Ken Smith is stepping down as chief executive of Clarity Commerce Solutions following the unsolicited bid for the retail, catering and cinema software supplier from Enigmatic Investments, which is owned by Jon Moulton’s BECAP Fund.
Basingstoke-based Clarity’s board advises shareholders to take no action on the 23p a share bid from Enigmatic, which values Clarity at £9.53m. The share price has not been as high as 23p since the beginning of April. It has been as high as 41p in the past 12 months, though.
Early in September, BECAP Fund initially acquired 7.66% and this was increased to 9.22% later in the month. Herald Investment sold its 5.59% stake in Clarity.
Clarity continues to win additional business from existing customers but it is not in a strong position because it is short of cash and it is trying to minimise cash outflow. Redundancies in the UK will cut annual costs by £1m.
BECAP already owns Basingstoke-based EPoS systems provider DigiPoS Store Solutions Holdings and the intention is to integrate the two businesses. There should be cross-selling opportunities. Further acquisitions could be made.
No due diligence has been carried out and whether this happens or not will depend on the reaction of Clarity’s board. This means there are no firm indications of the quantum of any costs savings.
Bob Morton’s related interests own around one-fifth of the shares in Clarity. Octopus and ISIS are also large shareholders and the three of them own more than one-third of the company. They will have to be persuaded that the bid provides an attractive exit from their investments.
Finance director Stephen Sadler will combine his role as finance director of Clarity with an operations role and become chief operating officer. Sir Colin Chandler becomes executive chairman and Tony Houldsworth will also take on extra responsibilities.
At the end of August, Clarity reported that it had swung from a profit of £1.44m to a loss of £1.44m in the year to March 2011. Revenues grew from £19.1m to £19.9m. Order delays were blamed for the poor performance. R&D spending should reduce now that the main product suite has been completed.
The financial year end is being changed to September.
Download the September 2011 edition of AIM Journal at http://www.hubinvest.com/AIMPDFSeptember2011_24.pdf
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