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February 21, 1993


By CBR Staff Writer

After all the recent problems at Pegasus Group Plc, what with declining profits and board reshuffles (CI No 2,090), the business accountancy software specialist is now implementing a recovery programme. The Kettering, Northamptonshire-based company has changed its year-end from July 31 to December 31 and so is reporting its results after 17 months this time, to enable the board ‘to present shareholders with a fuller account of the strategic changes taking place’. Pre-tax were UKP620,000 compared with UKP1.5m in 1991, while turnover increased from UKP8.2m to UKP10.3m. The board has recommended a final dividend of 2 pence, bringing the total to 9 pence for the whole period, compared with 12.1 pence for the previous fiscal year. The group has now set up a restructuring board, comprising Philip Sellers as chairman, James Minotto as executive director, the re-instated Jonathan Hubbard-Ford as chief executive, and Neil Pearce as non-executive director, to carry out internal reorganisation. These measures cost the group UKP179,000 last year and UKP646,000 this time. The latter figure includes redundancy payments following job cuts in early 1993. Headcount is down from an average of 140 during 1991 and 1992 to 108. The provisional board is focussing on developing the most profitable areas of activity; on winning additional business on the back of existing accounts rather than spending a lot of money on trying to win new customers; investing in new software and hardware to improve service quality and employee productivity; reducing the spread of its business – Pegasus is now concentrating on the UK market. It is no longer selling into Europe and has no short-term plans to re-start activities there – and finally, simplifying the product range. This has meant removing the residual development costs of some software products from the balance sheet – the measure cost an additional UKP369,000. The second step was to pass Pegasus Accounts for Windows on to Access Accounting Ltd, in which the group has a 15% stake. It will receive royalties on subsequent product sales. Pegasus has also redesigned its core product, Pegasus Senior to try and cash in on the trend towards modular software. Version 6 comprises additional new features such as a European Community value-added tax module. While gains from discontinued operations came to about UKP340,000 last time, this year the company made UKP1.3m after selling 25% of its forms subsidiary to Deluxe Corp in September 1992 on setting up a joint venture company. Hubbard-Ford said the firm ‘has made a successful start’, and Deluxe intends to establish a new overprinting operation in the UK to personalise standard forms. The key-note for the year ahead is ‘to revitalise Pegasus and to build on established strengths’. Chairman Philip Sellers reckons that these are its distribution network, a widely recognised brand-name, a large installed customer base, and strong cash resources.

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