ACCOUNTANCY software group Sage has reported a 14 per cent rise in interim pre-tax profits, in line with market expectations.

The company saw revenues grow as existing customers bought a broader range of software and services.

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

The Newcastle company said turnover had risen four per cent to £282.1m in the six months to March 31, with UK operating margins rising to 40 per cent in the period.

Pre-tax profits rose to £74.3m from £65.1m in the same period a year earlier.

During the six months, Sage added 115,000 clients to its books.

The UK business increased sales by five per cent, adding 23,000 customers in the period with market conditions largely unchanged.

But the European operation saw difficult trading due to depressed economic conditions and a one per cent fall in revenues compared with the previous period.

Sage's US business delivered a strong performance with revenue growth of eight per cent and operating profits up 30 per cent.

Company chairman Michael Jackson said: "While we have seen no improvement in market conditions, our business progressed well in the first half. We achieved strong results in the UK and the US and, while Europe was weaker, we see some encouraging signs there.

"We therefore continue to view 2003 with confidence."

The company, which is the FTSE 100 Index's only remaining blue-chip technology stock, employs 5,500 people worldwide, including about 1,600 staff in the UK.

Sage has also confirmed the departure of Graham Wylie, one of its founders and managing director of the UK business.

Mr Wylie will retire at the end of the month after 22 years with the firm.

He will be replaced by Paul Stobart, currently chief operating officer.