Tikit: Encouraging results and cash still flowing

Overall revenues for Tikit (LON:TIK) were down 11.52% to £25.2m but recurring support and outsourcing services revenues grew 10.2%.With a focus on cost cutting, the recurring cost base was cut by £1 million per annum resulting in a strong second half improvement in operating profit marginA sign of confidence was the full year dividend remaining unchanged at 6pence per share. Operating profit before amortisation of acquired intangibles and share-based charges was down 26.5% to £3.0 million with cash generated from operations £3.5 million (2008: £5.7 million).Basic earnings per share were 12.7p and net cash at year end was £1.6m.

Chairman Mike McGoun commented that trading so far in 2010 has been encouraging and they remain firmly optimistic about the future trading prospects of the Group. The results were slightly ahead of the house broker’s operating profit forecasts after a stronger H2. but eps at 12.7p appears to be below consensus of 13.77p -  a mere trifle as this remains a cracking little business as the wonderful cash generation suggests.The house broker maintains its 2010 and 2011 forecasts and Buy rating increasing its target price to 200p.Approximately 60% of Tikit’s revenues derive from the top 100 UK law firms therefore Tikit is dependent on their IT spend – signs of a recovery here and the shares could start to fly again.

This hitherto high flying AIM performer, the share price was 335p back in August 2007, perfectly encapsulates the problem with AIM in the current climate. On a day of promising results a mere 8,500 shares were traded by 3.30pm!