3rd Sep 2007 10:26
Clarity Commerce Solutions PLC03 September 2007 Clarity Commerce Solutions plc Board Statement Clarity Commerce Solutions plc (AIM:CCS), a leading supplier of managementsoftware solutions for the entertainment, ticketing, hospitality, retail andleisure sectors, announces its preliminary results for the year ended 31 March2007. • Turnover increased 10% to £20.8m (2006: £18.9m) • Recurring revenue increased by 10% to £9.1m (2006: £8.3m) • Gross margin increased slightly at 62% (2006: 61%) • Pre-tax loss of £458,000 (2006: profit £953,000) • Basic loss per share of 3.96p (2006: earnings per share 5.81p) • Acquisition of MATRA Systems (Holdings) Ltd in April 2006, expanding the Group's offering Enquiries: Clarity Commerce Solutions Ken Smith, Chief Financial Officer, 01932 778000 Grant Thornton (Nominated Adviser) Fiona Kindness, Director 020 7728 3414 SVS Securities plc (Broker) Jon Cable 020 7638 5600 A FORMATTED VERSION OF THIS ANNOUNCEMENT WILL BE AVAILABLE SHORTLY ON THECOMPANY'S WEBSITE: WWW.CLARITYCOMMERCE.COM Overview Clarity has a wide product portfolio covering a range of market sectors andgeographies. The acquisition of MATRA (described below) in April 2006 created astronger business that has brought considerable advantages to the combinedGroup. Clarity software is installed in many vertical markets, and consumersexperience our products every day, whether they are buying tickets, visiting ahealth club or golf course, in a restaurant or bar, booking into a hotel ormaking a purchase from a retailer. However, Clarity has nevertheless suffered a difficult year as a result ofcontract slippage and cost over-runs in a number of subsidiaries, resulting inpoorer performance across the second half of the year, despite a profitablefirst half. Shareholders will be aware that, shortly after the year-end, anumber of shareholders requisitioned an EGM in order to effect certain keychanges which they felt would improve the Group's performance. Although each ofthe resolutions voted on at the EGM held on 31 May 2007 was defeated, thepublicity which the process generated served to dent customer confidence, withthe result that several prospective contracts were lost or delayed in theprocess, and internal morale was also damaged. Furthermore, the process provedexpensive in terms of advisor and other costs, as well as diverting managementfocus from the day to day operations of the business for several months, and allof these factors will continue to have a material effect on results in 2007/8. The Board does, however, recognise the validity of certain issues raised duringthe EGM process, and has actively been making moves to address these concerns. As a direct result of this process, a number of changes were made to strengthenthe Clarity Board, with the appointment of a new Chairman, new Deputy Chairmanand a Chief Financial Officer, each of whom has strong experience of improvingunder-performing businesses, thus increasing the Board to four members,inclusive of two non-Executives. Brief biographies of each appointee are shownbelow. John O'Hara, Chairman, brings with him a wealth of relevant experience. John ledthe negotiations for Total Hospitality Solutions Limited and Total HospitalitySolutions (UK) Limited, which were acquired by Clarity on 22 May 2007. He hashad over 20 years experience across the technology sector in the UK, New Zealandand the US. During that time he has founded, grown and successfully exited threetechnology companies; one was sold privately, one listed in the US on NASDAQ andone was publicly listed in New Zealand. In 2005 John released a book titledCommercialising Innovation and he holds an honorary Master of BusinessInnovation and Entrepreneurship degree. Sir Colin Chandler, Deputy Chairman, has many years of valuable experience inthe public company arena. He joined easyJet plc in April 2002 and was appointedChairman in 2002. Until November 2004, he was Non-Executive Deputy Chairman ofSmiths Group plc, having been a Non-Executive Director of TI Group since 1992.Sir Colin has been variously Managing Director, Chief Executive and thenChairman of Vickers plc. Earlier in his career, Sir Colin was seconded fromBritish Aerospace to the role of Head of Defence Export Services, Ministry ofDefence. He was Chairman of Racal Electronics plc. He is Chairman of TIAutomotive Limited, Chairman of Automotive Technik Limited, and isPro-Chancellor of Cranfield University. He was Knighted in June 1988 forservices to export. Ken Smith, CFO, is a member of the Institute of Chartered Accountants ofScotland. Qualifying with Deloittes in Glasgow he spent four years with thefirm's Nairobi practice as Senior Manager. Following his return to the UK in1986, as Group Finance Director of Alphameric plc, he was instrumental in thatcompany's turnaround and return to profitable growth. Since leaving Alphamericin 1996, he has been part-time financial director, or consultant, to a varietyof companies in the IT sector, with particular emphasis on fundraising andturnarounds. He was closely involved in the acquisition of Cyntergy ServicesLimited, which Clarity acquired in 2003. Clarity intends to further strengthen the Board over the forthcoming months inorder to reflect its wider portfolio and increased size since the MATRAacquisition. Since its formation on 26 June 2007, the newly-constituted Board has beenreviewing the Group's structure, people and processes, as well as its productand marketing strategies. Although this strategic review is not formallycomplete at this time, it is the Board's