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Sage, the UK’s second-largest technology company, reported full year revenues a touch ahead of management targets after switching more customers from its old model of software installation to new cloud-based subscriptions.

The Newcastle-based accounting software group has undergone a strategic overhaul to shift customers – typically small and medium-sized businesses – to web-based accounting as it comes under pressure from startup rivals.

The group increased organic revenues by 6.6 per cent — ahead of management’s target of at least 6 per cent annual organic revenue growth — to £1.7bn in the year to 30 September, excluding sales from its North American payments business, which it sold in June.

The company said it expects organic growth next year to be higher at 8 per cent after it begins to reap benefits from two big acquisitions this year.

“This year marks the completion of the transformation of Sage outlined at the June 2015 capital markets day,” said Stephen Kelly, chief executive. “We now have the leadership, organisational alignment, brand and comprehensive suite of cloud solutions, to accelerate momentum in our markets.”

Organic operating profits, the best measure of Sage’s core profitability, increased 10.3 per cent to £475m compared with the previous year.

Sage was the UK’s largest technology company until Micro Focus completed its reverse takeover of HPE’s software assets in August.

Once an uncontested stalwart of the workplace the group has come under competition in more recent years from companies such as, Xero and NetSuite.

In July the group announced its largest ever acquisition with the purchase of US cloud-based financial software company Intacct for $850m.

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