6th Jul 2005 07:01
Clarity Commerce Solutions PLC06 July 2005 Clarity Commerce Solutions plc Fourth successive year of profitable growth across the Group Clarity Commerce Solutions plc, a leading supplier of management softwaresolutions for the entertainment, ticketing, hospitality and leisure sectors,announces its preliminary results for the year ended 31 March 2005. • Turnover increased by 22% to £16.3m (2004:£13.3m) • Pre-tax profit before goodwill at £763k (2004:£744k) • Research and Development investment increased by £600k to c.£1.6m (2004: c.£1m) • Adjusted earnings per share 4.03p (2004: 4.10p) • Recurring revenue increased by 21% to £6.8m (2004: £5.6m) • Appointment of John O'Connell as Chairman - former CEO and Chairman of Staffware PLC • Five year contract signed with BT Expedite to the value of £2 million for the provision of helpdesk services (see separate announcement) • Heads of terms signed with Sodexho, one of the world's largest providers of catering and business support services (see separate announcement) John O'Connell, Clarity Commerce Solutions, Chairman, said: "We have made significant progress during the last 12 months, our fourthsuccessive year of profit and overall growth. Revenues from existing customersrepresent 92% of the Group's total revenue, which is a strong endorsement of theproduct quality and service excellence that we offer." Graham York, Clarity Commerce Solutions, Chief Executive, said: "During the year there has been a series of strategic developments including theBaron acquisition and the replacement of the Ticketing system. We areparticularly excited by the Sodexho opportunity, which will accelerate our entryinto new market sectors. The increase in recurring revenues also provides theGroup with increased forward visibility. Furthermore, acquisitions completedover the last few years continue to be integrated, and are yielding significantbenefits across the Group, as demonstrated by the contract announced today withBT Expedite." Enquiries: Clarity Commerce Solutions Graham York, Chief Executive Officer 01932 778000 College Hill Adrian Duffield/Clare Warren 020 7457 2020 Results Clarity Commerce Solutions reports continued improvement in financialperformance. Sales increased by 22% to £16.3m (2004: £13.3m) for the year ended31 March 2005. Revenues from existing customers represented 92% of the Group's total revenue.Recurring revenue was £6.8m representing 42% of the total (2004: £5.6m; 42%).The Group expects these recurring revenues to increase over time and provideenhanced visibility for future revenues. Gross profit has accelerated by 23% to £10.16m (2004: £8.27m). Profit before taxand goodwill impairment was £763k (2004: £744k), including a total research anddevelopment cost of £1.6m (2004: £1m). Adjusted basic earnings per ordinary share were 4.03p (2004: 4.1p). No dividend is recommended for this year, as the Board has reaffirmed itsdividend policy that capital should be allocated to developing products anddriving future growth. Acquisitions and integration In October 2004, Clarity acquired Baron LRMS, a company focused on solutions forleisure resorts. Its software, installed in hotels and resorts includesspecialist functionality for club membership management golf courses and healthspas, adding further depth to our leisure offering. Baron was the Group's sixthacquisition since listing on AIM in July 2000. This last year has culminated in the continuing integration of the acquisitionsmade to date and the increasing realisation of value as Clarity benefits fromsignificant cross-selling benefits and the ability to more rapidly access newmarket sectors. During the last year, Clarity has focused on the integration and enhancement ofits software product portfolio. Clarity now provides a fully integrated solutionfor all of the business requirements of its hospitality, ticketing and leisuresector customers. This approach has already delivered sales, such as theinstallation for Bracknell Forest Borough Council, which incorporates Clarityleisure software and smartcard systems alongside the Group's hospitality andretail software. Geographic Markets The Group is continuing to expand its international sales network. Sales areincreasing in the USA and Europe, as well as in the Middle East and othermarkets through its growing network of reseller partners. Furthermore, theGroup's offices in each country are being equipped and developed as salesoutlets for the wider Clarity portfolio, to ensure that international salesopportunities are maximised. The geographical split of revenues in 2005 was asfollows: • 75% to the UK (2004: 69%);• 13% to the rest of Europe (2004: 23%);• 11% to the USA (2004: 6%); and• 1% elsewhere (2004: 2%) UK business continues to dominate the Group's revenue, comprising 75% of this(2004: 69%). Notable UK successes include the YO! Sushi restaurant contract, aninstallation of Clarity Central to support the software in over 400 Greene Kingpubs, a six-month Foreign Office support services contract, further penetrationof several local authority customers, and private sector contracts