Final Results

RNS Number : 3027O

Clarity Commerce Solutions PLC

28 June 2010

CCS.L

Clarity Commerce Solutions plc

("Clarity", the "Company", or the "Group")

Preliminary Announcement of Audited Results for the year ended 31 March 2010

Clarity Commerce Solutions plc (AIM:CCS), a leading supplier of software solutions for the hospitality, retail, leisure and entertainment sectors, announces its audited results for the year ended 31 March 2010.

Strong results with growth across all business units

HIGHLIGHTS

· Results ahead of market expectations with strong performance across Group

· 67% increase in profit before tax and amortisation to £1.9m (2009: £1.1m). Amortisation of £0.4m (2009: £0.6m).

· 8% increase in revenues to £19.1m (2009 £17.7m) - of which 30% is recurring

· Strong net cash position of £1.3m (2009: £0.5m), being cash and cash equivalents less bank loans

· Significant multi-million pound contract wins secured during the period including Merlin Entertainments Group and Pret A Manger

· Experienced new Board appointments including a new CFO, provide additional skills to drive growth

· Earnings Per Share from continuing operations increased to 5.68p (2009: 1.47p)

· Earnings Per Share from continuing operations (excluding deferred tax credit of £0.7m) 3.63p

· Post year end acquisition of support operation strengthens international capabilities & supports growing client base

· Board confident of continuing progress

Ken Smith, CEO commented:

"We have delivered a strong performance for 2010 which has been underpinned by multi-million pound contract wins with major clients such as Merlin Entertainments Group and Pret A Manger. We have increased profits by 67% to £1.9m and grown revenues by 8% with 30% of our £19m annual revenues now recurring - a significant achievement in current times.

With a robust balance sheet underpinned by strong cash generation and a forward pipeline that is very encouraging, we are primed for further steady growth. "

The Annual Report will be sent to shareholders on or around 5 July 2010. The Annual Report will be available from the Company's website at www.claritycommerce.com and additional copies will be made available to the public, free of charge, from the Company's registered office at Paterson House, Hatch Warren Farm, Hatch Warren Lane, Basingstoke RG22 4RA.

Enquiries:

Clarity Commerce Solutions plc
Ken Smith, CEO / Stephen Sadler, CFO	T: 01256 365 150
Arbuthnot Securities
Alasdair Younie / Ben Wells	T: 020 7012 2000
Biddicks
Shane Dolan	T: 020 7448 1000

Clarity Commerce Solutions plc

Chairman's Statement

It is with pleasure that I offer my first Preliminary Announcement as Chairman of Clarity Commerce Solutions plc. Against a background of challenging market conditions, the year to 31 March 2010 has again been positive for the Group, with a sound financial performance, coupled with significant customer wins and technology developments.

Under the leadership of Chief Executive, Ken Smith, Clarity's revenue increased with that much sought after combination of contributions from both existing and, importantly, new customers. This, coupled with a strong focus on cost containment, resulted in an increase of 67% to £1.9m in profit before tax and amortisation. It is pleasing that Clarity has again kept its promises to shareholders.

Several key orders were won during the year in each of our target markets, and these confirm the Group's growing reputation for leading edge software solutions which can enhance our customers' revenues and improve their business efficiency.

These results build on the work of John O'Hara whom I succeeded as Chairman in August 2009. John, who is based in New Zealand, became Chairman in 2007, when the Group was underachieving and shareholders had little confidence in the then management team. Despite the difficulties associated with communication and travel, John retained his commitment to the Group until it was clear it had been restored to good health.

On the basis of this strong performance for the year ended 31 March 2010, our attention has now turned to future growth and how we can deliver it to enhance shareholder value. As part of this process, the Board has been strengthened by appointments which give us a mix of skills and experience well-suited to a growth business.

In order to provide that important combination of challenge to and support for the management team, our two new Non-executive Directors, David Bennett and Colin Wells, come with backgrounds different to each other, but both share considerable experience of achievements in customer facing businesses. David's career and expertise in banking and finance enhances our corporate governance and business analysis needs whilst Colin's career in senior sales and marketing roles in our sector is already giving us improved capability in the capturing of prospects and in revenue enhancement. In a short time, both have made their presence felt to very positive effect.

I take this opportunity to express my thanks and appreciation to Steve Bellamy who, for two years until March 2010, provided valuable service during Clarity's turnaround phase.

The Board has also been strengthened by the arrival of Steve Sadler, ACA, who became our CFO in April 2010. He has a wealth of experience in senior finance roles, mainly in IT businesses and since replacing Chris Ford, who resigned in January 2010, Steve has already proved to be an excellent member of our team. I believe that the composition of Clarity's Board now is exactly what we need for directing the delivery of our growth strategy, while maintaining prudent fiscal management.

