Interim Results
Clarity Commerce Solutions PLC
28 November 2003
28 November 2003
Clarity Commerce Solutions plc
Interim Results Announcement
Half Year Ended 30 September 2003
Profits Turn Around Despite Slow Markets
Clarity Commerce Solutions plc ('Clarity'), the AIM listed provider of software
solutions and services to the hospitality, leisure, entertainment and retail
markets, announces a significant improvement in performance for the half year
ended 30 September 2003, over last year's corresponding period.
Commenting, Graham York, Chief Executive said: 'The improved results, with
pre-tax profits showing a turn around of £345,000 over last half year, were
achieved despite slow market conditions in the markets that the Group serves.'
Financial Highlights
* Pre-tax profit before interest and taxation: £227,000 (2002: loss
£118,000).
* Revenues: £4.85m (2002: £3.40m) up 43%.
* Continued organic growth and by acquisition.
* Four acquisitions in two years expands Group's presence in new markets and
geographically.
* Cash generative.
Operational Highlights
* Ongoing integration into two divisions from six subsidiaries.
* Local authority contract gains for Leisureflex Software in Thames Valley and
Midlands.
* Internet bookings successes for Leisureflex product with cinema and theatre
groups.
* Launch of new self service kiosks for ticketing.
* Cinema ticket sales via the internet for Clarity/Pacer CATS products in the
UK and Germany.
* Three new cinema customers in the UK, US, France (Apollo, Alamo Drafthouse
and Publicis).
* Clarity Central product installed by leading restaurant and pub operators.
* Business Intelligence Software in demand.
* New Clarity services division provides entry into new market sectors.
Current Trading and Prospects
Graham York said: 'Acquisitions made in August and September will contribute to
second half trading. The Group's strategy of expansion into related but parallel
marketplaces is proving to be effective, and the benefits of synergy across
these markets are starting to become evident.
Recurring revenue is growing, representing 40% of turnover for this half year.
The Board is confident that the full year will show continued growth in profits'
ENDS
For further information, please contact:
Clarity Commerce Solutions plc
Graham York, Chief Executive Officer
Peter Walker, Business Development Director
Tel: 01722 746200
Binns & Co PR Ltd
Peter Binns / Jacqui Graves
Tel: 020 7786 9600
About Clarity Commerce Solutions plc
The Group provides a range of software which includes business intelligence
tools, electronic point of sale, membership, admissions, ticketing, loyalty and
facility management software for its customer base which includes pubs, bars,
restaurants, nightclubs, health and fitness clubs, leisure centres, cinemas and
theatres.
The Group also provides multi-site IT project management and support services to
the leisure, hospitality and retail markets.
Clarity geographic markets are the UK, and more recently in France, Germany and
the US.
INTERIM STATEMENT
FINANCIAL REVIEW
We are pleased to report that the Group has made a profit before interest and
taxation for the half year ended September 30th 2003 of £227,000 (2002 loss of
£118,000), an improvement in performance over the corresponding half year of
£345,000.
This improved result comes from a 43% increase in revenues for the half year of
£4,853,000 (2002 £3,399,000), despite slow market conditions in the markets that
the Group serves.
Cash generation during the half year amounted to £773, 000.
Clarity has continued to grow organically and through strategic acquisition.
The Group acquired the Pacer/CATS cinema software business in August 2003. As
well as delivering a large UK customer base, this has brought an international
presence to the Clarity Group with customers and offices in the US, France, and
Germany. The assets of the business were acquired for a consideration of
£1,874,350, financed by a combination of a Placing of Ordinary Shares which
raised £750,000, additional bank funding and existing cash resources.
In September 2003, Clarity acquired the trading operations of Cyntergy, a
Sunbury based training and helpdesk company for £500,000, with funding provided
by the Bank of Scotland.
The acquisitions of Pacer/CATS, Cyntergy, and last year Romulus and Vision,
considerably expands the Group's markets. The Group is now of a size where it
will benefit from integration, and we are therefore moving towards establishing
two divisions out of the present six companies. These are a Software Division
that provides software to the hospitality, leisure and entertainment markets,
and business intelligence software across a range of sectors, and a Services
Division that provides training, implementation and helpdesk resources across
the hospitality and retail marketplaces.
OPERATING REVIEW - SOFTWARE
The Group is pleased to announce that good progress is being made on a number of
fronts.