such asLondon's Reebok Sports Club. The acquisition of Baron extends the Group's global reach, with clients such asJumeirah International in the Middle East. Clarity's international sales haveincreased both through its local offices and the establishment of resellerpartners in local markets, and the Group has customers in over 20 countries. InNorth America, there has been a concerted effort to penetrate the market forticketing and entertainment management software, together with progress in theattractions and theme parks sector. Clarity's European office has also beenfocused on growth in the existing cinema marketplace, announcing a newmaintenance and support contract in April 2005 with cinema operator EuroPalaces,worth €2.4m over 3 years. Operational Review The main focus of the Group is to become a major supplier to the leisureindustry worldwide. Clarity's solutions span the entertainment, leisure andretail sectors, where the Group is building its reputation for expertise insoftware, business intelligence solutions and IT support services. Clarity has continued to integrate its existing software portfolio, based aroundClarity Central, and is adopting Microsoft's .NET software development platformas the basis for all new offerings. This integration is a palpable source ofcompetitive advantage. This year has demonstrated clear evidence of the benefits of cross tradingacross the Group's divisions and market sectors, including: • Completion of an integrated hospitality and ticketing solution, already attracting significant interest from cinema chains • Delivery of innovative solutions to local authorities in Bracknell and Bolton, which combine state-of-the-art smartcard technology with point of sale (POS) and leisure management systems • Increasing recognition of the value of our Business Intelligence division's solutions, demonstrated by orders from Serco Leisure and other leisure management customers • Integration of hospitality services with our dedicated Services division. Market Sectors Clarity's sales increasingly combine elements of software systems, businessintelligence and IT support services in broad ranging customer solutions. Software Clarity's markets can broadly be defined as the hospitality, ticketing andleisure sectors. The Group provides hospitality clients, including major UK bar and restaurantgroups, with transactional systems covering everything from electronic point ofsale (EPOS) and staff and cash management at site level, to head office controlsystems. Clients include many leading industry names such as Greene King, Hall &Woodhouse Brewery, Strada and YO! Sushi. In terms of ticketing clients, Clarity has a very strong presence in the UK andEurope, with four of the top five cinema operators using Clarity software.Ticketing solutions encompass venue management, operation of box offices anddriving sales via the internet and other third party channels. Clients includeOdeon, Cine UK, UCI and EuroPalaces (Pathe and Gaumont). Recent sales to theme parks including Paramount Parks in the U.S.A. underlinethe potential for sales to non-cinema attractions such as stadiums andperformance venues. Cinemagic, a U.S. operator of stadium style theatres, becamethe first cinema customer for Clarity's .NET ticketing software (together withClarity POS software) in May 2005. Leisure software clients include a diverse range of operators seekingmembership, bookings and facilities management systems, again with a strongfocus on head office control via a central platform. Clarity continues to be aleading provider to the public sector, with Birmingham City Council and SercoLeisure running Clarity software in 60 and 50 sites respectively. The Group'sinnovative smartcard and internet bookings solutions put Clarity in a strongposition to capitalise on the growth potential of this sector. Clarity's leisure market presence has been extended with the acquisition ofBaron LRMS in October 2004. Baron is an established software supplier to hotelsand leisure resorts, with strong membership management features and dedicatedapplications for golf courses and health spas. This has brought a prestigiousprivate sector client list on-board, with the addition of names such asGleneagles, St Andrews, the Reebok Sports Club (London) and JumeirahInternational, the Middle East's leading hotel company. Clarity is drivingsoftware sales through an active reseller partner programme, and is achievingnotable sales success in Spain following the development of a Spanish languagesolution. Business Intelligence Clarity's Business Intelligence offering follows the March 2003 acquisition ofRomulus Enterprises. Sales continue to increase, with independent revenuestreams developing, and standardised business intelligence solutions foraccounting, ERP (Enterprise Resource Planning) and HR (Human Resource) systems.Customers operate in the Group's core hospitality, ticketing and leisuremarkets, and increasingly in the wider retail, manufacturing, production andtransport sectors. The integration of business intelligence solutions to Clarity's core product hasattracted huge