The Pegasus Group Plc took the opportunity of announcing its interim results to raise the profile of its Supplies division using a Green issue to do so. This division currently contributes 25% of the Group’s pre-tax profit (which was up 50% to UKP1.3m in the six months) and has a mission to raise this to 40% within the year. Martin Ruda, who leads the Supplies division pointed out that it was Pegasus’ regular sale of consumables – special papers, printer supplies and so forth that enabled it to maintain a dialogue with customers and urged dealers to add consumables sales as part of the service to their customers. Forms, which are sold through software dealers and stationery outlets, showed an overall 29% increase in turnover in this interim period, and they, along with other high profit margin products such as security payslips were reviewed as a critical piece of the Group’s action. This emphasis on Supplies was strengthened by the announcement that the division is about to start an in-house project to recycle paper for use as listing paper, labels and so on – a move that will no doubt jog the arm of managers of the new breed of ethical funds to give Pegasus shares a prominent place in their portfolios. Environmentally-friendly The Group ultimately intends to offer environmentally-friendly products to customers in all areas, and is already making the investment necessary to offer them recycled paper with commercial advantage. Supplies aside, Pegasus attributed its profitability to the 25% reduction it has made in the cost of packaging its software modules, and to its mix of products, with its Xenix and networking products accounting for 12% and 26% respectively of its UKP3.9m turnover. The Software division has recently added new Nominal Ledger, Fixed Assets, and Sales History modules to its range of Senior packages, as well as a Job Costing module, which was developed with Barclays Bank. Although there is no financial tie-up with Barclays and the Job Costing packages are distributed by the normal dealer network, the Bank may make the module mandatory as a security measure for vendors seeking a loan which, a measure that would significantly boost sales for Pegasus. An agreement has also been reached with Cashwise International Ltd for joint marketing of a tailored Retail Accounting product through a network of dealers at home in the electronic point-of sale arena. Pegasus stressed that the agreement was targeted at the smaller type of retailer and was in no way to be seen as a challenge to IBM or NCR. The company has also launched a new initiative through the UK dealer network to classify dealers into Pegasus Systems Centres and Pegasus Software Dealers. This classification will enable Pegasus to split the dealer channel into two tiers; those requiring single-user products and those requiring products from the Senior range for multi-screen systems. At present there are embryonic plans to restructure the company around these two product types. In terms of future products Pegasus Software has started working towards fourth generation language tools for IBM’s OS/400 and intends to move further into the Unix/Xenix and networking environments with its acounting packages. Finally, the Group is hungry for an acquisition but has so far been stymied by the lack of public software houses that are around. This may explain the new emphasis on its Supplies division, and executive deputy chairman Derek Moon said that consumables was a possible area for expansion by acquisition. Other possibilities include software related companies, and Moon added that a foray into the continental European market was looking increasingly likely.
