British accountancy software maker Sage said it was watching the economic situation in Europe and the impact a downturn would have on its small and medium customers, although it said trading was still on track.

The company, which sells software to more than 6 million businesses, said trading since the start of its financial year on October1 2011 was satisfactory and in line with its expectations.

Chief Executive Guy Berruyer said on Tuesday that the macro-economic environment remained challenging for Sage's customers, but it was able to cope with the ups and downs of the economic cycle.

We are confident that the business priorities, on which we are focused to drive growth, will bear fruit as the year progresses but we remain watchful of the European environment in particular, he said.

The group said it had received 200 million pounds ($312 million) from the disposal of Sage Software Healthcare to Vista Equity Partners, and it had net cash of 149.8 million pounds at December 31 against debt of 24.9 million at September 30.

($1 = 0.6412 British pounds)

(Reporting by Paul Sandle)