Patsystems Plc
Annual report & accounts 2010
Offices and addresses
Europe
London
Riverside House
2A Southwark Bridge Road
SE1 9HA
Tel +44 (0)20 7940 0490 
Fax +44 (0)20 7803 1619
USA
Chicago 
175 W. Jackson Blvd 
Suite #2260 
Chicago, IL 60604 
Tel +1 312 922 7600 
Fax +1 312 922 7625 
New York
245 Park Ave.
24th Floor
New York, NY. 10167
Tel +1 212 837 7841
Fax +1 212 792 4001
Asia Pacific
Singapore 
137 Telok Ayer Street
#07-07
Singapore 068602
Tel +65 6216 0452
Fax +65 6536 4167
Tokyo 
10th Floor
Nihonbashi Duplex B’s
9- 17 Nihonbashi Kobuna-cho
Chuo-Ku Tokyo 103-0024
Tel +81 (0) 3 3668 9372
Fax +81 (0) 3 3668 9393
Sydney 
Level 6
Underwood House
37 Pitt Street
Sydney NSW 2000
Tel +61 (0) 2 8987 9600
Fax +61 (0) 2 8252 7640
Hong Kong 
32 Hollywood Road
Unit 2004
Kinwick Centre
Sheung Wan
Hong Kong 
Tel +852 3180 9512
Fax +852 3180 9399
Patsystems Plc  Annual report & accounts 2010 01 About Patsystems
01 Highlights
02 Global Opportunities
04 Product Range
06 Chairman’s Statement
08 Chief Executive’s Report
12 Finance Director’s Review
15 Key Performance Indicators
16 Our Board
17 Directors’ Report
19 Statement of Corporate Governance
21  Report of the Board on Directors’ 
Remuneration and on Group 
Remuneration Policy
24  Independent Auditors’ Report to the  
Members of Patsystems Plc
25 Consolidated Income Statement
25  Consolidated Statement of 
Comprehensive Income
26  Consolidated Balance Sheet
27  Consolidated Statement of  
Changes in Equity
28 Consolidated Cash Flow Statement
29 Notes to the Financial Statements
53  Independent Auditors’ Report to the 
Members of Patsystems Plc
54 Company Balance Sheet
55 Notes to the Financial Statements
60 Directors and Advisers
Overview
Business Review
Governance Financial Statements Overview
Patsystems Plc
Annual report & accounts 2010 01
Overview
About Patsystems
Highlights
Financial Highlights
>  Total revenue £22.1 million  
(2009: £22. 1 million)
>  Adjusted pre-tax profit at £3.8 million  
(2009: £3.9 million)*
>  Cash and cash equivalents increased to  
£9.3 million (2009: £8.9 million)
>  Proposed full year dividend increased 29%  
to 0.55p per share (2009: 0.425p per share)
* adjusted for share option costs, marking to market of derivatives used to hedge 
cash flows and amortisation of intangibles other than internally developed software
Operational Highlights
>  Continued expansion into new growth markets 
with sales success for exchange offering in 
Argentina and Vietnam
>  Hosting centres established in Chicago, Hong 
Kong, Tokyo, Singapore and Sydney to deliver  
a fully-managed Application Service Provider 
(‘ASP’) to existing and new customers
>  Business’ global ASP offering promoted as 
Patsystems XConnect making anticipated contribution 
to trading systems revenue growth in 20 1 1
>  Bursa Malaysia Derivatives selected Patsystems as 
the provider of its new order management system
Patsystems delivers tailored solutions, built from  
modular components, to enhance derivatives trading 
performance and trade processing. Our solutions include 
real-time risk management tools, comprehensive 
exchange systems and robust trading systems with 
extensive market connectivity . 
We work in partnership with our customers to deliver 
robust systems that align with their business strategies 
– and have done since our foundation in 1994. 
The world’ s leading banks, trading houses, hedge 
funds and professional traders rely on Patsystems to 
facilitate the electronic trading of derivatives, FX, 
energy and other asset classes. Overview
Patsystems Plc
Annual report & accounts 2010 02
Patsystems Plc
Annual report & accounts 2010
Global Opportunities
Patsystems operates from a global network  
of offices covering all major derivatives  
trading centres.
With connectivity to over 60 exchanges  
and a network of more than 50 customers 
throughout Europe, the Middle East, the 
Americas and Asia Pacific, Patsystems enables 
over 10,000 traders to transact in the global 
derivatives market every month. 
Exchange Connectivity Overview 
North America
With strategically located offices in Chicago and New York, 
Patsystems provides low-latency access to some of the world’s 
largest futures exchanges.
Central and South America
Patsystems provides access to Latin America with connectivity  
to exchanges such as the Mexican Derivatives Exchange and 
BM&FBOVESPA.
Europe
From London to Paris, Brussels to Madrid, Patsystems  
offers connectivity to numerous leading futures exchanges  
throughout Europe.
Africa and the Middle East
Patsystems provides access to some of the leading exchanges  
in Africa and the Middle East including the Turkish Derivatives 
Exchange (‘TurkDEX’) and the South African Futures Exchange.
Asia Pacific
Patsystems’ leading position within Asia Pacific is the result of 
over 10 years’ investment in the region and extensive connectivity 
to futures exchanges in Australia, Hong Kong, Indonesia, Japan, 
Korea, Malaysia, Singapore, Taiwan and Vietnam.
Key Customers
As our customers expand into new and emerging markets,  
they naturally look to Patsystems as a key partner with our  
global presence, easily deployable software and extensive 
exchange connectivity.
Hong Kong
8 customers
London
16 customers Patsystems Plc
Annual report & accounts 2010
Overview
Patsystems Plc
Annual report & accounts 2010 03
Customers
Patsystems XConnect Hubs – existing
Patsystems XConnect Hubs – in development
Offices
Singapore
11 customers
Sydney
2 customers
Tokyo
7 customers
Chicago
15 customers
New Y ork
2 customers Overview
Patsystems Plc
Annual report & accounts 2010 04
Patsystems Plc
Annual report & accounts 2010
Product Range
Futures and options 
brokers, exchanges and 
other intermediaries 
deploy our technology 
to thousands of end 
users who range from 
independent traders 
to global financial 
institutions.
Trading Systems
Patsystems’ robust and scalable trading 
solutions range from plug-and-play 
modules that address a specific issue  
to complete high performance trading 
systems with extensive global access  
to derivatives exchanges and clearers. 
Every day the world’s leading banks, 
Futures Commission Merchants (‘FCMs’), 
trading houses and professional traders 
rely on Patsystems’ trading solutions for 
electronic trading and trade processing 
of futures and options.
Front-End Trading Tools
Patsystems offers a choice of two 
proprietary front-end trading 
applications: J-Trader and Pro-Mark. 
J-Trader is easy-to-use and widely 
distributed, making it the ideal front-end 
trading application. Pro-Mark is 
Patsystems’ premium front-end for 
professional traders. Pro-Mark is ideal  
for complex, high-volume trading with  
a wide range of advanced functionality. 
Both front-ends can be easily deployed 
over the internet. 
For traders who wish to develop their 
own front-end trading application, 
Patsystems offers our FIX Trading 
Gateway and proprietary Application 
Programming Interface (‘API’). Both the 
FIX and proprietary API allow users to 
benefit from our powerful order routing 
engine and market connectivity. 
Market Connectivity 
Patsystems’ extensive market connectivity 
delivers a major advantage to our 
customers. Connecting to over 60 
exchanges globally, Patsystems provides 
access to a broad range of derivatives 
products, giving customers the choices 
they want. 
Customers can access the exchanges 
directly or through Patsystems’ XLink 
capability. XLink is Patsystems’ unique 
software solution that enables customers 
to leverage one another’s exchange 
memberships. 
System Architecture 
The foundation of Patsystems’ trading 
solution is a powerful order management 
system, which facilitates high-speed 
order routing and robust throughput 
with low-latency impact. The core 
system is highly scalable, with the ability 
to support any number of users. The 
trading system is managed centrally  
with Patsystems’ user-friendly risk 
management and administration tool. 
Traditionally, our trading systems have 
been installed at each client site,  
with each client managing its own 
infrastructure. However, Patsystems  
now offers a fully-managed Application 
Service Provider (‘ASP’) model, 
Patsystems XConnect. Patsystems 
USP: Market connectivity,  
scalable architecture, ease and cost 
of deployment Patsystems Plc
Annual report & accounts 2010
Overview
Patsystems Plc
Annual report & accounts 2010 05
XConnect provides the full benefits of 
the Patsystems trading environment 
without the requirement for clients  
to invest in a technology infrastructure  
or technical support resources.
Risk Systems
Patsystems provides a standalone, 
multi-asset class risk management 
system that calculates margin and profit 
and loss in real-time. This real-time risk 
system, Risk Informer, is currently in use 
at 10 financial institutions. 
Business Benefits
Risk Informer integrates seamlessly  
with diverse data sources and can be 
extended to support all asset classes 
within the institution’s portfolio.
Benefits include:
Real-time margin calculation for •	
exchange-traded futures and options, 
equities, CFDs and FX using official 
methods sourced from the relevant 
organisations
Ability to integrate stand-alone •	
analytical modules
Ability to monitor intra-day risk for •	
Direct Market Access clients 
Seamless integration with multiple •	
data sources, including trading 
systems and market price feeds, 
exchange feeds and client back  
office systems 
‘Slice and dice’ analysis of trading data •	
Real-time processing and analysis of •	
new data 
Flexible ‘what if’ scenarios to analyse •	
the impact of specific events on a 
client’s risk profile, such as proposed 
trades or anticipated price changes
Event-driven alert function against •	
administrator defined margin limits, 
generating pre-defined messages 
depending on the severity of the alert. 
Alerts can be generated in email and 
text format
Exchange Systems
Patsystems’ exchange and back office 
solutions are built on proven technology 
with a track record for performance and 
reliability. The applications are highly 
customisable as well as easy and cost 
effective to support. 
Patsystems’ exchange technology is built 
around the Patsystems Matching Engine. 
It has been implemented across seven 
exchanges globally, including TurkDEX 
and the Indonesian Commodity and 
Derivatives Exchange. Banks and 
brokerage firms use Patsystems’ back 
office technology to facilitate back office 
reporting and clearing requirements. 
A Comprehensive Offering 
Patsystems presents a truly unique 
offering because of our market-leading 
position within the trading and risk 
management industry. When combined 
with Patsystems’ trading and risk 
management modules, Patsystems can 
provide a comprehensive end-to-end 
exchange solution that automates all 
steps in the trade cycle from front to 
back office.
USP: Real-time, multi-asset class, 
platform-independent
USP: Comprehensive end-to-end 
solution from a single vendor   Overview
Patsystems Plc
Annual report & accounts 2010 06
Patsystems Plc
Annual report & accounts 2010
“ 2010 was a year with a mixed performance across the 
business. We saw some notable sales successes, such as the 
new customers for our exchange system offering, tempered 
against deferred sales opportunities for our risk product and 
marginal growth within our trading systems business.  
 
The Group continues to demonstrate continued cash 
generation and profit resilience and we expect this to 
continue in 201 1 and beyond. The continued payment and 
growth in the level of the dividend is an important statement 
by the Board of our continued confidence in the growth 
prospects for the business. 
 