In the early part of the financial year, we undertook an internal capital restructuring. This project was designed to achieve operational efficiencies, whereby all UK trading was conducted via one entity, achieving simplified accounting and management. A further benefit of this reorganisation was the creation of distributable profits in our holding company, thereby establishing a platform for future dividends when sustained profitability and cash flow have been achieved.

In October 2009 the Company raised £2.6m net of expenses through the issue of 6,812,500 new Ordinary Shares at 40p per share. The proceeds of the placing were applied to reduce the balance owing to the vendors of MATRA Systems (Holdings) Ltd, and to strengthen the balance sheet by eliminating net debt. The MATRA acquisition provides a key element of Clarity's business going forward, and its former owners, who sold the company to Clarity in 2006, were owed £3.1m in remaining consideration at the time of the Placing. Approximately £1.5m of the net Placing proceeds were applied to reducing this debt, with the remaining balance being settled by monthly cash payments covered by trading receipts.

In addition to the financial benefits mentioned above, the placing brought a number of new, prestigious shareholders onto our register which now boasts some very strong names, and members of the Clarity Board again demonstrated their confidence in the Company by investing £100,000 as part of the placing.

On 28th May, after the end of our financial year, Clarity announced the acquisition of the business and assets of Cyntergy Services Ltd for a maximum cash consideration of £150,000. Cyntergy, which was previously owned by the Group until 2008 when it was sold for £500,000, provides IT service desk and training services to the retail, hospitality and leisure markets, principally in the UK, but also internationally. Its service desk is a 24/7 multi-lingual operation based in Sunbury on Thames.

The re-acquisition of this business was driven by a combination of need and opportunity. Earlier this year Clarity announced two multi-million pound contract wins with Merlin Entertainments Group Ltd and Pret A Manger. Since then further key contracts have been won, and these and other contracts increasingly require comprehensive support and services expertise. Continuing to support existing customers is a vital part of Clarity's business and the inclusion of Cyntergy not only enhances our capability considerably but also gives us a competitive advantage.

Clarity is a people business and it is they who, with their commitment to our products and customers, make the difference in our continuing pursuit of growth. I offer them, on behalf of the Board, our considerable gratitude for their achievements. Our shareholders have continued to provide us with support and loyalty and they deserve our thanks too. More importantly they expect to see their investments rewarded and I believe that they will not be disappointed.

Sir Colin Chandler
Group Chairman

28 June 2010

Chief Executive's Review

Overview

The Clarity Group has enjoyed another year of strong performance and, despite a challenging trading environment, again exceeded market expectations. Although key orders took longer to conclude than had been anticipated, the long-awaited major wins started to flow towards the end of the financial year, amongst which Merlin Entertainments Group Ltd and Pret A Manger have been key. In addition, the pipeline has continued to build, both in terms of quality of opportunity and value.

With its products and brand now well-established, and a much improved, scalable organisation, the Group is well-positioned in several important markets.

Financial Highlights

Revenues increased to £19.1m, up from £17.7m in 2009, representing growth of 8%, whilst gross margin was maintained at 82%. Tight control of overheads, which rose only 3%, and a decline in net finance costs from £187,000 to £54,000 meant that profit before tax and amortisation increased by 67% to £1.9m.

Amortisation on intangible assets was £0.4m (2009: £0.6m) and taxation on profits was a net credit of £0.6m (2009: £0.0m), resulting in retained earnings of £2.0m (2009: £0.5m).

The Group's cash position remained healthy, and was further improved by the receipt of £2.6m, net of expenses, from our placing in October 2009.

As described in the Chairman's Statement healthy profits, and an internal capital reorganisation carried out during the year, have resulted in Clarity's parent company being placed in a position where it can pay dividends once sustained profitability and cash flow render it prudent so to do. For the immediate future however, it remains the policy of the Board to invest for the growth that, when achieved, would bring both capital enhancement and dividend returns to shareholders.

	Year ended 31/03/10 £'000	Year ended 31/03/09 £'000
Continuing operations:
Revenue	19,081	17,683
Operating profit before amortisation	1,909	1,298
Net finance cost	(54)	(187)
Profit before tax and amortisation	1,855	1,111

Contract wins and prospects

Individual key contract wins have been discussed elsewhere, and it should be stressed that, in addition to the major successes announced during the year, a great number of smaller orders were taken from existing and new customers, many of which prefer not to be named for commercial reasons. Suffice to say that, despite the economic environment, the Group achieved its financial targets and added some very important new clients to its already extensive list.

