ACCOUNTANCY software group Sage said growth in all of its major markets was expected to drive a 20 per cent improvement in annual profits to £181m.

In a trading update ahead of its full-year results, Newcastle-based Sage said revenues surged 29 per cent to about £688m after reaping the benefits of recent acquisitions.

Sage - the last surviving technology group in the Footsie - has bought companies in the US, South Africa and Spain as part of a strategy to lift turnover at a time when many customers are tightening budgets for technology.

Revenues from core products are expected to have grown by six per cent during the year to September 30.

The group, which employs about 5,500 people including 1,500 staff in the UK, sells software solutions and other services for small and medium-sized enterprises (SMEs).

Vinay Bedi, director at the Newcastle office of investment managers, Wise Speke said: "Delighted to see Sage confounding the sceptics with its initial review of the year to September. Sage has clearly demonstrated that it can continue to grow strongly despite exaggerated fears of bigger, stronger competitors entering its market place.

"Sage has an excellent industry reputation and is almost becoming a generic term for the best in SME accountancy software packages in all of its major markets.

"If the City continues with some of its scepticism, despite a guide of 21 per cent earnings growth to September 2004, then there is little more the company can do other than continuing to produce excellent numbers whilst we will continue to pick up its high quality, good value shares."