The company behind virtual newsreader Ananova yesterday said it will work on technology to make virtual people, or avatars, look more human.

Glasgow-based Digital Animations said animation would remain at the core of the business, but it would also attempt to create a convincing world of virtual secretaries, receptionists and call-centre workers.

It has been working on more realistic animation, lip sync and the use of human voice as well as computer-generated speech.

"We have a vision that virtual characters will become prevalent in the next couple of years," said chief executive Michael Hambly, pictured above with a new avatar, TMmy, created to showcase the advances. TMmy will release a pop song, You Make My Day, be fore Christmas. The company will also produce title sequences for the Christmas releases of two leading computer games companies.

The 10-year-old company was reporting its first profits since it floated in 1996. Pre-tax profits for the six months to September were £1,175,717 but included a one-off gain of some £920,000 in reduced tax liability for employee share options. In the same period last year, the company lost £491,000. The shares rose 7p to 70p.