News

Update: Clarity out of intensive care

20 November 2008 13:58:00

Point of sale and bookings system software provider Clarity Commerce Solutions fell just short of returning to the black at the interim stage, though the company is profitable at the operating level.

Loss before tax in the six months to the end of September was £39,000, compared with a loss of £1.3m a year earlier.

Operating profit before amortisation was £0.4m, compared with a loss of £0.7m in the corresponding period of 2007.

Revenues grew to £8.33m from £6.78m, with solid contributions from the Retail and Ticketing divisions and a satisfactory performance by the Leisure division.

The company said it is comfortable with broker forecasts for full year performance, which are for a pre-tax profit of around £1m, roughly equal to the level of cost reduction the company expects to achieve in the current financial year.

The Hospitality division remains a problem for the company, with delayed revenues and some implementation issues. Steps are being taken to bring the performance up to scratch, with the division being reorganised to reduce the cost base and boost revenue generation.

Net debt has been reduced during the period to £1.2m from £1.8m, having peaked at £3.5m. Bank facilities with HBOS have been renewed for 12 months on renewed terms.

"HBOS have been very supportive. We are now out of intensive care as far as HBOS is concerned," chief executive officer Ken Smith told Sharecast.

The company has also finalised "advantageous terms" with regards to the MATRA acquisition. The company still has £4.1m to pay for the MATRA earn out and, at the discretion of the board, up to £1.8m of this may be settled at any time up to 30 September 2009 through the issue of Clarity shares, with £2.3m to be settled via loan notes over the next three years.

If the board decides not to issue Clarity shares as part of the consideration, loan notes will be issued instead.

Senior management has no immediate plans to pay a dividend. "We can't pay dividends because we haven't got reserves," CEO Ken Smith said, adding that he regards the shares as a growth stock.

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