13534 30032007 proof 7 13534 30032007 proof 7
annual report and financial statements 2006
tikit group plc annual report and financial statements 2006
professional it for law firms
and accountancy practices
tikit
africa house 6478 kingsway t 44 0 20 7 400 3737 wwwtikitcom
london wc2b 6ah f 44 0 20 7 400 3738
wwwtikitcom
13534tikitgrocvrlayout 1  12407  0840  page 1 13534 30032007 proof 7 13534 30032007 proof 7
2002 2003 2004 2005 2006
£’000 £’000 £’000 £’000 £’000
 turnover 8231 9558 11903 20162 23517
 pretax profit 648 1177 1512 2103 2888
 before goodwill amortisation and share option charges
highlights 01
about us 02
chairman’s statement 06
chief executive’s statement 12
financial review 16
directors 18
corporate governance statement 20
remuneration report 22
report of the directors 24
statement of directors’ responsibilities 26
report of the independent auditors 27
consolidated profit and loss account 28
consolidated statement of total recognised
gains and losses 29
consolidated balance sheet 30
company balance sheet 31
consolidated cash flow statement 32
notes forming part of the financial statements 33
notice of agm 51
directors and advisors 53
 contents
 consultancy 31
 services 34
 software 31
 other 4
percentage split of 2006 revenues
 5 year performance
professional it for law firms
and accountancy practices
 directors and advisers
tikit group plc
annual report 2006
5253
directors m mcgoun bsc msc chairman
d lumsden managing director
p giuffredi aca finance director
r price bsc econ fca fcca cta independent senior nonexecutive
n briant llb independent nonexecutive
secretary and registered office p giuffredi aca
africa house
64–78 kingsway
london
wc2b 6ah
telephone 020 7 400 3737
facsimile 020 7 400 3738
website wwwtikitcom
company number 4164203
auditors bdo stoy hayward llp
8 baker street
london
w1u 3ll
solicitors tlt llp faegre  benson llp
sea containers house 7 pilgrim street
20 upper ground london
london ec4v 6lb
se1 9lh
brokers and nominated adviser charles stanley  company limited
25 luke street
london
ec2a 4ar
principal bankers national westminster bank plc
98 st paul’s churchyard
london
ec4m 8bu
registrars capita registrars
northern house
woodsome park
fenay bridge
huddersfield
hd8 0la
13534tikitgrocvrlayout 1  12407  0840  page 2 01
tikit group plc
annual report 2006
13534 30032007 proof 7
 consultancy and services revenues increased by 13 to £153m 2005 £135m
 revenues from software business up 30 to £7 4m 2005 £57m
 group remains cash generative with £36m net cash inflow from operations
 2006 financial highlights
turnover
up 17
to £2352m
profit before taxation goodwill
amortisation and share option
charges
up 38
to £289m
operating margin
up 18
to 123
profit before taxation
up 233
to £213m
earnings per share before
goodwill amortisation and
share option charges
up 38
to 180p
basic earnings per share
up 606
to 120p
full year dividend per share
up 60
to 40p
net cash at year end
up 78
to £415m
13534tikitgro13534tikitgro  12407  0841  page 1 135 13534 30032007 proof 7
client relationship management crm
the crm group is a specialised team focused on the
development implementation and management of
crm programmes and systems the group has
implementated more than 70 crm systems over 8
years and has developed an implementation
methodology that is driven by the business needs of
a firm rather than the software this approach
results in a much higher level of acceptance within a
firm and delivers genuine business benefit
document management dm
tikit has installed firmwide dm systems at some of
the world’s largest law firms with over 100 dm
clients worldwide tikit has been one of the key
drivers in moving law firms towards the paperless
office a key strategy in cost and environmental
impact reduction
office productivity
tikit recognises that the microsoft office product
suite is a key tool for lawyers and support staff in law
firms the office productivity group is dedicated to
understanding the implications of developments in
the office suite for law firms as well as to developing
new legal specific tools that enhance the existing
functionality
information services
tikit’s information services group is focused on
leveraging microsoft’s sharepoint technology to
help law firms develop powerful internal and
external content solutions using sharepoint in
conjunction with complementary technologies such
as handshake ibox metastorm and redwood the
division creates integrated knowledge management
workflow and business intelligence solutions
 solutions practice groups
 what we do
tikit is one of the world’s largest it specialists focused on the legal and accounting markets the company works with more than
90 of the uk’s top 100 law firms 20 of the top 50 us law firms and 18 of the top 50 uk accountancy practices headquartered in
london and established in 1994 tikit has over 180 employees in 5 offices in the uk as well as madrid and paris in mainland
europe
tikit offers a broad range of legal and accountancy focused consulting services and software from client relationship management
and document management to networking and training
tikit’s team has an unparalleled level of experience in delivering it solutions for law firms having worked on hundreds of
major it implementations in the legal environment tikit’s consultants and technologists have a deep understanding of the
issues that law firms face and the solutions that can deliver real value
having gained valuable experience in the legal sector  tikit took their best of breed solutions into another professional
services market and now provide accountancy practices with these productivity enhancing solutions tikit has established a
strong presence in the accountancy market working with over 250 accountancy practices including 4 of the top 5
in the uk
as well as working with best of breed partners tikit also has a history of developing innovative
proprietary software packages to answer law firms’ specific needs to further
enhance the return on investment for its clients
about us
13534tikitgro13534tikitgro  12407  0841  page 2 23
tikit group plc
annual report 2006
13534 30032007 proof 7
managed support
tikit provides a comprehensive range of support
services to help firms make the most of their
investment in it tikit can offer 247 it helpdesk
support for firms of any size to ensure that
problems are quickly and efficiently resolved
firms outsource their entire it department to tikit
removing the hassles and complexity of a noncore
function
tikit has a dedicated software development team
which has extensive experience working with the
systems commonly used by law firms tikit uses its
experience of the legal sector  combined with direct
feedback from its legal clients to identify industry
specific issues and develop software solutions that
directly answer legal clients’ needs
the group has designed and built a range of
proprietary addon technologies that offer powerful
legalspecific tools that accommodate the industry’s
particular working patterns tikit has over 150
clients worldwide using its products including a high
proportion of the largest law firms in the us
training services
tikit training services is a highly skilled and
experienced technical training division with a
specialist understanding of both law firms and
accountancy practices tikit’s training consultants
provide a wide range of services with public courses
onsite training and bespoke courses available across
all of tikit’s key product areas
network  integration services
tikit’s network  integration services group is
committed to supplying installing maintaining and
supporting hardware and software solutions the group
has 25 years’ experience working with professional
service organisations with a strong foothold within law
firms and accounting practices they are therefore able
