A NORTH-EAST accountancy software group yesterday said annual profits would be in line with expectations.

In a year-end trading update, Newcastle group Sage said pre-tax profits would be about £151m, showing 12 per cent growth on the previous year.

The figure includes £400,000 of operating profit contributed by Oregon-based Timberline, which Sage bought for £63.9m in July.

Timberline, which has 20,000 customers, provides accounting and business management software to companies in the construction and real estate industries. The results also include a £2m charge to cover a loss on the group's sale in May of a non-core human resources division.

Group revenues were about £560m, up four per cent at constant exchange rates against the previous year.

Sage employs about 5,500 people worldwide including about 1,600 in the UK.

In May, it said interim pre-tax profits rose 14 per cent and revenues grew as customers bought a bigger range of software, helping it grow organically while also signing up new customers.

Sage, which supplies accounting and business management software and related products, has about three million small and medium-sized businesses as clients.

Yesterday, the group said revenues in its UK business grew three per cent to about £161m, with operating profits rising 12 per cent to about £65m.

Operating margins grew to 40 per cent from 37 per cent last time as the group focused on installed base activities and saw the benefits of a shake-up of its mid-market division.

In its mainland European business, it saw revenue growth of about four per cent to £135m, which it said was attributable to acquisitions. However, operating profits in the business fell five per cent to about £30m in market conditions which Sage said remained challenging.

In its US business, overall revenues grew four per cent to about £264m, with operating profits rising 17 per cent to about £61m.