Policy Master has reported a 37% increase in operating profits from £411,000 to £534,000 for the first half of the year on the back of news that the company's first digital television application was almost complete.

Turnover was up to £7.7m from £5m in 1998 while gross profit also increased from £2.2m to £3m.

The year also included two major acquisitions by the software house, one of specialist medical insurance package Mediquote, the other being Media Maker.

Policy Master chief executive Steve Verrall said he expected the coming year to produce similar results, but repeated warnings to brokers that they risk being left behind by the internet.

Verrall said: "It hasn't dawned on brokers the impact of e-commerce – some of the analysts' figures are incredible. UK spend on the e-commerce was over a billion this year, but it is expected to be over £50bn by 2002. "

Verrall said the software house's latest e-commerce plans, including a digital television application and PM Online, an internet strategy for brokers, would be up and running late this year or early next year.

Policy Master chairman John Kimberley added that Policy Master's first digital television application was "close to completion and delivery."