to design the it support solution specifically to address
the needs of growing businesses
 managed services practice groups
 product development group
13534tikitgro13534tikitgro  12407  0841  page 3 135 13534 30032007 proof 7
 what our clients say
about us
we’ve been working with tikit for a long time now and
their understanding of our marketplace is unmatched
they really understand the different problems faced by
law firms and are always able to source or develop new
products to help fix them tikit are about more than just
straight it — they help us develop new ways of working
that have made a real difference to our business
janet day it director
berwin leighton paisner llp
this year we are making a significant investment in our
it infrastructure with the implementation of new
content management and client relationship
management systems and we have enlisted tikit as our
natural it partner  tikit has been providing it services to
us for over ten years now and we are confident that
their knowledge and experience will help to ensure the
successful rollout of these new systems across our
global offices
chris white it director
ashurst
what makes tikit really stand out from the crowd is the
level of commitment and effort they put into maintaining
a strong relationship with their clients when we have a
major it issue we know that tikit can be relied upon to
go that extra mile to help us out and that makes a real
difference when it comes to choosing a supplier 
simon kosminsky it director
sj berwin llp
tikit has provided us with business intelligence
consultancy and training and advice on international
aspects of finance system setup what’s really made a
difference is the level of expertise and experience that
they can offer  as well as their general understanding of
the legal marketplace and how large law firms work they
can offer us consultants who are trained accountants
and therefore offer a deep understanding of our needs
and system requirements from a finance perspective
mike giles finance director
sj berwin llp
13534tikitgro13534tikitgro  12407  0841  page 4 45
tikit group plc
annual report 2006
 leading position in the market
legal vertical
uk
legal vertical
eu
usa
accounting vertical
uk
10
45 4
92
114 20 250
18 17
top 10
top 50 top 5
top
50
top 100
top 200
top 30
top 50 top 500
 shows the number of clients who have purchased one or more solutions 135 13534 30032007 proof 7
during 2006 the group achieved
record sales and profits
introduction
i am pleased to be able to announce
excellent results for tikit group plc for
the year ended 31 december 2006 the
group undertook a number of
acquisitions during late 2004 and 2005
and the focus for 2006 was to secure
good organic growth from the enlarged
group and at the same time improve
operating margins across all of the
business areas
we achieved overall revenue growth of
17 in 2006 compared with 2005 and
operating margins improved from 104
to 123 profit before taxation goodwill
amortisation and share option charges
increased by 38 to £29 million
compared with 2005 £21 million
good progress has been made
throughout the business including major
project wins with our existing large legal
clients and significant success from our
recent move into the accountancy sector 
our operations in france and spain
performed ahead of plan
results
turnover for the period increased by
17 to £235 million 2005 £202
million within this consultancy and
managed services businesses increased
by 13 to £153 million 2005 £135
million of which £80 million 2005
£7 2 million related to managed
services turnover  representing
recurring revenues of 34 of our 2006
turnover  the improvement of operating
margins from 104 to 123 reflects
higher utilisation rates of our
chargeable staff and efficiencies gained
through the integration of managed
services operations and reducing some
lower margin business in nonstrategic
areas such as hardware sales
the group improved profits by 38
achieving a profit before taxation
goodwill amortisation and share option
charges for the period of £29 million
2005 £21 million
the figure for pretax profit after share
option charges and goodwill
amortisation increased by 233 to £21
million 2005 £06 million following a
review by the board of the group’s
goodwill amortisation accounting policy
the goodwill charge for 2006 was made
on the basis of a tenyear amortisation
period 2005 five years as a result
goodwill amortisation in the year was
£064 million 2005 £134 million
share option charges during the period
as required by frs 20 were £127 000
2005 £126000
earnings per share before goodwill
amortisation and share option charges
increased by 38 to 180 pence 2005
130 pence basic earnings per share
were 120 pence 2005 17 pence
chairman’s statement
 mike mcgoun
13534tikitgro13534tikitgro  12407  0841  page 6 13534 30032007 proof 7
cash generated from operations was
£36 million 2005 £21 million our
balance sheet remains strong with net
assets at 31 december 2006 at £62
million 2005 £52 million including
cash balances of £42 million 2005
£23 million
during the year  we took the opportunity
to use £392000 of our cash resources
to purchase 203535 tikit shares in the
market for cancellation as we believed
this to be immediately earnings
enhancing
in order to facilitate a proposed new
long term incentive plan ltip for key
personnel the implementation of which
is subject to shareholder approval
100000 tikit shares were purchased in
the market during 2006 at a cost of
£234000 and these together with a
further 100000 purchased in january
2007 at a cost of £258500 are
available to satisfy the award of shares
under the proposed ltip
dividends
given the ongoing strength of the
business and our excellent record of
cash generation from operations the
board has decided upon a more
progressive dividend policy a final
dividend of 275 pence per share is
proposed it is to be paid on 7 may 2007
to shareholders on the register on
30 march 2007  this when taken with
the interim dividend of 125 pence
2005 075 pence brings total
dividends for the year to 40 pence
2005 25 pence an increase of 60
over the previous year 
employees
i would like to take the opportunity to
thank the directors and employees of
the group for their contribution in
delivering this excellent set of results
executive long term incentive plan
ltip
since its public listing in june 2001 tikit
has been very successful in generating
not only profits but also more
importantly cash from its operations
this generation of cash has enabled us to
make acquisitions and fund our growth
without recourse to the capital markets
although an issue of new tikit shares has
sometimes been used partially to fund
acquisitions the rate of growth of the
issued share capital has been
significantly less than the rate of growth
of the company as a result the ability of
the company to grant share options
within the abi guidelines which restrict
the issue of options over a ten year
period to a maximum of 10 of the
issued share capital is severely limited
the proposed long term incentive plan
ltip is performance related and
provides incentives to key executives and
staff to remain with the business and
share in the increase in shareholder
value over the next three years
the proposed ltip requires shareholder
approval at the company’s annual
general meeting to be held on 3 may
2007  in the notice convening the
group’s annual general meeting the
necessary resolution is set out together
with explanatory details of the proposed
scheme it is proposed that share
options over 250000 tikit group plc
shares are granted to the senior
management team with a nominal grant
price there are currently 200000
67
tikit group plc
annual report 2006
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the overriding group objective is to continue to
