Sage Group, the business software provider responsible for over 6 million business customers worldwide, has reported a 'continued growth' in subscription revenue.

The company said that its half year to March, reflected better cost management after profits increased 15 pct from £139.2 million to £159.6 million.

In addition, organic contraction of revenue was 2 pct compared with 6 pct last half year.

Chief Executive Paul Walker commented: "We are pleased to report a good performance for the half with our organic revenue stabilising and a strong increase in profitability following cost reductions made in 2009. Our customers remain cautious, but the relevance of our products and the compelling nature of our customer support has driven our business in the period.

Revenue remained down from £748.4 million to £718.9 million (-4 pct) whilst organically it was down from £721.1 million to £705.3 million (-2 pct).

Interim dividend increased by 3 pct to 2.58p per share, whilst margins were up one pct to 25.

Overall, improving trends in software and software-related revenue saw 7,000 more customers added than last half year.

"Following a period where SMEs have delayed upgrading and investing in software solutions, we believe there is pent up demand which will be realised as markets recover . In the longer term, we have a significant opportunity to provide connected business solutions to our customers. In the short term, while the recovery remains tentative, we will continue to manage our cost base prudently whilst investing and preparing for future profitable growth. The operational and financial strength of our business supports our progressive dividend policy and the 3% increase in the interim dividend." added Chief Executive Paul Walker.

Shares in the group, which are a buy with a target price 255, rose 1 pct in early trades to 9:00am BST.

"A gradual improvement in overall condition led by encouraging comments from the US Electronic Health Programme" was Dr Gunnar Plagge's prediction. The analyst added that 'restructuring' in US and UK will have had a 'positive effect'.

"Spain" he added, "would be difficult".