IT specialist Sage has poured cold water over fears that businesses are holding back from investing in new technology after revealing a jump in software sales.
Sage - the last surviving Footsie technology stock - yesterday said a growing band of customers opted to upgrade their software or buy more profitable products during the six months to March 31.
Software sales improved to £144.6 million in the period from £122.4 million, representing growth of eight per cent after stripping out the positive impact of recent acquisitions.
The news helped shares in Sage to rise more than three per cent as analysts welcomed evidence that sales were proving resilient in the face of a weakening global economy.
About 149,000 new customers were added during the half-year as firms made spending on IT a priority to help them cope with reporting requirements and regulation, Sage said.
Profits of £100.6 million were in line with expectations given by the company in a trading update last month and represented an increase of 16 per cent on a year earlier.
Turnover also provided no shocks - up 17 per cent at £381.6 million - including £237 million of revenues from support services.
Sage, which employs about 8,000 people worldwide including 1,850 staff in the UK, sells accountancy software and other services to small and medium- sized enterprises throughout the UK, including a large number in the West Midlands.
It has been acquiring companies such as Timberline, which sells software to the US construction and property sectors, and yesterday said it was continuing to look for businesses to buy.
In the UK, revenues climbed to £96.7 million from £90.8 million as customers upgraded their accounting and payroll systems.
But the Newcastle-based company saw its operating margin fall two percentage points to 38 per cent because of an increase in costs that followed the relocation of several offices in the UK.
Revenues in its biggest market of North America totalled £ 155.4 million, helped by growth from existing businesses of seven per cent, while turnover from mainland Europe broke through the £100 million barrier.
Chief executive Paul Walker said the group continued to view this year with confidence and it remained focused on growing its customer base of 4.5 million businesses, improving its products and developing those companies that it has recently bought.
Finance director Paul Harrison added: "The expectation of analysts is that we'll maintain that growth into the second half. We are comfortable with that presumption."
Investec analyst Gareth Evans said comments from Sage regarding businesses using their systems for compliance, reporting and analysis "could be heralding acquisitions in these areas".
He said: "We have, for some time, feared that the newer acquisitions are becoming necessarily more difficult to find, and less material to the overall group performance."
Shares in Sage Group closed last night up 2.5p at 202p.