Patsystems commences 201 1 with an encouraging sales 
pipeline that will provide opportunity to expand our 
geographical presence and grow the revenues for each  
of our product offerings. ”
Chairman’s Statement
Positioned for future growth
2010 was a year with a mixed 
performance across the business. We 
saw some notable sales successes, such 
as the new customers for our exchange 
system offering, tempered against 
deferred sales opportunities for our risk 
product and marginal growth within our 
trading systems business. I am pleased 
that the business has continued to 
expand into new growth markets with 
sales success for our exchange offering  
in Argentina and Vietnam.
In 2010, Patsystems established hosting 
centres in Chicago, Hong Kong, Tokyo, 
Singapore and Sydney in order to deliver 
a fully-managed Application Service 
Provider (‘ASP’) offering to both existing 
and new customers. Further investment 
will be made in 2011 in establishing 
hosting centres in London and São Paulo 
and implementing a global wide-area 
network between the centres.
The business’ global ASP offering is 
being promoted as Patsystems XConnect 
and is expected to be an important 
contributor to trading systems revenue 
growth in 2011.
Financial Results
Adjusted pre-tax profit (being profit 
before tax after adjusting for share 
option costs, marking to market of 
derivatives used to hedge cash flows and 
amortisation of intangibles other than 
internally developed software) for the full 
year ended 31 December 2010 was £3.8 
million compared to £3.9 million in 2009. 
Adjusted pre-tax profit is the definition 
of profit used by analysts to measure the 
performance of the Group.
Diluted earnings per share (‘EPS’) on this 
basis was 2p per share, the same as last 
year. Details of these calculations are set 
out in the Earnings Per Share section of 
the Finance Director’s Review on pages 
12 to 13.
Profit before income tax for the full year 
ended 31 December 2010 was £3.2 
million compared to £4.5 million in 2009. 
Diluted EPS was 1.4p per share 
(2009:1.8p).
Turnover for the year amounted to £22.1 
million (2009: £22.1 million) of which 
£13.7 million (2009: £13.2 million) is 
annuity revenue that derives from a 
combination of the provision of trading  Patsystems Plc
Annual report & accounts 2010
Overview
Patsystems Plc
Annual report & accounts 2010 07
screens and market access on a 
‘software-as-a-service’ rental model. 
When combined with revenue from 
contracted support and maintenance of 
our order routing technology, this means 
77% of the turnover is on a recurring 
annual basis (2009: 82%).
Geographical Review
Asia Pacific
The Asia Pacific region had a positive 
year with several significant new sales 
wins. The Patsystems’ Exchange and 
Trading System was adopted by the 
newly launched Vietnamese Commodity 
Exchange (‘VNX’) in Ho Chi Minh City 
and Bursa Malaysia Derivatives selected 
Patsystems as the provider of its new 
order management system. In addition 
NewEdge, a major existing customer  
and a number of new customers across 
the region adopted the Patsystems  
XConnect ASP solution. Sales in Asia 
Pacific account for 39% (2009: 37%)  
of Group revenues.
Europe
In Europe, we continued to grow the 
business during the year despite the 
increasingly long sales cycles. The 
long-term project to replace the 
exchange, risk and trading systems for 
TurkDEX continued throughout 2010 and 
is progressing to plan. Macquarie Bank 
Limited in Europe selected Patsystems’ 
post trade risk system, Risk Informer, for 
their exchange traded derivatives 
business. Sales in Europe account for 
35% (2009: 34%) of Group revenues.
Americas
The Americas region had a challenging 
year with the revenue contribution from 
existing clients failing to recover from 
2008 levels and the loss of £0.8 million 
revenue from Lehman Brothers Inc.  
The sales campaign into South America 
was rewarded by Mercado a Término  
de Buenos Aires (‘MATba’) selecting 
Patsystems as its key technology provider 
as it prepares to extend electronic trading 
capability to its existing open outcry 
operations. Sales in the Americas 
account for 26% (2009: 29%) of  
Group revenues.
Dividend
Patsystems has demonstrated continued 
cash generation and profit resilience and 
we expect this to continue in 2011 and 
beyond. As a result of this, together with 
our strong year end cash position, the 
Board is recommending the payment of 
a second interim dividend of 0.35p based 
on the results for 2010 as a whole, 
bringing the total dividend for the year to 
0.55p per share, compared to a total of 
0.425p for 2009. This gives a year on 
year growth of 29% in our dividend and 
the dividend remains well covered at 4 
times. The continued payment and 
growth in the level of the dividend is an 
important statement by the Board of our 
continued confidence in the growth 
prospects for the business.
The second interim dividend will be paid 
on 8 April 2011 to shareholders on the 
register as at 4 March 2011. 
Board, Management and Staff
On behalf of the Non-Executive 
Directors, I would like to thank the 
Executive Directors, the senior 
management team and all the 
Patsystems’ staff for all their hard  
work and dedication during the year. 
Steve Sparke resigned from the Board 
during the year due to increasing time 
commitments from his other executive 
business interests and on behalf of the 
Board I would like to thank Steve for his 
support and contribution since he joined 
the Board in 2006. 
I am delighted to welcome Stewart 
Douglas-Mann back to the Board; 
Stewart retired from the Board in 2007 
but has been operating as a consultant 
to the Board for the intervening period. 
On a personal note I should also like to 
thank John Priestley for his support 
during the year, his commitment and 
dedication to the business has been 
greatly appreciated. 
Customers and Shareholders
Many of our customers have endured 
significant market and business change 
during 2009 and 2010 and as such I am 
grateful for their ongoing support and 
for providing opportunities that enabled 
Patsystems to continue develop and 
grow its product and service propositions. 
I would also like to thank our shareholders 
for their continued support during 2010.
Future
In 2011, Patsystems expects that the 
significant investment in our global ASP 
offering, Patsystems XConnect, will 
stimulate recurring revenue growth 
within our trading systems business. We 
expect to see further opportunities to 
grow our exchange systems business 
across the globe with the additional 
functionality we developed as part of the 
project with TurkDEX. A number of 
opportunities exist to sell our risk product 
into major global banks, but as was 
experienced in 2010 a degree of caution 
must be exercised due to the long 
decision timescales and the change of 
strategic priorities that can take place 
within global banks during the product 
procurement process.
With offices in Singapore, Hong Kong, 
Sydney and Tokyo, Patsystems is well 
placed in the Asian and emerging market 
areas to provide end-to-end solutions for 
commodity futures exchanges and 
promoting the Patsystems XConnect 
offering for trading system adoption. 
Within established markets promotion of 
our post-trade risk offering will continue 
and offering our trading solutions by way 
of Patsystems XConnect.
Patsystems commences 2011 with  
an encouraging sales pipeline that  
will provide opportunity to expand  
our geographical presence and grow  
the revenues for each of our  
product offerings.
Richard Last
Chairman, Non-Executive Director
7 February 2011 Patsystems Plc
Annual report & accounts 2010 08
Patsystems Plc
Annual report & accounts 2010
Business Review
Chief Executive’ s Report
Developing new and  
existing markets
I am particularly delighted by the 
exchange system sales to both  
MATba and VNX, demonstrating the 
transformation of our exchange  
systems business from being materially 
dependent on small Japanese exchanges 
to a business with global appeal. With 
the integration of our matching engine, 
risk offerings and trading solution,  
I believe there will be significant 
opportunities for exchange solution  
sales in 2011 and beyond.
It was disappointing that a material  
Risk Informer opportunity that was 
significantly progressed through the 
procurement process did not conclude  
in 2010 and as such, risk system sales did 
not achieve the level we had targeted. 
However, we continue to have a number 
of exciting sales opportunities for the 
product and a range of new add-on 
modules to sell in 2011.
Though it was detrimental to the 2010 
results, I believe it is the correct strategy 
for revenue from exchange system sales 
to include a volume related charge rather 
than a sole upfront perpetual licence, 
thereby allowing Patsystems to share  
in the benefits of the exchange’s future 
growth. If new and developing electronic 
trading exchanges enjoy the growth  
that established exchanges have enjoyed 
in recent years, then this judgement will 
be vindicated by an anticipated increase 
to Patsystems’ recurring revenues in  
2012 onwards.
2010 Business Objectives
At the start of 2010, we set four 
objectives for the business and overall  
I am satisfied with our progress against 
these objectives, these are reported on 
as follows:
Solidify our position as the premier 
provider of risk margin systems within 
the world’s top global banks
In 2010, we partially achieved this 
objective, with Macquarie Bank Limited 
adopting the product and J. P. Morgan 
extending its use of the product. As 
previously reported a well progressed 
opportunity with a third global bank did 
not progress, to the detriment of our 
2010 results.
“We saw continued success for sales of our exchange 
systems business in 2010 and it is our opinion that 
Patsystems currently has a unique proposition in the 
global marketplace with our ability to provide exchange 
matching, clearing, trading and risk capability as an 
integrated package. ” Patsystems Plc
Annual report & accounts 2010
Patsystems Plc
Annual report & accounts 2010 09
Business Review
Increasing
shareholder
value 
01
Reduce the business’ 
reliance on one-off 
project and 
licence sales
02
Provide matching 
technology directly 
to exchanges to 
extend the breadth of 
Patsystems global 
connectivity
03
Continue the extension 
of geographical coverage 
to growth markets
04
Identify complimentary 
add-on acquisitions to 
leverage the existing 
sales and support 
infrastructure 
investment
Extend our sales penetration in new 
countries with additional sales in 
Malaysia, Indonesia and Brazil
The business had sales success in 
Malaysia, to Bursa Malaysia Derivatives, 
and also in Vietnam and Argentina. The 
Indonesian Commodity and Derivative 
Exchange which adopted the Patsystems 
exchange solution in 2009 has enjoyed a 
successful first period of trading in 2010 
with traded volumes growing steadily. 
We expect that the anticipated success  
in Brazil will be achieved once our 
Patsystems XConnect hub is deployed  
in São Paulo.
Deliver hosted services to new and 
existing customers within all regions that 
we operate
Patsystems XConnect hubs in Tokyo and 
Hong Kong are live with a total of 6 
customers. Patsystems XConnect hubs in 
Singapore and Chicago went live in the 
autumn of 2010 with NewEdge, one of 
our existing major customers. 
Continue the 2009 sales success for our 
exchange systems offering.
The exchange system sales to MATba 
and VNX during 2010 continue to 
demonstrate the global potential of our 
exchange systems offering. 
Revenue Streams
The Group operates in one product line, 
that of the supply of software to financial 
institutions and consists of the following 
revenue streams:
Trading Systems 
The investment in Patsystems XConnect 
is a key strategy in supporting the 
growth plan for increasing revenues from 
our trading systems business. Patsystems 
XConnect will leverage Patsystems XLink 
technology, which allows for seamless 
exchange connectivity and order routing 
between Patsystems XConnect hubs or 
client sites.
The Patsystems XConnect hubs planned 
for deployment in 2010 were all 
implemented on schedule apart from 
São Paulo where local procurement 
challenges have deferred this to 2011.
Our Strategy for Growth
To support the deployment of Patsystems 
XConnect in North America, Patsystems 
has selected Interactive Data 7ticks to 
provide ultra-low latency networking 
services and exchange connectivity. A 
selection process is under way to identify 
a partner to provide global WAN 
infrastructure connectivity.
It is expected that capital investment in 
excess of £0.5 million will be made in 
2011 to support Patsystems XConnect 
deployment globally. 
Our replacement order management 
system, Global Trading and Risk Alert, 
has been deployed to a number of 
customers. It is expected that further 
deployments of our new core trading 
system, Global Trading, will take place 
throughout 2011, commencing with the 
Patsystems XConnect hub in London.
Exchange Systems
As previously stated, we saw continued 
success for sales of our exchange systems 
business in 2010 and it is our opinion 
that Patsystems currently has a unique 
proposition in the global marketplace 
with our ability to provide exchange 
matching, clearing, trading and risk 
capability as an integrated package.
We believe that there are opportunities 
across the globe for smaller or newly 
established commodity or financial 
futures exchanges that want a complete 
end-to-end technology solution and wish 
to source this from a single supplier.
Based in Buenos Aires, MATba is  
a futures and options commodity 
exchange specialising in wheat, corn  
and soya. While the exchange has 
experienced steady demand over the  Patsystems Plc
Annual report & accounts 2010 10
Patsystems Plc
Annual report & accounts 2010
Business Review
Chief Executive’s Report continued
MATba leverages Patsystems’ technology to 
achieve its future growth plans 
After an extensive global selection process, the Mercado a Término de  
Buenos Aires (‘MATba’) has selected Patsystems as its key technology  
provider as it prepares to add electronic trading capability to its existing  
open outcry operations. 
Based in Buenos Aires, MATba is a futures and options commodity exchange 
specialising in wheat, corn and soya. While the exchange has experienced 
steady demand over the past few years, MATba acknowledges that they  
could experience increased volume with an electronic offering. 
Patsystems will provide MATba with a complete exchange system that includes 
straight through processing and matching supported by the Patsystems 
Matching Engine. The Patsystems Matching Engine is readily scalable and  
can fully accommodate the anticipated future growth of MATba. 
MATba will also utilise Patsystems pre-trade risk management module and 
front-end trading applications, Pro-Mark and J-Trader. Patsystems’ front-ends 
are user-friendly, feature-rich applications that can be easily deployed to 
MATba participants over the Internet, WAN, LAN or leased lines. Ease of 
deployment was a key consideration for MATba as they aim to make their 
market more accessible to local and international participants.
past few years, MATba recognise the 
Exchange could experience increased 
volume by extending electronic trading 
to its current open outcry offering. 
In addition to the Patsystems Matching 
Engine, MATba will also utilise Patsystems’ 
J-Trader, which will be deployed to 
MATba participants over the internet.
VNX was officially introduced at a 
ceremony in Ho Chi Minh City on 20 
October 2010 by the SME Securities  
Joint Stock Co and by Trieu Phong Gold 
International Joint Stock Co. VNX will 
initially trade in steel, rubber, and coffee 
which are some of Vietnam’s biggest 
exports. It will also provide an additional 
financial tool for producers and traders 
to protect themselves against price 
fluctuation risks. 
Patsystems’ exchange solution will 
facilitate the integration of electronic 
trading between domestic producers  
and traders and provide access to 
international customers interested  
in Vietnam’s commodity markets.
Our project with TurkDEX continued 
during 2010 and phase 1 is expected  
to go live in the first half of 2011; a 
subsequent phase 2 will be deployed  
later in 2011 or early in 2012. During the 
year the Indonesian Commodity and 
Derivatives Exchange successfully 
launched their second product, a crude 
palm oil contract, which will act as a 
reference point for Indonesia’s local 
commodity producers. Indonesia is one  
of the world’s largest producers of crude 
palm oil.
Risk Systems
During 2010, Prudential Bache, J. P. 
Morgan and Macquarie Bank Limited 
deployed Patsystems’ post-trade risk 
margining product, Risk Informer. Risk 
Informer is also a key component of a 
feature-rich clearing and risk solution 
that will be implemented at TurkDEX’s 
clearing bank in Turkey as part of the 
overall project with TurkDEX.
In 2011 we expect to sell Risk Informer 
services and license new modules to 
existing customers, as well as sell new 
Risk Informer licences to other global  
and local financial institutions. 
The new modules that will be promoted 
in 2011 include scenario analysis with the 
capability to simulate possible market or 
price shocking conditions as well as new 
options risk capability that will provide  
a view of option positions, prices and 
Greeks based upon the movement of  
the underlying contract. 
Staff and Operating Structure
Overall staff numbers have remained 
broadly similar to 2009 with 161 
employees at the 31 December 2010 
compared to 162 on 1 January 2010. 
During the first quarter of 2011, the 
operating structure of Patsystems will be 
completely reviewed with the objective 
of removing hierarchy, improving 
information dissemination and increasing 
operating margins.
As a first part of this process the 
management structure of the operations 
functions has been revised and the 
revised team will now review the 
remainder of the operations department.
The objective for the business is to 
improve operating margin by 2% based 
on our 2010 results.
Business Strategy
Patsystems’ business objective is to  
be the external partner of choice  
for investment banks, futures  
clearing merchants and exchanges  
for the provision of electronic  
trading, trade matching and risk  
management technology. Patsystems Plc
Annual report & accounts 2010
Patsystems Plc
Annual report & accounts 2010 11
Business Review
Patsystems selected by the 
Vietnam Commodity Exchange
The newly established Vietnam Commodity Exchange 
(‘VNX’) was officially introduced at a ceremony in  
Ho Chi Minh City on 20 October 2010. One of the  
key objectives of the exchange is to create a marketplace 
for Vietnam’s popular commodity products, steel, rubber,  
and coffee – some of Vietnam’s biggest exports. It will 
also provide an additional financial tool for producers  
and traders to protect themselves against price  
fluctuation risks. 
VNX will utilise Patsystems’ complete exchange solution. 
This will include Patsystems’ trade matching engine, 
clearing and settlement platform, pre-trade risk 
management module and the front-end execution 
platform. Patsystems’ exchange solution will facilitate  
the integration of electronic trading between domestic 
producers and traders, and provide access to international 
customers interested in Vietnam’s commodity markets.
The growth strategy of the business 
has four components:
Reduce the business’ reliance on •	
one-off project and licence sales
Provide matching technology directly •	
to exchanges to extend the breadth 
Patsystems global connectivity
Continue the extension of •	
geographical coverage to growth 
markets
Identify complimentary add-on •	
acquisitions to leverage the existing 
sales and support infrastructure 
investment
The acquisition strategy is to identify  
and acquire businesses that provide 
complimentary technology and where 
shareholder value can be created by 
selling that technology through the 
Patsystems global sales organisation.
A number of appropriate targets were 
identified in 2010, but an appropriate 
acquisition price could not be agreed 
that would have created value for 
Patsystems’ shareholders.
Business Objectives and Outlook
Our key objectives for 2011 are as 
follows:
Grow the recurring revenue base by •	
growth of the Patsystems XConnect 
ASP offering
Extend the Risk Informer customer •	
base and licence the new modules  
to existing customers
Continue the 2010 sales success for •	
our futures exchange system product 
in all markets
Revise our internal structure to •	
increase the operating margin
Trading subsequent to the year end has 
progressed in line with our expectations 
and we remain confident of fulfilling  
our growth aspirations across all areas  
of the business.
David Webber
Chief Executive 
7 February 2011 Patsystems Plc
Annual report & accounts 2010 1 2
Patsystems Plc
Annual report & accounts 2010
Business Review
Finance Director’s Review
Sustaining shareholder returns
 2010 2009 
 £’000 £’000
Profit for the year attributable to equity holders of the Company 2,551 3,362
Income tax expense 687 1,124
Profit before income tax 3,238 4,486
Share option costs 60 261
Movement in fair value of hedging instruments 338 (1,029)
Amortisation of intangibles 117 203
  
Adjusted pre-tax profit 3,753 3,921
Current taxation (99) (249)
Adjusted post-tax Profit 3,654 3,672
  