With a challenging trading environment, deals have been harder to close as our customers and prospects have naturally been cautious about their own expenditure. However, the Clarity proposition has some very strong features which dovetail well with customer budgets under pressure. Key amongst these are:

· our strong focus on the consumer experience. Our customers target their own share of their customers' retained income and strive to increase customer spend. Hence technology which improves customer retention and spend is one of the last budget elements to be cut, if at all; and

· our ability to protect and enhance legacy investments dramatically reduces costs in a "mend and make do" environment. This is particularly pertinent in our retail business, where our strength in extending and migrating customers from the ageing IBM 4690 system lends itself to strong opportunities with major retailers, especially in North America.

Hence, despite economic pressures and concerns, our pipeline remains strong at a time when some of our competitors are finding the environment very difficult.

Divisional Performance

Each of the Group's divisions made good progress during the year. In particular:

Retail

The Retail business enjoyed strong revenue growth especially in our US operations in Atlanta, Georgia and Raleigh, North Carolina. Although orders were biased towards the latter part of the year, key orders were secured for a variety of well-known retailers. Our operation in Raleigh continues to thrive, supporting existing IBM 4690 users, and offering new solutions, both from our own stable and from other retail software providers. Our strategy of using our IBM 4690 migration capability to increase our penetration on the US retail point of sale ("POS") market is gathering pace with several important bids under way.

In Europe, revenues were slightly ahead of 2009, with improved margin, with key deliveries to Coop Denmark, Schuitema (now C1000), Flytoget, Amsterdam Harbour and Focus DIY, where our point of sale solution has now been rolled out to over half the estate. Recent orders include Bakker Bart, a Dutch bakery chain, and a major UK retailer that will utilise ClarityLive to greatly enhance their personal shopping experience.

Leisure

Clarity's Leisure business, which has spent the past few years developing its new product set, saw several key orders towards the end of the year, resulting in revenues increased by 20%. These orders, and the activity level post year end, are most encouraging.

Our strategy of offering our new ClarityLive for Leisure product via a simple migration process for existing customers has paid off and we are seeing strong interest and enthusiasm from our customer base. At the same time our new solution has very successfully competed head on against the other major players in the market. Feedback in other competitive bids is equally encouraging and we anticipate a strengthening of our position in the market.

Hospitality

Hospitality, which includes our Hotels and Resorts business, enjoyed a good year. In 2009, we sold off our low-margin legacy pub solutions business to a reseller, which had the effect of reducing revenue, albeit with minimal profit impact. Off-setting this was a key win with Pret A Manger, which operates well over 200 premium sandwich restaurants in the UK, Hong Kong and the US. Roll out has commenced with vigour and has been praised by the customer. Finally, as icing on the cake, our solution was selected by Weston super Mare Pier for an exciting rebuild project designed to rejuvenate the old pier site which was severely damaged by fire in 2008.

At the same time our relationship with YO! Sushi and Sodexo continued to strengthen with opportunities to deliver more of the ClarityLive suite to each, to augment their continued expansion programmes.

Our Hotels and Resorts unit also saw good progress, increasing revenues and margins despite a slow market. The Oxford Hotels and Inns roll out, comprising some 43 sites, was achieved in the early part of the year, and our solution was well-received with the customer. Elsewhere, as our brand and reputation grows, relationships are emerging in several hotel chains, and Clarity is now preferred supplier in an increasing number of groups. Good wins were recorded against fierce competition with Bespoke Hotels, The Legacy Group, Classic British Hotels, De Vere Venues and Bannatynes. Although unsurprisingly, the market is a little slow, current bid activity remains strong.

Entertainment

Entertainment had a solid year and the conclusion of a major order from Merlin Entertainments Group, although having limited effect on our financial results for 2010, should contribute significantly to the coming years. Hot on the heels of our Merlin success, we received an order from Efteling, a major amusement park operator in Holland; this contract is in its early stages.

In the UK, cinema business was slow, with few new site openings, although in France business was brisk, especially in the first half of the year. Sales of ATMs in France, together with additional ClarityLive components into existing customers, ensured that overall cinema performance was ahead of the previous year.

Our investment in the new ClarityLive for cinema product has been significant and this will be unveiled at the major cinema events this year. The timing of this product release has been good with a number of customers considering system upgrades. We have several proposals under way and expect our new product to be well-received.

Clarity re-brand

Last summer we embarked upon a rebranding project which involved a completely new look and feel to the business, coupled with a restructured management approach. The effect of these changes was to bring together all companies, people and products within a single Clarity message. Nearly one year later, although some elements remain to be completed, the rebrand has been a major success.

Former company and product names have been replaced by the refreshed Clarity brand, and this has had the benefit of cohesion in our sales and operational efforts. Steadily the Clarity name and its associated quality are gaining impact.

In our marketing efforts the new brand is working well. An upgraded website, stationery and collateral are universal, and our people have a greater feeling of being part of a single worldwide team.

