'It has been a bad time for most software companies. But we are not doing too badly. If we were large, slow and dominant, with a lot of market share to defend, then maybe I would be worried. But I am not, because we are a fast-moving company causing a lot of pain for others because we are winning market share.'

These confident words belong to Graham York, chief executive of Clarity Commerce Solutions, one of the most ambitious and acquisitive software plays on the market at present.

Launched onto Aim in 2000, Clarity has built up an impressive blue chip client list in the hospitality, leisure, restaurant, hotels and pubs sector for its range of sophisticated, 'yet simple to use' customer relationship management software.

Its wares now include business intelligence software, electronic point-of-sale products, customer management tools, cashbook and finance management suites as well as stock control, staff management and admissions and door products.

'The group spent its early years sorting out the software architecture and building the right product foundation. Since then, we have added new features and innovations to allow us to serve new areas and new markets and reinvigorate the areas we are already in,' says York.

Acquisitions have fuelled expansion as Clarity has acted as something of a consolidator in this niche area. In 2001, it purchased Flex (with the help of a £2.6 million rights issue), taking it into the sports and leisure club management space. Last year, it snapped up a company called Vision, taking it into the health and fitness sector.

These buys enabled Clarity to achieve interim sales of £3.39 million and pare losses back to £118,000 (before amortisation and interest).

'There is no doubt that it is still tough in all of our markets', says York, 'and, to be fair, the figures were down on what we expected, but since then we have reeled in six significant deals, all of which will have a positive impact on our figures for the second half.'

Thanks to the new contracts, the results for the year to March 2003 are expected to see pre-tax profits of £400,000 on sales in the region of £8 million.

The current year should see yet another acquisition make its contribution to the bottom line. Romulus, a business intelligence software business bought in March 2003, boasts a client list that includes JD Wetherspoon, Belhaven and Robert Wiseman Dairies. Its products, which York claims are highly complementary to Clarity's, enable businesses to collect, consolidate, analyse and access information in such a way as to allow them to make 'better decisions'.

'We were already working with – and implementing – their software. When we have made bids to clients including it as a tool, we have had tremendous feedback,' says York.

Intriguingly, York suggests Clarity is likely to remain on the acquisition trail, 'although we will only be buying profitable, earnings-enhancing companies and we will only do deals that take us into new areas. Size doesn't matter. How well it fits our software architecture and our plans does.'

Whether a deal is pending is not something York will be drawn on, although he has a simple message for existing shareholders bemoaning the state of the share price, and indeed prospective investors looking for a canny opportunity. 'If you want decent, long-term returns from a company going places, this is the place to be.'

Clarity

GCI Recommendation

Buy