 Number Number
Weighted average number of shares 186,146,310 180,628,990
Effect of dilutive share options 1,170,581 1,628,191
 187,316,891 182,257,181
Adjusted EPS 2.0p 2.0p
Adjusted diluted EPS 2.0p 2.0p
Adjusted profit at £3.8 million is 
consistent with that achieved in 2009 
and operating cash flow reduced to £2.8 
million from £4.3 million in 2009. Cash 
at bank stood at £9.3 million on 31 
December compared to £8.9 million  
the previous year. 
Adjusted profit removes volatile or 
potentially volatile non-cash items to 
show an underlying level of profitability 
that enables the results for the business 
to be compared on a consistent basis for 
each accounting period. The most 
volatile and material item over the past 
three years has been the adjustment in 
respect of the marking to market of 
derivatives that are used to hedge 
overseas foreign currency cash flows. 
This year the adjustment is a credit to the 
profit and loss account of £0.3 million 
whilst in 2009 the adjustment was a 
reduction of £1.0 million, a change 
between the years of £1.3 million. 
The other adjustments made to the 
reported pre-tax profit on ordinary 
activities are to add back the charge or 
credit for; (i) share option costs; and (ii) 
amortisation of intangibles other than 
those charges for internally developed 
software. The table in the Earnings Per 
Share section below details the 
adjustments made to operating profit in 
both this and the prior year.
Revenue
Total revenue was £22.1 million (2009: 
£22.1 million).
Regional Analysis
Asia Pacific
Revenue in this region grew by 4% from 
the prior year to £8.5 million. Underlying 
revenue growth in this region remains 
strong at 25% after adjusting for the 
revenue lost as a result of the Tokyo 
Grain Exchange winding down.
Europe
Revenue in Europe grew by 4% to £7.8 
million from £7.5 million in the prior year.
Americas
Revenue declined in the Americas by 9% 
to £5.8 million from £6.4 million in the 
prior year. Patsystems Plc
Annual report & accounts 2010
Patsystems Plc
Annual report & accounts 2010 1 3
Business Review
Revenue Stream Analysis
Trading Systems
Trading systems revenue was consistent 
with that achieved in 2009 at £17.5 
million compared to £17.6 million.
Exchange Systems
Exchange systems revenue was also 
consistent with the 2009 performance at 
£2.9 million compared to £3.0 million.
Risk Systems
Revenue from the Risk Systems business 
at £1.7 million was up £0.2 million from 
£1.5 million last year.
Operating Expenses
Reported operating expenses of £18.4 
million were £1.2 million more than in 
2009. However, included in operating 
costs for 2009, and as noted above, was 
a gain in the mark to market value of the 
derivatives used to hedge the Group’s 
cash flow of £1 million compared to a 
charge of £0.3 million this year. 
Underlying total costs therefore reduced 
by £0.1 million. The movement between 
2009 and 2010 for the significant cost 
categories are detailed below:
Staff costs decreased by £0.6 million as a 
result of a reduction in our London head 
count and no bonus payments being 
made to the Group’s senior management. 
The reduction in direct staff costs was 
somewhat offset by an increase of £414k 
in the costs of our Chinese Development 
Centre as the number of contractors 
working for us there has grown over the 
year from 17 to 30.
At 31 December 2010 the Group had 
161 permanent staff (2009: 162), 4 
contractors (2009: 3) and 30 staff in the 
Chinese Development Centre (2009: 17).
Property costs decreased by £0.1 million 
primarily because the 2009 costs included 
the costs associated with the relocation 
of the London office from the Cottons 
Centre to Riverside House. 
Depreciation and amortisation costs 
increased by £0.15 million comprising of 
an increase of £0.15 million in amortisation 
of capitalised software and an increase of 
£0.1 million in the depreciation of tangible 
assets offset somewhat by a reduction in 
the amortisation of other intangibles of 
£0.1 million.
Profit Before Income Tax
Profit before income tax was £3.2 million 
(2009: £4.5 million).
Taxation
The Group has tax losses carried forward 
of £16.6 million and will not be paying 
tax on its UK profits for a number of 
years. Small amounts of withholding tax 
may or may not arise from time to time 
depending on the geographical locations 
of customers with whom the Group 
does business. 
The current tax charge shown on the 
face of the income statement of £0.10 
million comprises a corporation tax 
charge in Japan of £0.02 million (2009: 
£0.22 million), a minimum tax payment 
in the US of £0.02 million (2009: £0.02 
million) and withholding tax of £0.06 
million (2009: £0.01 million). The 
deferred taxation charge of £0.59 million 
(2009: £0.88 million) arises largely in 
respect of the use of trading losses in 
the year net of research and 
development (‘R&D‘) tax credits relating 
to prior years recognised as deferred tax 
assets this year.
Retained Profit for the Year
Retained profit for the year was £2.6 
million (2009: £3.4 million). 
Earnings Per Share
Basic EPS has fallen to 1.4p from 1.9p 
and diluted EPS has fallen to 1.4p from 
1.8p last year.
The Board monitors the Group’s EPS 
performance by reference to adjusted 
pre-tax profit less current tax. Deferred 
tax is excluded from this measure 
because of its potential volatility. The 
adjusted EPS calculations on this basis are 
shown opposite.
77% of Patsystems’ 
revenue is recurring  
in nature and, in  
stark contrast to  
many technology 
companies, this gives  
a level of guarantee  
for a minimum level  
of operating profit  
for the business on  
an annual basis. Patsystems Plc
Annual report & accounts 2010 14
Patsystems Plc
Annual report & accounts 2010
Business Review
Finance Director’s Review continued
Financial Assets/Liabilities – 
Derivative Financial Instruments
Financial assets represent the ‘marked to 
market’ value of derivatives used to 
hedge the Group currency exposures. 
The derivatives used are forward 
contracts and currency options. These 
derivatives are marked to market 
monthly and the resulting ‘profit or loss’ 
is taken to the income statement. In the 
current year a total cost of £0.3 million 
was charged to the income statement. 
(2009: £1.0 million credit).
Current Liabilities
Current liabilities at £3.0 million 
compared to £3.2 million in the prior 
year are broadly similar.
Cash and Treasury 
Cash and cash equivalents increased to 
£9.3 million from £8.9 million in 2009.
The Group generated net cash inflows 
from operating activities of £2.8 million 
(2009: £4.3 million). £1.7 million (2009: 
£1.3 million) was invested in intangible 
and tangible assets, with dividends of 
£0.9 million (2009: £0.7 million) being 
paid during the year. 
The Group is exposed to foreign currency 
risk on sales, purchases and cash 
balances that are denominated in a 
currency other than Sterling. The 
principal currency giving rise to this risk  
is the US Dollar. In order to smooth the 
impact of significant movements in 
exchange rates the Group has a policy  
to carry forward cover for 75% of US$/£ 
net anticipated exposure for 12 months 
forward. That level of cover is in place 
and is comprised of a mixture of forward 
contracts and options. The average 
US$/£ exchange rate used in the 2010 
income statement was 1.54 (2009: 1.57). 
The average rate of the hedges in place 
for 2011 is 1.58. The year end US$/£ 
exchange rate was 1.55 (2009: 1.59).
Business Risks
The principal business risks remain the 
same as in the prior year and these are 
detailed below.
Competition
The Group operates in a growing but 
competitive market. There are three 
major software suppliers in the global 
electronic trading systems market for 
futures and options, of which Patsystems 
is one. There are many smaller 
companies who supply screens but not 
market connectivity. In such a market 
there is always a risk that customers 
could move to other competitors and 
there is always downward pressure on 
margins. Patsystems mitigates this risk by 
supporting its brands with appropriate 
marketing activity and by consistently 
extending its market connectivity as well 
as improving its software, customer 
support and customer care.
Bad Debts
The deterioration of the global economic 
climate that began in 2008 continued in 
2009 and abated somewhat in 2010 has 
continued to affect the financial services 
sector. As the majority of our clients are 
financial services organisations the Group 
considers there is a risk that a client could 
experience financial difficulties and not 
be able to pay its debts as they fall due. 
In order to mitigate this risk Patsystems 
reviews all client accounts on a monthly 
basis and takes appropriate action to 
keep accounts within payment terms. 
Intangible and Tangible Fixed Assets
Goodwill
Goodwill remains unchanged from  
2009 at £3.3 million. The majority of  
this balance (£3.0 million) relates to  
the acquisition of Tamesis in 2005.  
As previously discussed Risk Systems 
continue to be a key element of  
our business. 
Intangible Assets
During the year the Group expended 
£0.8 million on intangible assets (2009: 
£0.7 million). This spend included £0.6 
million of capitalised development costs 
in respect of new products that will 
generate revenues in future years. These 
costs will be amortised over three to five 
years from the date of completion. The 
amortisation period reflects the expected 
life of the particular asset capitalised.
Property, Plant and Equipment
During the year the Group purchased 
fixed assets totalling £0.9 million (2009: 
£0.6 million). The additions comprised 
mainly of computer equipment for  
the establishment of our ASP offerings  
in Singapore, Hong Kong, Sydney  
and Chicago.
Current Assets
Trade Receivables
Trade receivables have increased 
marginally by £0.3 million to £2.9 million 
from £2.6 million. During the year the 
Group has not suffered any significant 
bad debt write-offs.
Prepayments and accrued income have 
grown by £1.4 million to £3.7 million 
mainly as a result of the TurkDEX project 
where revenue is recognised on the 
basis of percentage completion of the 
project and two new contracts that 
were entered into in the last quarter  
of the year. Patsystems Plc
Annual report & accounts 2010
Patsystems Plc
Annual report & accounts 2010 15
Business Review
Key Performance Indicators
 2008 2009 2010
 2008 2009 2010
 2008 2009 2010
 2008 2009 2010
 2008 2009 2010
 2008 2009 2010
 2008 2009 2010
 2008 2009 2010
 2008 2009 2010
Revenue – £m Adjusted profit – percentage of sales Adjusted pre-tax profit – £m
19.6
18.7 3.7
22.1 1 7.7
3.9
22.1
17.0
3.8
Diluted adjusted EPS – p
Pro-Mark screens deployed at year 
end – number
Average active users during the year – 
number
1.9
571
6,852
2.0
723 7,062
2.0
547
7,471
Operating profit – £m Operating cash flow – £m Diluted EPS – p
1.9
3.6
0.3
4.3 4.3
1.8
3.1
2.8
1.4
Customer Consolidation
Consolidation within the financial 
services industry has occurred over the 
past few years and further consolidation 
remains a risk. Where consolidation takes 
place the risk to the Group’s business is 
typically to the revenues associated with 
market connectivity and support and 
maintenance. We mitigate this risk by 
actively adding new customers, products 
and asset categories to our portfolio. 
Revenue Profile
77% of Patsystems’ revenue is recurring 
in nature and, in stark contrast to many 
technology companies, this gives a level 
of guarantee for a minimum level of 
operating profit for the business on an 
annual basis.
However, with products such as our Risk 
offerings and our Exchange Systems 
playing an integral role in the Group’s 
future growth expectations and the 
significant revenues from these 
opportunities being non-recurring in 
nature, the propensity for organisations 
to defer technology investments during 
tougher economic climates is a risk to  
our business. 
Martin Thorneycroft
Finance Director
7 February 2011 Patsystems Plc
Annual report & accounts 2010 16
Business Review
Our Board
Richard Last
Chairman, Non-Executive Director
Age 53. 
Richard is Chairman of Arcontech Group, 
a provider of IT solutions for the financial 
services sector, of Parseq plc a provider 
software and BPO solutions, both are 
listed on AIM and the British Smaller 
Technology Companies VCT 2 plc, a fully 
listed Venture Capital Trust. In addition 
Richard is Chairman of CSE Global (UK) 
Limited; the UK subsidiary of the 
Singapore Stock Exchange listed IT, 
Communications and Controls Systems 
Group, CSE Group Limited. Richard  
also sits on the Boards of Corero plc,  
an AIM listed IT solutions provider and 
Lighthouse Group plc, an AIM listed 
financial services group as well as a 
number of private businesses. Richard,  
a Fellow of the Institute of Chartered 
Accountants, holds a BA (Hons) from 
Sheffield University.
David Webber
Chief Executive
Age 45. 
David was appointed Chief Executive of 
Patsystems in January 2006. He was 
formerly Chief Executive of AttentiV 
Systems Group, where his business 
leadership saw the Company through 
significant expansion by both organic 
growth and acquisition. He led the 
management buyout, subsequent AIM 
flotation of the business and was 
retained as Chief Executive when 
AttentiV Systems Group plc was acquired 
by TietoEnator in May 2005. David, a 
member of the Institute of Chartered 
Accountants since 1989, holds a BSc 
(Economics) from the London School  
of Economics.
Martin Thorneycroft
Finance Director
Age 49. 
Martin joined Patsystems as Finance 
Director in July 2004. He was previously 
Finance Director of Profile Media Group 
plc. Martin, a member of the Institute of 
Chartered Accountants having qualified 
with Ernst and Young in 1986, holds a  
B. Com. from Birmingham University.
John Priestley
Non-Executive Director, Chairman  
of the Audit Committee
Age 61. 
John has over 30 years’ experience in the 
software and services sector and in 2003 
concluded a 13 year career with British 
Telecommunications as Director of 
Business Development for Syntegra. 
Previously, he was a Director of Kapiti 
and a Divisional Director with Hoskyns. 
Stewart Douglas-Mann
Non-Executive Director, Chairman  
of the Remuneration Committee  
and Nomination Committee
Age 73. 
Stewart was a partner of a City law firm 
before moving into investment banking 
in 1972. Prior to his retirement in 2003 
he was a senior Director of Corporate 
Finance at Investec Bank. Stewart has 
held senior positions at Charterhouse 
Bank and Hoare Govett and was a 
Managing Director of the London Stock 
Exchange. Stewart has also been a 
Non-Executive Director of a number  
of listed companies. Stewart holds  
a BA (Oxon).
1 Stewart Douglas-Mann, 2 David Webber, 3 Richard Last, 4 Martin Thorneycroft and 5 John Priestley.
1 2 3 4 5 Governance
Patsystems Plc
Annual report & accounts 2010 17
Governance
Directors’ Report
The Directors present their report for Patsystems Plc  
and the audited financial statements for the year ended  
31 December 2010.
Principal Activities
The principal activities of the Group are the development, 
distribution and support of software enabling:
the electronic trading of financial products on global trading •	
exchanges
real time trade capture, valuation and risk management for •	
the structured finance market
Results and Dividends
The profit on ordinary activities attributable to shareholders after 
taxation amounted to £2,551,000. (2009: £3,362,000). 
The proposed dividend for the year is detailed in the Chairman’ s 
Statement on page 7.
Review of Business and Future Developments
The Directors are pleased with the Group’ s performance during 
the year and its position at 31 December 2010. The Directors are 
confident that performance will continue to improve in 2011 
and beyond. 
The review section of this Report contains a detailed assessment 
of the business and future projects. 
Reviews of the risks faced by the business are detailed in the 
Chief Executive’s Report and the Finance Director’s Review. The 
Finance Director’s Review also details the Key Performance 
Indicators (‘KPIs’) for the year.
Proceeds from Shares Issues During the Year
£161,000 was received in proceeds from the exercise of share 
options during the year ended 31 December 2010 (2009: 
£682,000).
Substantial Shareholdings
On 2 February 2011, the following holdings of 3% or more of 
the issued share capital of Patsystems Plc were known to the 
Company: 
Beneficial owner, as notified to the Company Number of shares %
ION Trading Ireland Limited 55,051,191 29.49
Brewin Dolphin Limited 15,714,675 8.42
Herald Investment Management Limited 13,000,000 6.96
Cazenove Capital Management Limited 12,176,615 6.52
Wells Fargo Advisors 11,562,500 6.19
Kabouter Management LLC 8,649,000 4.63
Ignis Asset Management Limited 6,177,544 3.31
Directors
The Directors of the Company, together with those who served 
during the year, are as follows:
Executive Directors  Non-Executive Directors 
D Webber R Last 
M Thorneycroft  J Priestley
  S Douglas-Mann – appointed  
10 May 2010
 S Sparke – resigned 10 May 2010
Directors and their Interests
 2 February 31 December 31 December
Ordinary shares of 1p each in Patsystems Plc 2011 2010 2009
D Webber 875,000 875,000 875,000
M Thorneycroft 68,000 68,000 68,000
R Last 786,886 786,886 786,886
J Priestley 168,684 168,684 91,017
S Douglas-Mann 180,000 180,000 100,000
Details of the Directors who have an interest in share options are 
disclosed in the Remuneration Report.
Save as disclosed in this Report and note 28, there were  
no other contracts subsisting during or at the end of the 
financial year in which a Director of the Company is or was 
materially interested.
Employee involvement
The Directors recognise the importance of employee 
involvement established by good communications and working 
relationships. The decentralised nature of the Group’ s activities 
necessitates that the practical application of this policy is the 
responsibility of local management in a manner appropriate to 
their circumstances.
Employment policies
The Group is committed to the terms of the Codes of Practice 
for the elimination of all or any discrimination and to the 
promotion of equality of opportunities in employment.
It is Group policy to afford equal opportunities to all employees 
and job applicants. No employee or job applicant is less 
favourably treated than another on the grounds of their sex, 
sexual orientation, age, marital status, religion, race, nationality, 
ethnic or national origin, colour or disability and all 
appointments and promotions are determined solely by merit.
It is also Group policy to encourage and assist in the 
employment, training, re-training and career development of 
disabled persons where possible, having regard to their suitability 
for a particular vacancy and the nature of the Group’ s activities. 
In the event that employees become disabled during 
employment the Group will where possible continue their 
employment and arrange appropriate training.
Responsibility for monitoring the effective working of these 
policies is vested in Martin Thorneycroft, the Finance Director.
Financial instruments and financial risk management
The Group’s activities expose it to a variety of financial risks and 
it has developed and operates an overall risk management 
programme that recognises the unpredictability of financial 
markets and seeks to minimise potential adverse effects on the 
Group’ s financial performance. 
Financial risk management is under the control of the Finance 
Director and is carried out centrally for the Group in compliance 
with policies approved and monitored by the full Board. The 
Board regularly reviews the effectiveness of these policies 
examining specific areas including foreign exchange risk, interest  Patsystems Plc
Annual report & accounts 2010 18
Patsystems Plc
Annual report & accounts 2010
Governance
Directors’ Report continued
rate risk, credit risk and the extent to which financial 
instruments are being used to hedge certain risk exposures. 
Details of the Group’ s exposures to market, credit and liquidity 
risks are set out in note 3 to the financial statements.
Research and Development
During the year the Group continued to invest in R&D. All 
expenditure, whether incurred through internal staff costs or 
through third party suppliers, relating to R&D that satisfies the 
criteria for capitalisation under IAS 38, ‘Intangible assets’, is 
capitalised. Otherwise it is written off to the income statement 
in the period incurred.
Creditor Payment Policy
Given the international nature of the Group’s operations, there 
is no standard code for the Group in respect of payments to 
suppliers. Operating subsidiaries are responsible for agreeing 
terms and conditions for their business transactions when 
orders for goods and services are placed, ensuring that  
suppliers are aware of the terms of payment and including  
the relevant terms in contracts where appropriate. These 
arrangements are adhered to provided that suppliers meet  
their contractual commitments.
Creditor days for the Company are 30 days.
Charitable and Political Donations
The Group made charitable contributions of £3,950 during the 
year (2009: £2,409). The current year donations were made to 
The Back-Up Trust, World Challenge and Sparks. No political 
donations were made in 2010 or 2009.
Disclosure of Information to Auditors
For each of the persons who were Directors at the time this 
Report was prepared, the following applies:
So far as the Directors are aware, there is no relevant •	
information of which the Company’ s auditors are unaware; 
and
The Directors have taken all the steps that they ought to •	
have taken as Directors in order to make themselves aware 
of any relevant audit information and to establish that the 
Company’ s auditors are aware of that information.
Disclosure and Transparency Rules (‘DTR’)
The Group has complied with the DTR so far as they are 
applicable to AIM listed companies.
Annual General Meeting
The Notice convening the Annual General Meeting (‘AGM’) 
together with the proposed resolutions is being sent to 
shareholders. The AGM will be held on 19 April 2011.
Statement of Directors’ Responsibilities
Company law requires the Directors to prepare financial 
statements for each financial year, which give a true and fair 
view of the state of affairs of the Company and the Group, as 
at the end of the year, and of the profit or loss of the Group for 
the year. In preparing those financial statements, the Directors 
are required to:
1. Select suitable accounting policies and then apply them 
consistently;
2. Make judgements and estimates that are reasonable  
and prudent;
3. State whether applicable accounting standards have been 
followed, subject to any material departures disclosed and 
explained in the financial statements;
4. Prepare the financial statements on the going concern basis 
unless it is inappropriate to presume that the Group will 
continue in business.
The Directors confirm that the financial statements comply with 
the above requirements.
The Directors are responsible for the maintenance and integrity 
of the Patsystems website. Information published on the 
internet is accessible in many countries with different legal 
requirements. Legislation in the United Kingdom governing the 
preparation and dissemination of financial statements may 
differ from legislation in other jurisdictions.
The Directors are responsible for maintaining proper accounting 
records which disclose with reasonable accuracy at any time the 
financial position of the Company and the Group and enable 
them to ensure that the financial statements comply with  
the Companies Act 2006 (as amended from time to time).  
The Directors are also responsible for safeguarding the assets of  
the Company and the Group and hence for taking reasonable 
steps for the prevention and detection of fraud and other 
irregularities.
For and on behalf of the Board of Patsystems Plc.
Martin Thorneycroft
Company Secretary 
7 February 2011
Registered office: Riverside House,  
2A Southwark Bridge Road, London SE1 9HA Patsystems Plc
Annual report & accounts 2010
Governance
Patsystems Plc
Annual report & accounts 2010 19
Statement of Corporate Governance
The following statement of corporate governance reflects the 
position of the Group as at 31 December 2010.
The Board is responsible for the Group’s corporate governance 
policy and recognises the importance of high standards of 
integrity, and consistently seeks to apply the principles set out in 
the Combined Code on Corporate Governance (the ‘Code’) to 
the extent that they are appropriate for, and applicable to, a 
company of Patsystems’ size quoted on the Alternative 
Investment Market (‘AIM’).
Directors
Details of the dates of appointment and resignation of Directors 
within the year are shown in the Directors’ Report. All Directors 
are subject to re-election within a three-year period. The roles of 
the Chairman and Chief Executive are separate and have been 
so throughout the year.
The Non-Executive Directors are considered to be ‘independent’ 
within the definition contained in the Code. The Non-Executive 
Directors meet, without the presence of the Executive Directors, 
whenever it is appropriate for them to do so.
All the Directors have access to the advice of the Company 
Secretary and may, in furtherance of their duties, take 
independent legal and financial advice at the Company’ s 
expense. They also have access to the minutes of the Board, in 
which any concerns expressed by them regarding matters 
pertaining to the Group are recorded.
While there is no formal process, the performance and 
effectiveness of each Director, including the Non-Executive 
Directors, is assessed on an on-going basis by the other 
members of the Board.
Board Meetings
The Board generally meets monthly and at such other times as 
required, and receives regular reports on a wide range of key 
issues including operational performance, risk management and 
corporate strategy.
The Board’ s accountability is demonstrated by the adoption of a 
formal schedule of matters specifically reserved to the Board for 
its decision concerning all key areas across the Group’ s activities, 
thereby ensuring that all major decisions affecting the Group 
are taken at Board level. All the Directors are free to bring any 
matter to the attention of the Board, at any time.
Committees
The Audit Committee and the combined Remuneration and 
Nominations Committee meet at least twice a year.
Audit Committee
The Audit Committee is chaired by John Priestley and comprises 
all the Non-Executive Directors. The external auditors, together 
with the Finance Director and other financial staff are invited to 
attend these meetings as and when required.
In accordance with its terms of reference the principal function 
of this Committee is to determine the appropriateness of 
accounting policies to be used in the Group’ s annual results.  
In addition the Committee is responsible for monitoring the 
independence of the Group auditors, assessing the Group’ s 
audit arrangements and the Group’s system of internal  
controls, and reviewing the half-yearly and annual results  
before publication.
Remuneration and Nominations Committee
The Remuneration and Nominations Committee comprises  
all the Non-Executive Directors and is chaired by Stewart 
Douglas-Mann. 
In accordance with its terms of reference the Committee 
determines the level and make-up of remuneration (including 
bonuses and options) of the Executive Directors and certain 
senior management. This also includes formulation of 
remuneration policy throughout the Group, embracing both 
share options and bonuses.
The Committee also evaluates the balance of skills, knowledge 
and experience on the Board and considers all new Board 
appointments and re-appointments against this evaluation.
The Report of the Board on Directors’ Remuneration and on 
Group Remuneration Policy giving details of Company policy 
and individual Directors’ remuneration is set out on pages 21  
to 23. The remuneration arrangements of the Non-Executive 
Directors are determined by the Board as a whole.
The notice period provisions contained in the Directors’ service 
agreements are summarised on page 22 of these accounts.
Executive Management Committee
The Executive Management Committee (the ‘EMC’), under  
the Chairmanship of the Chief Executive, or in his absence  
the Finance Director, meets monthly and is responsible for the 
day-to-day running of the Group. The members of the EMC  
are the two Executive Directors of the Company, together with 
the five key business heads who are not Directors.
Relations with Shareholders
The Board welcomes the views of shareholders.
The AGM is used as an opportunity to communicate with 
shareholders. All shareholders are encouraged to attend the 
Company’ s AGM, in order to take advantage of the opportunity 
to ask questions of the Directors.
Shareholders may also contact the Company in writing or via its 
website, which is regularly updated. Additional information is 
supplied through the circulation of the Interim Report and the 
Annual Report and Accounts. During the year the Company 
issued a series of announcements to the Stock Exchange. The 
Chief Executive, Finance Director and the Chairman from time 
to time meet individual and institutional shareholders and 
provide such information as is permissible in order to facilitate a 
better understanding of the Group’ s business and operations. Governance
Patsystems Plc
Annual report & accounts 2010 20
Patsystems Plc
Annual report & accounts 2010
Statement of Corporate Governance continued
Internal Control
The Board of Directors has overall responsibility both for the 
Group’ s system of internal controls, which includes internal 
financial controls and for reviewing their effectiveness. The 
Directors recognise that no system of internal control can 
provide absolute assurance. The Group’ s systems are designed 
to manage the risk of failure to achieve business objectives and 
therefore can only provide the Directors with reasonable 
assurance against material misstatement or loss.
The key elements of the Group’s internal control system, which 
have been operational for the whole of the financial year,  
are as follows:
Management Structure •	
The Board has overall responsibility for the Group and there 
is a formal schedule of matters specifically reserved for 
decision by the Board. Each Executive Director has been 
given responsibility for specific aspects of the Group’ s affairs. 
Reporting to the Chief Executive, is the EMC which is 
responsible for the day to day running of the Group’ s affairs.
Monitoring Systems used by the Board •	
The Board receives regular reports on the financial and 
business performance of the Group. The Board is regularly 
advised through these reports on the working capital 
position and financial performance relative to the Group’ s 
approved budget.
Internal Audit •	 
The Board reviews from time to time the need for an Internal 
Audit function and remains of the opinion that the systems 
of internal financial control are appropriate to the Group’ s 
present activities and that such a function is unnecessary.
Going Concern
The Directors have reasonable expectation that the Company 
and the Group have adequate resources to continue in 
operational existence for the foreseeable future. For this reason 
they continue to adopt the going concern basis in preparing the 
financial statements.
Compliance Statement
Corporate Governance procedures are subject to regular review 
by the Board. Throughout the year the Directors believe that the 
Group has complied with the provisions as set out in Section 1 
of the Code, to the extent that they are appropriate for, and 
applicable to, a company of Patsystems’ size quoted on AIM.
For and on behalf of the Board of Patsystems Plc.
Martin Thorneycroft
Company Secretary
7 February 2011 Patsystems Plc
Annual report & accounts 2010
Governance
Patsystems Plc
Annual report & accounts 2010 21
Report of the Board on Directors’ Remuneration and  
on Group Remuneration Policy
Remuneration Committee
The Remuneration Committee, which comprises all of, and  
only, Non-Executive Directors, determines Group remuneration 
policy and the remuneration (including annual bonuses and 
long-term incentives) of Executive Directors and certain other 
senior management.
Policy on Group Remuneration
The Company’ s policy is to set the remuneration of senior 
executives (including Executive Directors) at a level to attract 
and retain executives of appropriate ability and experience to 
manage the affairs of the Company. This approach contains 
costs, improves employee benefits and increases the Company’ s 
competitiveness in the market for scarce skills. In formulating its 
remuneration policy, the Remuneration Committee is mindful of 
the competitive pressures inherent in a sector that straddles 
both the software and financial services industries. It is the 
Company’s policy that a significant element of total 
remuneration is related to the financial performance of the 
Company. Remuneration is reviewed annually.
The Remuneration Package
The remuneration package comprises base salary and benefits, 
pension contributions, annual bonus and long-term incentive 
arrangements. All senior employees of the Group (including 
the Executive Directors) are remunerated using the policy 
described below.
Base Salary and Benefits
Base salary takes into account the performance of the individual 
and information from independent sources on market levels of 
remuneration. The Executive Directors’ basic salaries are 
reviewed by the Committee prior to the beginning of each year. 
The Executive Directors are also entitled to private medical, 
death in service, critical illness and permanent health insurance 
and subsidised health club membership.
Pension Contributions
The Group operates a defined contribution pension scheme for 
eligible UK employees. Neither of the Executive Directors are 
members of this scheme; the Executive Directors receive a 
Company contribution to their individual pension arrangements.
Annual Bonuses
Bonus scheme arrangements are in place for all members of staff, 
including the Executive Directors. Bonuses for the Executive 
Directors are linked to the financial performance of the Group 
and staff bonuses are based on individual performance.
Long-Term Incentives
Share Options
The Group operates two share option plans – an Enterprise 
Management Incentive Share Option Scheme (‘EMI’) and a 
standard unapproved share option scheme. All senior staff, 
including the Executive Directors participate in both schemes.
Options awarded under the three main grants (as detailed 
below) are now 100% exercisable as they have vested.
The Company has also made a number of special awards under 
both schemes to Directors and senior employees which vested 
in between one and three years from the date of grant subject 
to certain performance conditions. These awards (as detailed 
below) are now 100% exercisable as they have vested.
2007 Cash-Based Long-Term Incentive Scheme
During 2007 the Group introduced a new cash-based long-
term incentive scheme (‘the 2007 Cash Scheme’). As disclosed 
in the Company’ s Report and Accounts for 2009 all awards 
under the 2007 Cash Scheme fully vested in March 2010. The 
maximum conditional award allowable under the three year 
2007 Cash Scheme was 100% of salary with each award 
vesting no earlier than the third anniversary from date of grant 
and vesting being subject to achievement of performance 
conditions and continued employment (‘the Awards’). When 
the Awards to the Directors vest, they will be expected to use 
50% of the net of tax amount to purchase the Company’ s 
shares in the open market until such time as a total personal 
shareholding has been achieved which is equivalent to 100% of 
base salary. In the event of a change of control (eg a take-over) 
the Awards will vest provided the Remuneration Committee is 
satisfied that it is fair and reasonable for them to do so (eg. that 
the terms of a take-over implicitly reflect prospective 
performance on a scale that would have resulted in full vesting).
 