Operationally, during the year, the roll out of 43 Oxford Hotels and Inns sites and around half of the Focus DIY retail estate was challenging, yet successful. Currently, our solutions delivery teams are working extremely hard with simultaneous rollouts under way in several geographies. These activities underpin the rationale for our recent acquisition of Cyntergy and its specialist skills will assist us in similar future projects.

Management and staff

Clarity is positioned in a fast-moving environment where change is constant. Accordingly, there is a need regularly to refresh and enhance our management and structure, and to ensure that procedures and controls are relevant and effective. This process will continue and accelerate as we grow further.

In the UK, our sales team has been strengthened with key appointments, and our solutions delivery team has been extended in order to keep abreast of customer demand. Further appointments are planned as we address existing and new markets.

In Holland, where we have seen strong business growth in the past year, our team has been enhanced to include local skills and knowledge in the areas of sales, support, project management and business analysis. With several recent contract wins, this process is dynamic and stretching, but our team is responding well.

Our US business has grown strongly over the past year, and such growth has brought many successes and challenges. We are well-positioned in this market with exciting technology and opportunities, and our goal is to continue and indeed accelerate our recent growth whilst augmenting our management and operational structures to cope with this demand. Again, we have added to our sales and operational resources in each of our US sites, and further appointments are pending. Our projections show an enormous potential for our products and services in this territory and, following a recent management reorganisation, North America is a key area of focus.

Our highly successful business in France has continued to deliver on various fronts. New product development places us in good shape with our key customers, and prospects for new business are encouraging. We suffered a setback in April 2010 with the untimely death of Dr Wolfgang Buscher, our much respected CEO in Paris. Nevertheless, Wolfgang would have been proud of the manner in which his team rallied around and communicated internally and externally, continued his strategy and ensured continuity of the business he nurtured so well. With his successor now in place, he would be pleased that our French operation is in very good hands.

Product strategy and solutions delivery

With our rebrand over the past year, our product strategy has centred on the creation of ClarityLive, a set of products and services focused on enhancing our customers' ability to engage with their customers. ClarityLive comprises an extensive set of software, designed to operate together to provide the customer with the best possible experience when purchasing products and services, via whichever medium he or she chooses. Today's consumer demands choices and information, together with outstanding customer service. If the vendor fails to offer this level of service, the consumer simply buys elsewhere.

Clarity's suite of products and services addresses these challenges by providing its own customer, who may be a hotelier, a retailer, a restaurant or an amusement park operator, with the tools with which to provide outstanding service, thereby encouraging the consumer to do more, buy more, and remain loyal. This may be by offering, for example, the best in-store or hotel reception experience, or may be the provision of seamless internet booking, or even access to services via Blackberry or iPhone. Whatever medium is chosen, ClarityLive is designed to accommodate our changing technological environment.

Across the product range, ClarityLive is being enhanced and integrated, bringing the best ideas, solutions, practices and technologies from across different verticals to each of our markets. The resulting proposition is emerging as highly-compelling, made possible by an already advanced and well-designed product family. Once complete, we believe the suite will place us firmly ahead of the competition, and it is already delivering tangible wins, such as:

· our loyalty and business intelligence functionality, originally developed for retail, is being sold into cinema and hospitality applications;

· our golf and spa booking capability is being sold into retail stores;

· our food and beverage capability is being installed in all divisions; and

· our cinema ticketing capabilities are being offered in amusement park and similar applications.

Our ultimate goal is to achieve one set of fully-integrated products encompassing all elements of the consumer purchase experience, via whichever channel is selected, and to provide outstanding post-sale support to our customers in providing these solutions.

Acquisition of Cyntergy

As mentioned above, following the year end on 28th May 2010, Clarity re-acquired the business and assets of Cyntergy Services Ltd, the IT helpdesk and training company based in Sunbury on Thames.

Cyntergy provides a 24/7 multi-lingual service desk to several major high street retailers, and to the hotel, leisure and telecommunications markets. In addition, Cyntergy currently provides IT support and related services for Clarity's software.

Our intention is that, with the integration of Cyntergy, in addition to enhanced revenue opportunities, Clarity can provide the best possible post sale experience to its customers, thereby further differentiating the Group from its competitors.

Current trading and activities

Good bids and tenders are under way in all territories and we are enhancing our sales and operational resources to address higher activity levels. In an increasing number of areas we will be working with resellers to extend our reach.

Resellers will form a key component in our planned growth, with several already in place and more identified for relationship building both in existing territories and new geographies.

The management team is being further strengthened at all levels in order to address increasing activity levels and opportunities. Our team is strong and we will continue to develop our organisation as new revenues are secured.

Outlook

World-wide market conditions remain difficult for most businesses. However, good order prospects remain across each of our chosen markets and, although the sales ordering process has inevitably taken longer in some cases, our improving reputation and market awareness are resulting in healthy levels of prospect activity.