focus on the provision of it systems and support
to large law firms
shares held in treasury an additional
50000 shares will if required be
purchased in the market and held in
treasury these options may vest at the
end of a threeyear period and will be
subject to an earnings per share growth
target over three years for the
maximum number of shares to vest
under this scheme a compound growth
rate of 20 per annum in normalised
earnings per share has to be achieved
for this purpose normalised means the
fully diluted earnings per share of the
company taxed at the standard
corporation tax rate of the company and
before goodwill amortisation and share
option charges
most of the cost to the company will be
fixed at the outset as 80 of the
maximum number of shares to vest
under this scheme have already been
purchased and held in treasury no
dilution of the existing issued share
capital through the issue of new shares
will occur 
as at 31 december 2006 there were
unexercised options granted over
638778 shares under existing group
share options schemes representing
approximately 50  of the existing
issued share capital of the company if
the proposed ltip is approved and
implemented share options over an
additional 250000 shares representing
approximately 19 of the company’s
existing issued share capital will be
granted
business review and prospects
the purpose of this section is to give
shareholders a summary of the
prospects of the business the
performance in 2006 is a good indicator
of the skills that currently exist within
the group and the financial results show
how effectively those skills are
employed
the overriding group objective is to
continue to focus on the provision of it
systems and support to large law firms
and accountancy practices tikit has
established itself as a leading supplier to
this market in the uk and remains
focused on expanding its market share
in addition we seek to become the
chairman’s statement
13534tikitgro13534tikitgro  12407  0841  page 8 13534 30032007 proof 7
leading supplier of these services and
products to the large firms in mainland
europe
the large uk law firms and accountancy
practices have announced significant
recent growth in their businesses and
are investing commensurately in their it
systems tikit is ideally positioned to
provide consultancy services and
products to help these firms derive
maximum benefit from their it
investment in 2006 we estimate that
the top one hundred law firms in the uk
spent approximately £500 million on it
products and services the top fifty
accountancy firms spent an estimated
£300 million at this stage of our
development we do not believe that the
size of our chosen market is a limit to
our growth
tikit’s competitive advantage is that it is
a specialised business focused on the
large legal and accountancy markets
this differentiates us from general it
consultancy organisations our
relationship with clients is from a service
perspective in that we understand how
large law firms and accountancy
practices work their language and
culture we understand their business
issues and can help them identify
potential itbased solutions to those
issues we differentiate ourselves from
software vendors by our independence
and whilst we have strong relationships
with our software partners our strength
is that we endeavour to select the best
of breed software appropriate to our
clients’ needs and are not committed to
providing standard solutions there may
be some shortterm risk associated with
this strategy given that new software
developments may render existing
partnership arrangements
inappropriate this may lead to short
term direct competition from software
vendors
our focus remains on achieving strong
organic growth at the same time we
continue to look for businesses products
or services that can further expand our
current portfolio we also believe that
tikit is well positioned to participate in
the consolidation that is taking place in
both the legal and accountancy sectors
the average size of the top one hundred
uk law firms continues to rise faster
than the overall market because of
merger activity we believe that the large
uk law firms will lead consolidation
across europe and that tikit with its
strong client base among those firms
will benefit from this
the group’s pipeline of consultancy and
implementation projects should provide
the opportunity to schedule resources
more efficiently and improve utilisation
the managed services group will
continue to streamline its services so
that clients can benefit from the full
range of support offerings from
hardware and infrastructure support to
onsite support for complex applications
in addition the introduction of a number
of new software products during 2006 is
expected to result in additional sales in
2007 and beyond
the key performance indicators kpi’s
used by your board to measure the
success of the business remain those
that have underpinned our success to
date the most important of these is
89
tikit group plc
annual report 2006
13534tikitgro13534tikitgro  12407  0841  page 9 135 13534 30032007 proof 7
when your board considers risk issues
going forward the prominent element
is dependence on our people
customer retention especially reflected
in support contract renewal rates
following our first year in business
some 13 years ago we have had annual
renewal rates in excess of 90 with 92
of the top one hundred uk law firms as
clients and 18 of the top fifty
accountancy practices it is essential
that we retain existing clients at the
same time as winning new ones
the second kpi is the organic growth of
our revenues and this should be at least
as great as that of the top one hundred
firms in addition we seek to add
additional services so that our actual
revenue growth is higher  the third kpi
is the operating margin that we are able
to achieve since inception in 1994 tikit
has had operating margins in excess of
10 with the exception of the year
ended 31 december 2002 where
operating margin was 65 we aim to
have operating margins of 125 a final
kpi is our ability to generate cash from
our operating activities — in our view
the true measure of profit this is an
area where tikit has excelled over the
years we aim to achieve a conversion
ratio of profit before tax to cash of at
least 100
in commenting upon the capital
structure of the company i draw
attention to the acquisitions made by us
that have largely been funded by the
cash generated by the business we have
been able to act quickly without incurring
the time and costs associated with equity
or debt fundraisings the company has
had no debt since its inception in 1994
however  we continue to consider the
most appropriate capital structure given
the outlook for interest rates on long
term debt there is a determination not
to hold surplus cash and we will return
such cash to shareholders by a
combination of the progressive dividend
policy where it is our intention to provide
shareholders with a yield over 2
combined with the purchase of shares in
the market for cancellation
business review — risks
when your board considers risk issues
going forward the prominent element is
the dependence on our people we
recognise the value of their
chairman’s statement
13534tikitgro13534tikitgro  12407  0841  page 10 13534 30032007 proof 7
commitment and are conscious that we
must keep the reward systems both
financial and motivational in place to
minimise this area of risk our proposed
ltip is an example of this a second risk
issue competition arises in relation to
our strong position with the large law
firms given that there is no external
direct competition of any size in this
market we must be careful not to abuse
our position the main competition issue
in any project proposal is whether a law
firm’s internal it department may wish
to undertake the assignment itself