Payments to the Directors under the 2007 Cash Scheme are 
detailed in the emoluments table overleaf. No further awards 
will be made under the 2007 Cash Scheme as it is being 
replaced by the share-based long-term incentive scheme 
detailed below.
New Share-Based Long-Term Incentive Scheme
The Remuneration Committee was unable, for reasons beyond 
its control, to introduce the scheme referred to in last year’ s 
report. It intends to introduce a modified version of that scheme 
early in 2011. The new Scheme will be open to the Executive 
Directors and certain other key senior staff. 
An annual award of shares will be made to participants on an 
individual basis up to a maximum award of 100% of basic 
salary. No award will vest if EPS (calculated on an adjusted profit 
basis as detailed in the Finance Director’ s Review) growth over 
the preceding year is less than 7.5%. The maximum level of 
vesting will occur only if EPS growth reaches 20%, with a 
pro rata award vesting between 7.5% and 20%. Once granted, 
the shares will only vest unconditionally three years from date of 
conditional vesting provided the individual is still employed by 
the Company. 
If, at the date of vesting unconditionally, the compound annual 
EPS growth over the previous 3 year period is greater than 10% 
then an additional award (a ‘Matching Share Award’) will be 
made on a sliding scale between 5% (for compound growth of 
10%) and 100% (for compound growth of 20% or better) of 
the original value of the annual award. Matching Share Awards 
will vest unconditionally only if the individual is still employed by 
the Company 12 months after the grant of such award. In the 
event of a change of control, the Scheme provides for 
accelerated vesting. Governance
Patsystems Plc
Annual report & accounts 2010 22
Patsystems Plc
Annual report & accounts 2010
Report of the Board on Directors’ Remuneration and  
on Group Remuneration Policy continued
Directors’ Emoluments
      Benefits Total T otal
   Salary/fees Bonus LTIP in kind 2010 2009
   £ £ £ £ £ £
Executive Directors      
D Webber   255,000 – 130,000 5,608 390,608 405,039
M Thorneycroft   161,160 – 85,000 3,981 250,141 256,699
      
Non-Executive Directors      
R Last   45,000 – – – 45,000 45,000
J Priestley   30,000 – – – 30,000 30,000
S Sparke   10,894 – – – 10,894 30,900
S Douglas-Mann   19,194 – – – 19,194 –
   521,248 – 215,000 9,589 745,837 767,638
S Sparke resigned on 10 May 2010 and S Douglas-Mann was appointed on 10 May 2010.
Pensions
The Group operates a defined contribution pension scheme for eligible UK employees. The Executive Directors that served  
during the year were not members of this scheme. The following contributions to their private pensions were charged to  
the income statement:
       2010 2009
       £ £
D Webber       26,479 25,960
M Thorneycroft       16,735 16,407
       43,214 42,367
Directors’ Contractual Terms
    D Webber M Thorneycroft R Last J Priestley S Douglas-Mann
Date appointed    03-Jan-06 05-Jul-04 17-Feb-03 01-Jan-07 10-May-10
Service contract*    Yes Yes No No No
Notice period     
– by Company    12 months 6 months 3 months 3 months 3 months
– by Director    12 months 6 months 3 months 3 months 3 months
Benefits    Death in service Death in service – – –
Pension    10% 10% – – –
* All the Non-Executive Directors are engaged under ‘letters of appointment’.
In the event that an offer for the entire issued share capital of Patsystems Plc becomes wholly unconditional, the Executive and 
Non-Executive Directors are entitled to 12 months’ notice. Patsystems Plc
Annual report & accounts 2010
Governance
Patsystems Plc
Annual report & accounts 2010 23
Directors’ Share Options
    Outstanding  Outstanding  
    options at Exercised options at  
  Scheme Exercise 31 December during 31 December Exercise Expiry
  type price 2009 the year 2010 date date
D Webber  Unapproved 29.00p 1,000,000 – 1,000,000 Note 1 19.04.17
    1,000,000 – 1,000,000  
       
  EMI 15.25p 655,737 – 655,737 Note 2 30.07.14
  Unapproved 15.25p 344,263 – 344,263 Note 3 30.07.14
M Thorneycroft  Unapproved 18.00p 500,000 – 500,000 Note 3 17.03.15
    1,500,000 – 1,500,000
The IFRS 2 charge to the income statement in relation to these options was £12,522.
Note 1: These options were granted under special awards of Part B (Inland Revenue Unapproved) of the Patsystems Plc 2003 Share 
Option Scheme. These options are now 100% exercisable.
Note 2: Options were granted under the second and third awards of the Enterprise Management Incentive (‘EMI’) Scheme. These 
options are now 100% exercisable. 
Note 3: These options were granted under the second and third awards of Part B (Inland Revenue Unapproved) of the Patsystems 
Plc 2003 Share Option Scheme. These options are 100% exercisable.
The mid-market price of the Company’s shares at the end of the financial year was 25p, and the range of market prices during the 
year was 21p to 31p.
Directors’ Awards Under the Cash-Based Long-Term Incentive Scheme
The cash-based long-term incentive scheme is described above. The Awards vested in full in March 2010 and payments to the 
Directors are detailed in the emoluments table on page 22.
Stewart Douglas-Mann
Chairman, Remuneration Committee
7 February 2011 Patsystems Plc
Annual report & accounts 2010 24
Financial Statements
Independent Auditors’ Report to the Members  
of Patsystems Plc
We have audited the Group financial statements of Patsystems 
Plc for the year ended 31 December 2010 which comprise the 
Consolidated Income Statement, Consolidated Statement of 
Comprehensive Income, Consolidated Balance Sheet, 
Consolidated Statement of Changes in Equity, Consolidated 
Cash Flow Statement and the related notes. The financial 
reporting framework that has been applied in their preparation 
is applicable law and International Financial Reporting Standards 
(IFRSs) as adopted by the European Union.
Respective Responsibilities of Directors and Auditors
As explained more fully in the Directors’ Responsibilities 
Statement set out on page 18, the Directors are responsible for 
the preparation of the financial statements and for being 
satisfied that they give a true and fair view. Our responsibility  
is to audit and express an opinion on the financial statements  
in accordance with applicable law and International Standards 
on Auditing (UK and Ireland). Those standards require us to 
comply with the Auditing Practices Board’ s Ethical Standards  
for Auditors.
This Report, including the opinions, has been prepared for and 
only for the Company’s members as a body in accordance with 
Chapter 3 of Part 16 of the Companies Act 2006 and for no 
other purpose. We do not, in giving these opinions, accept or 
assume responsibility for any other purpose or to any other 
person to whom this report is shown or into whose hands it 
may come save where expressly agreed by our prior consent  
in writing.
Scope of the Audit of the Financial Statements
An audit involves obtaining evidence about the amounts  
and disclosures in the financial statements sufficient to give 
reasonable assurance that the financial statements are free  
from material misstatement, whether caused by fraud or  
error. This includes an assessment of: whether the accounting  
policies are appropriate to the Group’s circumstances and  
have been consistently applied and adequately disclosed;  
the reasonableness of significant accounting estimates  
made by the directors; and the overall presentation of the 
Financial Statements.
Opinion on Financial Statements 
In our opinion the Group Financial Statements: 
give a true and fair view of the state of the Group’ s affairs as •	
at 31 December 2010 and of its profit and cash flows for the 
year then ended;
have been properly prepared in accordance with IFRSs as •	
adopted by the European Union; and 
have been prepared in accordance with the requirements of •	
the Companies Act 2006.
Opinion on Other Matter Prescribed by the  
Companies Act 2006
In our opinion the information given in the Directors’ Report for 
the financial year for which the Group Financial Statements are 
prepared is consistent with the Group Financial Statements.
Matters on Which we are Required to Report by Exception
We have nothing to report in respect of the following matters 
where the Companies Act 2006 requires us to report to you if, 
in our opinion: 
certain disclosures of Directors’ remuneration specified by •	
law are not made; or 
we have not received all the information and explanations •	
we require for our audit. 
Other Matter 
We have reported separately on the Parent Company financial 
statements of Patsystems Plc for the year ended 31 December 
2010.
Nigel Reynolds 
(Senior Statutory Auditor)
for and on behalf of PricewaterhouseCoopers LLP
Chartered Accountants and Statutory Auditors
London
7 February 2011 Financial Statements
Patsystems Plc
Annual report & accounts 2010 25
Consolidated Income Statement
for the year ended 31 December 2010
       2010 2009
      Notes £’000 £’000
Revenue      4 22,111 22,097
Cost of sales         (628) (555)
Gross profit        21,483 21,542
Operating expenses         (18,390) (17,196)
Operating profit       5 3,093 4,346
Finance income       7 145 140
Profit before income tax       3,238 4,486
Current tax charge        (99) (249)
Deferred tax charge        (588) (875)
T axation – total      8 (687) (1,124)
Profit for the year attributable to equity holders of the Company       2,551 3,362
Earnings per ordinary share       10  
– basic       1.4p 1.9p
– diluted        1.4p 1.8p
The income statement has been prepared on the basis that all operations are continuing operations. 
Consolidated Statement of Comprehensive Income
for the year ended 31 December 2010
       2010 2009
       £’000 £’000
Profit for the year       2,551 3,362
Other comprehensive income:   
Foreign exchange adjustment on foreign currency net investments     267 (162)
Total comprehensive income for the year        2,818 3,200 Financial Statements
Patsystems Plc
Annual report & accounts 2010 26
Patsystems Plc
Annual report & accounts 2010
Consolidated Balance Sheet
at 31 December 2010
       2010 2009
      Notes £’000 £’000
ASSETS   
Non-current assets   
Goodwill      12 3,251 3,251
Intangible assets      13 3,403 3,426
Property, plant and equipment      14 1,148 689
Deferred tax assets      15 4,467 4,945
Trade and other receivables      17 427 326
         12,696 12,637
Current assets   
Inventories      16 – 1
Trade and other receivables      17 6,632 5,006
Financial assets – derivative financial instruments      27 46 176
Income tax       – 8
Cash and cash equivalents      18 9,344 8,896
         16,022 14,087
LIABILITIES   
Current liabilities   
Trade and other payables      19 (3,023) (2,793)
Current income tax liabilities       (8) (98)
Provisions      20 – (317)
         (3,031) (3,208)
Net current assets        12,991 10,879
Non-current liabilities   
Provisions      20 (32) (8)
         (32) (8)
Net assets        25,655 23,508
EQUITY   
Capital and reserves attributable to equity holders of the Company
Share capital      22 1,866  1,853
Share premium account      24 4,641  4,493
Other reserves      24 20,862  20,862
Retained earnings      24 (1,714) (3,700)
Total equity      25 25,655  23,508
The financial statements on pages 25 to 52 were approved by the Board of Directors on 7 February 2011.
David Webber Martin Thorneycroft
Chief Executive Officer Finance Director
Patsystems Plc, Company number: 4498002 Patsystems Plc
Annual report & accounts 2010
Financial Statements
Patsystems Plc
Annual report & accounts 2010 27
Consolidated Statement of Changes in Equity 
for the year ended 31 December 2010
     Share
    Share Premium Other Retained 
    Capital Account Reserves Earnings 
    £’000 £’000 £’000 £’000 £’000
At 1 January 2010    1,853 4,493 20,862 (3,700) 23,508
Profit for the year    – – – 2,551 2,551
Other comprehensive income:     
– Foreign exchange movement    – – – 267 267
T otal comprehensive income for the period     – – – 2,818 2,818
Shares issued in the year    13 148 – – 161
Dividends paid    – – – (892) (892)
Share compensation expense    – – – 60 60
At 31 December 2010    1,866 4,641 20,862 (1,714) 25,655
Of the other reserve at 31 December 2010 £20,812,000 relates to a merger reserve.
     Share
    Share Premium Other Retained 
    Capital Account Reserves Earnings 
    £’000 £’000 £’000 £’000 £’000
At 1 January 2009    1,795 3,869 20,862 (6,472) 20,054
Profit for the year    – – – 3,362 3,362
Other comprehensive income:     
– Foreign exchange movement    – – – (162) (162)
T otal comprehensive income for the period     – – – 3,200 3,200
Shares issued in the year    58 624 – – 682
Dividends paid    – – – (689) (689)
Share compensation expense    – – – 261 261
At 31 December 2009    1,853 4,493 20,862 (3,700) 23,508
Of the other reserve at 31 December 2009 £20,812,000 relates to a merger reserve. Financial Statements
Patsystems Plc
Annual report & accounts 2010 28
Patsystems Plc
Annual report & accounts 2010
Consolidated Cash Flow Statement
for the year ended 31 December 2010
       2010 2009
       £’000 £’000
Cash flows from operating activities  
Cash flows from operations       2,843 4,292
Interest received       145 140
T ax paid       (186) (149)
Net cash flows from operating activities       2,802 4,283
Cash from investing activities  
Purchase of intangible assets       (812) (653)
Purchase of property, plant and equipment       (932) (596)
Net cash flows used in investing activities        (1,744) (1,249)
Cash flows from financing activities  
Net proceeds from issue of ordinary share capital        161 682
Dividends paid to Company’ s shareholders       (892) (689)
Net cash flows used in financing activities       (731) (7)
Net increase in cash and cash equivalents       327 3,027
Cash and cash equivalents at beginning of the period       8,896 5,929
Effect of exchange rates on cash and cash equivalents      121 (60)
Cash and cash equivalents at end of the period       9,344 8,896
Reconciliation of net profit to net cash flows from operating activities
       2010 2009
       £’000 £’000
Net profit       2,551 3,362
Tax        687 1,124
Depreciation of property, plant and equipment        508 419
Amortisation of intangible assets        807 753
Write off of intangible assets       29 –
Share compensation expense        60 261
Finance income       (145) (140)
Decrease in inventories        1 2
(Increase)/decrease in trade and other receivables        (1,605) 1,123
Decrease/(increase) in financial assets        130 (1,029)
Increase/(decrease) in trade and other payables        113 (1,687)
(Decrease)/increase in provisions        (293) 104
Cash flows from operating activities        2,843 4,292 Patsystems Plc
Annual report & accounts 2010
Financial Statements
Patsystems Plc
Annual report & accounts 2010 29
Notes to the Financial Statements
1. Accounting Policies
The principal accounting policies applied in the preparation of these consolidated financial statements are set out below. These 
policies have been consistently applied to all the years presented, unless otherwise stated.
1.1 Accounting Convention and Basis of Preparation
These financial statements have been prepared in accordance with International Financial Reporting Standards (‘IFRS’) and IFRIC 
interpretations endorsed by the European Union (‘EU’) and with those parts of the Companies Act 1985/2006 applicable to 
companies reporting under IFRS. 
The results and net assets of subsidiary undertakings acquired are included in the consolidated income statement and consolidated 
balance sheet using the acquisition method of accounting from the effective date of acquisition.
These consolidated financial statements have been prepared under the historical cost convention, with the exception of financial 
instruments which are stated in accordance with IAS 39 Financial Instruments: Recognition and Measurement.
The preparation of financial statements in conformity with IFRS requires the use of certain critical accounting estimates. It also 
requires management to exercise its judgement in the process of applying the Group’s accounting policies. The areas involving a 
high degree of judgement or complexity, or areas where assumptions and estimates are significant to the consolidated financial 
statements, are disclosed in note 2.
New and Amended Standards Adopted by the Group
The following new standards and amendments to standards are mandatory for the first time for the financial year beginning 1 
January 2010.
IFRS 3 (revised), ‘Business combinations’, and consequential amendments to IAS 27, ‘Consolidated and separate financial •	
statements’, IAS 28, ‘Investments in associates’, and IAS 31, ‘Interests in joint ventures’, are effective prospectively to business 
combinations for which the acquisition date is on or after the beginning of the first annual reporting period beginning on or 
after 1 July 2009. The revised standard continues to apply the acquisition method to business combinations but with some 
significant changes compared with IFRS 3. For example, all payments to purchase a business are recorded at fair value at the 
acquisition date, with contingent payments classified as debt subsequently remeasured through the statement of 
comprehensive income. There is a choice on an acquisition-by-acquisition basis to measure the non-controlling interest in the 
acquiree either at fair value or at the non-controlling interest’ s proportionate share of the acquiree’ s net assets. All acquisition-
related costs are expensed.
New and Amended Standards, and Interpretations Mandatory for the First Time for the Financial Year Beginning 
1 January 2010 but not Currently Relevant to the Group
The following standards and amendments to existing standards have been published and are mandatory for the Group’ s 
accounting periods beginning on or after 1 January 2010 or later periods, but the Group has not early adopted them.
IAS 27 (revised) requires the effects of all transactions with non-controlling interests to be recorded in equity if there is no •	
change in control and these transactions will no longer result in goodwill or gains and losses. The standard also specifies the 
accounting when control is lost. Any remaining interest in the entity is re-measured to fair value, and a gain or loss is recognised 
in profit or loss. IAS 27 (revised) has had no impact on the current period, as none of the non-controlling interests have a deficit 
balance; there have been no transactions whereby an interest in an entity is retained after the loss of control of that entity, and 
there have been no transactions with non-controlling interests.
IFRIC 17, ‘Distribution of non-cash assets to owners’ (effective on or after 1 July 2009). The interpretation was published in •	
November 2008. This interpretation provides guidance on accounting for arrangements whereby an entity distributes non-cash 
assets to shareholders either as a distribution of reserves or as dividends. IFRS 5 has also been amended to require that assets 
are classified as held for distribution only when they are available for distribution in their present condition and the distribution 
is highly probable.
IFRIC 18, ‘Transfers of assets from customers’, effective for transfer of assets received on or after 1 July 2009. This interpretation •	
clarifies the requirements of IFRSs for agreements in which an entity receives from a customer an item of property, plant and 
equipment that the entity must then use either to connect the customer to a network or to provide the customer with ongoing 
access to a supply of goods or services. In some cases, the entity receives cash from a customer that must be used only to 
acquire or construct the item of property, plant, and equipment in order to connect the customer to a network or provide the 
customer with ongoing access to a supply of goods or services (or to do both).
IFRIC 9, ‘Reassessment of embedded derivatives and IAS 39, Financial instruments: Recognition and measurement’, effective 1 July •	
2009. This amendment to IFRIC 9 requires an entity to assess whether an embedded derivative should be separated from a host 
contract when the entity reclassifies a hybrid financial asset out of the ‘fair value through profit or loss’ category. This assessment is 
to be made based on circumstances that existed on the later of the date the entity first became a party to the contract and the 
date of any contract amendments that significantly change the cash flows of the contract. If the entity is unable to make this 
assessment, the hybrid instrument must remain classified as at fair value through profit or loss in its entirety. Financial Statements
Patsystems Plc
Annual report & accounts 2010 30
Patsystems Plc
Annual report & accounts 2010
Notes to the Financial Statements continued
1. Accounting Policies continued
IFRIC 16, ‘Hedges of a net investment in a foreign operation’ effective 1 July 2009. •	
This amendment states that, in a hedge of a net investment in a foreign operation, qualifying hedging instruments may be held 
by any entity or entities within the Group, including the foreign operation itself, as long as the designation, documentation and 
effectiveness requirements of IAS 39 that relate to a net investment hedge are satisfied. In particular, the Group should clearly 
document its hedging strategy because of the possibility of different designations at different levels of the Group. 
IAS 1 (amendment), ‘Presentation of financial statements’. The amendment clarifies that the potential settlement of a liability by •	
the issue of equity is not relevant to its classification as current or non current. By amending the definition of current liability, the 
amendment permits a liability to be classified as non-current (provided that the entity has an unconditional right to defer 
settlement by transfer of cash or other assets for at least 12 months after the accounting period) notwithstanding the fact that 
the entity could be required by the counterparty to settle in shares at any time.
IAS 36 (amendment), ‘Impairment of assets’, effective 1 January 2010. The amendment clarifies that the largest cash-generating •	
unit (or group of units) to which goodwill should be allocated for the purposes of impairment testing is an operating segment, as 
defined by paragraph 5 of IFRS 8, ‘Operating segments’.
IFRS 2 (amendments), ‘Group cash-settled share-based payment transactions’, effective from 1 January 2010. In addition to •	
incorporating IFRIC 8, ‘Scope of IFRS 2’, and IFRIC 11, ‘IFRS 2 – Group and treasury share transactions’, the amendments expand 
on the guidance in IFRIC 11 to address the classification of Group arrangements that were not covered by that interpretation.
IFRS 5 (amendment), ‘Non-current assets held for sale and discontinued operations’. The amendment clarifies that IFRS 5 •	
specifies the disclosure required in respect of non-current assets (or disposal groups) classified as held for sale or discontinued 
operations. It also clarifies that the general requirement of IAS 1 still apply, in particular paragraph 15 (to achieve a fair 
presentation) and paragraph 125 (sources of estimation uncertainty) of IAS 1.
New Standards, Amendments and Interpretations Issued but not Effective for the Financial Year Beginning 1 January 
2010 and not Early Adopted 
IFRS 9, ‘Financial instruments’, issued in November 2009. This standard is the first step in the process to replace IAS 39, ‘Financial •	
instruments: recognition and measurement’. IFRS 9 introduces new requirements for classifying and measuring financial assets 
and is likely to affect the Group’ s accounting for its financial assets. The standard is not applicable until 1 January 2013 but is 
available for early adoption. However, the standard has not yet been endorsed by the EU.
Classification of rights issues (amendment to IAS 32), issued in October 2009. The amendment applies to annual periods beginning •	
on or after 1 February 2010. Earlier application is permitted. The amendment addresses the accounting for rights issues that are 
denominated in a currency other than the functional currency of the issuer. Provided certain conditions are met, such rights issues 
are now classified as equity regardless of the currency in which the exercise price is denominated. Previously, these issues had to be 
accounted for as derivative liabilities. The amendment applies retrospectively in accordance with IAS 8 ‘Accounting policies, changes 
in accounting estimates and errors’. The Group will apply the amended standard from 1 January 2011.
IFRIC 19, ‘Extinguishing financial liabilities with equity instruments’, effective 1 July 2010. The interpretation clarifies the •	
accounting by an entity when the terms of a financial liability are renegotiated and result in the entity issuing equity instruments 
to a creditor of the entity to extinguish all or part of the financial liability (debt for equity swap). It requires a gain or loss to be 
recognised in profit or loss, which is measured as the difference between the carrying amount of the financial liability and the fair 
value of the equity instruments issued. If the fair value of the equity instruments issued cannot be reliably measured, the equity 
instruments should be measured to reflect the fair value of the financial liability extinguished. The Group will apply the 
interpretation from 1 January 2011, subject to endorsement by the EU. 
‘Prepayments of a minimum funding requirement’ (amendments to IFRIC 14). The amendments correct an unintended •	
consequence of IFRIC 14, ‘IAS 19 – The limit on a defined benefit asset, minimum funding requirements and their interaction’. 
Without the amendments, entities are not permitted to recognise as an asset some voluntary prepayments for minimum funding 
contributions. This was not intended when IFRIC 14 was issued, and the amendments correct this. The amendments are effective 
for annual periods beginning 1 January 2011. Earlier application is permitted. The amendments should be applied retrospectively 
to the earliest comparative period presented. The Group will apply these amendments for the financial reporting period 
commencing on 1 January 2011.
The above amendments are not expected to have a material impact on the Group or Company’ s financial statements.
Revised IAS 24 (revised), ‘Related party disclosures’, issued in November 2009. It supersedes IAS 24, ‘Related party disclosures’, •	
issued in 2003. IAS 24 (revised) is mandatory for periods beginning on or after 1 January 2011. Earlier application, in whole or in 
part, is permitted. However, the standard has not yet been endorsed by the EU. The revised standard clarifies and simplifies the 
definition of a related party and removes the requirement for government-related entities to disclose details of all transactions 
with the government and other government-related entities. The Group will apply the revised standard from 1 January 2011. 
When the revised standard is applied, the Group will need to disclose any transactions between its subsidiaries. The Group is 
currently assessing the impact of this standard. Patsystems Plc
Annual report & accounts 2010
Financial Statements
Patsystems Plc
Annual report & accounts 2010 31
1.2 Foreign Currency Translation
Functional and Presentation Currency
Items included in the financial statements of each of the Group entities are measured using the currency of the primary economic 
environment in which the entity operates (the ‘functional currency’). The consolidated financial statements are presented in Pounds 
Sterling, which is the Parent Company’ s functional and presentation currency.
Transactions and Balances
Foreign currency transactions are translated into the functional currency using the exchange rates prevailing at the dates of  
the transactions. Foreign exchange gains and losses resulting from the settlement of such transactions and from the translation  
at year-end exchange rates of monetary assets and liabilities denominated in foreign currencies are recognised in the  
income statement.
Group Companies
The results and financial position of all Group entities (none of which has the currency of a hyper-inflationary economy) that have  
a functional currency different from the presentation currency are translated into the presentation currency as follows:
assets and liabilities for each balance sheet presented are translated at the closing rate at the date of that balance sheet; •	
income and expenses for each income statement are translated at average exchange rates; and •	
all resulting exchange differences are recognised in reserves. •	
1.3 Goodwill
Goodwill represents the excess of the cost of an acquisition over the fair value of the Group’ s share of the net identifiable assets of 
the acquired subsidiary at the date of acquisition. Goodwill is tested annually for impairment and carried at cost less accumulated 
impairment losses. The carrying value of capitalised goodwill is also reviewed if events or changes in circumstances indicate a 
potential impairment. Any impairment is charged to the income statement. Gains and losses on the disposal of an entity include  
the carrying amount of goodwill relating to the entity sold. Goodwill is allocated to cash-generating units for the purpose of 
impairment testing.
1.4 Intangible Assets 
Computer software licences are capitalised on the basis of the costs incurred to acquire and bring to use the specific software. The 
software acquired in the T amesis acquisition was capitalised at fair value. These costs are amortised over their estimated useful lives 
(three years). Costs associated with maintaining computer software programmes are recognised as an expense as incurred.
1.5 Impairment of Assets
Assets that have an indefinite useful life are not subject to amortisation and are tested annually for impairment and whenever 
events or changes in circumstance indicate that the carrying value may not be recoverable. Assets that are subject to amortisation 
are tested for impairment whenever events or changes in circumstance indicate that the carrying value may not be recoverable. An 
impairment loss is recognised for the amount by which the assets carrying value exceeds its recoverable amount. The recoverable 
amount is the higher of an asset’s fair value less costs to sell and value in use. For the purposes of assessing impairment, assets are 
grouped at the lowest levels for which there are separately identifiable cash flows (cash generating units).
1.6 Research and Development
Research expenditure is recognised as an expense as incurred. Costs directly attributable to development are capitalised as intangible 
assets when it is probable that the development will provide economic benefits, considering its commercial and technical feasibility, 
resources are available for the development and costs can be measured reliably. Other development expenditures are recognised as 
costs when incurred. Capitalised product development is amortised from completion of development over periods of between 3 
and 5 years.
1.7 Property, Plant and Equipment
Property, plant and equipment is shown at cost less subsequent depreciation. Cost includes expenditure that is directly attributable 
to the acquisition of the items.
Depreciation on assets is calculated using the straight-line method to reduce the cost of each asset to its estimated residual value 
over its estimated useful life, as follows:
Leasehold improvements – over the period of the lease
Plant and equipment – over 3 years
Office furniture, fixtures and fittings – over 4 years
1.8 Current and Deferred Income Taxes
The current income tax charge is calculated on the basis of the tax laws enacted or substantively enacted at the balance sheet date 
in the countries in which the Company and its subsidiaries operate and generate taxable income. Management periodically 
evaluates positions taken in tax returns with respect to situations in which applicable tax regulations are subject to interpretation 
and establishes provisions where appropriate on the basis of amounts expected to be paid to the tax authorities. Financial Statements
Patsystems Plc
Annual report & accounts 2010 32
Patsystems Plc
Annual report & accounts 2010
Notes to the Financial Statements continued
1. Accounting Policies continued
Deferred income tax is provided in full, using the liability method, on temporary differences arising between the tax bases of assets 
and liabilities and their carrying amounts in the consolidated financial statements. The deferred income tax is not accounted for on 
the initial recognition of an asset or liability in a transaction, other than a business combination, that at the time of the transaction 
affects neither accounting nor taxable profit or loss. Deferred income tax is determined using tax rates (and laws) that have been 
enacted or substantially enacted by the balance sheet date and are expected to apply when the related deferred income tax asset  
is realised or the deferred income tax liability is settled.
Deferred income tax assets are recognised to the extent that it is probable that future taxable profits will be available against which 
the temporary differences can be utilised.
Deferred income tax is provided on temporary differences arising on investments in subsidiaries except where the timing of the 
reversal of the temporary difference is controlled by the Group and it is probable that the temporary difference will not reverse in 
the foreseeable future.
Deferred income tax balances are not discounted.
1.9 Inventories
Inventories are stated at the lower of cost and net realisable value. 
1.10 Financial Assets
The Group classifies its financial assets between ‘assets at fair value through profit or loss’ and ‘loans and receivables’. The 
classification depends on the purpose for which the financial assets were acquired. Management determines the classification  
of its financial assets at initial recognition. 
Financial assets at fair value through profit or loss are financial assets held for trading. A financial asset is classified in this category  
if acquired principally for the purpose of selling in the short term. Derivatives are also categorised as held for trading unless they are 
designated as hedges. Assets in this category are classified as current assets.
 