interest and growing sales from existing Clarity clients in allsectors, with several new contracts, including that with Serco Leisure. Thisintegrated offering is proving a major sales feature in all markets. Clarity Business Intelligence division clients include Robert Wiseman Dairiesplc and Raytheon Systems, and the Group is now accredited to sell and implementthe Cognos Enterprise Planning suite. The number and type of training coursesrun in partnership with Cognos have also been extended, with strong clientattendances driving additional revenues. Services Clarity acquired the Cyntergy Services division in 2003, offering helpdesk andtraining services to support clients across the retail and hospitality markets,as well as providing support to Clarity's existing software clients. It operateson a 24-hour, 7 days a week basis and provides IT support in five languages. Newsales during the period include a one year rolling contract to provide firstlevel helpdesk services to Warnaco for their 25 European Calvin Klein and Speedoretail outlets, a contract supporting 600 network connections for TFM's clientsincluding Travelodge, Officers Club, Co-op, Uniqlo and H&M, and supporting 70major Jarvis Hotels on behalf of ATM, as well as multiple contracts with WincorNixdorf. A six month Foreign Office contract involved implementation and trainingservices to support Visa payment processing software, with on-site trainingdelivered in 140 Visa offices, worldwide. Further training contracts includedsupporting a hotel software rollout for Travelodge, providing training resourcesto other major hotel groups including De Vere and Hilton, and introducing newcustomer booking software to staff from approximately 500 Specsavers stores. Today Clarity announces that BT Expedite, the retail software division of BT,has awarded Cyntergy Services, Clarity's services division, a five year contractto the value of £2 million for the provision of helpdesk services to one of itsmajor high street retail clients. Research & Development Clarity remains committed to innovative product development, which is underlinedby the Group's £1.6m investment over the year in software development andquality assurance work. During the period, a dedicated Research and Developmentdepartment was established which has made substantial progress in integratingthe company's portfolio of solutions around Clarity Central, based onMicrosoft's .NET platform. The .NET platform offers major advantages to Clarityand its customers, and is contributing to a healthy prospect list for Claritysoftware products. Clarity's first .NET solutions are now installed with clients including YO!Sushi restaurants in the UK and Paramount Parks in the USA. A few months agoClarity announced its intention to deliver a .NET-based ticketing solution, andnow Cinemagic has become the Group's first Ticketing division client to go livewith this software. Board changes John O'Connell, founder CEO and Chairman of Staffware plc was appointedNon-Executive Chairman on 7 April 2005 following the retirement from the Boardof Bob Morton, who had been a key figure in steering the company through itsearly phases of development. The Board, on behalf of its shareholders, isextremely grateful for his invaluable contribution in the Group's formativeyears. Dave Shearmon, one of the founding directors of Clarity, has indicated hisintention to step down from his Board role effective as of the AGM on 25 August2005. Dave Shearmon has expressed his willingness to continue with the Group ina strategic and advisory role, for which Clarity are appreciative. Strategy Clarity has achieved continued growth in the past year, but more significantlythe Group has made huge strides forward in integrating and developing itsproducts to capitalise on its strengths and the opportunities a convergingmarket presents. Clarity's acquisitions have been embedded in the business andare performing increasingly well. New sales are being generated on the basis ofClarity's capability to provide broad ranging solutions encompassing software,business intelligence and IT services elements. Clarity has invested significant effort and resources to migrate its software tothe Microsoft .NET platform, and this process continues apace. The move to .NETwill stand the Group in excellent stead in the long term, offering clearadvantages to clients as the Group delivers next generation solutions that taketheir business to new levels. Together with this investment, Clarity has awell-established and dedicated team of people who are relishing the prospect ofdeveloping, selling and delivering such innovative business solutions. Clarity is committed to delivering organic growth using the Group's existingsoftware portfolio, based around its flagship software solution, ClarityCentral. Future offerings will be based on the Microsoft .NET developmentplatform, helping the Group to integrate solutions from additional acquisitionsand enabling the Group to enter new market sectors and drive future growth. TheGroup will continue to extend its global footprint via direct and indirect saleschannels. Clarity