accordingly our services are designed
to complement and assist internal staff
rather than replace them finally we are
aware of the supply risk of losing key
software partners this would have a
shortterm impact as we sought to
identify and then train our staff in a
suitable alternative product we have an
excellent record of maintaining good
relationships with our software partners
and usually get notice of impending
changes in time to minimise the impact
on tikit
environmental policies
the group acknowledges the
importance of environmental matters
and where possible utilises environment
friendly policies in its offices such as
recycling and energy efficient practices
summary and prospects
in summary 2006 was an excellent year
for the group we enter 2007 with a
good order book of projects to be
implemented reflecting a blend of
consultancy support and software
business sold in the last quarter  the
targets we have set ourselves for 2007
and 2008 are challenging and if met
will lead to further significant
improvements in the trading
performance of the group and to
earnings per share tikit’s opportunities
are many and your board continues to
be optimistic about the trading
prospects of the group
mike mcgoun
chairman
tikit group plc
21 march 2007
1011
tikit group plc
annual report 2006
13534tikitgro13534tikitgro  12407  0841  page 11 135 13534 30032007 proof 7
chief executive’s statement
2006 has been very encouraging with a number
of large projects awarded to tikit
operating review
all parts of the business made positive
contributions to the group’s results in
2006 the group currently operates and
is managed across three coordinated
business streams consultancy
managed services and software sales
clients are delivered an integrated
solution based upon a managed blend
of these three areas of expertise
the table below summarises group
sales by business category
consultancy
tikit continues to be the leading
provider of document management
dm systems to large law firms and
undertook consultancy assignments
with over fifty clients in the year
including major projects at simmons
and simmons slaughter and may sj
berwin and bevan brittan new
document management systems were
also implemented at two large scottish
firms shepherd and wedderburn and
andersen strathern
our client relationship management
crm team undertook assignments at
over sixty clients during 2006 with
major projects at simmons and
simmons and sj berwin in the uk and
de brauw in holland this team has also
had significant success in the
accountancy arena completing a major
project at grant thornton utilising both
tikit’s own emarketing solution and
twelve months to 31 december increase
2006 2005 decrease
£m £m 
consultancy 73 63 16
managed services 80 7 2 11
software sales 74 57 30
other incl hardware 08 10 19
total 235 202
 david lumsden
13534tikitgro13534tikitgro  12407  0841  page 12 13534 30032007 proof 7
lexisnexis’ interaction software our
crm system is deployed across grant
thornton’s 32 uk offices totalling some
1600 users in addition tikit undertook
extensions to the crm systems installed
at ernst  young offices both in the uk
and australia a significant number of
these projects also benefited from the
data auditing and cleansing expertise of
the shamrock team
shamrock have also been adding value
to our accounting and legal clients by
providing outsourced marketing
campaign activities
our practice management systems
pms group are recognised experts in
the backoffice systems upon which law
firms are reliant they have undertaken
a number of assignments to help clients
implement pms systems and for hm
government’s treasury solicitors have
installed a new time recording system
for over 500 users based upon the
sage carpe diem system they have had
early success with redwood software
sold exclusively by tikit in the uk for
financial planning and budgeting with
installations under way at clarke
willmott cms cameron mckenna and
sj berwin
tikit is continuing its strong alliance with
microsoft we are a microsoft gold
certified partner  as well as recently
being awarded our fifth competency the
information worker solutions
accreditation in recognition of our
expertise with implementations of
platforms such as sharepoint and
office we are currently developing an
innovative portal solution in conjunction
with eversheds and microsoft using
share point and handshake software
which we expect to be applicable across
a wide number of professional firms
a webbased portfolio control and billing
workflow system developed by tikit
has achieved wide adoption at
freshfields bruckhaus deringer  this
project not only shows tikit’s
understanding of law firm processes but
also its versatility in creating a new
process flow that integrates a range of
existing applications
managed services
good progress is being made in the
provision of outsourced infrastructure
support services to law firms through
our network and infrastructure support
nis division historically specialising in
the accountancy sector  nis has this
year  won large projects with brabner
chaffe street and dickinson manser in
the legal sector as well as continuing its
business with the large accountancy
practices the major work in 2006 has
been a number of complete server
refresh projects incorporating microsoft
exchange and full security and network
management implementations of
particular note is the exciting project at
chantry vellacott which will be
implemented in 2007 and which will
standardise it systems across all six uk
offices
1213
tikit group plc
annual report 2006
13534tikitgro13534tikitgro  12407  0841  page 13 chief executive’s statement
the acquisitions we made in 2005 have
performed well
recent improvements to our document
editing and classification service in
yorkshire which provides clients with a
cost effective way of classifying their
key documents to enhance the value of
their knowledge management systems
is delivering greater benefit to both tikit
and its clients
software sales
2006 has been very encouraging with a
number of large projects awarded to
tikit many of which were tendered for
in 2005 total revenues for the year
ended 31 december 2006 from all
software sales were £7 4 million 2005
£57 million an increase of 30 on the
prior year 
we are interwoven’s preferred partner
in the legal and accountancy market
sector  being awarded their global
partner of the year award for the
second year running the recent
announcement of tikit signing its one
hundredth interwoven worksite client
illustrates our continued success in
this area
tikit has invested resources into several
other new technologies such as ibox a
new indexing and search tool which
combines taxonomy management
browsing and searching in a new way
especially suited to use by law firms and
is undertaking a pilot implementation at
one of the uk’s largest law firms
another such initiative is with
microsystems d3 which provides clients
with software and a service to ensure
that working documents are stripped of
unnecessary metadata and that styles
and formatting are consistent early
adopter projects are already underway
with a number of clients
product development
in conjunction with thirdparty software
products tikit has developed a number
of software application packages which
typically provide additional functionality
in key application areas one of these
products the emarketing solution
which includes emerge and reaction
server is now installed in 152 clients
worldwide with sales secured not only in
the uk but also in the usa canada
ireland and australia we achieved sales
of £734000 of our own ipr in the year
2005 £660000
135 13534 30032007 proof 7
13534tikitgro13534tikitgro  12407  0841  page 14 following on from the success of the
emarketing solution we have recruited
extra people to provide more focus on
