ACCOUNTANCY software group Sage said a rise in customers had helped it increase profits by 17 per cent.

The Newcastle company added 146,000 clients during the six months to March 31 and increased software sales to its customer base.

The performance came despite companies maintaining a tight grip on budgets.

Sage - the only technology group in the FTSE 100 Index - posted pre-tax profits of £86.7m and a 23 per cent rise in turnover to £332.5m.

Software sales, which account for 38 per cent of revenues, increased by 15 per cent, but the main driver was its support services section.

Revenues were lifted by contributions from three acquisitions, especially in North America, where Sage does a third of its business.

Timberline, which sells software to the US construction and property sectors, generated revenues of £17.2m following its acquisition for £56m in September.

"While market conditions are substantially unchanged, these strong results show our growth strategy is gaining momentum in each of our core markets," said chairman Michael Jackson.

"We therefore continue to view 2004 with confidence."

Sage, which employs more than 8,000 people worldwide, including about 1,600 in the UK, sells software solutions and other services for small to medium-sized enterprises.

Its UK business grew revenues by seven per cent to £90.8m through strong sales of products and services to existing customers.

Gareth Evans, an analyst with stockbroker Investec, raised concerns that sales in North America were stagnating. He said: "Revenues were flat on an organic basis, which we find worrying."