Successful Placing & Trading

RNS Number : 7200Z

Clarity Commerce Solutions PLC

28 September 2009

 



CCS.L

Clarity Commerce Solutions plc

('Clarity' or the 'Company')

Placing of new Ordinary Shares, Notice of General Meeting

and

Trading Update

Clarity Commerce Solutions plc (AIM:CCS), a leading supplier of software solutions for the hospitality, retail, leisure and entertainment sectors, is pleased to announce that it proposes to raise approximately £2.725 million (before expenses) (the 'Placing') through the issue of 6,812,500 new Ordinary Shares of 25p each (the 'Placing Shares') at a price of 40p per share ('Placing Price'). £1.7 million of the Placing was raised from AIM venture capital trusts.

The Placing Price represents a discount of approximately 4.8 per cent. to the closing mid-market price of 42p per Existing Ordinary Share on 25 September 2009, being the last dealing day prior to the date of this announcement. The Placing Shares will represent approximately 17.5 per cent. of the Company's Enlarged Share Capital. Following Admission, the Company will have 38,841,805 Ordinary Shares in issue.

The Placing Shares have been conditionally placed by Arbuthnot Securities Limited with institutional and other investors. A circular will be posted to Shareholders containing a Notice of General Meeting and subject, inter alia, to the passing of the Resolutions at the General Meeting on 15 October 2009, Admission and dealings in the Placing Shares are expected to commence on AIM at 8.00 a.m. on 16 October 2009. As part of the Placing, certain Directors are subscribing for an aggregate of 250,000 Placing Shares. 

Certain Directors (and their related parties) and other Shareholders have irrevocably undertaken to vote in favour of the Resolutions in respect of 12,180,071 Existing Ordinary Shares, representing, in aggregate, approximately 38.0 per cent. of the Company's Existing Ordinary Shares. 

The Company intends to invest the net proceeds of the Placing to fund part payment of the deferred consideration due to the vendors of MATRA, to repay bank debt and to strengthen the Company's balance sheet. 

The Company expects to announce its unaudited interim results for the six months ended 30 September 2009 in November 2009. Clarity's results are expected to be in line with management expectations. The Directors believe that the outlook for the Company remains positive. Its cash position is healthy and there are strong sales pipelines in all divisions of the business. The market remains challenging but the Company is continuing to experience high levels of recurring maintenance spend and request for change revenues from its existing client base and is also on short lists for a number of Tier 1 contracts. 

Ken Smith, CEO of Clarity commented:

'Clarity has made significant progress over the last two years under a new management team, which refocused the business back to its core markets and returned it to profitability and growth. The successful placing endorses the success of this strategy and highlights the support we enjoy from both existing as well as new shareholders. Our financial position has now been strengthened and with this comes the flexibility to make strategic investments in order to address and capitalise on market opportunities. Despite a challenging trading environment, our pipeline is encouraging and I look forward to reporting on some of these prospects in due course.'

For further information, please contact:

Clarity Commerce Solutions plc
Ken Smith, CEO	Tel: [phone]
Chris Ford, CFO
Arbuthnot Securities Limited
Alasdair Younie/Ben Wells	Tel: [phone]
Biddicks
Shane Dolan	Tel: [phone]

Placing of 6,812,500 new Ordinary Shares at 40p per share 

and

Notice of General Meeting

Introduction

The Company announces that it proposes to raise approximately £2.725 million (before expenses) by way of a conditional placing of 6,812,500 new Ordinary Shares at a price of 40p per share. The net proceeds of the Placing will be used to fund part payment of the deferred consideration due to the vendors of MATRA, to repay bank debt and to strengthen the Company's balance sheet. 

The Placing Shares have been conditionally placed with institutional and other investors. Subject, inter alia, to the passing of the Resolutions at the GM, Admission and dealings in the Placing Shares are expected to commence on AIM on 16 October 2009.

Certain Directors (and their related parties) and other Shareholders have irrevocably undertaken to vote in favour of the Resolutions in respect of 12,846,738 Ordinary Shares, representing, in aggregate, approximately 40.1 per cent. of the Existing Ordinary Shares.  

Background to and reasons for the Placing

The Company's shares were admitted to trading on AIM in July 2000. Clarity specialises in the delivery of software solutions for point of sales, e-commerce and loyalty cards for the retail, leisure, entertainment (ticketing) and hospitality markets. Its integrated software solutions and services are used daily by approximately 5,500 retail stores, 300 cinemas and leisure attractions, 1,000 bars, restaurants and hotels and 450 leisure centres. The Company's clients are currently spread across more than 20 countries.

In the last eighteen months the Company has experienced a significant improvement in its financial performance. In late 2007, the Company faced a number of management and operational challenges which were impacting its financial performance and long-term potential. The Company's management team headed by Ken Smith, Clarity's Chief Executive, have restructured the business and a successful fundraising in February 2008 when the Company raised approximately £1.6 million via a placing and open offer strengthened the Company's financial position.

