Record sales in the fourth quarter of 2012 will enable Saltaire-based digital technology group Pace to produce better-than-expected results for the year.

In a trading update, the company, which employs 400 people at its Salts Mill global headquarters, including research engineers developing the latest pay TV and broadband technology and hardware, said a strong second half and finish to the year would produce results ahead of those expected by the board when the figures are announced in March.

The record fourth-quarter performance was largely driven by demand for next-generation media server products in North America. Full year revenues are expected to be around £1.5 billion, or four per cent, ahead of the 2011 figure and of previous guidance issued by company bosses.

Despite the £48 million cost of disruption to hard disc drive supplies caused by flooding in Thailand, Pace said its underlying operating margin is expected to be 7.3 per cent higher with earnings rising by 11 per cent to £98 million.

Net debt is expected to be 47 per cent lower at no more than £106 million, against around £200 million in 2011 – when debt rose by thee per cent.

Pace said good progress had been made on executing its strategic plan, including focusing on operating efficiency and achieving ‘sustainable’ savings.

Work was also underway , on transforming Pace’s supply chain to deliver tangible benefits in 2013 and beyond.

The company expects strong demand for its media server products from pay TV operators to continue during 2013 and is also looking to build on key business wins for related software and services for which it had a strong pipeline of orders.

Foxtel, the largest pay TV operator in Australia, had selected Pace to provide an integrated home system using Pace media hardware and software and Integration services .

In the UK, BSkyB had used deployed Pace’s component management system.

Pace also announced a landmark deal to supply software to French communications firm Bouygues Telecom with its new Helium unified gateway system which will be installed in 1.3 million homes across France and will work on rivals’ equipment.

It also unveiled three major contracts in India, where 80 million homes will be switched to digital TV services by 2015.

It will supply a range of products to three cable operators, Delhi Distribution Company, Faction Digital and New Delhi and Kozhikode Cablecommunicators Ltd, Calicut, to support their government-driven move to digital television services.

Pace chief executive Mike Pulli said: “Pace has performed impressively in 2012 with a particularly strong second half to the year. We have made good headway on executing our strategy and Pace is becoming a more profitable, cash generative company.

“We have momentum and a sustainable platform to build from, and we expect to make further progress in 2013 and beyond.”