creating and developing more tikit own
brand software products these
products will provide further
functionality and management to key
application areas within law firms and
will initially be aimed at interwoven
worksite and microsoft word
overseas
the french subsidiary lecsoft is
developing well with a particularly
strong performance in the second half
of the year  our spanish operation
continues to focus on gaining market
share presence and reputation and
made a small contribution to profits in
2006 total overseas sales including our
operations in france and spain
accounted for 22 of sales in the year
ended 31 december 2006
summary
overall tikit had a very good year
operationally and the acquisitions that
we made in 2005 have performed well
tikit operates in a market where people
and their relationships are absolutely
critical to the success of the business
and the quality of the newer people
coming into tikit together with the
enthusiasm and support from tikit’s
existing staff has enabled the business
to be significantly stronger than at the
same time last year  i would therefore
like to thank every employee of tikit for
contributing to the success we enjoyed
in 2006
david lumsden
chief executive
tikit group plc
21 march 2007
1415
tikit group plc
annual report 2006
13534 30032007 proof 7
13534tikitgro13534tikitgro  12407  0841  page 15 135 13534 30032007 proof 7
the group achieved another record year with
both turnover and profits growing strongly
the financial statements have been
prepared in accordance with generally
accepted accounting principles in the uk
and cover the results for the group for
the year to 31 december 2006
trading
the group achieved another record
year with both turnover and profits
growing strongly total turnover in the
year was £2352 million 2005 £2016
million — an increase of 17
group profit on ordinary trading
activities before taxation amortisation
of goodwill and share option charges
was £289 million 2005 £210 million —
an increase of 38
a detailed review of the performance of
the business can be found in the
chairman’s and the chief executive’s
statements
taxation
based on the group profit before tax
amortisation of goodwill and share
option charges the current year tax
charge is an effective rate of 218
2005 196 in 2006 the charge
benefited from the utilisation of tax
losses acquired on the purchase of tikit
nis limited on 17 december 2004 and
the exercise of share options the
standard rate of corporation tax in the
uk is 30
earnings and dividends
the group measures its adjusted
earnings per share performance on
trading results after excluding goodwill
amortisation and share option charges
from the calculation adjusted basic
earnings per share based on the actual
shares in issue was 180p 2005 130p
an increase of 38 basic earnings per
share was 120p 2005 17p the average
number of shares in issue in the year was
1254 million 2005 1253million
when determining dividend policy
current earnings future prospects and
financial review
 paul giuffredi
13534tikitgro13534tikitgro  12407  0842  page 16 13534 30032007 proof 7
future cash flows are taken into account
this year the board is recommending a
final dividend of 275p 2005 175p
which when combined with the interim
dividend of 125p gives a total dividend
for the year of 40p 2005 25p — an
increase of 60 the dividend is
covered 44 times by posttax earnings
after adding back goodwill amortisation
and share option charges
cash flow
cash inflow from operating activities of
£358 million 2005 £210 million
reflects our usual strong conversion of
profit to cash the year end bank
balances increased by £182 million to
£415 million
financial instruments
the group’s financial instruments
comprise cash liquid resources trade
debtors and trade creditors the main
risks arising from these financial
instruments are interest rate risk
liquidity risk credit risk and foreign
currency exchange rate risk the
policies for managing each of these
risks are as follows
interest rate risk
the group is cash positive and places its
balances on shortterm deposits with
highly regarded financial institutions
changes in interest rates will affect the
return on cash balances the group
does not hold or issue derivative
financial instruments
liquidity risk
the group is cash positive and has a
policy of ensuring sufficient funds are
always available for its operating
activities while the need for borrowing
facilities are not required at present the
board continually monitors the group’s
cash requirements
foreign currency exchange risk
part of the cash at bank is held in euro
and us dollar accounts there are also
trade balances and investments in these
currencies the group’s foreign
exchange risk is hedged by way of
forward exchange contracts where
appropriate and any resulting gains or
losses are recognised in the profit and
loss account
credit risk
the group has a small exposure to
credit risk from credit sales it is the
group’s policy to assess the credit risk of
new customers before entering into
contracts
shareholder information
the group’s website at wwwtikitcom
contains a wide range of information
about our activities and visitors can
download copies of the report and
accounts as well as newsletters and
matters of interest
paul giuffredi
finance director
tikit group plc
21 march 2007
1617
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annual report 2006
13534tikitgro13534tikitgro  12407  0842  page 17 135 13534 30032007 proof 7
 group directors
mike mcgoun
executive chairman
mike has a wealth of management experience
within the it industry he spent 10 years at ibm
prior to cofounding a successful computerland
franchise in 1989 in 1994 mike moved to
skillsgroup plc now known as qa plc as a main
board director  with responsibility for corporate
development and later as a nonexecutive
director  mike was appointed as a nonexecutive
chairman of tikit in 1997  becoming parttime
executive chairman in 2000 and parttime
executive chairman of tikit group plc on 1 june
2001
nicholas briant
nonexecutive director
nicholas is a solicitor and has been a partner of
taylor wessing a leading city law firm for over
20 years he is an acknowledged expert in the
legal and commercial aspects of corporate
finance flotations mergers and acquisitions of
a public and private nature and private equity
transactions he was appointed a
director of tikit in may 2001
david lumsden
managing director
david’s expertise of legal it spans nearly 25 years
whilst at wang david implemented systems at
firms such as linklaters denton wilde sapte and
masons in 1990 he joined ashurst a leading city law
firm as head of its uk it function in 1997 he moved
to tikit and brought with him a wealth of knowledge
gained at ashurst and set up a support services
team to provide the service to law firms that he felt
was missing following the success of this team he
joined the tikit limited board in 1999 and was
appointed managing director in 2000 he became
group managing director on 1 june 2001
richard price
senior nonexecutive director
richard is a chartered accountant and tax specialist
by training he cofounded bpp holdings plc a training
and publishing group in 1976 and was chairman of the
organisation until mid2002 bpp holdings plc has
been a listed company since 1986 and has a market
capitalisation in excess of £100 million
richard was appointed a director
of tikit in may 2001
paul giuffredi
group financial director
paul qualified as a chartered accountant at
kpmg he then spent four years at costain
group plc in a group accounting role working
on a number of corporate finance transactions
in 1996 he moved to ge information services
now gxs a division of the us conglomerate
general electric at ge he held a number of roles
including uk finance director  since 2000 he
has been finance director of two private equity