With a significant level of repeat business, anticipated further Merlin and Pret rollouts, and good order-gathering activity under way, we remain cautiously confident about the Group's prospects.

K R Smith BA CA
Chief Executive Officer

28 June 2010

Financial Review

	Year ended 31/03/10 £'000	Year ended 31/03/09 £'000	Year on year change

Revenue	19,081	17,683	8%
Gross profit	15,561	14,547	7%
Operating expenses	(13,652)	(13,249)	3%
Operating profit from continuing operations (before amortisation)	1,909	1,298	47%
Net finance costs	(54)	(187)	(71%)
Profit before tax and amortisation of intangibles	1,855	1,111	67%
Amortisation of intangible assets	(416)	(646)	(36%)
Tax credit	556	6	-
Profit for the year from continuing operations	1,995	471	324%
Earnings per share from continuing operations	5.68p	1.47p	286%
Adjusted earnings per share *	3.63p	1.47p	147%
Net increase in cash and cash equivalents for the year	457	2,114
Net cash at 31 March	1,258	466

*Adjusted earnings per share excludes deferred tax credit of £721,000 in 2010 (2009: £nil).

Revenue

Group revenues in the year increased 8% to £19.1m (2009: £17.7m). All four of our divisions increased their revenue year on year. The Retail division showed a 10% increase to £10.1m (2009: £9.2m) and benefitted particularly from new orders in the US and Europe. In future reports revenue from amusement park customers, currently reported in the Retail division, is expected to be shown in the Entertainment division.

Gross profits increased in line with revenue and gross profit margin was maintained at 82% (2009: 82%) for the Group.

Operating expenses

Operating expenses were held to a 3% increase year on year reflecting efficiency gains as previously acquired businesses were further integrated into the Group. Closer cooperation between operating teams and the integration of separate products into the ClarityLive platform are facilitating greater operational efficiency as the business scales up.

Net finance costs

Net finance costs for the year were £54,000 (2009: £187,000). This reduction reflects reduced loan balances and a lower average interest rate in the year.

Profit before tax and amortisation

Profit before tax and amortisation has increased 67% to £1.9m from £1.1m in 2009 reflecting the increased revenue and greater operational efficiencies.

Amortisation

Amortisation of intangible assets represents the write off of software rights acquired. These assets are being amortised over 5 years. The charge in the year has reduced from £0.6m to £0.4m as it is now restricted to software acquired as part of the MATRA acquisition, all other amounts now being fully written off.

Taxation

In previous years the Group has not recognised its deferred tax asset. Given the improved profitability and visibility of future profits the Group has recognised a deferred tax asset of £721,000 (2009: £nil) in the year with an equivalent credit to the income statement. When netted against the Group's tax charge for the year of £165,000, this gives a net credit of £556,000.

Earnings per share

Earnings per share increased to 5.7p, or 3.6p if the deferred tax credit is added back, compared to 1.5p in 2009.

Capital reorganisation and dividend policy

In April 2009 the trade and assets of a number of the Group subsidiaries were acquired by Clarity Retail Systems Limited, a direct subsidiary of the Company. As a consequence of this process Clarity now has distributable reserves and therefore has the ability to pay dividends. The Board considers that in the Group's current growth phase the cash generated in the business should be reinvested, but it will now be possible to make future distributions to shareholders once sustained profitability and cash flow are achieved.

Statement of financial position

Non current assets at 31 March 2010 were £10.0m (2009: £10.0m) reflecting amortisation of £0.4m, deferred tax of £0.7m and a reduction to the cost of goodwill of £0.3m in the year on the agreement of the MATRA earn out amount.

Trade and other receivables increased to £5.4m (2009: £4.4m) reflecting the increase in revenues.

Trade payables were £1.5m compared with a 2009 figure of £2.3m which included significant one off hardware balances.

Net cash

Cash and cash equivalents at 31 March 2010 were £2.4m (2009: £2.0m). The balance on our bank loan at 31 March 2010 was £1.1m (2009: £1.5m) giving net cash at 31 March of £1.3m (2009: £0.5m).

Placing

In October 2009 the Company raised £2.7m (before expenses) through the placing of 6,812,500 new ordinary shares at 40p per share. The funds were applied to the MATRA earn out and to provide working capital for the business.

Cyntergy acquisition

On 28 May 2010 the Company acquired 80% of the business and assets of Cyntergy Services Ltd (in administration), a software support and training business. The cash consideration was £150,000 and the acquired assets and liabilities are set out in note 6.

