29th Jun 2006 07:02
Clarity Commerce Solutions PLC29 June 2006 Clarity Commerce Solutions plc Continued profitable growth across the Group - pre-tax profit increased by 86%and earnings per share up 82% Clarity Commerce Solutions plc, a leading supplier of management softwaresolutions for the entertainment, ticketing, hospitality, retail and leisuresectors, announces its preliminary results for the year ended 31 March 2006. • Turnover increased by 16% to £18.9m (2005: £16.3m). • Recurring revenue increased by 22% to £8.3m (2005: £6.8m). • Sale of software licences grown by 31% to £3.4m (2005: £2.6m). • Pre-tax profit before goodwill increased 58% to £1.2m (2005: £763,000). • Pre-tax profit increased 86% to £953,000 (2005: £513,000). • Adjusted basic earnings per share increased 82% to 7.34p (2005: 4.03p). • Research and Development investment sustained at £1.6m. • Initiated the recommendation of a dividend for fiscal year 2006/07. • MATRA acquisition completed April 2006 - fund raising oversubscribed. • Client wins have included the £2.3 million contract with Sodexho, and new contracts with Greenhalgh's Craft Bakery, Vinci plc, and William Grant and Sons. • Good start to 2006/07 with $1.4m contract with EuroPalaces in the ticketing division. Graham York, Clarity Commerce Solutions, Chief Executive, said: "Clarity has developed a range of quality support service offerings to match itsleading software portfolio. This enhances our ability to win large contractsfrom global players such as Sodexho. The acquisition of MATRA Systems hasstrengthened Clarity's existing portfolio and enables us to offer a compellingsolution to retailers, whether that retailer runs a supermarket theme park,leisure centre, cinema circuit, bar or restaurant." John O'Connell, Clarity Commerce Solutions, Chairman, said: "There are tremendous opportunities ahead for Clarity as our strategy positionsthe business more strongly than ever to deliver accelerating financialperformance." Enquiries: Clarity Commerce Solutions Graham York, Chief Executive Officer 0870 44 44 234 College Hill Adrian Duffield/Ben Way 020 7457 2020 A FORMATTED VERSION OF THIS ANNOUNCEMENT WILL BE AVAILABLE ON THE COMPANY'SWEBSITE IN DUE COURSE: WWW.CLARITYCOMMERCE.COM Financial Highlights We are pleased to report on another successful twelve months for ClarityCommerce Solutions, the fifth successive year of profitability and growth. Revenues increased by 16% to £18.9m (2005: £16.3m). Recurring revenues continueto grow strongly, reaching £8.3m, an increase of 22% (2005: £6.8m). Pre-tax profit before goodwill has accelerated 58% to £1.2m (2005: £763,000),and pre-tax profit increased 86% to £953,000 (2005: £513,000). We were also pleased with the performance of the second half of the year.Revenues for the second half were £10.5m (H1/2006: £8.4m) and PBT increased to£953,000 for the full year from £323,000 in H1/2006. Adjusted basic earnings per ordinary share were 7.34p (2005: 4.03p) and earningsper share increased by 146% to 5.81p from 2.36p. Cash generation from operating activities has increased by 80% to £884,000(2005: £490,000) Overview Clarity's improved financial performance shows that the Group's long-termstrategy is delivering growth, through acquisition as well as through greaterpenetration of our core markets, and our global presence is expanding. Additionally, the objectives that the Board set early in 2005 regarding newproduct development and divisional integration, are also being delivered. TheCompany is becoming leaner and more efficient by consolidating operations, andis well positioned to achieve the next stage of development; becoming a fullyintegrated software company that is recognised as the leader in its primarymarkets. Clarity continues to invest heavily in its chosen software platform, Microsoft.NET, and has already delivered new products based on this. The £2.3m landmarkcontract with Sodexho won in October 2005 is evidence that we are on track toachieve our vision of highly integrated and flexible solutions, of value acrossmultiple market sectors. In addition to intensive product development work in house, we have alsostrengthened the Clarity portfolio by paving the way during the year for a majoracquisition. Acquiring MATRA Systems after the year end equips Clarity withgenuine expertise in transactional point of sale systems in the retail sector,while extending our blue chip client base in North America, South Africa andNorthern Europe. Over the last twelve months we have made other operational changes thatcontribute to better product delivery and provide a source of efficiencysavings. Our ticketing division has been relocated, maximising the benefits ofcross-divisional synergies. Hospitality product support has also beensuccessfully integrated into our Services division at Sunbury. Development fromthe US and UK has been consolidated into the Group's new R&D Centre inBasingstoke, where the focus is on delivering leading edge, innovative solutionsbased on the Microsoft .NET platform. There are a series of key strands to our overall vision for the business and howwe can reinforce profit growth in the future, and we believe that we areachieving real progress in each of these areas. Leading products As a high margin software business, delivering on our vision means achievingproduct leadership right across the Clarity portfolio. We can already claimexpertise in head office systems with our Central product, as well as with ourtransactional Electronic Point of Sale (EPOS) systems, across several markets.We also offer several other component related