On 22 June 2009, the Company announced its preliminary results for the year ended 31 March 2009. Despite a difficult economic environment, the Company reported profit before tax and amortisation of £1.1 million which was ahead of market expectations. The Company also reported turnover of £17.7 million and its cash position improved considerably from the prior period with a year end drive eliminating net debt (excluding deferred earn out consideration) despite payments to a number of long-standing creditors. These results were driven by a number of contract wins in the year including:

·               PriceSmart, a cash and carry chain based in San Diego with warehouses throughout Central America and the Caribbean;

·               a major US bedding and speciality store with around 1,000 stores in the USA, Puerto Rico and Canada;

·               Peel Hotels, a major UK-wide hotel chain; and

·               BBA, which is responsible for the commercial management of Amsterdam’s waterways.

In the nine years since the Company's shares were admitted to trading on AIM, the Company has made a number of acquisitions. One of these was the acquisition of MATRA, a global software and solutions provider to the retail sector, in March 2006. The Vendors received £2.5 million in cash and a further sum of £0.5 million which was satisfied by the issue of 757,576 Ordinary Shares to Anthony Houldsworth and Andrew Jacobs. In addition, a further payment was possible depending on certain performance criteria being met. This deferred payment would be calculated by reference to a formula and although the value of this payment would be unknown, the maximum amount payable by the Company, as calculated by the formula, would never exceed £8 million. 

Since it joined the Group, MATRA has delivered a strong performance and has won a number of contracts across multiple retail verticals including grocery, amusement parks and general merchandise including the BBA contract. On 15 August 2008, the Company announced that it had reached agreement with the Vendors whereby the aggregate deferred consideration payable to the Vendors under the Earn Out would be £4,566,000, satisfied by the following:

 

a)            the allotment and issue to the Vendors at any time prior to 30 September 2009 of such number of Ordinary Shares as are valued at £1,783,000 at the relevant time;

b)            the issue by the Company to the Vendors of the Loan Notes; and

c)            the issue and allotment to Anthony Houldsworth and Andrew Jacobs (for and on behalf of the Vendors) of a further 757,576 Ordinary Shares, which took place on 21 August 2006.  

Since the start of 2009, the Company's share price has risen from 17.5p per share to a recent high of 50p per share. In order to take advantage of the Company's improved share price, the Directors resolved to issue the Earn Out Shares to the Vendors, valued at £1,783,000 at the relevant time in accordance with the terms of the revised agreement outlined in paragraph (a) above.

However, the Company and the Vendors have now agreed that in place of issuing the Earn Out Shares to the Vendors, the Company will place such shares with investors and the Vendors shall receive the proceeds of the placing of such Earn Out Shares in cash. Whilst the issue of the Earn Out Shares to the Vendors would not have required shareholder approval, the issue of the Placing Shares pursuant to the Placing, being a non pre-emptive issue of shares for cash, requires the approval of the Shareholders at the General Meeting.

Approximately £1.5 million of the proceeds of the Placing (before expenses) will therefore be used to fund this element of the Earn Out. Following Admission, the outstanding deferred consideration due to the Vendors under the Earn Out will be approximately £1.6 million which will be satisfied by the issue of the unissued balance of the Loan Notes.

It is intended that the balance of the net proceeds of the Placing will be used for general working capital and to repay a proportion of the Company's bank debt. Following the Placing, the Company will be in a stronger position financially and will be able to focus on continuing to grow the business successfully.

Details of the Placing

The Company proposes to raise approximately £2.725 million (before expenses) through the issue of the Placing Shares at the Placing Price. The Placing Price represents a discount of approximately 4.8 per cent. to the closing mid-market price of 40p per Ordinary Share on 25 September 2009, being the last dealing day prior to this announcement. The Placing Shares will represent 17.5 per cent. of the Company's Enlarged Share Capital.

Pursuant to the terms of the Placing Agreement, Arbuthnot, as agent for the Company, has agreed conditionally to use reasonable endeavours to procure subscribers for the Placing Shares at the Placing Price. The Placing Agreement is conditional upon, inter alia, the Resolutions being duly passed at the GM and Admission becoming effective on or before 8.00 a.m. on 16 October 2009 (or such later time and/or date as the Company and Arbuthnot may agree, but in any event no later than 8.00 a.m. on 30 October 2009). The Placing Agreement contains provisions entitling Arbuthnot to terminate the Placing Agreement at any time prior to Admission in certain circumstances. If this right is exercised the Placing will not proceed. The Placing has not been underwritten by Arbuthnot.

Application will be made to the London Stock Exchange for the Placing Shares to be admitted to trading on AIM. It is expected that Admission will become effective and that dealings in the Placing Shares on AIM will commence on 16 October 2009.