intention to ensure the Company is ontrack for growth in the second half of the 2007/8 financial year. The Board has also begun to review strategy and focus on reducing costs andimproving the accountability of individual business units within the Group. TheGroup is in the process of implementing the selection of suitable business unitmanagers who are strongly motivated and incentivised to achieve profit and cashgeneration in their respective market sectors. Financial Highlights After several years of improving financial performance the past financial yearsaw a dip in Clarity's fortunes, with a loss before tax of £458,000 (2006 profit- £953,000). The loss resulted from delays in the completion of new productdevelopment, a slippage of several anticipated contracts and increased costs ina number of divisions. Revenues increased from £18.9m to £20.8m, and gross margin improved slightly to62% (2006 61%). Gross margins were adversely impacted as a direct result of lowmargin hardware supplied in terms of roll-out business to a key client; theadjusted gross margin for the Group, excluding this supply, would have been63.5%. Operating costs increased from £10.4m to £13.0m which gave rise to an OperatingLoss of £148,000 (2006 Operating Profit - £1.1m). This increase was almostexclusively due to the inclusion of MATRA within the Group from May 2006onwards. MATRA added £3.55m to Operating Costs and the Group therefore, on alike for like basis, reduced costs by £950,000 across its continuing operations. However, primarily as a result of trading underperformance and revenue slippage,this meant there was no commensurate increase in turnover in tandem with theincreased cost base, and hence the Group recorded a Loss before Tax of £458,000. MATRA acquisition MATRA, a global software and solutions provider was acquired on 29 April 2006for an initial consideration of £2.5m, and a further £500,000 which has beensatisfied by the issue of Clarity shares. In addition, a further £500,000 ofClarity shares were issued during the year in relation to the three year earnout arrangement. MATRA brings to the Group an up to date product range that spans many aspects ofthe retail sector. MATRA's FREEDOM products, which include point of sale (POS) and relatedsoftware, have been successfully deployed in Europe, North America, Asia andSouth Africa. The acquisition therefore strengthens Clarity's internationalpresence, and will help build Clarity's critical mass as a solutions provider inthe POS market. MATRA clients operate in the grocery, department store, general merchandisingand entertainment chains. Customers include Coop Denmark, Six Flags,Somerfield, Compagnie des Alpe, MoviePark, The John Lewis Partnership, The HMVand Waterstones Group, Focus and Woolworths in South Africa. Their software isa true "multi-channel" offering, allowing transactions to take place through avariety of devices and technologies. The combination of Clarity and MATRA strengthens the Group's senior managementand has added considerable technical expertise. Total Hospitality Solutions acquisition Shortly after the year end, Clarity acquired Total Hospitality Solutions (THS)for an initial consideration of £2.2m, satisfied by the issue of Clarity shares. In addition there is a two year earn out, and the total consideration will notexceed £4m. THS comprises an established New Zealand business, and relatively new UKbusiness, both operating in the provision of property management systems to thehospitality, hotel and events management industry. The Board recognises obvious synergies between THS and its existing leisure andhospitality businesses. This has already been evidenced by a combined sale ofthe Group's Baron product offering with the THS product offering. It is theintention to fully investigate and exploit the opportunities that thisrepresents. Products and Services Clarity's new .Net ticketing software has recently been accepted in live tradingenvironments in the US, and interest from other outlets in the US is developingrapidly. The Group believes that its product is ideal for this market, and iscurrently building its sales strategy whilst in close discussion with a numberof prospects. The integration of golf, spa, hotels and our food and beverage software into asingle division will not only offer cross market sales, but a more integratedproduct range. This is evidenced by the recent combined Baron/THS sale referredto above. Although the hospitality market has recently been quiet, we are nowseeing evidence of interest in replacement solutions. In the leisure sector, our customer base awaits our new leisure solution basedon the Microsoft .Net platform. Elements of this software are now working in alive trading environment with a private sector customer, and we have receivedinitial orders from public sector clients. In the retail arena, the integration of Clarity Central with MATRA's software isprogressing according to plan with the imminent implementation of the firstrelease with an existing customer. Feedback from our customer base is positiveand is helping to prioritise our road map for the further integration workplanned. Dividend Policy In view of the loss incurred during the year, no dividend is proposed. Oncefinancial performance has improved it remains the Board's intention to pursue aprogressive dividend policy. This is unlikely to occur in the 2007/8 financialyear, but remains under constant review. Outlook Clarity has experienced a difficult year. The EGM was inevitably a distractionto the business, diverting management focus from