products such as bookings andmembership, primarily for the leisure market, and ticketing software for cinemasand entertainment venues. Clarity is continuing to create synergies across these product sectors so thatwe can offer comprehensive, flexible, component solutions to multi channelretailers of any size, and in any location. To achieve this, we have consolidated our R&D and quality assurance work at ourbrand new development centre in Basingstoke, investing c£1.6m in theseactivities (2005: c£1.6m). The development capabilities previously based at ourDenver, US, and Salisbury, UK, offices have been relocated to this facility, asthe first stage in a plan to centralise global development and attract qualitydevelopers. All development work is now focused on creating a single Microsoft .NET basedmulti-market system platform, maximising ease of integration with other systemsand promoting customer retention by ensuring that our products fully satisfyclient requirements. Regular contact with Microsoft is now built-in to ourdevelopment programme, ensuring that we benefit from the expertise and resourcesthey offer. Continuing geographical expansion During the year Clarity has made further inroads across international markets.An increasing number of international hotel chains are adopting our golf and sparesort software, with new contracts signed throughout the year. Clarity continues to be a leading force in the European ticketing market. Duringthe year we secured a major new maintenance contract with EuroPalaces (operatorof the Pathe and Gaumont cinema brands) that runs until the end of 2008, andincorporated cross sales functionality at an innovative ticketing centre for theMK2 cinema circuit in Paris. In North America, Clarity successfully launched its new Microsoft .NET ticketingproduct in SeaTurtle Entertainment's new 2,200 seat, 12 screen cinema complex.The new web browser based cinema operation modules are integrated with Clarity'sCentral management and business intelligence products, delivering unprecedentedflexibility, efficiency and profitability to SeaTurtle's business. Additionally, our acquisition of MATRA Systems after the year end significantlyboosts our global presence. Around half of MATRA's business is generated inNorth America from its Atlanta office, and it also gives Clarity a firm footholdwith major retail chains in South Africa and Northern Europe. Expansion across new market sectors Clarity has been actively seeking opportunities to deploy its products acrossnew market sectors, maximising the value we deliver with our existing assets.New client wins demonstrate this thinking. In October 2005 Clarity won a landmark contract with Sodexho, one of the world'sleading catering and support services contractors, worth an estimated £2.3m overthree years. This contract takes Clarity into several new market spaces andpositions us to achieve further penetration in these as well as our traditionalmarkets. Sodexho were seeking a software provider that was innovative andflexible enough to adapt to their business, so that regardless of whichcontracts they were managing, they had a control solution to match therequirement. Clarity's new Microsoft .NET based solution provided that level of flexibility,and with Microsoft's weekly monitoring of all Clarity's .NET development work,Sodexho were assured of a quality product. We are proud to have achieved asmooth, low defect product rollout, supplying systems to Sodexho sites in highprofile commercial settings including large corporate centres, world famousleisure venues, public sector hospitals and military barracks. Greenhalgh's Craft Bakery is a privately owned company operating a wholesale andretail bakery business in the Northwest of England, with a retail estate of 42outlets. Clarity is providing the product suite for all 42 sites, with a Centralsolution in place at its head office. Winning this business marks Clarity'sentry into the niche bakery market, and will enable an 'off-the-shelf' bakerypoint of sale system to be marketed in this sector. Clarity's acquisition of MATRA Systems also brings real opportunities forfurther penetration into the retail sector. MATRA's client base offers majorcross-selling potential for Clarity's Central solution, while the complementarynature of the MATRA and Clarity product and service sets represents a strongerproposition to related markets. Online and web-based software Clarity recognises the growth and increasing importance of consumer access toservices via the internet, and is focused on maintaining leadership in thisfield. Our resource management and internet bookings software continues to bethe preferred choice for numerous UK local authorities and trusts seeking todrive the 'eGovernment' initiatives they have been tasked with. We expect therequirement in this sector to grow for the foreseeable future, as localauthorities strive to achieve a series of government targets. Warrington Borough Council is one organisation illustrating the potential ofthis sector, deploying Clarity internet booking software to increase citizenaccess to wide-ranging services. Warrington has radically improved customerservice by providing a comprehensive online facility and enabling remotebookings and payments. Forty nine local authority, trust and theatreorganisations have now deployed Clarity internet bookings software acrossapproximately 350 sites. Fifty nine of these sites have been added during thelast 12 months, and we are very well placed to capitalise on the furtherpotential that exists. In a move that demonstrates our continuing