Shares digital

Tikit (TIK:AIM) – Finals PTP: £3.39m (£2.79m) Divi: 5p (4p)

Record results for 2007 from the provider of software and IT solutions to the legal profession did not prevent its shares from languishing near their year’s lows at 236p, as investors continued to fret about the impact of the credit crunch upon its client base’s fee income in 2008.

Careful cost control, strong capacity utilisation and good business mix all helped last year’s figures, as did encouraging progress from the £30 million cap’s move into the accountancy area. However, a move from revenues based on initial licence fees to a subscription model, with contracts typically five years in length, will depress short-term earnings growth but improve longer-term visibility.

Shares says: A market cap to sales ratio of barely one is far from excessive for a business with a mid-teens operating margin.

by: Russ Mould