backed companies he joined tikit in august
2005
left to right nicholas briant paul giuffredi david lumsden mike mcgoun richard price
directors
13534tikitgro13534tikitgro  12407  0842  page 18 1819
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liam flanagan
sales director
liam flanagan was cofounder of tikit in 1994 and
has been the creative force behind the organisation
for 13 years he has been responsible for sourcing a
wide range of products and has established
lexisnexis’ interaction crm system and
interwoven’s worksite dm system as the systems of
choice for the uk legal market liam’s industry
knowledge is unsurpassed and is the result of 16
years in the legal it sector  he previously spent time
with aeg olympia and systenhouse inc more
recently liam set up tikit’s office productivity
group in recognition of the importance of microsoft
word and continues to source and drive the
development of innovative products such as interse
ibox microsystems d3 and the new tikit template
management system which deliver real value to
tikit’s target markets and existing clients
gordon simpson
technical director
gordon joined computergroup in 1988 as a systems
integration manager  transferring to shl ’s geneva
office in 1992 where he was responsible for managing
a number of largescale systems integration projects
he has been a director at tikit since it was formed
twelve years ago in that time he has been responsible
for over 75 document management implementations
25 knowledge management implementations and 50
crm implementations as well as various other legal
project areas
ivor owen
operations director
ivor spent 10 years working as a communications
specialist in the royal corps of signals before
joining wilde sapte in 1989 where he was it 
operations manager with responsibility for the day
today management of the firm’s it department
when wilde sapte merged with denton hall ivor
became it manager of the merged firm responsible
for all european it services ivor joined tikit in 2000
and has used his management experience to
continue to develop the managed services team
mike bailey
bpm director
after qualifying as a chartered accountant in 1990
mike has worked exclusively within the legal market
for software resellers and consultancy
organisations since 1996 he has specialised in the
practice management arena initially as general
manager of cms europe now aderant and more
recently as an implementation consultant
specialising in the issues associated with the
implementation of systems in a global environment
danny hoffman
network  integration services director
danny spent 4 years at the bbc before moving into
information technology he joined micl who
specialised in supplying software to the accounting
profession 20 years ago and progressed to the role
of technical director building a dedicated
infrastructure division dealing with nearly 200
professional service organisations following various
acquisitions his team now form tikit’s network 
integration services group
neil renfrew
professional services director
neil renfrew began his career in legal it as a software
developer with olivetti in edinburgh in 1984 he set up
the company that became ressoft and was
responsible for the design of systems such as
firmcontrol for linklaters firmware for freshfields
and panaseea for slaughter and may in february
2005 following the acquisition of ressoft neil
became tikit’s professional services director  bringing
with him a wealth of it project management
solutions design and systems integration
and implementation experience
steve knowles
managed services director
steve has over 20 years it industry experience
steve has held a number of roles including business
development manager for plumb center ltd
financial director and company secretary at brandt
computers ltd before moving to ressoft ltd where
he was client services director and company
secretary following tikit’s acquisition of ressoft
steve now works as managed services director for
tikit and has been responsible for extending the
services offered by tikit’s managed services group
 tikit directors
left to right liam flanagan steve knowles ivor owen danny hoffman david lumsden gordon simpson paul giuffredi neil renfrew
13534tikitgro13534tikitgro  12407  0842  page 19 135 13534 30032007 proof 7
 corporate governance statement
statement by the directors on
compliance with the combined code
the company is listed on the alternative
investment market aim and is
therefore not required to comply with
the provisions of the 2006 financial
reporting council’s revised combined
code nevertheless the board is
committed to ensuring that proper
standards of corporate governance
operate throughout the group and has
followed the principles of the code so
far as is practicable and appropriate for
the nature and size of the group
a statement of the directors’
responsibilities in respect of the financial
statements is set out on page 26 below
is a brief description of the role of the
board and its committees followed by a
statement regarding the group’s system
of internal controls
the board
the board comprises two nonexecutive
directors and three executive directors
and is responsible to shareholders for
the proper management of the group
the nonexecutive directors are richard
price the senior nonexecutive director
and nicholas briant and the board
consider both to be independent the
board meets regularly reviewing trading
performance setting and monitoring
strategy and examining major capital
expenditure and acquisition
opportunities all directors have access
to the advice and services of the
company secretary any director
appointed during the year is required
under the company’s articles of
association to retire and seek re
election by shareholders at the next
annual general meeting it is company
policy that each director retires and
seeks reelection every three years
audit committee
the audit committee comprises the two
nonexecutive directors of the company
and is chaired by richard price its terms
of reference require it to meet not less
than twice each year and it provides a
forum for reporting by the group’s
auditors by invitation the meetings are
also attended by the chairman
managing director and the finance
director 
the audit committee is responsible for
reviewing a wide range of financial
matters including ensuring that the
financial performance of the group is
adequately measured and controlled
correctly represented reported to and
understood by the board the audit
committee advises the board on the
appointment of external auditors and on
their remuneration both for audit and
nonaudit work and discusses the
nature and scope of their audit
the committee meets the auditors at
least once a year without any executive
directors present
remuneration committee
the remuneration committee
comprises the two nonexecutive
directors and is chaired by nicholas
briant details of the executive
remuneration policy is set out in the
separate remuneration report
individual directors’ remuneration
packages are included in the
remuneration report on page 23
nominations committee
the nominations committee comprises
the chairman and the two nonexecutive
directors it is responsible for making
recommendations to the board on all
new appointments to the board and
considering and making
recommendations as to the board’s
composition and balance
going concern
having reviewed the future plans and
projections for the business the
directors believe that the company and
its subsidiary undertakings 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
internal controls
the directors are responsible for the
group’s system of internal control and
for reviewing its effectiveness which by
its nature can only provide reasonable
and not absolute assurance against
material misstatement or loss
