Trading Update

RNS Number : 1956E

Clarity Commerce Solutions PLC

04 April 2011

 



Clarity Commerce Solutions plc
("Clarity", the "Company", or the "Group")

Trading Update

Clarity, a leading supplier of software solutions for the hospitality, retail, leisure and entertainment sectors, announces the following update on trading for the year ended 31 March 2011.

The challenging market conditions and the associated lengthening of sales order cycles seen in the first half of the financial year have continued to impact the Group in the second half of the year.  Key orders which had been anticipated in the second half, particularly in Europe are still being negotiated and it is expected that most of these orders will now be received in the new financial year.  These delays will result in the Group's revenue for the year ended 31 March 2011 being significantly below market forecasts.  As these key orders were expected to include large elements of upfront licence income and given that the majority of the Group's costs are relatively fixed, this will have a consequent impact on the Group's profit or loss position for the year ended 31 March 2011.

Nevertheless, following the announcement of the EuroPalaces contract in September 2010 the Group has continued to win business throughout the second half.  Although not large in terms of individual financial value, these contracts secured in the second half of the year establish relationships with some important new customers including:

·      Iceland Foods, where Clarity is providing an innovative customer loyalty solution. The contract provides licence, hardware and services, together with support and maintenance over three years.

·      Merlin Entertainments Group, where ClarityLive has been rolled out into two further amusement parks, including Alton Towers in the UK, and Jesolo in Italy.

·      Sodexo, where Clarity's newly-developed ClarityLive Inventory module is being deployed for their Londis Stores client.

·      A renowned retailer of natural foods, where our US business has agreed to deploy ClarityLive Data to the client in order to provide sales transaction data management.

·      Further business with our major amusement park customers, including deployments to two European Parks owned by the Parques Reunidos Group and continued progress in the US.

Operationally, Clarity had significant success in the second half, completing a number of customer roll outs. Two key examples were at Les Cinemas Gaumont Pathe (formerly EuroPalaces) and Pret a Manger.  The successful completion of these two installations in the fourth quarter represents a key milestone for the Group and we continue to work closely with both customers to support their growth plans. Both systems are performing well and we believe that the success of these programmes should enhance Clarity's reputation.

The investment made in development has seen us improve product performance in all our vertical markets and we exit the year with an improved product set and organisational structure, providing an efficient platform for future growth.

Our new sales organisation is now established and the increased resource has led to a broader sales pipeline.

Effective 31 March 2011, Clarity has appointed Paragon POS Limited ('Paragon') as a non exclusive UK reseller of Clarity's Hotels and Resorts software. As part of this agreement Clarity has agreed to transfer certain of its UK Hotels customers and certain staff to Paragon for cash consideration of £470,000, of which £140,000 was received in March with the balance to be received in the new financial year. Clarity will now focus its effort in this market on larger hotels and resorts opportunities.

In addition to continuing to pursue revenue opportunities, the Board have identified a number of cost reduction measures which are actively being pursued.

Given the difficult market conditions, management has also remained focussed on cash conservation and the Group had cash balances of £0.7m at 31 March 2011.

The Company expects to release its preliminary results for the year ended 31 March 2011 in June 2011.

Commenting, Ken Smith, Clarity's CEO, said:

"Despite enhancements to our operational capability and a growing pipeline, the poor market conditions and lengthening sales cycles have led to us falling short of our revenue target for the year to 31 March 2011. The Board does not expect any change in market conditions in the short term, but given the quality of the sales pipeline and the opportunities for cost reduction, the Directors remain optimistic about prospects for the new financial year.  It is important to recognise that none of our key contract opportunities has been lost, rather decisions have been deferred into the next financial year."

Enquiries:

Clarity Commerce Solutions plc	Ken Smith, CEO Stephen Sadler, CFO	01256 365 150
Arbuthnot Securities	Hugh Field Adam Lloyd	020 7012 2000

About Clarity Commerce Solutions (www.claritycommerce.com)

Clarity Commerce Solutions plc offers technology solutions which span all levels of consumer interaction, from ticketing through to sophisticated consumer behaviour tracking and loyalty programmes. Clarity Commerce Solutions plc has installations in over 7,000 sites across the world within all sub-segments of the retail, leisure and entertainment industries. It is our mission to help customers effectively compete, win and retain a loyal, profitable customer base.

Established in 1993, Clarity is headquartered in Basingstoke, United Kingdom and has over 750 customers worldwide. Key sectors include Retail, Entertainment, Leisure, Hospitality, Accommodation, Food and Drink.

 

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