The recent acquisitions of Pacer/CATS and Cyntergy have demonstrated early
benefit to the Group. Cyntergy has brought additional skills and resource to the
Group as a whole in the service arena, significantly bolstering our helpdesk
offering and Pacer/CATS has opened up a number of new sales opportunities in a
variety of new market sectors and geographical areas.
The Group's product portfolio continues to develop and we continue to secure new
contracts in a range of market sectors.
New contracts for Leisureflex
The group has secured several new major contracts for its LeisureFlex software.
LeisureFlex will be installed at a Metropolitan Council's two largest leisure
centres before 1st January 2004. It will be subsequently rolled out to a further
10 dual-use centres, all of which will be live before April 2004. The Council
are also keen to install Flex's Internet Bookings module, which will help them
meet their targets for compliance with the e-Government Interoperability
Framework (eGIF), a government led initiative to increase public access to
government via the web.
Flex will install 5 Borough Council sites in the Thames Valley area, based on a
central server solution, in early 2004. This is part of a major collaboration
between a number of Councils in the region, in which Central Government have a
vested interest, and will have a significant impact on future Local Government
use of Smart Card technologies.
Lewes District Council will link 5 sites to a central LeisureFlex server in
early 2004. They have also purchased the LeisureFlex Internet Bookings module
and will launch their on-line service at the same time.
Bromsgrove District Council has also provided Flex with a contract to replace
systems at three sites in December 2003.
Internet Bookings - Success Continues
Ipswich Borough Council installed LeisureFlex Internet Bookings in February
2002. The module was an immediate success, reducing the number of enquiries at
leisure centre receptions and releasing staff to other duties. It has also
generated significant new business, and Ipswich B.C. report increased revenues
across all their leisure centres. In early 2003 Ipswich recorded their highest
ever on-line booking levels.
Sales of the Internet Booking module to Preston and Newport councils have
increased the base of customers using this module and there is further interest
from other LeisureFlex customers who are keen to increase the services they
offer over the Internet in line with the governments 'eGIF' policy.
Clarity has also made two further sales of the Internet Booking module to
customers of the TheatreFlex box office booking system.
Self-Service Kiosks launched
The newly launched LeisureFlex Self-Service Terminals are public-facing
browser-based ticket kiosks allowing direct debit customers to issue
self-service casual tickets, without having to queue at the front desk.
Birmingham City Council has gone live at a single centre, but have plans to
install kiosks in around 25 others. Thousands of tickets have already been
issued, releasing front desk staff to other duties, and providing an enhanced
service to customers who had previously complained about queuing times.
The solution has been developed using Microsoft .NET technology.
Cinema Ticket sales via the Internet
Clarity is pleased to announce that one of the UK's biggest cinema operators has
this week commenced selling cinema tickets via the Internet using Clarity/Pacer
products in a northern pilot site, and intends this service to be available for
all their cinemas in the UK and Germany.
The investment in the Groups XML Internet Gateway software has enabled them to
sell tickets via the web. The addition of internet ticket sales increases the
ways in which customers can make advance bookings.
Three new cinema customers
Apollo Cinemas Limited, the largest independent and seventh largest cinema
operator in the UK with 10 cinemas and 59 screens around the country, have
awarded Clarity/Pacer the contract to refit their Torbay multiplex cinema with
their Ticketing and Concession system.
Apollo have purchased ticketing, concession, sale and purchase ATMs, online
credit card authorisation and internet gateway software.
With aggressive expansion plans for 2004 and 2005, including a London based site
and at least four other regional multiplexes, the award of this contract should
provide further revenue opportunities.
In the US, the Group has received an order from Alamo Drafthouse Cinemas. This
order is for four sites in Texas. Clarity/Pacer will be implementing a ticketing
solution with an XML interface to their website. Alamo is a highly rated cinema
group that attempts to offer the moviegoer a different experience. Each cinema
serves a full menu of dinner and drinks to the seats while their guests watch
the movies.
In France, Pacer/CATS has received an order to install its ticketing software in
a prestigious development on the Champs Elysees. This complex, owned by
Publicis, combines retail operations with a cinema operated by Europalaces.
Publicis Groupe SA is the world's 4th largest communications group and ranks
number one in Europe.
Clarity Central installed by leading operators
Premier Leisure, based in York, with an estate that includes Hotels, Restaurants
and Pubs have installed Clarity Central to control prices, products and
promotions across the diverse estate. Premier have also installed Clarity Stock
Management systems across the group for greater control of inventory at centre
and sites.
Signature Restaurants have implemented Clarity Central for its chain of Strada
restaurants across London. The project went live in October in 14 sites with
further sites planned in the near future.