Purchases and sales of financial assets are recognised on the trade-date – the date on which the Group commits to purchase or sell 
the asset. Financial assets are initially recognised at fair value and transaction costs are expensed in the income statement. Financial 
assets are derecognised when the rights to receive cash flows from the investments have expired or have been transferred and the 
Group has transferred substantially all risks and rewards of ownership. 
Gains or losses arising from changes in the fair value of the financial assets are presented in the income statement in the period in 
which they arise. 
The Group assesses at each balance sheet date whether there is objective evidence that a financial asset or a Group of financial 
assets is impaired. Impairment testing of trade receivables is described in note 1.12.
1.11 Accounting for Derivative Financial Instruments and Hedging Activities
The Group enters into forward currency contracts and options in order to hedge against the cash flow risk of foreign currency 
exchange rate movements. Derivatives are initially recognised at fair value on the date the contract is entered into and subsequently 
re-measured in future periods at their fair value. The movement in fair values is taken to the income statement.
The fair value of forward contracts is determined using forward exchange market rates at the balance sheet date.
1.12 Trade Receivables
Trade receivables are recognised initially at fair value and subsequently measured at amortised cost using the effective interest 
method, less provision for impairment. A provision for impairment of trade receivables is established when there is objective 
evidence that the Group will not be able to collect all amounts due under the original terms of the receivables. Significant financial 
difficulties of the debtor, probability that the debtor will enter bankruptcy or financial reorganisation and default or delinquency in 
payments are considered indicators that the trade receivable may be impaired. The amount of the provision is the difference 
between the asset’s carrying amount and the present value of estimated future cash flows, discounted at the original effective 
interest rate. The carrying amount of the asset is reduced through the use of an allowance account, and the amount of the loss is 
recognised in the income statement within ‘operating expenses’. When a trade receivable is uncollectible, it is written off against 
the allowance account for trade receivables. Subsequent recoveries of amounts previously written off are credited against ‘operating 
expenses’ in the income statement. 
1.13 Cash and Cash Equivalents
Cash and cash equivalents includes cash in hand, cash in transit, deposits held at call with banks, other short term highly liquid 
investments with original maturities of three months or less, and bank overdrafts. Patsystems Plc
Annual report & accounts 2010
Financial Statements
Patsystems Plc
Annual report & accounts 2010 33
Cash in transit represents the net amount of monies due to Group companies that have been paid to independent clearing agents 
and are pending release by overseas withholding tax authorities.
1.14 Trade Payables
Trade payables are recognised initially at fair value and subsequently measured at amortised cost using the effective interest method.
1.15 Leases
Costs in respect of operating leases are charged to the income statement on a straight line basis over the lease term. 
1.16 Provisions
Provisions are measured at the present value of the expenditures expected to be required to settle the obligation using a pre-tax rate 
that reflects current market assessments of the time value of money and the risks specific to the obligation. This relates to provisions 
including dilapidations and long-term share incentive schemes.
1.17 Segment Reporting
Operating segments are reported in a manner consistent with the internal reporting provided to the chief operating decision-maker. 
The chief operating decision-maker, who is responsible for allocating resources and assessing performance of the operating 
segments, has been identified as the Board of Directors.
1.18 Revenue Recognition
Revenue comprises the fair value of the sale of goods and services, net of value added tax. Revenue is recognised as follows:
Non-refundable installation income, consultancy and software development projects: revenue is taken to the income statement •	
in line with the performance of the work. 
Monthly end user or lot charges, monthly maintenance and income on any rentals – these are credited to the income statement •	
in the period in which the service is provided.
Income from perpetual licences – this is recognised in the income statement when the Group has fulfilled all of its obligations in •	
accordance with the terms for acceptance set out in the customer contracts and it is probable that economic benefits associated 
with the transaction will flow to the Group.
Revenue relating to development projects is recognised using the percentage of completion method, based primarily on contract •	
costs incurred to date, compared to estimated overall contract costs. 
1.19 Employee Benefits
Pension Obligations
The Group operates a defined contribution scheme which is open to UK and US employees.
The Group pays contributions to publicly or privately administered pension insurance schemes on a mandatory, contractual or 
voluntary basis. The Group has no further payment obligations once the contributions have been paid. The contributions are 
recognised as employee benefit expense when they are due.
Termination Benefits
Termination benefits are payable when employment is terminated before the normal retirement date, or when an employee  
accepts voluntary redundancy in exchange for these benefits. The Group recognises termination benefits when it is demonstrably 
committed to either: terminating the employment of current employees according to a detailed formal plan without possibility  
of withdrawal; or providing termination benefits as a result of an offer made to encourage voluntary redundancy.
Share-Based Benefits
The Group operates two share options schemes; the Enterprise Management Incentive Scheme and the 2003 Share Option Scheme 
(Inland Revenue unapproved). 
The fair value of options is recognised as an employee benefit expense with a corresponding increase in reserves over the vesting 
period. The proceeds received net of any directly attributable transaction costs are credited to share capital (nominal value) and 
share premium when the options are exercised. A detailed explanation of how the fair values have been derived can be seen  
in note 23.
Cash-Based Long-Term Incentive Benefits
The Group introduced a cash-based long-term incentive scheme (the ‘2007 Cash Scheme’) in 2007 and awards were granted to the 
Executive Directors and to certain senior and key employees. These awards were conditional upon the rate of growth in fully diluted 
pre-deferred tax EPS over the period from 31 December 2006 to 31 December 2009. The cost of these awards was estimated 
based on projected EPS growth and is recognised as an employee benefit expense on a straight line basis over the period from grant 
to March 2010 when the Awards fully vested. Financial Statements
Patsystems Plc
Annual report & accounts 2010 34
Patsystems Plc
Annual report & accounts 2010
Notes to the Financial Statements continued
1. Accounting Policies continued
Other Benefits
UK employees are also entitled to private medical, death in service insurance, critical illness and long-term sickness insurance and 
subsidised health club membership. The costs of providing these benefits are recognised as employee benefit expense as they fall due.
This year the Group has a flexible benefits scheme that enables employees to tailor their total remuneration packages to meet their 
own individual lifestyle and family requirements. 
1.20 Dividend Distributions 
Final dividend distributions to the Company’s shareholders are recognised as liabilities in the Group’s financial statements in the 
period in which the dividends are approved by the Company’ s shareholders. Interim dividend distributions to the Company’ s 
shareholders are recognised as liabilities in the Group’ s financial statements when paid.
2. Critical Accounting Estimates and Judgements
Estimates and judgements are continually evaluated and are based on historical experience and other factors, including expectations 
of future events that are believed to be reasonable under the circumstances.
The Group makes estimates and assumptions concerning the future. The resulting accounting estimates will, by definition, seldom 
equal the related actual results. The estimates and assumptions that have a significant risk of causing a material adjustment to the 
carrying amounts of assets and liabilities within the next financial year are addressed below:
Capitalisation of research and development costs. •	
Impairment reviews for intangible assets. •	
Development projects, where the percentage completion method is used. This requires the Group to estimate the development •	
performed to date as a proportion of the total development to be performed. Another uncertainty is the expected total profit.
In applying the Group’ s revenue recognition policy management undertake judgements in relation to the recoverability of current •	
and future billings. These amounts are disclosed within trade receivables and accrued income.
Deferred tax, see note 15. •	
IRFS 2 share-based payment charge and the provision for the cash-based long-term incentive scheme, where judgement has •	
been applied as to the number of awards expected to vest.
3. Financial Risk Management
The Group’ s activities expose it to a variety of financial risks and it has developed and operates an overall risk management 
programme that recognises the unpredictability of financial markets and seeks to minimise potential adverse effects on the Group’ s 
financial performance. 
Financial risk management is under the control of the Finance Director and is carried out centrally for the Group in compliance with 
policies approved and monitored by the full Board. The Board regularly reviews the effectiveness of these policies examining specific 
areas including foreign exchange risk, interest rate risk, credit risk and the extent to which financial instruments are being used to 
hedge certain risk exposures. 
3.1 Market Risk 
The principal market risk to which the the Group is exposed is foreign currency risk on sales, purchases and cash balances that are 
denominated in a currency other than Sterling. The principal currency giving rise to this risk is the US Dollar. Patsystems’ policy is to 
carry forward cover for 75% of US$/£ net anticipated exposure for 12 months forward. Forward cover is achieved through a 
mixture of forward contracts and options. This policy has remained unchanged throughout both 2010 and 2009 although the level 
of cover and the exposure to risks on other foreign currencies are kept under regular review.
The average US$/£ exchange rate used in the 2010 income statement was 1.54 (2009: 1.57). The average rate of the hedges in 
place at 31 December 2010 for 2011 was 1.58 (2009 for 2010: 1.60). The fair value of these hedges is recognised as a financial 
asset of £46,000 (2009: asset of £176,000) on the Group balance sheet at the year end.
The Group has certain investments in foreign operations, whose net assets are exposed to foreign currency translation risk. This 
exposure is minimised by a Group policy requiring individual subsidiaries to remit any surplus funds to the Parent Company to 
facilitate central management as set out above and to enable each individual subsidiary to match remaining assets and liabilities 
denominated in their specific functional currencies.
During the year ended 31 December 2010 the US$/£ exchange rate fluctuated between 1.44 and 1.60 (2009 between 1.42  
and 1.65). At 31 December 2010, if the US$ had weakened/strengthened by 20% against the £ with all other variables held 
constant, post tax profit for the year would have been £915,000 (2009: £630,000) lower/higher, mainly as a result of foreign 
exchange gains/losses on translation of US$ denominated trade receivables.
The Group is also exposed to interest rate risks on the fair values of the hedging instruments that it holds and on the cash flows 
arising from any interest bearing cash deposits. These assets are regularly realised to settle trade and other payables as part of the  Patsystems Plc
Annual report & accounts 2010
Financial Statements
Patsystems Plc
Annual report & accounts 2010 35
Group’ s management of its liquidity risks. The Group has no material borrowings and accordingly, exposures to interest rate risks are 
not regarded as significant.
3.2 Credit Risk 
Credit risk arises from cash and cash equivalents and from credit exposures to the Group’ s customers, including outstanding 
receivables and committed transactions. Credit risk is managed centrally with regular reports of exposures reviewed by the Board. 
The Group does not set individual credit limits but will seek to ensure that counterparties enter into legally enforceable contracts 
that include settlement terms that demonstrate the counterparties’ commitment to the transaction and minimise this risk exposure. 
The Board does not assess the credit quality of financial assets by reference to external credit ratings, but will regularly examine the 
ageing of financial assets and individual counterparty historic default rates. An aged analysis of trade receivables at 31 December 
2010 is set out in note 17. 
3.3 Liquidity Risk 
The Group has no borrowings or committed credit lines and its liquidity management policy is carried out at a local level and 
involves projecting cash flows in major currencies and considering the levels of liquid assets necessary to meet these. Requirements 
are overseen by the Board with Group levels of cash and cash equivalents reviewed on a monthly basis. A maturity analysis of trade 
and other payables is shown in note 19.
3.4 Capital Risk Management
The Group’ s objectives when managing capital are to safeguard the Group’ s ability to continue as a going concern in order to 
provide returns for shareholders and benefits for other stakeholders. Consistent with others in the industry and of its size, the 
Group believes that an optimum capital structure is currently achieved entirely through equity and with no net debt. T otal equity at 
31 December 2010 was £25,655,000 (2009: £23,508,000).
In order to maintain or adjust the capital structure, the Group may adjust the amount of dividends paid to shareholders, return 
capital to shareholders, issue new shares or raise future funds through debt. Financial Statements
Patsystems Plc
Annual report & accounts 2010 36
Patsystems Plc
Annual report & accounts 2010
Notes to the Financial Statements continued
4. Segmental Analysis
The Chief Operating Decision Maker is the Board of Directors. The Board reviews the Company’ s internal reporting in order to assess 
performance of the business. Management has determined the operating segments based on the reports reviewed by the Board. 
The Board considers the business from a geographic perspective, monitoring performance by Europe, the Americas and Asia Pacific.
The Group operates in one product line, that of the supply of software to financial institutions.
The Board assesses the performance of the business based on a measure of adjusted profit. Adjusted profit is defined as ‘profit 
before tax after adjusting for share option costs, marking-to-market of derivatives used to hedge cash flows and amortisation of 
intangibles other than internally developed software.’ A reconciliation of adjusted profit to profit before tax is detailed below.
       Asia
     Europe Americas Pacific Total
 2010     £’000 £’000 £’000 £’000
Revenue from external customers     8,325 6,056 7,730 22,111
Revenue by destination     7,773 5,800 8,538 22,111
Adjusted profit      2,966 121 666 3,753
Depreciation and amortisation     1,037 60 218 1,315
Finance income     139 3 3 145
Income tax expense     358 155 174 687
T otal assets     22,531 2,274 3,913 28,718
T otal liabilities     (1,791) (430) (842) (3,063)
       Asia
     Europe Americas Pacific T otal
 2009     £’000 £’000 £’000 £’000
Revenue from external customers     7,788 6,745 7,564 22,097
Revenue by destination     7,518 6,353 8,226 22,097
Adjusted profit      2,515 391 1,015 3,921
Depreciation and amortisation     1,065 31 76 1,172
Finance income     130 7 3 140
T axation expense     829 16 279 1,124
T otal assets     21,953 1,569 3,202 26,724
T otal liabilities     (2,035) (211) (970) (3,216)
A reconciliation of adjusted profit to profit before tax is provided as follows:
       2010 2009
       £’000 £’000
Adjusted profit for reportable segments       3,753 3,921
Share compensation expense       (60) (261)
Movement in fair value of hedging instruments       (338) 1,029
Amortisation of intangibles       (117) (203)
Finance income         (145) (140)
Operating profit       3,093 4,346
Finance income          145 140
Profit before income tax         3,238 4,486
The amounts provided to management with respect to total assets and total liabilities are measured in a manner consistent with 
that of the financial statements. The assets are allocated based on the operations of the segment and the physical location of the 
asset and the liabilities are allocated based on the operations of the segment.
The total of non-current assets other than deferred tax assets located in Europe is £7,201,000 (2009: £7,428,000), and the total of 
these non-current assets located in other regions is £1,028.000 (2009: £264,000).
Revenue from one customer (2009: two customers) accounts for more than 10% of total revenue, with revenue of £3,232,000 
(2009: £3,574,000 and £2,560,000). These revenues are attributable to all segments. Patsystems Plc
Annual report & accounts 2010
Financial Statements
Patsystems Plc
Annual report & accounts 2010 37
5. Operating Profit 
       2010 2009
Operating profit is stated after charging/(crediting):       £’000 £’000
Staff costs       11,900 12,310
Share compensation expense       60 261
T otal staff costs       11,960 12,571
Less: wages and salaries capitalised in accordance with IAS 38      (339) (377)
        11,621 12,194
Depreciation:  
 – owned tangible assets       508 419
 – total tangible assets       508 419
Amortisation:  
 – capitalised development costs       689 550
 – other intangible assets       118 203
 – total intangible assets       807 753
Write off of intangible assets       29 –
Operating lease costs:  
 – plant and machinery       31 32
 – other       520 540
 – total operating lease costs       551 572
Foreign exchange (gain)/loss:  
 – movement in fair value of hedging instruments       338 (1,029)
 – other exchange gains and losses       (64) 455
 – total foreign exchange loss/(gain)       274 (574)
Services provided by the Group’ s auditor and network firms:
  
