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October 8, 1991


By CBR Staff Writer

Kettering, Northamptonshire-based Pegasus Group Plc, the business accountancy software specialist, ended its financial year to July 31 with the acquisition of 15% of Access Accounting Ltd, an Apple Computer accounting software house in Colchester, for UKP30,000. Pegasus finance director Tony Barber describes the move as very important strategically and says it is just the sort of thing (Pegasus) should be doing. There are lots of small companies out there, he explains, that are technically superb, but lacking in marketing know-how – we add the marketing muscle, so that two plus two makes five. To date, the company has steered clear of the Apple marketplace, because of technology differences and the relatively small market for Apple accounting software. Now that Apple has increased its market share, says chief executive Derek Moon, this potentially provides an improved market for Apple accounting. Since Pegasus took its minority stake in Access, the two companies have jointly developed a range of software for the Macintosh market which was launched in August. With UKP3.3m in the bank, up from UKP1.1m at the end of the 1990 financial year, there is scope for Pegasus to pursue this newly-formed policy of acquiring minority stakes in small technical companies, in areas in which the company is lacking. But Barber says the cash will stay where it is for the moment, growing interest, until another suitable expansion path presents itself. And this is surely a wise move, given the company’s continuing fall in turnover – pre-tax profits in 1991 fell 28% to UKP1.8m, on sales down 35% at UKP8.5m. The group has been restructuring during the year, selling its remaining piece of Unix specialist company Sphinx to a management buy-out team in January, for its net asset value, which didn’t amount to much; laying off some 10 employees; and moving Bedford-based Facts Software – acquired in March – to Kettering, where it will be overseen by a newly-created Budget Division. These actions, taken in August, have reduced annualised costs by around UKP1m. Meanwhile, all salaries have been frozen. The software divi sion reported trading profits down 51% at UKP1m on revenues down 14% at UKP6m, though new entry-level products are now in place (CI No 1,740) and these are expected to turn sales around. Pegasus Supplies saw trading profits decline by 8% to UKP573,000 on sales down 12% at UKP2.2m, said to reflect the fall in ancil lary computer consumables. As reported at the inter im stage (CI No 1,643), Pegasus has cemented its al liance with the French low-end accountancy software company, SAARI, with the formation of a 50-50 joint venture in Paris, European Software Company SA. The venture company is currently involved in developing product modules for sale in the UK, and plans are reportedly underway for a joint supplies operation for France and Germany. In the longer term, the two companies are researching the next generation of pan- European accounting software products. And according to Moon, German, Italian and Dutch parties have now begun to show some interest in joining the venture.

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