Pegasus Plc’s decision to pull out of the micro distribution sector last year to focus on its software interests seems to have paid off at the interim stage (CI No 902). The Kettering, Northamptonshire-based accounting software publisher, formerly known as the Brikat Group, is now embarking on a strategy of diversifying within the software market. Its experiences outside the software market – in the cutthroat hardware and software dealer sector – seem to have convinced it that its best prospects for future growth lie within the software arena. Its move into the electronic point of sale software market by buying a package to be sold as the Pegasus retail accounting range targeted at intelligent tills is the first sign of this new approach. The company sees the retail accounting sector as one about to take off: It’s a market set to grow, said Pegasus finance director Tony Barber. The company is calculating that IBM will expand in the point of sale terminals market and aiming to become a major player in that software sector. The revamp of the company’s operations – when it pulled out of hardware sales and disposed of its US arm – and its performance during the past six months pre-tax profits of UKP863,000 on sales of UKP6.5m – have left it with a current cash balance of UKP1m. At the moment it’s earning interest in the bank but it would earn more if we made it work, said chief executive Johnnie Johnson: Pegasus paid just UKP43,300 for the point of sale package by C-Star of Birkenhead, Merseyside, so it could still do some more shopping yet. About 95% of turnover came from the UK – nearly 80% of this generated by Pegasus Software; its Days and Office supplies – which sells forms such as invoices and pay slips for Pegasus accounting software users – arms accounted for the rest. Foreign sales are hampered by the nature of the accounting market where products tend to be home market specific. So the quest international growth may mean a move out of the parochial accounting software market into a sector were applications can be sold more easily across national boundaries. But that may come later: At the moment we are busy expanding our operations in the UK, Johnson said. The company wants to make more use of its third party dealer distribution network by selling more products through it. They will not necessarily have to be allied with accounting but it would help, Johnson said. He ruled out a move into office productivity software such as integrated spreadsheets in favour of areas such as manufacturing software. The company is expanding its supplies subsidiary and has also earmarked this as a potential growth area. Pegasus’ end of year results will show whether the company is now ready to realise its ambitious plans. But it will have to tread warily – Pegasus can ill-afford another flight of fancy.
