by a fifth.

Before exceptionals, tax and amortisation, Pace's profits plunged from £44.3 million to £13.1 million on turnover down 33% at £352 million. This highlighted how much prices for set-top boxes fell, as unit sales were only 19% lower at 2.2 million.

Pace has issued three profit warnings in four months, the latest after it signed a new contract with BSkyB for its personal video recorders involving some being sold below cost price. It said this would knock £1.7 million from last year's profits and £8 million from this year's.

Chief executive Malcolm Miller said: "Turbulent conditions in the broadcasting market have caused delay and disappointment. For the longer term Pace is well positioned for growth as and when the market allows."