The Placing Shares will rank pari passu in all respects with the Existing Ordinary Shares, including the right to receive all dividends and other distributions declared following Admission. It is expected that CREST accounts will be credited on the day of Admission and that share certificates (where applicable) will be despatched by 23 October 2009. 

As part of the Placing, Sir Colin Chandler, Ken Smith and Chris Ford, each directors of the Company have agreed to subscribe for 250,000 Placing Shares in aggregate at the Placing Price. This represents 3.7 per cent. of the Placing Shares comprising: 

Director	Number of Placing Shares	Resultant Shareholding following Admission	% Shareholding following Admission
Sir Colin Chandler	62,500	396,522	1.02
Ken Smith	125,000	445,000	1.15
Chris Ford	62,500	62,500	0.16

Changes to Articles of Association

The Company is taking the opportunity at the General Meeting to amend the Articles in order to bring them in line with recent changes to legislation relating to UK companies.  

Current trading and prospects

Clarity's interim results for the six months ending 30 September 2009 are expected to be in line with management expectations. The Company expects to announce its unaudited interim results for the six months ended 30 September 2009 in November 2009. 

The Directors believe that the outlook for the Company remains positive. Its cash position is healthy and there are strong sales pipelines in all divisions of the business. The market remains challenging but the Company is continuing to experience high levels of recurring maintenance spend and request for change revenues from its existing client base and is also on short lists for a number of Tier 1 contracts. 

Irrevocable Undertakings

The Directors have irrevocably undertaken to vote in favour of the Resolutions in respect of 2,161,598 Ordinary Shares, representing, in aggregate, approximately 6.7 per cent. of the Existing Ordinary Shares. Certain other Shareholders have irrevocably undertaken to vote in favour of the Resolutions in respect of 10,018,473 Ordinary Shares, representing, in aggregate, approximately 31.3 per cent. of the Existing Ordinary Shares. Therefore, the Company has received in aggregate undertakings to vote in favour of the Resolutions in respect of 12,180,071 Ordinary Shares, representing approximately 38.0 per cent. of the Existing Ordinary Shares.

General Meeting

The General Meeting will be held on 15 October 2009 at the offices of the Company at Paterson House, Hatch Warren Farm, Hatch Warren Lane, Basingstoke, Hampshire RG22 4RA at 10.00 a.m. at which the Resolutions will be proposed.

'Act'	the Companies Act 2006 (as amended)
'Admission'	the admission of the Placing Shares to trading on AIM becoming effective in accordance with the AIM Rules
'AIM'	the market of that name operated by London Stock Exchange
'AIM Rules'	the AIM Rules for Companies and the AIM Rules for Nominated Advisers
'Arbuthnot'	Arbuthnot Securities Limited, the Company's nominated adviser and broker
'Articles'	the existing articles of association of the Company
'BBA'	Dienst Binnenwaterbeheer Amsterdam
'Board' or 'Directors'	the directors of the Company
'Company' or 'Clarity'	Clarity Commerce Solutions plc
'Earn Out'	deferred consideration payable to the Vendors following the acquisition of MATRA
'Earn Out Shares'	3,799,391 Ordinary Shares proposed to be issued in connection with the Earn Out
'Enlarged Share Capital'	the Existing Ordinary Shares and the Placing Shares
'Existing Ordinary Shares'	the 32,029,305 Ordinary Shares in issue at the date of this announcement
'FSA'	The Financial Services Authority of the United Kingdom
'General Meeting' or 'GM'	the general meeting of the Company convened for 10.00 a.m. on 15 October 2009
'Group'	Clarity and its subsidiaries and subsidiary undertakings
'Loan Notes'	unsecured loan notes in the Company to an aggregate value of £2,283,000, issued to the Vendors
'London Stock Exchange'	London Stock Exchange plc
'MATRA'	MATRA Systems (Holdings) Limited
'New Articles'	the new articles of association of the Company
'New Ordinary Shares'	the Placing Shares
'Notice of GM'	the notice convening the GM
'Ordinary Shares'	ordinary shares of 25p each in the capital of the Company
'Placing'	the conditional placing by Arbuthnot of the Placing Shares pursuant to the Placing Agreement
'Placing Agreement'	the conditional agreement dated 28 September 2009 between the Company and Arbuthnot relating to the Placing
'Placing Price'	40p per Placing Share
'Placing Shares'	the 6,812,500 new Ordinary Shares proposed to be issued pursuant to the Placing
'Resolutions'	the resolutions set out in the Notice of GM
'Shareholders'	holders of Ordinary Shares
'United Kingdom' or 'UK'	the United Kingdom of Great Britain and Northern Ireland
'Vendors'	the vendors of MATRA

 

END

 

 

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