operations for a number ofmonths. It also had the effect of adding costs, and having an adverse impact onrevenues and trading during the first half of the current year, mainly due toheightened uncertainty during and immediately after the process. Having due acknowledgement for the concerns raised by the requisitionists, andby implementing our own strategy, confidence is slowly returning and the Boardanticipates that the cost-reduction programme commenced in July 2007, togetherwith the revised strategy being introduced, will result in an enhanced Groupperformance in the medium term. Despite concerns as a result of the adverse publicity surrounding the EGM,discussions are currently under way with a number of key prospects. The Boardexpects to announce some successes in the near future. With the appointment of Grant Thornton as Nominated Advisor and SVS Securitiesas stockbroker, and the empowerment of some highly talented individuals withinthe Group, the Directors believe that a strong core team is in place, with therequisite skills and experience to achieve a significant improvement in theGroup's financial performance and subsequent results. The Board would particularly like to take the opportunity to thank Clarity'sstaff for their patience and commitment during a difficult period. Clarity Commerce Solutions plc. Consolidated Profit and Loss Account FOr the Year Ended 31 March 2007 Year ended Year ended 31 March 2007 31 March 2006 £' 000 £' 000Turnover- continuing operations 16,401 18,884- acquisitions 4,402 - 20,803 18,884Cost of sales (7,919) (7,361)Gross Profit 12,884 11,523 Operating costs (13,032) (10,414)Operating (loss)/profit (148) 1,109 Operating (loss)/profit analysed between:- continuing operations (581) 1,109- acquisitions 433 - (148) 1,109 Operating (loss)/profit from continuing operations before (581) 1,358impairment of goodwillContinuing operations - impairment of goodwill - (249)Operating profit from acquired operations 433 -Operating (loss)/profit after impairment of goodwill (148) 1,109 Interest receivable 560 506Interest payable (870) (662) (310) (156) (Loss)/Profit on ordinary activities before taxation (458) 953 Taxation on profit on ordinary activities (332) (3)Retained (loss)/profit for the year (790) 950 (Loss)/Profit on ordinary activities before impairment of (458) 1,202goodwill and taxationImpairment of goodwill - (249)(Loss)/Profit on ordinary activities before taxation (458) 953 (Loss)/Profit per ordinary share - basic (3.96)p 5.81p- diluted (3.96)p 5.80p Dividends per share - - Clarity Commerce Solutions plc. Consolidated Balance Sheet as at 31 March 2007 As at As at 31 March 2007 31 March 2006 £'000 £'000Fixed assetsIntangible assets 16,496 11,352Tangible assets 583 563 17,079 11,915Current AssetsStocks 711 600Debtors 5,731 6,778Cash at bank and in hand 351 852 6,793 8,230 Creditors: amounts falling due within one year (7,399) (8,100) Net current (liabilities)/assets (606) 130Total assets less current liabilities 16,473 12,045 Creditors: amounts falling due aftermore than one year (4,177) (1,691)Provisions for liabilities and charges (41) (34) 12,255 10,320Capital and reservesCalled up share capital 5,271 4,084Share premium account 7,742 5,974Profit and loss account (758) 262Equity shareholders' funds 12,255 10,320 Clarity Commerce Solutions plc. CONSOLIDATED CASH FLOW STATEMENT FOR THE YEAR ENDED 31 MARCH 2007 Year ended Year ended 31 March 2007 31 March 2006 £' 000 £' 000Net cash inflow from operating activities 134 884 Returns on investments and servicing of financeInterest received 528 506Interest paid (772) (595)Interest element of hire purchase and finance leases (4) (2)Net cash outflow from returns on investments and servicing offinance (248) (91) Taxation (51) (10) Capital expenditure and financial investmentPurchase of tangible fixed assets (138) (200)Sale of tangible fixed assets 8 -Net cash outflow from capital expenditure and financialinvestment (130) (200) AcquisitionsPurchase of subsidiary undertakings (3,151) (110)Cash at bank acquired with subsidiaries 374 -Net cash outflow from acquisitions (2,777) (110)Net cash (outflow)/inflow before management of liquidresources and financing (3,072) 473 Management of liquid resourcesMovement in blocked cash collateral account 582 75 FinancingIssue of share capital (net of costs) 1,817 -New secured loan 2,425 -Repayment of loan notes (699) (646)Capital element of finance leases (7) (5)Bank loan repayments (1,339) (304)Net cash inflow/(outflow) from financing 2,197 (955)Decrease in cash (293) (407) Notes to the Financial Statements: 1. These preliminary results have been prepared in accordance with UK GAAP. 2. UK Corporation Tax has been provided on the results for the year at 30% and overseas tax at applicable rates. 3. The Directors do not recommend the payment of a dividend. 4. Earnings per ordinary share: Basic loss per share for the year ended 31 March 2007 is calculated by dviding the loss for the year of £790,000 (2006: profit £950,000) by 19,955,595 (2006: 16,338,086) 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 loss for the year of £790,000 (2006: profit £950,000) by the weighted diluted average number of shares being 19,955,595 (2006: 16,381,088). 5. The Annual General Meeting will be held on 29 November 2007. 6. 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, Hooper House, Hatch Warren Farm, Hatch Warren Lane, Hatch Warren, Basingstoke RG22 4RA. 7. 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. This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
Crossword Cybersecurity