       2010 2009
       £’000 £’000
Fees payable to the Group’ s auditor for the audit of the Group’ s annual accounts      36   35 
Fees payable to the Group’ s auditor and its associates for other services:  
– the audit of the Group’ s subsidiaries pursuant to legislation        53   51 
– tax services          39   41 
– human resource services        10   – 
All other services         33   33 
         171   160  Financial Statements
Patsystems Plc
Annual report & accounts 2010 38
Patsystems Plc
Annual report & accounts 2010
Notes to the Financial Statements continued
6. Staff Costs
       2010 2009
       £’000 £’000
Staff costs (including Directors’ emoluments) during the year amounted to:
Wages and salaries        10,101 10,458
Share compensation expense        60 261
Social security costs        1,099 1,146
Pension costs        700 706
       11,960 12,571
  
Included in the above wages and salaries is £339,000 (2009: £377,000) in relation to development costs that were capitalised in 
accordance with IAS 38.
The average monthly number of persons (including Directors) employed by the Group during the year, in full time equivalents, was:
       2010 2009
       Number Number
Sales, account management and marketing        23 21
Customer operations, testing and technical        77 73
Development and product development        45 48
Finance, administration and board        21 20
       166 162
Details of the emoluments of the Directors are contained in the Report of the Board on Directors’ Remuneration and Group 
Remuneration Policy on page 22, under the heading ‘Directors’ Emoluments’.
Details of key management remuneration are shown in note 28.
7. Finance Income 
       2010 2009
       £’000 £’000
Bank interest receivable       113 78
Interest receivable on the fair value of long-term receivables      29 37
Other interest       3 25
       145 140
Other interest relates to the interest received on an office rental deposit in the United States (2009: interest on the return of a rental 
deposit from the Cottons Centre premises and interest on the office rental deposit in the United States). Patsystems Plc
Annual report & accounts 2010
Financial Statements
Patsystems Plc
Annual report & accounts 2010 39
8. Tax on Profit on Ordinary Activities
       2010 2009
       £’000 £’000
United Kingdom   
Withholding tax       9 12
Foreign tax  
Corporation tax – current year       72 177
Corporation tax – in relation to prior year       (30) 60
Withholding tax       48 –
Total current tax       99 249
Deferred tax 
Movement in deferred tax (note 15)       588 875
Taxation charge       687 1,124
The tax for the year is different from that which would result from applying the standard rate of Corporation T ax in the UK (28%). 
The differences are explained below:
       2010 2009
       £’000 £’000
Profit on ordinary activities before tax       3,238 4,486
Profit on ordinary activities multiplied by standard rate of  
 Corporation T ax in the UK of 28% (2009: 28%)       907 1,256
Effects of:  
Expenses not deductible for tax purposes       221 (77)
Effect of differing tax rates on overseas earnings       (18) (87)
Withholding tax       57 11
Adjustments in respect of prior years – corporation tax      (30) 60
Adjustments in respect of prior years – deferred tax       (101) (46)
R&D tax losses       (517) –
T ax losses for which no deferred tax asset has been recognised      17 7
Re-measurement of deferred tax on change of UK rate      151 –
Taxation charge        687 1,124
From 1 April 2011 the UK Corporation Tax rate will change from 28% to 27%. Deferred tax assets have been remeasured at the 
rate of 27%. 
Future tax balances will be affected by the proposed changes in the Corporation T ax rates: from 1 April 2012: 26%, 1 April 2013: 
25% and 1 April 2014: 24%.
The Group made successful claims for R&D tax credits in relation to 2007 and 2008 which has resulted in additional tax losses being 
available in Patsystems (UK) Limited. 
Factors that May Affect Future Tax Charges
The Group has unrelieved tax losses of £16,640,000 (2009: £18,128,000) that are available for offset against future taxable profits 
in their respective territories. A deferred tax asset amounting to £145,000 (2009: £156,000) has not been recognised in respect of 
these losses as their future recovery is uncertain.
9. Parent Company Accounts 
The Parent Company accounts are set out in pages 53 to 59.
10. Earnings Per Ordinary Share
In accordance with IAS 33, the calculation of earnings per ordinary share is based upon:
  
(a) Basic Earnings Per Share  
Basic earnings per share is calculated by dividing the earnings attributable to ordinary shareholders by the weighted average 
number of ordinary shares in issue during the year: Financial Statements
Patsystems Plc
Annual report & accounts 2010 40
Patsystems Plc
Annual report & accounts 2010
Notes to the Financial Statements continued
10. Earnings Per Ordinary Share continued
      2010  2009
Profit for the year attributable to equity holders of the company      £2,551,000 £3,362,000
Weighted average number of shares      186,146,310 180,628,990
Basic earnings per share      1.4p 1.9p
(b) Diluted Earnings Per Share  
Diluted earnings per share is calculated by adjusting the weighted average number of ordinary shares outstanding to assume 
conversions of all dilutive potential ordinary shares. 
The Group has one category of dilutive potential ordinary shares: share options.
For share options a calculation is performed to determine the number of shares that could have been acquired at fair value 
(determined as the average annual market price of the Group’ s shares) based on the monetary value of the subscription rights 
attached to the outstanding options. 
The number of shares calculated above is compared with the number of shares that would have been issued assuming the exercise 
of the share options.
      2010  2009
Profit for the year attributable to equity holders of the Company   £2,551,000 £3,362,000
Weighted average number of shares      186,146,310 180,628,990
Effect of dilutive share options      1,170,581 1,628,191
      187,316,891 182,257,181
Diluted earnings per share      1.4p 1.8p
11. Principal Subsidiaries 
The principal investments in subsidiary undertakings held by the Parent Company are as follows:
1. A 100% investment in respect of voting rights and nominal value in Patsystems Holdings Limited, a company incorporated in 
England and Wales. 
 
The historical cost of the investment in the shares of Patsystems Holdings Limited is £11,180,000. Under the Scheme of 
Arrangement the subsidiary undertaking returned capital to the Company amounting to £9,865,000, and the cost of the 
investment has been reduced accordingly to reflect this. 
 
The following subsidiary undertakings are wholly owned by Patsystems Holdings Limited in respect of voting rights and nominal 
value of issued shares and perform the sale and support of electronic trading systems: 
 
Patsystems (UK) Ltd  – incorporated in England and Wales 
Patsystems (NA) LLC  – incorporated in United States of America 
Patsystems Pte Ltd  – incorporated in Singapore 
Patsystems Pty Ltd  – incorporated in Australia 
Patsystems GmbH  – incorporated in Germany 
Patsystems Hong Kong Limited – incorporated in Hong Kong 
 
The following subsidiary is wholly owned by Patsystems Holdings Limited in respect of voting rights and nominal value of issued 
shares and acts as a holding company: 
 
Professional Automated Trading Systems BV (incorporated in The Netherlands). 
 
Professional Automated Trading Systems BV owns 100% of voting rights and nominal value of issued shares in Patsystems 
(Japan) KK (incorporated in Japan), which performs the sale and support of electronic trading systems.  
 
Patsystems (Japan) KK owns 100% of voting rights and nominal value of issued shares in Patsystems (Ireland) Ltd (incorporated 
in the Republic of Ireland), which acts as a holding company.
2. During the year Patsystems Plc transferred all of the assets and liabilities of T amesis Limited to Patsystems (UK) Limited.  
 
All subsidiaries are included in the consolidation. Patsystems Plc
Annual report & accounts 2010
Financial Statements
Patsystems Plc
Annual report & accounts 2010 41
12. Goodwill
       2010 2009
       £’000 £’000
Cost and net book value  
At 1 January       3,251 3,251
Additions        –  –
At 31 December       3,251 3,251
The goodwill is all held in Europe.
Impairment review
The recoverable amount for the cash generating unit has been measured based on a value in use calculation. The calculations use 
pre-tax profits based on budgets approved by management for the year 2011. Cash flows beyond this are based on a growth rate 
of 2.25%. A pre-tax discount rate of 15% has been applied to the calculations.
As the value in use is greater than the carrying value there is no impairment in the period and the carrying value of goodwill 
represents the excess of the cost of acquisition over the fair value of the Group’ s share of the net identifiable assets of the acquired 
subsidiary at the date of acquisition.
13. Intangible Assets
     Software Acquired Capitalised
      licences software development Total
 2010     £’000 £’000 £’000 £’000
Cost    
At 1 January 2010     572 898 4,904 6,374
Additions     195 – 617 812
Disposals     (437) – (62) (499)
Foreign exchange      2 – – 2
At 31 December 2010     332 898 5,459 6,689
Amortisation     
At 1 January 2010     (463) (898) (1,587) (2,948)
Charge for the year      (118) – (689) (807)
Disposals     437 – 33 470
Foreign exchange      (1) – – (1)
At 31 December 2010     (145) (898) (2,243) (3,286)
Net book value     
At 31 December 2010     187 – 3,216 3,403
At 31 December 2009     109 – 3,317 3,426
     Software Acquired Capitalised
      licences software development T otal
 2009     £’000 £’000 £’000 £’000
Cost    
At 1 January 2009     678 898 4,294 5,870
Additions     43 – 610 653
Disposals     (144) – – (144)
Foreign exchange      (5) – – (5)
At 31 December 2009     572 898 4,904 6,374
Amortisation     
At 1 January 2009     (408) (898) (1,037) (2,343)
Charge for the year      (203) – (550) (753)
Disposals     144 – – 144
Foreign exchange      4 – – 4
At 31 December 2009     (463) (898) (1,587) (2,948)
Net book value     
At 31 December 2009     109 – 3,317 3,426
At 31 December 2008     270 – 3,257 3,527 Financial Statements
Patsystems Plc
Annual report & accounts 2010 42
Patsystems Plc
Annual report & accounts 2010
Notes to the Financial Statements continued
14. Property, Plant and Equipment
       Offi ce
       furniture 
     Leasehold Plant and fixtures and 
     improvements equipment fittings Total
 2010     £’000 £’000 £’000 £’000
Cost    
At 1 January 2010     158 1,054 128 1,340
Additions     4 928 – 932
Disposals     (48) (277) (32) (357)
Foreign exchange       – 58 3 61
At 31 December 2010     114 1,763 99 1,976
Depreciation    
At 1 January 2010     (46) (519) (86) (651)
Charge for the year     (32) (455) (21) (508)
Disposals     48 277 32 357
Foreign exchange      –  (24) (2) (26)
At 31 December 2010     (30) (721) (77) (828)
Net book value
At 31 December 2010     84 1,042 22 1,148
At 31 December 2009     112 535 42 689
       Offi ce
       furniture 
     Leasehold Plant and fixtures and 
     improvements equipment fittings T otal
 2009     £’000 £’000 £’000 £’000
Cost    
At 1 January 2009     564 1,301 111 1,976
Additions     110 455 31 596
Disposals     (509) (667) (11) (1,187)
Foreign exchange      (7) (35) (3) (45)
At 31 December 2009     158 1,054 128 1,340
Depreciation    
At 1 January 2009     (451) (956) (53) (1,460)
Charge for the year     (110) (265) (44) (419)
Disposals     509 667 11 1,187
Foreign exchange      6 35 – 41
At 31 December 2009     (46) (519) (86) (651)
Net book value    
At 31 December 2009     112 535 42 689
At 31 December 2008     113 345 58 516 Patsystems Plc
Annual report & accounts 2010
Financial Statements
Patsystems Plc
Annual report & accounts 2010 43
15. Deferred Tax Assets
       Other
    Trading Capital Share timing
    losses  allowances options differences Total
 2010    £’000 £’000 £’000 £’000 £’000
At 1 January 2010    4,933 (100) 70 42 4,945
Utilisation of losses against current year profits    (1,133) – – – (1,133)
Adjustments in respect of prior years    101 – – – 101
Impact of change in corporation tax rate    (151) – – – (151)
R&D tax losses     517 – – – 517
Credits/(charges) arising in the year     – 119 (11) (30) 78
(Charged)/credited to income statement    (666) 119 (11) (30) (588)
Foreign exchange    36 – – – 36
Future tax value of withholding tax payable    74 – – – 74
At 31 December 2010    4,377 19 59 12 4,467
       Other
    Trading Capital Share timing
    losses  allowances options differences T otal
 2009    £’000 £’000 £’000 £’000 £’000
At 1 January 2009    5,706 (171) 41 301 5,877
Utilisation of losses against current year profits    (762) – – – (762)
Adjustments in respect of prior years    46 – – – 46
(Charges)/credits arising in the year     – 71 29 (259) (159)
(Charged)/credited to income statement    (716) 71 29 (259) (875)
Foreign exchange    (57) – – – (57)
At 31 December 2009    4,933 (100) 70 42 4,945
Deferred tax assets in respect of Group companies’ unrelieved trading losses are recognised when the specific company’ s business 
has become profitable and to the extent that it is probable there will be future trading profits to utilise such losses.
From 1 April 2011 the UK Corporation Tax rate will change from 28% to 27%. Deferred tax assets have been remeasured at the 
rate of 27%.
16. Inventories
       2010 2009
       £’000 £’000
Goods for resale       – 1 Financial Statements
Patsystems Plc
Annual report & accounts 2010 44
Patsystems Plc
Annual report & accounts 2010
Notes to the Financial Statements continued
17. Trade and Other Receivables  
       2010 2009
       £’000 £’000
Trade receivables       2,996 2,737
Less: provision for impairment of receivables       (120) (107)
Trade receivables – net       2,876 2,630
Other receivables       438 392
Prepayments and accrued income       3,745 2,310
       7,059 5,332
Less non-current portion – accrued income       (427) (326)
Current Portion       6,632 5,006
Non-current receivables are due as follows:
       2010 2009
       £’000 £’000
Within between one and two years       142 84
Within between two and five years       285 225
After more than five but less than ten years        – 17
Non-current receivables       427 326
The carrying values less impairment provisions of trade and other receivables approximate their fair values.
The effective interest rates on non-current receivables were between the range of 1 – 6% (2009: 1 – 6%).
The ageing of trade receivables is as follows:
    Not Up to 3 to Over
    past due 3 months 6 months 6 months Total
 2010    £’000 £’000 £’000 £’000 £’000
Fully performing     2,070 – – – 2,070
Past due but not impaired     – 806 – – 806
Impaired and provided for     – 10 66 44 120
    2,070 816 66 44 2,996
Percentage    69% 27% 2% 2% 100%
    Not Up to 3 to Over
    past due 3 months 6 months 6 months T otal
 2009    £’000 £’000 £’000 £’000 £’000
Fully performing     1,870 – – – 1,870
Past due but not impaired     – 737 22 1 760
Impaired and provided for     – 11 52 44 107
     1,870 748 74 45 2,737
Percentage    68% 27% 3% 2% 100%
Trade receivables that are less that three months past due are not considered impaired. As of 31 December 2010, trade receivables 
of £806,000 (2009: £760,000) were past due but not impaired. These relate to a number of independent customers for whom 
there is no indication of financial difficulties or recent history of default. The Group is in contact with these customers and obtained 
assurances from which it believes that the amounts receivable will be collected in full with no additional cost to the Group.
Provisions for the portion of individually impaired trade receivables assessed to be irrecoverable at 31 December 2010 totalled 
£120,000 (2009: £107,000). These relate to customers where there are indications of financial difficulties or disputes that are 
unlikely to be resolved without further costs to the Group. Patsystems Plc
Annual report & accounts 2010
Financial Statements
Patsystems Plc
Annual report & accounts 2010 45
The carrying amounts of the Group’ s trade and other receivables are denominated in the following currencies:
       2010 2009
       £’000 £’000
UK Pound       2,452 2,080
US Dollar       3,826 2,470
Singapore Dollar       239 363
Japanese Yen       179 334
Australian Dollar       126 46
Other currencies       237 39
Total       7,059 5,332
Movements on the Group provision for impairment of trade receivables are as follows: 
 
