Pegasus, the Kettering, UK-based accounting software house, believes it is poised and ready to grow organically through the new products it has coming on stream, and also through acquisition. However, with the Sage Group Plc’s proposal to offer 425 pence per share last month (CI No 2,970), which Pegasus considers far too low, hanging over its head, acquisitions are obviously on hold, and employees, customers and the channel are all getting a bit jumpy. The company’s interim figures continue to present it as a healthy proposition, with profits up nearly 200% at 511,000 British pounds on revenue up 20% at 3.7m pounds. Chief executive Jonathan Hubbard-Ford is waiting for the City to move to unlock the impasse. He says the Takeover Panel has so far not pushed Sage into moving from a provisional to a firm offer, so none of the deadlines inherent in normal takeover rules yet apply. Hubbard-Ford, who has already lived through a previous bid from Sage in 1992 (CI No 1,852), seems pretty fed up with the whole business, and says he would hope the Panel will push Sage for an answer within the next seven days. Commenting on the rumor in the Daily Telegraph that an American software and services company is stalking Sage (CI No 2,973), Hubbard-Ford simply said he did not believe there was any truth in it at all. He says a Sage acquisition of Pegasus would be heavily weighted in Sage’s favor, and therefore the price offered should reflect this. Buying Pegasus, Sage will effectively knock out its major competition in the UK. It will also get itself some new, 32-bit Windows95-compliant accounting software products, entry into a whole new electronic point-of-sale market, and a company that according to Hubbard-Ford has huge opportunities to increase its profits in the short and medium term.
Capital Gold
As part of a strategic plan embarked on three years or so ago, it has re-vamped its accounting software, diversified into manufacturing and electronic commerce, and now point-of-sale. It has also strengthened its internal sales, marketing and support operations. The Windows-based Capital accounting product it launched last year (CI No 2,612) has been extended to take Sage’s Sterling range head on. Entry-level Capital Lite was launched in June, to sell for less than 100 pounds, and Capital Gold , an enhanced, 32-bit networked version, will launch in October. After acquiring Inntec Ltd’s PayPoint point-of-sale software in April for 424,000 pounds, Pegasus has signed with IBM Corp to distribute the company’s recently launched SureOne personal computer-based till, along with PayPoint. It is also forging deals with ICL Plc and Avery Berkel, the electronic scales company. PayPoint is one of the first off-the-shelf packages for point-of-sale, and Pegasus sees an enormous opportunity with any retailer smaller than the likes of high street giants Tesco Plc and J Sainsbury Plc. After buying PayPoint, Pegasus had net cash of 4.3m pounds, with which it is ready to make further strategic acquisitions, provided it remains independent. Hubbard-Ford said the majority of the company’s research and development effort has now translated into product ready for shipping, and he expects to see significant increases in both revenue and profit in the coming year. The company will pay an interim dividend of 2.0 pence, unchanged from last time.