the board has reviewed the
effectiveness of the group’s internal
control systems for the period 1 january
2006 to the date of approval of the
financial statements the board will
continue to review the effectiveness of
its control assessment system on a
regular basis
13534tikitgro13534tikitgro  12407  0842  page 20 2021
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annual report 2006
13534 30032007 proof 7
the board has established procedures
which are designed to provide effective
internal control for the group and these
include
control environment and procedures
the directors have in place an
organisational structure with clearly
defined levels of responsibility and
delegation of authority
control procedures include annual
budget approval and monitoring of
actual performance formal staff
appraisal procedures and training
programmes are in place capital
expenditure requests are reviewed by
the board and appropriate due diligence
work will be carried out when a business
is to be acquired
it is board policy that executive directors
receive suitable training for their
position which is considered as part of
the appraisal process
risk management
the directors and operating company
management have a clear responsibility
for identifying risks facing each of the
businesses and for putting in place
procedures to mitigate and monitor
risks risks are formally assessed during
the annual budget process which is
monitored by the board and the
ongoing group strategy process
financial reporting
the group has a comprehensive system
of financial reporting there is a detailed
budgeting system in place which
includes the plan of each operating
company being approved by the
executive directors and the board
approves the overall group budget on a
monthly basis actual results are
reported against budget and any
significant adverse variances examined
and remedial action taken where
necessary
13534tikitgro13534tikitgro  12407  0842  page 21 135 13534 30032007 proof 7
 remuneration report
the remuneration committee is
constituted in accordance with the
combined code the committee is
composed entirely of nonexecutive
directors who are believed by the
company to be independent as set out
on page 20 the chairman during the
year was mr nicholas briant the terms
of reference for the committee are to
determine the group’s policy on
executive remuneration and to consider
and approve the remuneration packages
for directors subject to ratification by
the board during the financial year the
committee met a total of 3 times
policy on executive director
remuneration
the group’s current and ongoing
remuneration policy aims to ensure that
executive directors are fairly rewarded
for their individual contributions to the
group’s overall performance and is
designed to attract retain and motivate
executives of the right calibre the
committee is responsible for
recommendations on all elements of
directors’ remuneration including in
particular  basic salary annual bonus
share options and any other incentive
awards in implementing the
remuneration policy the committee has
regard to factors specific to the
company such as salary and other
benefit arrangements within the group
and the achievement of the group’s
strategic objectives
the committee determines the group’s
policy on executive directors’
remuneration with reference to
comparable companies of similar
market capitalisation location and
business sector 
basic salary
the basic salaries of executive directors
are reviewed annually having regard to
individual performance and position
within the company and are intended to
be competitive but fair using
information provided from both internal
and external sources the performance
related annual bonus forms a significant
part of the level of remuneration
considered appropriate by the
remuneration committee details of
directors’ emoluments are set out on
page 23
performance related annual bonus
the percentage of basic salary on which
annual cash bonuses are based is set by
the committee the 2006 bonuses paid
to executive directors on achievement
of the target group profits before tax
are shown in the remuneration table on
page 23 target based bonuses payable
to the executive directors for the 2007
financial year will be on a similar basis
and capped at a maximum of 40 of
basic pay including any pension
contributions in determining whether a
bonus payment is made or not the
committee will consider any factors that
may alter the targets against which
performance is measured and adjust the
level of bonus accordingly in addition to
the formal bonus scheme the
committee has the discretion to
recommend the payment of ad hoc
awards to reflect exceptional
performance
incentive plans
no new share options were issued to
directors or senior management in
the year  an outline of the proposed new
long term incentive plan is set out in
the chairman’s statement
pensions
contributions are made to the executive
directors’ personal pension schemes up
to a maximum of 10 of basic salary
details of directors’ pension
contributions are set out on page 23
other benefits
the committee aims to provide an
objective and independent assessment
of all benefits granted to directors
service contracts
the executive directors have rolling 12
month service contracts with notice
periods of 12 months directors are
entitled to a nonpensionable bonus
subject to achieving the targets set by
the remuneration committee for the
bonus scheme in place for the year in
question as set out at the beginning of
this report no director receives
additional remuneration or benefits in
relation to being a director or sitting on
the board of any group company
policy on remuneration of non
executive directors
the board determines the group’s policy
on nonexecutive directors’ fees and will
continue to set fees with reference to
the individual director’s role the
company’s market capitalisation
location and business sector 
nonexecutive directors are not
permitted to participate in employee
share option schemes neither are they
entitled to participate in the company’s
pension arrangements
13534tikitgro13534tikitgro  12407  0842  page 22 2223
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annual report 2006
13534 30032007 proof 7
the two nonexecutive directors have
letters of appointment dated 16 may
2001 which specify that their
appointment lasts for a renewable three
year term initially to 15 may 2004
following expiration of the initial term
the appointments have been extended
on an annual basis
advisers to the remuneration
committee
any advisers to the remuneration
committee are appointed and instructed
by the committee members no such
advisers were appointed in 2006
remuneration of directors
the remuneration of directors who
served during 2006 is shown in the
table on page 23 remuneration
includes management salaries taxable
benefits and bonuses remuneration
shown is in respect of each director’s
period in office during 2006 as a board
member of tikit group plc and includes
remuneration from the company and its
subsidiary undertakings
the emoluments of individual directors
are as follows
salary bonus benefits total pensions
fees in kind 2006 2005 2006 2005
£’000 £’000 £’000 £’000 £’000 £’000 £’000
m mcgoun 96 20 1 117 91 — —
d lumsden 113 40 1 154 154 8 8
a pearson 29 10 1 40 96 2 4
p giuffredi 47 10 1 58 — 3 —
n briant 24 —— 24 22 — —
r price 22 —— 22 22 — —
331 80 4 415 385 13 12
prior to his appointment as a director  p giuffredi received emoluments of £55000 from tikit limited
details of directors’ options to acquire ordinary shares in the company are provided in note 5 to the accounts
nick briant
chairman of the remuneration committee
21 march 2007
13534tikitgro13534tikitgro  12407  0842  page 23 135 13534 30032007 proof 7
 report of the directors
the directors present their annual