       2010 2009
       £’000 £’000
At 1 January       107 134
Provision for receivables impairment       60 60
Receivables written off during the year as uncollectible      (24) (17)
Unused amounts reversed       (26) (67)
Foreign exchange       3 (3)
At 31 December       120 107
The creation and release of provisions for impaired receivables has been included in ‘operating expenses’ in the income statement. 
Amounts charged to the allowance account are generally written off when there is no expectation of recovering additional cash.
The other classes within trade and other receivables do not contain impaired assets.
The maximum exposure to credit risk at the reporting date is the fair value of each class of receivable mentioned above. The Group 
does not hold any collateral as security.
18. Cash and Cash Equivalents
       2010 2009
       £’000 £’000
Cash at bank and on hand       4,011 3,294
Short-term deposits       5,333 5,602
       9,344 8,896
The credit quality of the Group’ s financial assets represented by cash and cash equivalents is not assessed by reference to external 
credit ratings but is regularly reviewed by the Board. Monies are held with international banking organisations and, where 
appropriate, with well established local bankers that are able to provide the levels of security, accessibility and service to meet  
local needs.
The interest rates on interest bearing short-term deposits are floating rates. All financial assets represented by cash and cash 
equivalents mature within one year.
The carrying values of cash and cash equivalents approximate their fair values.
The carrying amounts of the Group’ s cash and cash equivalents are denominated in the following currencies:
       2010 2009
       £’000 £’000
UK Pound       7,087 6,879
US Dollar       1,380 1,215
Singapore Dollar       280 233
Japanese Yen       358 367
Australian Dollar       117 116
Other currencies       122 86
Total       9,344 8,896 Financial Statements
Patsystems Plc
Annual report & accounts 2010 46
Patsystems Plc
Annual report & accounts 2010
Notes to the Financial Statements continued
18. Cash and Cash Equivalents continued
In the year ended 31 December 2009 the Group put in place a guarantee of the value of $800,000 in respect of one of its ongoing 
contracts. This guarantee remains in place at 31 December 2010.
19. Trade and Other Payables 
       2010 2009
       £’000 £’000
Current liabilities  
Trade payables       779 418
Other tax and social security       509 562
Other creditors       2 15
Accruals        1,477 1,535
Deferred income       256 263
       3,023 2,793
  
None of the payables are secured. 
All trade and other payables mature within one year.
The carrying amounts of the Group’ s trade and other payables are denominated in the following currencies:
       2010 2009
       £’000 £’000
UK Pound       1,729 1,652
US Dollar       628 534
Singapore Dollar       370 281
Japanese Yen       98 233
Australian Dollar       58 38
Other currencies       140 55
Total       3,023 2,793
The carrying amounts of the Group’ s trade and other payables approximate their fair values.
The Group’ s intercompany receivables and payables, which are eliminated on consolidation, are recorded in the books of the local 
entities in the following currencies:
     2010 2010 2009 2009
     £’000 £’000 £’000 £’000
     Receivables Payables Receivables Payables
UK Pound     21,681 (37,867) 21,278 (38,229)
US Dollar     – (4,624) – (3,834)
Singapore Dollar     1,895 (3,432) 1,307 (2,613)
Japanese Yen     1,592 (1,493) 1,712 (1,807)
Australian Dollar     263 (619) 224 (576)
Other currencies     190 (2,062) 171 (2,109)
     25,621 (50,097) 24,692 (49,168)
The difference between the intercompany receivables and payable of £24,476,000 relates to provision made against intercompany 
receivables in prior years. Patsystems Plc
Annual report & accounts 2010
Financial Statements
Patsystems Plc
Annual report & accounts 2010 47
20. Provisions 
     At   At
     1 January Utilised Movement 31 December
     2010 in year in year 2010
     £’000 £’000 £’000 £’000
No later than one year    
Cash–based long term incentive scheme     317 (383) 66 –
Later than one year and no later than five years    
Dilapidations provision     8 – 24 32
     325 (383) 90 32
The cash-based long term incentive scheme is described in the Remuneration report. This expired in March 2010.
The dilapidations provision is in respect of work to be carried out at the end of the lease on property at Riverside House. This is due 
to expire in 2014. 
21. Commitments Under Operating Leases
The Group leases various offices and plant and machinery under non-cancellable operating lease arrangements. The leases have 
varying terms, escalation clauses and renewal rights. 
The lease expenditure charged to the income statement during the year is disclosed in note 5.
The future minimum lease payments under non-cancellable operating leases are as follows:
 Land and Buildings Plant and Machinery Total
   2010 2009 2010 2009 2010 2009
   £’000 £’000 £’000 £’000 £’000 £’000
No later than one year   575 368 29 30 604 398
Later than one year and no later than five years   1,116 1,269 40 55 1,156 1,324
Later than five years   – – – – – –
   1,691 1,637 69 85 1,760 1,722
22. Share Capital 
   
       2010 2009
       £’000 £’000
Authorised
Ordinary shares of 1p each   
At 1 January and 31 December – 250,000,000 shares       2,500 2,500
Deferred shares of 1p each  
At 1 January and 31 December – 2 shares        – –
Redeemable preference shares of £1 each   
At 1 January and 31 December – 49,998 shares        50 50
Allotted, called up and fully paid   
Ordinary shares of 1p each   
At 1 January – 185,330,693 shares        1,853 1,795
Allotted under share option schemes – 1,332,601       13 58
At 31 December – 186,663,294 shares        1,866 1,853
The 1p ordinary shares are listed on the AIM market. They have one voting right per share. 
Deferred shares of 1p each   
At 1 January and 31 December – 2 shares        – –
  
The deferred 1p shares are not listed. They have no voting rights and no access to dividends.  Financial Statements
Patsystems Plc
Annual report & accounts 2010 48
Patsystems Plc
Annual report & accounts 2010
Notes to the Financial Statements continued
23. Share Option Schemes
The following options to purchase 1p Ordinary shares in Patsystems plc were granted, exercised, lapsed and outstanding during  
the year:
 Exercise Outstanding    Outstanding Exercisable
 price in at 1 January Granted Exercised Lapsed at 31 December at 31 December Effective
 pence 2010 in year in year in year 2010 2010 dates
 5.08p 558,000  –  (378,000) – 180,000 180,000 Note a
 9.50p 90,000  –  (45,000)  –  45,000 45,000 Note a
14.25p 403,553  –  (197,453) (44,400) 161,700 161,700 Note a
14.50p 496,951  –   –   –  496,951 496,951 Note a
15.25p 775,737  –  (60,000)  –  715,737 715,737 Note a
15.58p 670,400  –  (275,600) (30,000) 364,800 364,800 Note a
17.50p 30,000  –  – – 30,000 30,000 Note a
27.75p 250,000  –  – – 250,000 250,000 Note c
29.00p 444,827  –  – – 444,827 444,827 Note c
  3,719,468  –  (956,053) (74,400) 2,689,015 2,689,015 
14.25p 179,143  –  (56,168) (89,375) 33,600 33,600 Note b
14.50p 83,089  –   –   –  83,089 83,089 Note b
15.25p 344,263  –   –  – 344,263 344,263 Note b
15.58p 595,700  –  (320,380) (258,520) 16,800 16,800 Note b
18.00p 500,000  –  –  –  500,000 500,000 Note b
27.75p 1,000,000  –  –  –  1,000,000 1,000,000 Note d
29.00p 1,655,173  –  –  –  1,655,173 1,655,173 Note d
  4,357,368  –  (376,548) (347,895) 3,632,925 3,632,925 
Total all 
schemes 8,076,836  –  (1,332,601) (422,295) 6,321,940 6,321,940 
Note a: These options were granted under the first, second and third awards of the Enterprise Management Incentive (‘EMI’) 
Scheme. These options are now 100% exercisable.
Note b: These options were granted under the second and third awards of Part B (Inland Revenue Unapproved) of the Patsystems 
plc 2003 Share Option Scheme. These options are now 100% exercisable.
Note c: These options were granted under a special award of the EMI Scheme. These options are now 100% exercisable.
Note d: These options were granted under a special award of Part B (Inland Revenue Unapproved) of the Patsystems plc 2003 
Share Option Scheme. These options are now 100% exercisable.
No share options were granted in the year (2009: nil). 
 
For the options that were exercised during the year, the weighted average share price at the date of exercise was 24p (2009: 21p).
The weighted average remaining contractual life of options outstanding at the year end is 5.2 years (2009: 5.7 years)
The total fair value that was charged to the income statement in relation to the share options was £60,000 (2009: £261,000), all of 
which related to equity settled share-based payment transactions.
The fair values of the options have been calculated using the Binomial Model. The model takes into account the following factors in 
determining the fair value of an option:
(a) Share Price and Exercise Price 
Share prices are closing share prices as at the date of grant. Exercise prices are listed in the above schedule.
(b) Expected Term of the Options
It is assumed that the expected life of the options under consideration is 5 years. 
(c) Volatility
Volatility of the Company’ s share price has been calculated as the annualised standard deviation of daily continuously compounded 
returns on the Company’ s stock, derived from the Company’ s historical share prices, adjusted for splits, over 5 years back from each 
date of grant. Patsystems Plc
Annual report & accounts 2010
Financial Statements
Patsystems Plc
Annual report & accounts 2010 49
(d) Risk-Free interest rate
The risk-free rates of interest are assumed to be the yield to maturity on a UK Gilt Strip with the term to maturity equal to the 
expected life of the option. 
(e) Dividends
The valuations take account of the expected future dividend yield at the date of each grant.
The table below sets out the volatilities, risk-free interest rates and dividend yields applied in each valuation:
      Risk-free  
     Volatility  interest rate  Dividend yield
 Date of grant     (%)   (%)   (%)
24 February 2003    77.8009%  4.6922%  0.00%
13 March 2003    78.3590%  4.7175%  0.00%
30 June 2003    78.4194%  4.6412%  0.00%
27 October 2003    79.8321%  5.7891%  0.00%
01 January 2004    78.6748%  5.4125%  0.00%
30 July 2004    73.6821%  5.8602%  0.00%
27 August 2004    71.7764%  5.6660%  0.00%
16 November 2004    58.9201%  5.2789%  0.00%
04 February 2005    56.6301%  5.1507%  0.00%
17 March 2005    52.4971%  5.4148%  0.00%
06 October 2005    54.9819%  4.7689%  2.00%
23 November 2005    49.8819%  4.8322%  2.00%
14 December 2005    50.0097%  4.8764%  2.00%
14 February 2006    50.1501%  4.7515%  2.00%
19 April 2007    48.4035%  5.2980%  1.00%
7 December 2007    30.0527%  4.5550%  1.00%
31 December 2007    30.9369%  5.6204%  1.00%
24. Share Capital and Reserves
  At Shares Earnings  Foreign Share At
  1 January issued in for the Dividends exchange compensation 31 December
  2010 the year year paid movement expense 2010
  £’000 £’000 £’000 £’000 £’000 £’000 £’000
Paid up share capital   1,853 13 – – – – 1,866
Share premium   4,493 148 – – – – 4,641
Other reserves   20,862 – – – – – 20,862
Retained earnings   (3,700) – 2,551 (892) 267 60 (1,714)
  23,508 161 2,551 (892) 267 60 25,655
Of the other reserve at 31 December 2010 £20,812,000 relates to a merger reserve.
  At Shares Earnings  Foreign Share At
  1 January issued in for the Dividends exchange compensation 31 December
  2009 the year year paid movement expense 2009
  £’000 £’000 £’000 £’000 £’000 £’000 £’000
Paid up share capital   1,795 58 – – – – 1,853
Share premium   3,869 624 – – – – 4,493
Other reserves   20,862 – – – – – 20,862
Retained earnings   (6,472) – 3,362 (689) (162) 261 (3,700)
  20,054 682 3,362 (689) (162) 261 23,508
Of the other reserve at 31 December 2009 £20,812,000 relates to a merger reserve.
Investments in Own Shares 
The Group has an investment in own shares of 71,856 shares (2009: 71,856 shares) as a result of employees leaving the All 
Employee Share Scheme. The nominal value of these shares is £719 (2009: £719). The market value at 31 December 2010 is 
£18,000 (2009: £16,000).  Financial Statements
Patsystems Plc
Annual report & accounts 2010 50
Patsystems Plc
Annual report & accounts 2010
Notes to the Financial Statements continued
25. Statement of Changes in Shareholders’ Equity 
Statement of Changes in Equity  
       2010 2009
       £’000 £’000
Profit on ordinary activities after taxation       2,551 3,362
Dividends paid       (892) (689)
Foreign exchange adjustment       267 (162)
Share compensation expense       60 261
Proceeds from the issue of ordinary share capital       161 682
       2,147 3,454
Shareholders’ funds at 1 January       23,508 20,054
Shareholders’ funds at 31 December        25,655 23,508
26. Dividends 
The dividends paid in the year were as follows:
       2010 2009
       £’000 £’000
Second interim dividend in respect of the year ended 31 December 2009  
 at 0.28p per share (2009: 0.237p)       519 427
Interim dividend at 0.2p per share (2009: 0.145p)       373 262
       892 689
A second interim dividend in respect of the year ended 31 December 2010 of 0.35p per share amounting to a total dividend of 
£653,000, is to be paid on 8 April 2011. These financial statements do not reflect this dividend payable. 
27. Financial Instruments
27.1 Financial Risk Management
The Group’s financial instruments comprise cash and liquid resources, trade and other debtors and creditors arising directly from the 
operations of the Group and forward exchange contracts. The main risks arising from the Group’ s financial instruments are interest 
rate risk and foreign currency risk. The Board reviews and agrees policies for managing each of these risks and they are summarised 
in note 3 above. 
Note 3.1 includes an analysis of the sensitivities of the movement in the US$/UK£ exchange rate and the impact on the  
financial statements.
27.2 Accounting Policies
The Group’ s accounting policies for financial instruments are detailed in note 1 above and have been applied to the line  
items below.
       Assets at
       fair value
       through
      Loans and the profit
      receivables and loss Total
 2010      £’000 £’000 £’000
Assets as per balance sheet 
Trade and other receivables       7,059 – 7,059
Derivative financial instruments       – 46 46
Cash and cash equivalents       9,344 – 9,344
      16,403 46 16,449 Patsystems Plc
Annual report & accounts 2010
Financial Statements
Patsystems Plc
Annual report & accounts 2010 51
      Liabilities at 
      fair value 
      through Other
      the profit financial
      and loss liabilities Total
 2010      £’000 £’000 £’000
Liabilities as per balance sheet
Trade and other payables       3,023 – 3,023
Income tax       – 8 8
Provisions      32 – 32
      3,055 8 3,063
       Assets at
       fair value
       through
      Loans and the profit
      receivables and loss T otal
 2009      £’000 £’000 £’000
Assets as per balance sheet
Trade and other receivables       5,332 – 5,332
Derivative financial instruments       – 176 176
Income tax      8 – 8
Cash and cash equivalents       8,896 – 8,896
      14,236 176 14,412
      Liabilities at 
      fair value 
      through Other
      the profit financial
      and loss liabilities T otal
 2009      £’000 £’000 £’000
Liabilities as per balance sheet
Trade and other payables       2,793 – 2,793
Income tax       – 98 98
Provisions      325 – 325
      3,118 98 3,216
The Group had no borrowings as at 31 December 2010 or 31 December 2009.  
27.3 Foreign Currency Exposure 
The Group’ s principal exposure to exchange rate fluctuations arises on the translation of overseas net assets and profits into Sterling 
for accounting purposes. 
Analyses of the Group’ s financial assets and liabilities denominated in foreign currencies are given in notes 17, 18 and 19. 
  