Laurel Pub Co continues to expand with the purchase of 17 new sites. Clarity
systems have been installed into all these sites linked to the Laurel Clarity
Central system that already controls the 612 site estate.
Business Intelligence software in demand
The Group's Business Intelligence division, Romulus, has increased its turnover
in the first six months of trading by over 95% on a year on year basis.
This has been achieved by new contract wins with a variety of plc customers. One
of Romulus's most recent contract wins is with Caledonian MacBrayne, the ferry
operators, operating from their HQ in Gourock, Scotland.
Romulus has forged a close working relationship with all of its Scottish based
customers and have several large projects in the pipeline over the next four
months. These projects should ensure their continued double digit growth over
the second half of the year.
OPERATING REVIEW - SERVICES
Clarity's services division has been enhanced by the acquisition of Cyntergy
Services, which has been part of the Group for four weeks of the half year. This
is a strategic acquisition for Clarity, bringing into the Group several well
known high street clients in general retail, as well as hospitality. The new
Services Division now provides increased training and implementation services,
as well as a 36 strong multi-lingual helpdesk providing a 24/7 service across
its base of international clients. Group support and helpdesk requirements will
be provided by a centralised support and helpdesk service providing an improved
cost effective resource for Clarity's clients.
Cyntergy's customers and trading partners have been very positive about the
acquisition of the company by Clarity and the security it offers clients.
Cyntergy have secured renewed as well as new contracts for training and helpdesk
services. They have also been selected as the training partner for the rollout
of Travelodge's new property management system commencing mid 2004.
EMPLOYEES
The Group currently employs 198 staff in the UK, and 50 overseas.
CURRENT TRADING AND PROSPECTS
The Group's strategy of expansion into related but parallel marketplaces is
proving to be effective, and the benefits of synergy across these markets are
starting to become evident.
Recurring revenue is growing, representing 40% of turnover for the half year.
The Board is confident that the full year will show continued growth in profits.
ALR Morton: Group Chairman
G York: Group Chief Executive
28th November 2003
CONSOLIDATED BALANCE SHEET
AT 30 SEPTEMBER 2003
At At At
30 September 30 September 31 March
2003 2002 2002
Unaudited Unaudited Audited
£'000 £'000 £'000
Fixed assets
Tangible assets 508 302 310
Intangible assets 10,683 7,207 8,444
-------
--------- ---------
11,191 7,509 8,754
-------
--------- ---------
Current assets
Stocks 654 590 481
Debtors 4,564 2,170 3,540
Cash at bank and in hand 1,349 732 453
--------- -------
---------
6,567 3,492 4,474
Creditors: amounts falling due (6,153) (2,258) (2,958)
within one year
--------- --------- -------
Net current assets 414 1,234 1,516
--------- ------- ---------
Total assets less current 11,605 8,743 10,270
liabilities
Creditors: amounts falling due (2,942) (1,805) (2,521)
after more than one year
--------- --------- -------
Net assets 8,663 6,938 7,749
------- --------- ---------
Capital and reserves
Called up share capital 3,856 3,481 3,481
Share premium account 5,662 5,287
Shares to be issued 125 - 125
Profit and loss account (980) (1,830) (1,144)
--------- --------- -------
Equity shareholders' funds 8,663 6,938 7,749
--------- --------- -------
CONSOLIDATED PROFIT AND LOSS ACCOUNT
FOR THE PERIOD ENDED 30 SEPTEMBER 2003
Period Period Period
1 April 2003 to 1 April 2002 to 1 Arpil 2002
30 September 30 September to 31 March
2003 2002 2003
Unaudited Unaudited Audited
£'000 £'000 £'000
Turnover
- continuing 3,494 3,399 7,263
- acquisitions 1,359 - -
-------- --------- --------
4,853 3,399 7,263
Cost of sales (1,860) (1,670) (3,174)
--------- --------- --------
Gross profit 2,993 1,729 4,089
Operating costs (2,766) (2,124) (3,776)
--------- --------- --------
Operating profit/(loss)
- continuing operations 88 (395) 313
- acquisitions 139 - -
--------- --------- --------
Operating profit/(loss) is 227 (395) 313
analysed between:
Operating profit/(loss) 227 (118) 380
before goodwill amortisation
/impairment
Goodwill amortisation/ - (277) (67)
impairment --------- --------- --------
Operating profit/(loss) 227 (395) 313
after amortisation/
impairment of goodwill
Interest receivable 110 90 198
Interest payable and similar (143) (124) (196)
charges --------- --------- --------
