Back in 2009 Tikit cut costs by parting with various businesses. The resulting annual savings of around £1m pushed up 2010 profits. But last year's profits driver was the company's own software; indeed revenues from that source rose by a third to £8.2m and so offset lower third-party software sales – linked specifically to the loss of an agency to distribute LexisNexis Client Relationship Management (CRM) products.
LexisNexis decided to sell directly but now it's up against Tikit. In less than nine months, Tikit has designed its own CRM software and has a big market to aim at: 92 of the top 100 UK law firms are clients. Last year support income from the same software advanced 41 per cent to £6.5m. And when times are good for software companies (a big plus for them is holding little stock), the balance sheet also impresses: during 2011 Tikit's net cash balances almost doubled from £2.9m and could realistically be £8m in 12 months time – so financing further dividend hikes. Another big plus is that chairman Mike McGoun sees no reason to diversify away from its legal and accountancy base as "it's awash with opportunities in legal".
With three new software products starting to make an impact this year, Investec Securities forecasts 2012 underlying pre-tax profits £0.4m higher at £5.2m, giving EPS of 25.5p (23.6p in 2011).
TIKIT (TIK) | ||||
|---|---|---|---|---|
| ORD PRICE: | 339p | MARKET VALUE: | £49.9m | |
| TOUCH: | 334-343p | 12-MONTH HIGH: | 339p | LOW: 242.5p |
| DIVIDEND YIELD: | 2.4% | PE RATIO: | 18 | |
| NET ASSET VALUE: | 123p* | NET CASH: | £5.45m | |
| Year to 31 Dec | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2007 | 26.4 | 3.39 | 18.6 | 5.0 |
| 2008 | 28.5 | 3.49 | 18.1 | 6.0 |
| 2009 | 25.2 | 2.47 | 12.7 | 6.0 |
| 2010 | 26.9 | 2.95 | 15.5 | 6.3 |
| 2011 | 26.4 | 3.53 | 19.0 | 8.0 |
| % change | -2 | +20 | +23 | +27 |
Ex-div: 28 Mar Payment: 4 May *Includes intangible assets of £19.3m, or 131p a share | ||||