S Sadler
Chief Financial Officer

28 June 2010

Consolidated Income Statement

for the year ended 31 March 2010

	Notes	Year ended 31/03/10 £'000	Year ended 31/03/09 £'000
Continuing operations:
Revenue	3	19,081	17,683
Cost of sales		(3,520)	(3,136)
Gross profit		15,561	14,547

Operating costs:
Operating expenses		(13,652)	(13,249)
Amortisation and impairment of acquired intangible assets		(416)	(646)
Total operating costs		(14,068)	(13,895)

Operating profit from continuing operations		1,493	652

Operating profit from continuing operations is analysed between:
Operating profit from continuing operations		1,909	1,298
Amortisation of acquired intangible assets		(416)	(646)
		1,493	652

Finance income		49	617
Finance costs		(103)	(804)
Profit before taxation from continuing operations		1,439	465

Taxation credit	4	556	6
Profit for the year from continuing operations		1,995	471

Loss for the year from discontinued operations		-	(586)
Profit on disposal of discontinued operations		-	333
Profit for the year attributable to the owners of the parent company		1,995	218

Earnings/(loss) per share:	5
Basic and diluted - continuing operations		5.68p	1.47p
Basic and diluted - discontinued operations		-	(0.79)p
		5.68p	0.68p

Consolidated Statement of Comprehensive Income

for the year ended 31 March 2010

	Year ended 31/03/10 £'000	Year ended 31/03/09 £'000
Profit for the year attributable to the owners of the parent company	1,995	218
Other comprehensive income:
Exchange differences on translation of foreign operations	(66)	(39)
Total comprehensive income for the year attributable to the owners of the parent company	1,929	179

Consolidated Statement of Financial Position

as at 31 March 2010

Company Number 3914814

	As at 31/03/10 £'000	As at 31/03/09 £'000
Assets:
Non current assets:
Property, plant and equipment	262	248
Deferred tax	721	-
Goodwill	8,627	8,890
Other intangible assets	406	812
Total non current assets	10,016	9,950

Current assets:
Inventories	155	260
Trade and other receivables	5,439	4,370
Cash and cash equivalents	2,347	1,951
Total current assets	7,941	6,581

Total assets	17,957	16,531

Liabilities:
Non current liabilities:
Bank loans	689	1,085
Deferred consideration	713	3,136
Obligations under finance leases	-	14
Total non current liabilities	1,402	4,235

Current liabilities:
Trade payables	1,496	2,264
Other payables	2,747	2,797
Income tax	633	184
Bank loans and overdrafts	400	400
Loan notes	102	129
Obligations under finance leases	14	8
Deferred consideration	690	570
Total current liabilities	6,082	6,352

Total liabilities	7,484	10,587

Net assets	10,473	5,944

Equity:
Shareholders' equity:
Share capital	9,710	8,007
Share premium	8,473	7,576
Retained earnings	(9,044)	(11,039)
Translation reserve	(362)	(296)
Other reserve	1,696	1,696
Total equity attributable to the owners of the parent company	10,473	5,944

Consolidated Statement of Cash Flows

for the year ended 31 March 2010

	Year ended 31/03/10 £'000	Year ended 31/03/09 £'000
Operating activities:
Profit before tax and finance costs	1,493	399
Depreciation	95	107
Amortisation:
Intellectual property rights	416	640
Software	-	6
Interest paid	(290)	(705)
Taxation	389	(267)
Operating cash flows before movements in working capital	2,103	180

Decrease in inventories	105	366
(Increase)/Decrease in trade and other receivables	(1,075)	433
(Decrease)/increase in trade and other payables	(923)	450
Cash generated from operations	210	1,429

Investing activities:
Proceeds on disposal of property, plant and equipment	-	31
Proceeds on disposal of businesses (net of expenses)	-	748
Purchase of property, plant and equipment	(114)	(61)
Interest received	238	524
Purchase of subsidiary undertakings net of cash acquired	-	(19)
Cash from investing activities	124	1,223

Financing activities:
Proceeds from the issue of share capital	2,600	-
Repayment of loan notes	(2,067)	(386)
New bank loans	-	1,485
Repayment of bank loans	(400)	(1,576)
Capital element of finance leases	(8)	(53)
Interest element of finance leases	(2)	(8)
Cash generated from/(absorbed in) financing activities	123	(538)

Net increase in cash and cash equivalents	457	2,114

Cash and cash equivalents at the beginning of the year	1,951	(89)
Foreign exchange rate adjustments	(61)	(74)
Cash and cash equivalents at the end of the year	2,347	1,951

Consolidated Statement of Changes in Equity

for the year ended 31 March 2010

As at 31 March 2010

	Attributable to the owners of the parent company
	Share Capital £'000	Share Premium Account £'000	Retained Earnings £'000	Other Reserve £'000	Translation Reserve £'000	Total £'000
At 31 March 2008 and 1 April 2008	8,007	7,576	(11,257)	1,696	(257)	5,765
Consolidated profit for the year	-	-	218	-	-	218
Other comprehensive income net of tax:
Exchange differences on translation of foreign operations	-	-	-	-	(39)	(39)
At 31 March 2009 and 1 April 2009	8,007	7,576	(11,039)	1,696	(296)	5,944

