The provider of IT related services to leading law and accountancy firms issued a reassuring AGM statement. First quarter profits and operating margins for Tikit (LON:TIK) are significantly ahead of the previous year and in line with the Board’s expectations.They are also experiencing strong demand for most of their services and Tikit-owned software products. The share price (295p) is up over 60% over the past 12 months but remains below historic highs of c335p attained back in June 2007. Peak diluted earnings per share were 18p in the year ending December 2007 with average annual earnings per share of 16.12p over the 5 year period from Dec 2006 to Dec 2010.December 2011 forecasts are for earnings per share of 21.28p which would represent 33% growth over Dec 2010 and current year PER of 13.8x. with a yield of 2.2%. Chief Exec David Lumsden sold 30,000 shares at 259p back in April 2011 but still holds 271,000 shares representing 1.84% so not too much should be read into the recent sale. For the year ending December 2010 total revenue increased by 7% to £26.9m, with operating profit up 27% to £3.82m and operating margins up 14.2%. Net cash at period end increased 77% to £2.9m
- Conclusion
We consider the shares look fairly (almost fully!) valued and remain holders across our AIM portfolios at the current level with the reassuring support of a 2.2% dividend yield. We await the interim results to be able to better assess prospects and valuation.
