Changes to payroll and European value-added tax regulations are delightful things that cause much rejoicing – if you are Pegasus Group Plc. At the beginning of the year the firm launched Version Six of its Pegasus Senior accounts package, including modules that implemented these changes and of course, since the changes were statutory, the company saw customers rushing to upgrade, boosting its figures substantially. That particular revenue stream has more or less dried up however – the company says that about 50% of Senior users have upgraded and the rest probably don’t need to – they neither use Pegasus’ payroll module or do business with other European Community countries. The impact of these upgrades will not recur in the second half and software sales will continue at reduced levels said chief executive Jonathan Hubbard-Ford. The company is pinning its future on Pegasus Opera, previously known as Sequel, the Foxpro-based accountancy package bought last year (CI No 2,046). Based as it is on database technology, Opera is potentially much more flexible than Senior, but perhaps most importantly it enables resellers to write their own extensions and add value to the package. This is the kind of feature that buys channel loyalty: there is money to be made in customisation and it provides a measure of protection against cost cutting. Though some favoured customers have already got their hands on Opera, the official launch is not until late September. Even with Opera shipping, Hubbard-Ford warns that turnover for the next half will still drop, moreover the company does not expect a mass exodus from Senior to Opera from its existing customers. Instead the company says that the two lines will co-exist and head of product marketing Stuart Anderson says Senior has three good years of active development left in it. Senior may have life after Version Six, but the bulk of research and development expenditure will be swallowed by Opera from now on. The future of Opera itself is, to an extent, in the hands of Microsoft; the accounts package will get a welcome multi-platform boost should the promised Mac and Unix versions of Foxpro come to pass. The nature of the software business is nicely illustrated by Pegasus’s accounts: that the company’s pre-tax profits soared 200% in the six months to 30 while the turnover rose only 26.5% not down to any particular cost-cutting exercise, says Hubbard-Ford. Rather it is an indication of the just how high the business’s margins are: any increase in orders goes straight to the bottom line. Cash balances stay relatively stable at UKP2.4m compared with UKP2.6m last year. Dividends are complicated by the company’s change in financial year, which lead to a 17 month period being reported last December. Dividends per share were 2.0 pence compared with 3.5 pence for the same period last year, but Hubbard-Ford says that the effective dividend is unchanged.