Consolidated profit for the year	-	-	1,995	-	-	1,995
Other comprehensive income net of tax:
Exchange differences on translation of foreign operations	-	-	-	-	(66)	(66)
Transactions with owners in their capacity as owners	1,703	897	-	-	-	2,600
At 31 March 2010	9,710	8,473	(9,044)	1,696	(362)	10,473

Notes to the Preliminary Announcement

1 Reporting entity

Clarity Commerce Solutions plc is a public limited company incorporated and domiciled in England and Wales (registration number 3914814). The Company's registered address is Paterson House, Hatch Warren Farm, Hatch Warren Lane, Hatch Warren, Basingstoke, Hampshire RG22 4RA.

The Company's ordinary shares are traded on the AIM market of the London Stock Exchange plc. The consolidated financial statements of the Group for the year ended 31 March 2010 comprise the Company and its subsidiaries.

Across the year the Group was primarily involved in the provision of software solutions for entertainment, leisure, hospitality and retail sectors with offices in the United Kingdom, United States, France, Holland and New Zealand.

The results are presented in GBP (£) being the functional currency of the ultimate parent company.

The Annual General Meeting will be held on 22 July 2010. Notice of the meeting will be enclosed with the audited statutory financial statements.

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, Paterson House, Hatch Warren Farm, Hatch Warren Lane, Hatch Warren, Basingstoke RG22 4RA.

This Preliminary Announcement was approved by the Board on 28 June 2010.

The figures for the year ended 31 March 2010 and 2009 do not constitute statutory accounts within the meaning of S.434 of the Companies Act 2006.

The figures for the year ended 31 March 2010 have been extracted from the statutory accounts for that year on which the auditor has issued an unqualified audit report which have yet to be delivered to the Registrar of Companies. The figures for the year ended 31 March 2009 have been extracted from the statutory accounts for that year which have been delivered to the Registrar of Companies and on which the auditor has issued an unqualified audit report. No statement has been made by the auditor under Section 498(2) or (3) of the Companies Act 2006 in respect of either of these sets of accounts.

The consolidated financial statements have been prepared in accordance with International Financial Reporting Standards adopted by the International Accounting Standards Board ('IASB') and interpretations issued by the International Financial Reporting Interpretations Committee of the IASB (together 'IFRS') as endorsed by the European Union. The information in this preliminary statement has been extracted from the audited financial statements for the year ended 31 March 2010 and as such, does not contain all the information required to be disclosed in the financial statements prepared in accordance with IFRS.

The directors do not recommend the payment of a final dividend (2009: £nil).

2 Critical judgements and estimation uncertainty

The preparation of the financial statements requires management to make estimates and assumptions that affect the reported amount of revenues, expenses, assets and liabilities, and the disclosure of contingent liabilities at the date of the financial statements. If in the future such estimates and assumptions, which are based on management's best judgement at the date of preparation of the financial statements, deviate from actual circumstances, the original estimates and assumptions will be modified as appropriate in the year in which circumstances change. Where necessary, the comparatives have been reclassified or extended from the previously reported results to take into account presentational changes.

Impairment of goodwill, intangible assets and investments

Where there is an indication that the carrying value of items in goodwill, intangible assets and investments may have been impaired through events or changes in circumstances a review will be undertaken of the recoverable amount of those assets based on a value in use calculation which will involve estimates and assumptions to be made by management.

Tax losses

As the Group is now profitable and recovery of the tax losses is likely over the coming periods, a deferred tax asset of £0.7m, representing the tax value of the losses carried forward has been recognised in the Consolidated Financial Statements.

3 Operating segments

For management reporting purposes, the Group is organised into four separate divisions, each with income streams that can carry different risks and rewards. This is the basis on which the Group reports its primary segment information.

The four income streams are:

· revenue from Retail operations;

· revenue from Entertainment operations;

· revenue from Leisure operations; and

· revenue from Hospitality operations.

Segmental information for continuing operations with regard to these four income streams is presented herewith.

Following the restructure of the UK trading companies, into a single entity (Clarity Retail Systems Limited) all UK operating costs were apportioned to cost centres. These costs were then allocated to the divisions via the Group cost allocation. This is a different approach to previous years, where separate reporting entities made up the divisions for segment reporting, which then received a smaller allocation of Group costs. It is no longer possible to split the restructured UK statement of financial position between the separate divisions and as the management reporting only details operating profit levels of the divisions, no statement of financial position segment information for the year ended 31 March 2010 is reported here.

