ACCOUNTANCY software group Sage has staved off the tough economic climate, thanks to strong sales to existing customers.

The Newcastle business saw pre-tax profits in the six months to March 31 rise by ten per cent to £65.1m as it focused on selling upgrades and support services to its client base.

Chairman Michael Jackson said the business had progressed well and had also managed to attract new customers in the period. "Our strong recurring revenues provide stability and growth.

"We remain cautiously optimistic about the rest of the financial year despite the continuing challenging market conditions," he said.

Revenues from existing customers in the six months increased by 23 per cent and recurring revenues now account for two-thirds of Sage's business. The growth helped turnover come in 22 per cent higher than the same period a year ago, at £279.8m.

Sage said it had managed to move its customers, predominantly small and medium sized-firms, beyond entry level products to "more sophisticated" software.

The company was continuing to make progress at Interact, the US customer relationship management group bought last year.

Shareholders will receive an interim dividend of 0.15p per share, ten per cent up on a year ago.