drive to optimise products across theGroup, the expertise of our Business Intelligence division has been used tointegrate powerful, web-based Cognos reporting software across our portfolio.This has proved a significant factor in a series of leisure, ticketing andhospitality sector contract wins. Investment in business intelligence tools In today's data rich world, Clarity understands the need to provide businesseswith easy access to meaningful information. This means making it easy forclients to get the most from their data using alerts, simple reports, charts andgraphs, and for them to be able to do this wherever they happen to be, withweb-enabled tools. The integration of world-renowned Cognos based tools into Clarity's broadersuite of applications has created added value solutions and delivered a tellingcompetitive differentiator. The deployment of these tools with our leisuresoftware in particular has contributed to several contract wins. As well as helping to fuel Group sales in this way, Clarity's BusinessIntelligence division has also won several major contracts in its own right.William Grant and Sons Ltd, the makers of Glenfiddich Scotch Whisky, purchasedCognos licenses to deliver a corporate performance management system in March06. The new Cognos system will be used as the company standard reporting tool,linking all of the client's current systems into one reporting database, and weanticipate further license requirements over the next financial year. Another significant new contract is with Vinci PLC, which commissioned a newdata warehouse. The system provides the building block for a highly robustsolution, allowing the client to report on every aspect of their business. Development of support services In tandem with our software product activities, Clarity's ambition is to furtherdevelop its portfolio of services, and we have continued to invest in thetechnology to do this. An example of this is our work on eLearning initiativesto deliver ongoing and refresher training for clients. With improved communications technology now installed in most retail outlets, weare able to host and deliver a range of training programmes simply, consistentlyand cost effectively, accelerating project implementations and improvingbusiness performance. These solutions meet measurable due diligence requirementsfor store staff, as well as fulfilling the training demand created by high staffturnover. Clarity's Services division has seen excellent revenue growth over the lastfinancial year, as we respond to growing demand for outsourced training andhelpdesk services. We have developed closer integration of service deliveryacross the Group as a whole, and the fruits of this work were perhaps mostvisible in the provision of training resources to our largest client, Sodexho.The computer based training solutions we created for this contract have provedessential to the rollout of systems at prestige sites. The services business continues to grow, not only by providing helpdesk andtraining support to Clarity Group software clients, but also by gaining retailand hotel clients who are not users of our software. We have successfullydelivered training programmes for Travelodge, gained the contract for storehelpdesk services for WHSmith through BTExpedite, and at the end of 2005 wecommenced a two year project for Carpetright that incorporates a blend ofe-learning and classroom delivered training. Expansion through complementary acquisitions In addition to expanding the Group's business organically, Clarity hasconsistently followed a strategy of acquiring businesses that add value to theGroup, not only through direct profit contribution, but via the new markets andcross-selling opportunities they afford. We have been actively engaged with a number of potential acquisitions over thelast twelve months; in particular with MATRA systems, a deal that wassubsequently completed in April of the new 2006/07 financial year. MATRA andClarity offer complementary technology, equipping the Group with a well-provenMicrosoft .NET based point of sale solution. This addition increases our abilityto compete effectively in the retail and leisure market spaces. MATRA's existing client base includes numerous North American customers, as wellas major retail chains in South Africa and Northern Europe, strengthening theGroup's presence in these key global markets. This offers the potential forsignificant cross-sales opportunities to MATRA clients, not only of our Centralhead office management software, but also of our business intelligence andsupport services solutions. The fact that Clarity and MATRA solutions aredeveloped on the common Microsoft .NET platform is a major advantage, making foreasy and rapid product integration. MATRA Systems clients include: Anglia Co-Op Co-Op (Denmark)Focus DIY HMVJohn Lewis Partnership Longs Drugs (US)London Drugs (US) Six Flags (US)Smart and Final (US) SomerfieldWoolworths (South Africa) Waterstones Continuing organic growth Clarity's expansion through acquisition is important, however we maintain aparallel emphasis on achieving growth organically. The investment we have madein product development has delivered significant progress towards a single,multi-market system platform. This, combined with closer organisational integration, positions Clarity morestrongly to capitalise on cross-selling opportunities and to compete in newmarket sectors. A string of major client wins such as Sodexho underline thesuccess of this strategy, and are helping us to rapidly build credibility in aseries of new markets. Dividend Policy