Television set-top box firm Pace Micro Technology today said profits were ahead of target after a surge in demand from high definition viewers.

Pace, of Saltaire, Shipley, benefited from strong take-up of boxes linked to the HD technology in the United States, where it has long-term relationships with a number of the leading pay-TV operators including DirecTV and Comcast. As a result, it said it expected profits for the financial year just ended to be slightly ahead of current market expectations.

Yesterday's update, which lifted Pace's share price by two per cent, builds on upbeat comments in February when it said it had "turned the corner".

Delays in launching new products for the American market left its previous set of full-year figures in the red at £15.6 million. Ahead of yesterday's update, ABN Amro had been expecting profits of about £5 million.

Pace said it was the first to market with new technologies such as MPEG-4 compression, which is enabling operators to push ahead with their HD launches.

With a eight million such boxes due to be installed in Europe by 2010, the company said it was well placed to benefit from its early investment. The company added: "Common to all Pace markets, most importantly the US, is growing consumer demand for high definition products, in particular HD personal video recorders, following rapid growth in sales of HD-ready flat panel televisions and expanding HD content."