Business management software firm Sage has reported a jump in profits, and said that its business model would enable it to flourish despite forecasts of a tough year ahead.

The Newcastle-based company posted an eight per cent increase in pre-tax profits to £241m for the year to the end of September. Sales rose seven per cent to £1.29bn.

Sage, which sells business management software to small and medium-sized companies (SMEs), said that a rise in subscription revenues compensated for weak software sales in the new financial year.

Quick adaptation and business refocusing allowed Sage to weather difficult economic conditions as its markets weakened in the UK and North America, according to chief executive Paul Walker.

"We anticipate that the broader economic climate will remain uncertain for the near future. However, our business model, together with consistently strong cash flows, robust balance sheet and high level of recurring revenue streams, provides a solid foundation for our operations," he said.

"Our large and geographically diverse base of over five million customers also provides many opportunities to meet future demand for business-critical solutions designed to help SMEs run their businesses more efficiently in difficult market conditions."