We have reviewed our policy on dividends and will initiate the recommendation ofa progressive dividend policy starting in respect of Clarity's fiscal year 2006/07, the amount of which will be determined in the light of that year's results. Outlook The financial performance of the business reflects Clarity's continued success,and there have been a number of positive strategic developments that positionthe company strongly for the future. We believe the Sodexho contract will proveto be a landmark deal that will open up a range of exciting opportunities. This contract and other high profile client wins, the excellent progress made onproduct development and integration via our new R&D centre, and the acquisitionof MATRA and the global opportunities it offers, all create confidence thatfurther growth and profitability can be anticipated in 2006/07. CLARITY COMMERCE SOLUTIONS PLC. CONSOLIDATED PROFIT AND LOSS ACCOUNT FOR THE YEAR ENDED 31 MARCH 2006 Year ended Year ended 31 March 2006 31 March 2005 £' 000 £' 000Turnover- continuing operations 18,884 16,310 18,884 16,310Cost of sales (7,361) (6,155)Gross Profit 11,523 10,155 Operating costs (10,414) (9,486)Operating profit 1,109 669 1,109 669Operating profit before impairment of goodwill 1,358 919Impairment of goodwill (249) (250)Operating profit after impairment of goodwill 1,109 669 Interest receivable 506 596Interest payable (662) (752) (156) (156)Profit on ordinary activities before taxation 953 513Taxation on profit on ordinary activities (3) (120)Retained profit for the year 950 393 Profit on ordinary activities before impairment of goodwill and 1,202 763taxationImpairment of goodwill (249) (250)Profit on ordinary activities before taxation 953 513 Profit per ordinary share- basic 5.81p 2.46p- diluted 5.80p 2.36p Dividends paid per share - - CLARITY COMMERCE SOLUTIONS PLC. CONSOLIDATED BALANCE SHEET AS AT 31 MARCH 2006 As at As at 31 March 2006 31 March 2005 £'000 £'000Fixed assetsIntangible assets 11,352 11,305Tangible assets 563 530 11,915 11,835Current AssetsStocks 600 628Debtors 6,778 4,767Cash at bank and in hand 852 1,334 8,230 6,729 Creditors: amounts falling due within one year (8,100) (6,745) Net current assets / (liabilities) 130 (16) Total assets less current liabilities 12,045 11,819 Creditors: amounts falling due after more than one year (1,691) (2,332)Provisions for liabilities and charges (34) - 10,320 9,487 Capital and reservesCalled up share capital 4,084 4,084Share premium account 5,974 5,974Profit and loss account 262 (571)Equity shareholders' funds 10,320 9,487 CLARITY COMMERCE SOLUTIONS PLC. CONSOLIDATED CASH FLOW STATEMENT FOR THE YEAR ENDED 31 MARCH 2006 Year ended Year ended 31 March 2006 31 March 2005 £' 000 £' 000Net cash inflow from operating activities 884 490Returns on investments and servicing of financeInterest received 506 596Interest paid (595) (683)Interest element of hire purchase and finance leases (2) (5)Net cash outflow from returns on investments and servicing of (91) (92)finance Taxation (10) -Capital expenditure and financial investmentPurchase of tangible fixed assets (200) (105)Sale of tangible fixed assets - 12Net cash outflow from capital expenditure and financial investment (200) (93) AcquisitionsPurchase of subsidiary undertakings (110) (112)Cash at bank acquired with subsidiaries - (24)Net cash outflow from acquisitions (110) (136)Net cash inflow before management of liquid resources and financing 473 169 Management of liquid resourcesMovement in blocked cash collateral account 75 248 FinancingRepayment of loan notes (646) (622)Capital element of finance leases (5) (32)Bank loan repayments (304) (303)Net cash outflow from financing (955) (957)Decrease in cash (407) (540) Notes to the Financial Statements: 1. UK Corporation Tax has been provided on the results for the year at 30% and overseas tax at applicable rates. 2. The Directors do not recommend the payment of a dividend. 3. Earnings per ordinary share: Basic profit per share for the year ended 31 March 2006 is calculated by dividing the profit for the year of £950,000 (2005: £393,000) by 16,338,086 (2005: 15,956,500) being the weighted average number of shares in issue during the year. The weighted average number of ordinary shares in issue has been adjusted to assume conversion of those shares to be issued as well as all dilutive potential ordinary shares. Diluted earnings per share is calculated by dividing the profit for the year of £950,000 (2005: £393,000) by the weighted diluted average number of shares being 16,381,088 (2005: 16,666,937). The adjusted basic earnings per share for the year ended 31 March 2006 is calculated by dividing the profit for the year before impairment of goodwill of £1,199,000 (2005: £643,000) by 16,338,086 (2005: 15,956,500) being the weighted average number of shares in issue during the year. The profit for the year before impairment and amortisation is calculated by adding back £249,000 (2005: £250,000) to the retained profit for the year of £950,000 (2005: £393,000). 4. The Annual General Meeting will be held on Wednesday 20th September 2006. 5. The Annual Report and Accounts will be posted to shareholders shortly. Further copies will be available on request from the Company's Registered Office: Clarity Commerce Solutions plc, No.1 Netherhampton Business Centre, Netherhampton, Salisbury, Wiltshire. SP2 8PU. 6. The financial information set out above does not comprise the Company's full statutory accounts within the meaning of Section 240 of the Companies Act 1985. 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