For the year ended 31 March 2010

	Retail 2010 £'000	Entertainment 2010 £'000	Leisure 2010 £'000	Hospitality 2010 £'000	Group 2010 £'000	Consolidated 2010 £'000
Revenue	10,081	4,731	1,477	2,792	-	19,081

Gross profit	8,727	3,400	1,251	2,183	-	15,561

Depreciation	(43)	(17)	(12)	(23)	-	(95)
Amortisation of software rights	(406)	-	-	-	(10)	(416)
Finance income	-	-	-	-	49	49
Finance cost	-	-	-	-	(103)	(103)
Taxation credit	-	-	-	-	556	556

For the year ended 31 March 2009

	Retail 2009 £'000	Entertainment 2009 £'000	Leisure 2009 £'000	Hospitality 2009 £'000	Group 2009 £'000	Consolidated 2009 £'000
Revenue	9,178	4,624	1,232	2,649	-	17,683

Gross profit	8,200	3,253	1,023	2,071	-	14,547

Non recurring reorganisation costs	-	-	-	-	(426)	(426)
Depreciation	(25)	(9)	(2)	(71)	-	(107)
Amortisation of software rights	(390)	(6)	-	-	(250)	(646)
Finance income	-	-	-	-	617	617
Finance cost	-	-	-	-	(804)	(804)
Taxation credit	-	-	-	-	6	6

The Group has taken advantage of early adoption for the amendment to IFRS 8 "Operating segments".

Geographic segments

Below is an analysis of revenue by geographic location.

For the year ended 31 March

	2010 £'000	2009 £'000
United Kingdom	9,373	9,792
Europe (excluding United Kingdom)	3,340	2,566
United States of America	6,087	5,083
Rest of World	281	242
	19,081	17,683

4 Taxation

Current tax (credit)/expense

for the year ended 31 March 2010

	Year ended 31/03/10 £'000	Year ended 31/03/09 £'000
UK taxation - current year	-	(304)
UK adjustments in respect of previous years	36	-
Overseas taxation - current year	383	298
Overseas adjustments in respect of previous years	(254)	-
Deferred tax benefit from previously unrecognised losses (note 2)	(721)	-
Total tax credit for the year	(556)	(6)

Reconciliation of effective tax rate

for the year ended 31 March 2010

	Year ended 31/03/10 £'000	Year ended 31/03/09 £'000
Profit on ordinary activities before taxation	1,439	212

Profit on ordinary activities before taxation multiplied by the standard rate of corporation tax in the UK of 28% (2009: 28%)	403	59

Effects of:
Difference between depreciation and capital allowances	11	15
Non deductible items	62	348
Utilisation of tax losses not previously recognised	(152)	-
Foreign tax rates	80	46
Enhanced relief for research and development	(147)	(360)
Losses carried forward	126	25
Amortisation	-	(17)
Chargeable gains adjustment	-	(122)
Tax losses not previously recognised as a deferred tax asset	(721)	-
Adjustments to prior year	(218)	-
Total taxation reported in the consolidated financial statements	(556)	(6)

Effective tax rate	(38.6)%	(2.8)%

Domestic income tax is calculated at 28% (2009: 28%) of the estimated assessable profit for the year.

The effective tax rate is (39%) (2009: (3%)) This is lower than the standard UK rate of 28% due to receipt of overseas tax refunds previously provided against, differences in overseas tax rates and the recognition of UK tax losses.

5 Earnings/(loss) per share

The calculations of earnings/(loss) per share are based on the profit/(loss) after tax for the financial year and the following numbers of shares:

For the year ended 31 March 2010

	Year ended 31/03/10 Number	Year ended 31/03/09 Number
Weighted average number of shares:
For basic profit/(loss) per share	35,127,593	32,029,305
For diluted profit/(loss) per share	35,127,593	32,029,305

	Year ended 31/03/10 £'000	Year ended 31/03/09 £'000
Earnings for the year from continuing operations	1,995	471
Loss for the year from discontinued operations	-	(253)
Earnings for the year attributable to owners of the parent company	1,995	218

Earnings/(loss) per share:
Basic and diluted - continuing operations	5.68p	1.47p
Basic and diluted - discontinued operations	-	(0.79)p
	5.68p	0.68p

6 Acquisitions

On 28 May 2010 the Company acquired 80% of the business and assets of Cyntergy Services Ltd (in administration). Cyntergy Services Ltd provides software support and training services. As part of the acquisition Clarity has taken on a number of customer contracts and approximately 80 employees. Cash consideration was £150,000 and the acquired assets and liabilities are set out in the table below.

	Carrying Value as at 28/05/10 £'000	Fair Value Adjustment £'000	Provisional Fair Value to the Group £'000
Financial assets:
Property, plant and equipment	24	(19)	5
Trade receivables	276	-	276
	300	(19)	281

Financial liabilities:
Deferred income	93	-	93
Other payables	218	-	218
	311	-	311

Net liabilities	(11)	(19)	(30)

Goodwill			180
Cash consideration			150