The Group has a net earnings exposure to the US Dollar together with an exposure to the translation of the balance sheet of its US 
subsidiary. During the year, the Board authorised the hedging of US Dollar exposures. At 31 December 2010 the Company has the 
following hedges in place: Financial Statements
Patsystems Plc
Annual report & accounts 2010 52
Patsystems Plc
Annual report & accounts 2010
Notes to the Financial Statements continued
27. Financial Instruments continued
Currency Options
Forward contract value       Maturity date  Effective forward rate 
$300,000      27-Jan-11  1.5500
$300,000      24-Feb-11  1.5500
$300,000      29-Mar-11  1.5500
$300,000      27-Apr-11  1.5500
$300,000      26-May-11  1.5500
$300,000      28-Jun-11  1.5500
$300,000      27-Jul-11  1.6000
$300,000      26-Aug-11  1.6000
$400,000      28-Sep-11  1.6000
$450,000      27-Oct-11  1.6000
$450,000      28-Nov-11  1.6000
At the year end the fair value of the above contracts is an asset of £46,000 (2009: asset £176,000). The movement in fair values of 
£338,000 (2009: £1,029,000) has been debited (2009: credited) to the income statement in the year.
28. Related Party Transactions
Revenue includes £393,000 (2009: £428,000) in respect of Banca Caboto Spa (London Branch), a member of a Group of 
companies which include CAI (Suisse), a shareholder of the Company. At 31 December 2009 the amount owing to Group 
companies by Banca Caboto Spa (London Branch) was £nil (2009: £78,870).
Revenue also includes £483,000 (2009: £350,000) in respect of Marex Trading Services, a company of which one of the Non-
Executive Directors in the year, Steve Sparke, is also a Director. At 31 December 2010 the amount owing to Group companies by 
Marex Trading Services was £nil (2009: £43,341).
Key Management Remuneration
Details of the remuneration of key management are detailed below:
       2010 2009
       £’000 £’000
Salaries and short-term employee benefits        1,618 1,705
Share-based payments        58 124
       1,676 1,829 Patsystems Plc
Annual report & accounts 2010
Financial Statements
Patsystems Plc
Annual report & accounts 2010 53
Independent Auditors’ Report to the Members  
of Patsystems Plc
We have audited the Parent Company Financial Statements of 
Patsystems Plc for the year ended 31 December 2010 which 
comprise the Balance Sheet and the related notes. The financial 
reporting framework that has been applied in their preparation 
is applicable law and United Kingdom Accounting Standards 
(United Kingdom Generally Accepted Accounting Practice).
Respective Responsibilities of Directors and Auditors
As explained more fully in the Directors’ Responsibilities 
Statement set out on page 18, the Directors are responsible for 
the preparation of the Parent Company financial statements 
and for being satisfied that they give a true and fair view. Our 
responsibility is to audit and express an opinion on the Parent 
Company financial statements in accordance with applicable 
law and International Standards on Auditing (UK and Ireland). 
Those standards require us to comply with the Auditing 
Practices Board’ s Ethical Standards for Auditors.
This Report, including the opinions, has been prepared for and 
only for the Company’s members as a body in accordance with 
Chapter 3 of Part 16 of the Companies Act 2006 and for no 
other purpose. We do not, in giving these opinions, accept or 
assume responsibility for any other purpose or to any other 
person to whom this report is shown or into whose hands it 
may come save where expressly agreed by our prior consent  
in writing.
Scope of the Audit of the Financial Statements
An audit involves obtaining evidence about the amounts and 
disclosures in the financial statements sufficient to give 
reasonable assurance that the financial statements are free from 
material misstatement, whether caused by fraud or error. This 
includes an assessment of: whether the accounting policies  
are appropriate to the Parent Company’s circumstances and 
have been consistently applied and adequately disclosed; the 
reasonableness of significant accounting estimates made by the 
Directors; and the overall presentation of the Financial Statements.
Opinion on Financial Statements 
In our opinion the Parent Company Financial Statements: 
give a true and fair view of the state of the Company’ s affairs •	
as at 31 December 2010;
have been properly prepared in accordance with United •	
Kingdom Generally Accepted Accounting Practice; and 
have been prepared in accordance with the requirements of •	
the Companies Act 2006.
Opinion on Other Matter Prescribed by the Companies 
Act 2006
In our opinion the information given in the Directors’ Report  
for the financial year for which the Parent Company Financial 
Statements are prepared is consistent with the Parent Company 
Financial Statements.
Matters on Which we are Required to Report by Exception
We have nothing to report in respect of the following matters 
where the Companies Act 2006 requires us to report to you if, 
in our opinion: 
adequate accounting records have not been kept by the •	
Parent Company, or returns adequate for our audit have  
not been received from branches not visited by us; or 
the Parent Company financial statements are not in •	
agreement with the accounting records and returns; or 
certain disclosures of Directors’ remuneration specified by •	
law are not made; or 
we have not received all the information and explanations •	
we require for our audit.
Other Matter 
We have reported separately on the Group financial statements 
of Patsystems Plc for the year ended 31 December 2010.
Nigel Reynolds 
(Senior Statutory Auditor)
for and on behalf of PricewaterhouseCoopers LLP
Chartered Accountants and Statutory Auditors
London
7 February 2011 Financial Statements
Patsystems Plc
Annual report & accounts 2010 54
Patsystems Plc
Annual report & accounts 2010
       2010 2009
      Notes £’000 £’000
FIXED ASSETS   
Investments      4 1,315 1,605
CURRENT ASSETS   
Debtors      5 8,552 6,932
Cash at bank and in hand        4 28
         8,556 6,960
CREDITORS: AMOUNTS FALLING DUE WITHIN ONE YEAR     6 (70) (65)
Net current assets        8,486 6,895
Net assets        9,801 8,500
CAPITAL AND RESERVES   
Share capital      7 1,866  1,853
Share premium account      9 4,641  4,493
Other reserves      9 50  50
Retained earnings      9 3,244  2,104
Total equity      9 9,801  8,500
The financial statements on pages 54 to 59 were approved by the Board of Directors on 7 February 2011.
David Webber Martin Thorneycroft
Chief Executive Officer Finance Director
Patsystems Plc, Company Number: 4498002
Company Balance Sheet
at 31 December 2010 Patsystems Plc
Annual report & accounts 2010
Financial Statements
Patsystems Plc
Annual report & accounts 2010 55
Notes to the Financial Statements
1. Accounting Policies
The financial statements have been prepared on the historical cost basis of accounting and in accordance with applicable 
accounting standards in the United Kingdom. 
The principal accounting policies applied in the preparation of these financial statements are set out below. These policies have been 
consistently applied to all the years presented, unless otherwise stated.
1.1 Investments 
Investments in subsidiaries are stated at cost less any provision for impairment. Where an acquisition satisfies the provisions of 
sections 611 to 616 of the Companies Act 2006, merger relief is available and the investment is stated at nominal value of shares 
issued plus the value of any other consideration.
1.2 Operating Leases
Costs in respect of operating leases are charged to the Profit and Loss Account on a straight line basis over the lease term. 
1.3 Current and Deferred Income Taxes
The current income tax charge is calculated on the basis of the tax laws enacted or substantively enacted at the Balance Sheet  
date. Management periodically evaluates positions taken in tax returns with respect to situations in which applicable tax regulations 
are subject to interpretation and establishes provisions where appropriate on the basis of amounts expected to be paid to the  
tax authorities.
Deferred taxation is recognised in respect of timing differences that have originated but not reversed at the Balance Sheet date, 
where transactions or events that result in an obligation to pay more tax in the future or a right to pay less tax in the future have 
occurred at the Balance Sheet date.
A net deferred tax asset is regarded as recoverable and therefore recognised only when, on the basis of all available evidence, it can 
be regarded as more likely than not that there will be sufficient taxable profits to utilise carried forward tax losses and against which 
the reversal of underlying timing differences can be deducted.
Deferred tax is measured at the average tax rates that are expected to apply in the periods in which the timing differences are 
expected to reverse based on tax rates and laws that have been enacted or substantively enacted by the Balance Sheet date. 
Deferred tax is measured on a non-discounted basis.
1.4 Related Party Transactions
Financial Reporting Standard (FRS) 8, ‘Related Party Transactions’, requires the disclosure of the details of material transactions 
between the reporting entity and related parties. The Company has taken advantage of exemptions under FRS 8 not to disclose 
transactions between Group companies.
1.5 Share-Based Payments
The Group operates two share options schemes; the Enterprise Management Incentive Scheme and the 2003 Share Option Scheme 
(Inland Revenue unapproved). 
The fair value of options is recognised as an employee benefit expense with a corresponding increase in reserves over the vesting 
period. The proceeds received net of any directly attributable transaction costs are credited to share capital (nominal value) and 
share premium when the options are exercised. 
1.6 Cash Flow Statement 
The Company is the Parent Company of the Patsystems plc Group and is included in the consolidated financial statements of 
Patsystems plc. Consequently, the Company has taken advantage of the exemption from preparing a cash flow statement under 
the terms of Financial Reporting Standard 1 (revised 1996).
1.7 Dividend Distributions
Final dividend distributions to the Company’ s shareholders are recognised as liabilities in the Company’ s financial statements in  
the period in which the dividends are approved by the Company’ s shareholders. Interim dividend distributions to the Company’ s 
shareholders are recognised as liabilities in the Company’ s financial statements when paid.
2. Directors and Employees
The Parent Company does not employ any Directors or employees. Financial Statements
Patsystems Plc
Annual report & accounts 2010 56
Patsystems Plc
Annual report & accounts 2010
Notes to the Financial Statements continued
3. Profit and Loss Account 
The profit for the year dealt with in the accounts of the Company was £1,972,000 (2009: £799,000).
The Directors have taken advantage of the exemption available under section 408 of the Companies Act 2006, and have not 
presented a Profit and Loss Account for the Company alone. 
4. Investments  
  
        £’000
Investment in subsidiary undertaking  
At 1 January 2010        1,605
Disposals        (290)
At 31 December 2010        1,315
During the year Patsystems Plc transferred all of the assets and liabilities of Tamesis Limited to Patsystems (UK) Limited. The above 
reduction of £290,000 relates to the investment in T amesis Limited. 
The Investment in Subsidiary Undertakings Represents:
1. A 100% investment in respect of voting rights and nominal value in Patsystems Holdings Limited, a company incorporated in 
England and Wales. 
 
The historical cost of the investment in the shares of Patsystems Holdings Limited is £11,180,000. Under the Scheme of 
Arrangement the subsidiary undertaking returned capital to the Company amounting to £9,865,000, and the cost of the 
investment has been reduced accordingly to reflect this. 
 
The following subsidiary undertakings were wholly owned by Patsystems Holdings Limited in respect of voting rights and 
nominal value of issued shares and perform the sale and support of electronic trading systems: 
 
Patsystems (UK) Ltd  – incorporated in England and Wales 
Patsystems (NA) LLC  – incorporated in United States of America 
Patsystems Pte Ltd  – incorporated in Singapore 
Patsystems Pty Ltd  – incorporated in Australia 
Patsystems GmbH  – incorporated in Germany 
Patsystems Hong Kong Limited – incorporated in Hong Kong 
The following subsidiary is wholly owned by Patsystems Holdings Limited in respect of voting rights and nominal value of issued 
shares and acted as a holding company:
Professional Automated Trading Systems BV (incorporated in The Netherlands).
 
Professional Automated Trading Systems BV owns 100% of voting rights and nominal value of issued shares in Patsystems (Japan) 
KK (incorporated in Japan), which performs the sale and support of electronic trading systems. 
Patsystems (Japan) KK owns 100% of voting rights and nominal value of issued shares in Patsystems (Ireland) Ltd (incorporated in 
the Republic of Ireland), which acts as a holding company. 
5. Debtors
  
       2010 2009
       £’000 £’000
Amounts owed by Group undertakings       8,531 6,909
Other debtors       13 16
Prepayments and accrued income       8 7
       8,552 6,932 Patsystems Plc
Annual report & accounts 2010
Financial Statements
Patsystems Plc
Annual report & accounts 2010 57
6. Creditors: Amounts Falling Due Within One Year 
       2010 2009
       £’000 £’000
Trade creditors       10 1
Accruals and deferred income       60 64
       70 65
  
None of the creditors are secured. 
7. Share Capital  
   
       2010 2009
       £’000 £’000
Authorised
Ordinary shares of 1p each   
At 1 January and 31 December – 250,000,000 shares       2,500 2,500
Deferred shares of 1p each  
At 1 January and 31 December – 2 shares        – –
Redeemable preference shares of £1 each   
At 1 January and 31 December – 49,998 shares        50 50
Allotted, called up and fully paid   
Ordinary shares of 1p each   
At 1 January – 185,330,693 shares        1,853 1,795
Allotted under share option schemes – 1,332,601       13 58
At 31 December – 186,663,294 shares        1,866 1,853
  
The 1p ordinary shares are listed on the AIM market. They have one voting right per share. 
  
Deferred shares of 1p each   
At 1 January and 31 December – 2 shares        – –
8. Share Option Schemes
The following options to purchase 1p Ordinary shares in Patsystems plc were granted, exercised, lapsed and outstanding during  
the year:
 Exercise Outstanding    Outstanding Exercisable
 price in at 1 January Granted Exercised Lapsed at 31 December at 31 December Effective
 pence 2010 in year in year in year 2010 2010 dates
 5.08p 558,000  –  (378,000) – 180,000 180,000 Note a
 9.50p 90,000  –  (45,000)  –  45,000 45,000 Note a
14.25p 403,553  –  (197,453) (44,400) 161,700 161,700 Note a
14.50p 496,951  –   –   –  496,951 496,951 Note a
15.25p 775,737  –  (60,000)  –  715,737 715,737 Note a
15.58p 670,400  –  (275,600) (30,000) 364,800 364,800 Note a
17.50p 30,000  –  – – 30,000 30,000 Note a
27.75p 250,000  –   –   –  250,000 250,000 Note c
29.00p 444,827  –   –   –  444,827 444,827 Note c
  3,719,468  –  (956,053) (74,400) 2,689,015 2,689,015 
14.25p 179,143  –  (56,168) (89,375) 33,600 33,600 Note b
14.50p 83,089  –   –   –  83,089 83,089 Note b
15.25p 344,263  –   –  – 344,263 344,263 Note b
15.58p 595,700  –  (320,380) (258,520) 16,800 16,800 Note b
18.00p 500,000  –   –   –  500,000 500,000 Note b
27.75p 1,000,000  –   –   –  1,000,000 1,000,000 Note d
29.00p 1,655,173  –   –   –  1,655,173 1,655,173 Note d
  4,357,368  –  (376,548) (347,895) 3,632,925 3,632,925 
Total all 
schemes 8,076,836  –  (1,332,601) (422,295) 6,321,940 6,321,940 
              Financial Statements
Patsystems Plc
Annual report & accounts 2010 58
Patsystems Plc
Annual report & accounts 2010
Notes to the Financial Statements continued
8. Share Option Schemes continued
Note a: These options were granted under the first, second and third awards of the Enterprise Management Incentive (EMI) 
Scheme. These options are now 100% exercisable.
Note b: These options were granted under the second and third awards of Part B (Inland Revenue Unapproved) of the Patsystems 
plc 2003 Share Option Scheme. These options are now 100% exercisable.
Note c: These options were granted under a special award of the EMI Scheme. These options are now 100% exercisable.
Note d: These options were granted under a special award of Part B (Inland Revenue Unapproved) of the Patsystems plc 2003 
Share Option Scheme. These options are now 100% exercisable.
No share options were granted in the year (2009: nil). 
For the options that were exercised during the year, the weighted average share price at the date of exercise was 24p (2009: 21p).
The weighted average remaining contractual life of options outstanding at the year end is 5.2 years (2009: 5.7 years).
The total fair value that was charged to the income statement in relation to the share options was £60,000 (2009: £261,000), all of 
which related to equity settled share-based payment transactions.
The fair values of the options have been calculated using the Binomial Model. The model takes into account the following factors in 
determining the fair value of an option:
(a) Share Price and Exercise Price 
Share prices are closing share prices as at the date of grant. Exercise prices are listed in the above schedule.
(b) Expected Term of the Options
It is assumed that the expected life of the options under consideration is 5 years. 
(c) Volatility
Volatility of the Company’ s share price has been calculated as the annualised standard deviation of daily continuously compounded 
returns on the Company’ s stock, derived from the Company’ s historical share prices, adjusted for splits, over 5 years back from each 
date of grant.
(d) Risk-Free Interest Rate
The risk-free rates of interest are assumed to be the yield to maturity on a UK Gilt Strip with the term to maturity equal to the 
expected life of the option. 
(e) Dividends
The valuations take account of the expected future dividend yield at the date of each grant.
The table below sets out the volatilities, risk-free interest rates and dividend yields applied in each valuation:
      Risk-free  
     Volatility  interest rate  Dividend yield
 Date of grant     (%)   (%)   (%)
24 February 2003    77.8009%  4.6922%  0.00%
13 March 2003    78.3590%  4.7175%  0.00%
30 June 2003    78.4194%  4.6412%  0.00%
27 October 2003    79.8321%  5.7891%  0.00%
01 January 2004    78.6748%  5.4125%  0.00%
30 July 2004    73.6821%  5.8602%  0.00%
27 August 2004    71.7764%  5.6660%  0.00%
16 November 2004    58.9201%  5.2789%  0.00%
04 February 2005    56.6301%  5.1507%  0.00%
17 March 2005    52.4971%  5.4148%  0.00%
06 October 2005    54.9819%  4.7689%  2.00%
23 November 2005    49.8819%  4.8322%  2.00%
14 December 2005    50.0097%  4.8764%  2.00%
14 February 2006    50.1501%  4.7515%  2.00%
19 April 2007    48.4035%  5.2980%  1.00%
7 December 2007    30.0527%  4.5550%  1.00%
31 December 2007    30.9369%  5.6204%  1.00% Patsystems Plc
Annual report & accounts 2010
Financial Statements
Patsystems Plc
Annual report & accounts 2010 59
9. Share Capital and Reserves
   At Shares Earnings  Share At
   1 January issued in for the Dividends compensation 31 December
   2010 the year year paid expense 2010
   £’000 £’000 £’000 £’000 £’000 £’000
Paid up share capital    1,853 13 – – – 1,866
Share premium    4,493 148 – – – 4,641
Other reserves   50 – – – – 50
Retained earnings    2,104  – 1,972 (892) 60 3,244
   8,500 161 1,972 (892) 60 9,801
10. Dividends  
The dividends paid in the year were as follows:
       2010 2009
       £’000 £’000
Second interim dividend in respect of the year ended  
 31 December 2009 at 0.28p per share (2009: 0.237p)      519 427
Interim dividend at 0.2p per share (2009: 0.145p)       373 262
       892 689
A second interim dividend in respect of the year ended 31 December 2010 of 0.35p per share amounting to a total dividend of 
£653,000, is to be paid on 8 April 2011. These financial statements do not reflect this dividend payable.  Financial Statements
Patsystems Plc
Annual report & accounts 2010 60
Directors and Advisers
Directors
Richard Last Chairman and Non-Executive Director
David Webber Chief Executive
Martin Thorneycroft Finance Director 
John Priestley Non-Executive Director, Chairman of the Audit Committee 
Stewart Douglas-Mann  Non-Executive Director, Chairman of the combined Remuneration  
and Nominations Committee
Company Secretary  
Martin Thorneycroft
Advisers
Broker and nominated adviser Numis Securities
Lawyers DLA Pipers
 Vedder Price, Kaufman & Kammholz
Registered auditors PricewaterhouseCoopers LLP 
Principal bankers Barclays Bank plc
    
Registrars Computershare Services plc
 PO Box 82
 The Pavillions
 Bridgewater Road
 Bristol
 BS99 7NH
Corporate Details
Registered office: Riverside House, 2A Southwark Bridge Road, London SE1 9HA
Company number: 4498002
Country of incorporation: England and Wales
Website: www.patsystems.com
Stock Exchange symbol: pts 01 About Patsystems
01 Highlights
02 Global Opportunities
04 Product Range
06 Chairman’s Statement
08 Chief Executive’s Report
12 Finance Director’s Review
15 Key Performance Indicators
16 Our Board
17 Directors’ Report
19 Statement of Corporate Governance
21  Report of the Board on Directors’ 
Remuneration and on Group 
Remuneration Policy
24  Independent Auditors’ Report to the  
Members of Patsystems Plc
25 Consolidated Income Statement
25  Consolidated Statement of 
Comprehensive Income
26  Consolidated Balance Sheet
27  Consolidated Statement of  
Changes in Equity
28 Consolidated Cash Flow Statement
29 Notes to the Financial Statements
53  Independent Auditors’ Report to the 
Members of Patsystems Plc
54 Company Balance Sheet
55 Notes to the Financial Statements
60 Directors and Advisers
Overview
Business Review
Governance Financial Statements Patsystems Plc
Annual report & accounts 2010
Offices and addresses
Europe
London
Riverside House
2A Southwark Bridge Road
SE1 9HA
Tel +44 (0)20 7940 0490 
Fax +44 (0)20 7803 1619
USA
Chicago 
175 W. Jackson Blvd 
Suite #2260 
Chicago, IL 60604 
Tel +1 312 922 7600 
Fax +1 312 922 7625 
New York
245 Park Ave.
24th Floor
New York, NY. 10167
Tel +1 212 837 7841
Fax +1 212 792 4001
Asia Pacific
Singapore 
137 Telok Ayer Street
#07-07
Singapore 068602
Tel +65 6216 0452
Fax +65 6536 4167
Tokyo 
10th Floor
Nihonbashi Duplex B’s
9-17 Nihonbashi Kobuna-cho
Chuo-Ku Tokyo 103-0024
Tel +81 (0) 3 3668 9372
Fax +81 (0) 3 3668 9393
Sydney 
Level 6
Underwood House
37 Pitt Street
Sydney NSW 2000
Tel +61 (0) 2 8987 9600
Fax +61 (0) 2 8252 7640
Hong Kong 
32 Hollywood Road
Unit 2004
Kinwick Centre
Sheung Wan
Hong Kong 
Tel +852 3180 9512
Fax +852 3180 9399
Patsystems Plc  Annual report & accounts 2010