ACCOUNTANCY software firm Sage has hit the acquisition trail after seeing full year profits rise 12 per cent.

The Newcastle firm, which has acquired a number of businesses over recent months, said it would continue to grow through deals. The pledge came despite the slump in the global economy and the associated high-tech downturn.

Chairman Michael Jackson said: "Notwithstanding the current economic climate, we believe that the strength of our brands, the breadth of our product offering, the resilience of our channel and the sheer scale of our customer base provide us with a platform for sustained long-term growth.''

During the year to September 30, Sage acquired 248,000 new customers to bring its installed base to 2.8 million customers.

The increase, along with contributions from acquisitions such as May's £189m purchase of rival Interact Commerce, helped push turnover up 17 per cent to £484.1m.

Pre-tax profits rose to £121.3m.

There had been concerns the group's US activities would be damaged by the slowing economy and the fall-out from the September 11 terrorist attacks.

Sage said of the US: "Market conditions have been challenging and were exacerbated by disruption following September's terrorist attacks.

"The market for new licence sales was especially tough, but despite this our US businesses maintained their market share."

Operating profits in the US were up to £45.6m from £36.8m, while in the UK they edged ahead £1.3m to £56.3m.

Despite a 13 per cent increase in revenues and an extra 46,000 customers in the UK, operating margins declined in Sage's domestic market as the slowing economy hit home.

The group said: "In the mid-market, despite a healthy pipeline, closure of sales has proved difficult, leading to lower revenues and margins."

However, overall Mr Jackson said the group was looking forward to 2002 "with confidence".

Shareholders will receive a total dividend of 0.425p per share, up on last year's payout of 0.386p.