Profit/(loss) on ordinary 194 (429) 315
activities before taxation
Taxation on ordinary (30) - (58)
activities --------- --------- --------
Retained profit/loss for the 164 (429) 257
period --------- --------- --------
Earnings/(loss) per ordinary share
- basic 1.14 p (3.08)p 1.85 p
- fully diluted 1.12 p (3.08)p 1.84 p
- adjusted basic 1.14 p (1.09)p 2.33 p
CONSOLIDATED CASHFLOW STATEMENT
FOR THE PERIOD ENDED 30 SEPTEMBER 2003
Period Period Period
1 April 1 April 1 April
2003 to 2002 to 2002 to
30 September 2003 30 September 2002 31 March 2003
Unaudited naudited Audited
£'000 £'000 £'000
Net cash inflow/(outflow) from 773 (244) (319)
operating activities --------- ---------- ---------
Returns on investments and
servicing of finance
Interest received 110 90 198
Interest paid and similar (143) (124) (200)
charges
Interest element of hire purchase - - (5)
and finance lease --------- ---------- ---------
Net cash outflow from returns on (33) (34) (7)
investments and servicing of
finance
Taxation 54 (5) (31)
Capital expenditure and financial
investment
Purchase of tangible fixed (50) (4) (14)
assets
Sale of tangible fixed assets 15 10 14
--------- ---------- ---------
Net cash (outflow)/inflow from (35) 6 -
capital expenditure and financial
investment
Acquisitions and disposals
Purchase of subsidiary (3,010) (196) (522)
undertakings
Cash at bank acquired with 969 - 13
subsidiary --------- ---------- ---------
Net cash outflow from (2,041) (196) (509)
acquisitions --------- ---------- ---------
Net cash outflow before (1,282) (473) (866)
financing
Management of liquid resources
Deposit in blocked cash (70) - 230
collateral account
Financing
New secured loan 750 - 197
Repayment of loan notes (60) (308) (412)
Capital element of finance (10) (33) (12)
leases
New loans 1,540 - -
Loan repayments (42) - -
--------- ---------- ---------
Net cash inflow/(outflow) from 2,178 (341) (227)
financing --------- ---------- --------
Increase/(decrease) in cash in 826 (814) (863)
the period --------- ---------- ---------
NOTES
1 Nature of the financial information
The Company prepares statutory accounts annually to 31 March. These are the
interim accounts covering the six months ended 30 September 2003.
The results for the period from 1 April 2002 to 30 September 2002 and year to 31
March 2003 are extracted from the previous year's interim and final accounts
respectively.
The results for the six months ended 30 September 2003 and the period from 1
April 2002 to
30 September 2002 are unaudited, and have been prepared in accordance with the
accounting policies set out in the Company's annual report.
The financial information set out above does not constitute statutory accounts
within the meaning of section 240 of the Companies Act 1985. The results for the
year ended 31 March 2003 are an abridged version of the full statutory accounts
that have an unqualified audit report and have been delivered to the Registrar
of Companies.
2 Taxation
The taxation charge for the six months ended 30 September 2003 and 2002 is based
on the anticipated tax position for the full year.
3 Earnings per share
Basic earnings per share for the period ended 30 September 2003 is calculated by
dividing the profit for the period of £164,000 (period ended 30 September 2002
loss of £429,000, year ended 31 March 2003 profit of £257,000) by 14,361,828
(period ended 30 September 2002 13,927,402, year ended 31 March 2003 13,927,402)
being the weighted average number of shares in issue during the period.
The adjusted basic earnings per share for the period ended 30 September 2003 is
calculated by dividing the profit for the period before amortisation of goodwill
of £164,000 (period ended 30 September 2002 loss of £152,000, year ended 31
March 2003 profit of £380,000) by 14,361,828 (period ended
30 September 2002 13,927,402, year ended 31 March 2003 13,927,402, being the
weighted average number of shares during the year.
The diluted earnings per share has been calculated on the basic earnings and the
weighted average number of shares in issue during the period to 30 September
2003 plus an additional 270,372 (period ended 30 September 2002: 147,594, year
ended 31 March 2003: 155,454) shares representing the fair value of the weighted
average number of shares under option during the period.
4 Dividend
The Company does not propose the payment of a dividend.
The Interim Report will be posted to Shareholders shortly. Copies will be
available free of charge from the Company's registered office:
Clarity Commerce Solutions plc. 1 Netherhampton Business Centre, Salisbury,
Wiltshire SP2 8PU.
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