continues to pursue its goal of establishing the Group as a leading ITsupplier to the global leisure industry, and looks forward to future growth in2006. Current Trading & Outlook Clarity now offers world class software, business intelligence solutions and ITsupport services to the hospitality, entertainment, leisure and retail sectors. The Group is strongly positioned to capitalise on the converging market forentertainment software. Prospects in terms of new business opportunities arehigh, due in part to the fact that the Group has blue-chip customers in Europe,the Middle East and the USA, who provide reference points for new customers andin so doing, help drive further organic growth in these markets. The Board will also seek to continue generating growth through acquisition,building on its experience of successful integration of acquisitions over thelast four years. Clarity is confident that the progress reported here will be sustained, basedupon the Group's current reading of its markets, competitive position andbusiness environment generally. Clarity Commerce Solutions plc. Consolidated Profit and Loss Account FOr the Year Ended 31 March 2005 Year ended Year ended 31 March 2005 31 March 2004 £' 000 £' 000Turnover - continuing operations 15,851 13,325- acquisitions 459 - 16,310 13,325Cost of sales (6,155) (5,052)Gross Profit 10,155 8,273 Operating costs (9,486) (7,680)Operating profit 669 593 Operating profit/(loss) split between:- continuing operations 648 593- acquisitions 21 - 669 593Operating profit from continuing operations before impairment of 898 826goodwill Continuing operations - impairment of goodwill (250) (233) Operating profit from acquired operations 21 - Operating profit after impairment of goodwill 669 593 Interest receivable 596 322Interest payable (752) (404) (156) (82)Profit on ordinary activities before taxation 513 511 Taxation on profit on ordinary activities (120) (131)Retained profit for the year 393 380 Profit on ordinary activities before impairment of goodwill and 763 744taxationImpairment of goodwill (250) (233)Profit on ordinary activities before taxation 513 511 Profit per ordinary share - basic 2.46p 2.54p- diluted 2.36p 2.49p- adjusted basic 4.03p 4.10pDividends per share - - Clarity Commerce Solutions plc. Consolidated Balance Sheet as at 31 March 2005 As at As at 31 March 2005 31 March 2004 £'000 £'000Fixed assets Intangible assets 11,163 10,322Tangible assets 530 518 11,693 10,840Current Assets Stocks 628 501Debtors 4,767 4,023Cash at bank and in hand 1,334 2,122 6,729 6,646 Creditors: amounts falling due within one year (6,745) (5,973) Net current (liabilities) / assets (16) 673 Total assets less current liabilities 11,677 11,513 Creditors: amounts falling due after more than one year (2,332) (2,492) 9,345 9,021 Capital and reservesCalled up share capital 4,084 3,985Share premium account 5,832 5,833Shares to be issued - 125Profit and loss account (571) (922)Equity shareholders' funds 9,345 9,021 Clarity Commerce Solutions plc. CONSOLIDATED CASH FLOW STATEMENT FOR THE YEAR ENDED 31 MARCH 2005 Year ended Year ended 31 March 2005 31 March 2004 £' 000 £' 000Net cash inflow from operating activities 490 2,290Returns on investments and servicing of financeInterest received 596 322Interest paid (683) (396)Interest element of hire purchase and finance leases (5) (8)Net cash outflow from returns on investments and servicing of (92) (82)finance Taxation 0 (161)Capital expenditure and financial investmentPurchase of tangible fixed assets (105) (151)Sale of tangible fixed assets 12 41Net cash (outflow) from capital expenditure and financial (93) (110)investment AcquisitionsPurchase of subsidiary undertakings (112) (2,989)Cash at bank acquired with subsidiaries (24) 767Net cash outflow from acquisitions (136) (2,222)Net cash inflow / (outflow) before management of liquid resources 169 (285)and financing Management of liquid resourcesMovement in blocked cash collateral account 248 (118) FinancingIssue of share capital (net of costs) 750New secured loan 1,540Repayment of loan notes (622) (110)Capital element of finance leases (32) (32)Bank loan repayments (303) (194)Net cash (outflow) / inflow from financing (957) 1,954(Decrease) / increase in cash (540) 1,551 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 2005 is calculated by dividing the profit for the year of £393,000 (2004: £380,000) by 15,956,500 (2004: 14,957,917) 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 £393,000 (2004: £380,000) by the weighted diluted average number of shares being 16,666,937 (2004: 15,246,514). The adjusted basic earnings per share for the year ended 31 March 2005 is calculated by dividing the profit for the year before impairment of goodwill of £643,000 (2004: £613,000) by 15,956,500 (2004: 14,957,917) being the weighted average number of shares in issue during the year. 4. The Annual General Meeting will be held on 25th August 2005. 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. This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
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