report and the audited financial
statements for the year ended
31 december 2006
results and dividends
the results of the group for the year are
set out on page 28 and show a profit
after taxation of £1503000 2005
£223000 after adding back goodwill
amortisation and share option charges
for the year  the profit after taxation
increases to £2259000 2005
£1690000 an interim dividend of
125p 2005 075p per share was paid
on 11 october 2006 and subject to
shareholders’ approval the directors
recommend the payment of a final
ordinary dividend of 275p 2005 175p
per share making a total ordinary
dividend for the year of 40p
2005 25p
during the year the company purchased
203535 ordinary shares in the market
for cancellation for a consideration of
£392000 representing approximately
16 of the issued share capital
principal activity review of business
and future developments
the group is principally engaged in the
provision and maintenance of
information technology products and
solutions a review of the business and
future developments that fulfils the
requirements of the business review is
contained in the chairman’s statement
in the paragraphs headed “results”
“business review and prospects” and
“business review — risks” on pages 6
to 11
directors and directors’ interests
the directors who held office during the
year and their beneficial interests in the
share capital of the company at the end
of the financial year were as follows
for the year ended 31 december 2006
ordinary shares preference shares
of 10p each of £1 each
2006 2005 2006 2005
m mcgoun 1040890 1025890 1000 1000
d lumsden 281158 381158 — —
a pearson na 72757 na —
p giuffredi — — — —
n briant 6500 6500 — —
r price 6500 6500 — —
details of directors’ interests in options on the ordinary share capital of the company are disclosed in note 5 to the financial
statements
substantial holdings
as far as the directors are aware as at 15 january 2007  the only holdings of 3 or more of the company’s issued share capital
were as follows
percentage percentage
number of of issued number of of issued
ordinary share preference share
shares capital shares capital
m mcgoun 1040890 82 1000 100
gartmore investment management 827 066 65 ——
blackrock investment management 810981 64
w flanagan 7 49490 59 ——
rensburg investment management 677 863 53 ——
hargreave hale  co 675000 53
m  k bailey 519023 41 ——
g simpson 47 4338 37 ——
rathbone investment management 452075 35 ——
universities superannuation scheme 434783 34 ——
trivest vct plc 434782 34 ——
13534tikitgro13534tikitgro  12407  0842  page 24 2425
tikit group plc
annual report 2006
13534 30032007 proof 7
the nominee accounts are identified in
the share register but the number and
identity of the underlying holdings have
not been notified to the company
creditors’ payment policy
it is the policy of the group to agree
terms and conditions with suppliers and
to pay in accordance with them
provided the goods or services
concerned have been supplied in
accordance with those terms and
conditions
at 31 december 2006 the company had
113 days 2005 101 days of outstanding
liabilities to creditors
research and development
the group continues to invest in
carefully targeted low cost research and
development to identify and write a
number of software enhancement
modules which improve the
functionality of certain third party
applications in a law firm environment
expenditure on research and
development is charged to the profit
and loss account in the year it is
incurred but produces intellectual
property rights which are expected to
benefit the group’s trading results in the
medium and longer term
financial instruments
the group’s financial instruments
comprise cash liquid resources trade
debtors and trade creditors the main
risks arising from these financial
instruments are interest rate risk
liquidity risk and foreign exchange risk
the policies for managing these risks
are set out in the financial review and
the exposures are contained in note 21
employees
the group has a policy of keeping all
employees fully informed about its plans
and progress through regular meetings
formal presentations and electronic
communication participation by
employees in the progress and
profitability of the group is encouraged
where appropriate through annual
bonus schemes in addition to the group
share option schemes employee
development is encouraged with formal
staff appraisals and training
programmes
the group operates recruitment and
selection procedures which consider all
applicants for employment on the basis
of qualification for specific vacancies
without regard to race colour  religion
sex age disability or national origin
political and charitable donations
the group made no political
contributions in the year 2005 £nil
donations to uk charities totalled
£2756 2005 £1246
auditors
bdo stoy hayward llp have expressed
their willingness to continue in office
and a resolution to reappoint them will
be proposed at the annual general
meeting
annual general meeting
the annual general meeting will be held
at the company’s registered office on
3 may 2007 
by order of the board
p giuffredi
company secretary
tikit group plc
21 march 2007
13534tikitgro13534tikitgro  12407  0842  page 25 135 13534 30032007 proof 7
 statement of directors’ responsibilities
the directors are responsible for
preparing the annual report and the
financial statements in accordance with
applicable law and united kingdom
generally accepted accounting practice
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 group and of the profit or
loss of the group for that period in
preparing those financial statements
the directors are required to
 select suitable accounting policies
and then apply them consistently
 make judgements and estimates
that are reasonable and prudent
 state whether applicable
accounting standards have been
followed subject to any material
departures disclosed and explained
in the financial statements and
 prepare the financial statements
on the going concern basis unless
it is inappropriate to presume that
the group will continue in business
the directors are responsible for
keeping proper accounting records
which disclose with reasonable accuracy
at any time the financial position of the
company and group and to enable them
to ensure that the financial statements
comply with the companies act 1985
they are also responsible for
safeguarding the assets of the group
and hence for taking reasonable steps
for the prevention and detection of
fraud and other irregularities
financial statements are published on
the company’s website in accordance
with legislation in the united kingdom
governing the preparation and
dissemination of financial statements
which may vary from legislation in other
jurisdictions the maintenance and
integrity of the company’s website is the
responsibility of the directors the
directors’ responsibility also extends to
the ongoing integrity of the financial
statements contained therein
13534tikitgro13534tikitgro  12407  0842  page 26 2627
tikit group plc
annual report 2006
13534 30032007 proof 7
 report of the independent auditors
independent auditors’ report to the
shareholders of tikit group plc
we have audited the group and parent
company financial statements of tikit
group plc for the year ended
31 december 2006 which comprise the
group profit and loss account the group
and company balance sheets the group
cash flow statement the group
statement of total recognised gains and
losses and the related notes these
financial statements have been
prepared under the accounting policies
set out therein
respective responsibilities of
directors and auditors
the directors’ responsibilities for
preparing the financial statements in
accordance with applicable law and
united kingdom accounting standards
united kingdom generally accepted
accounting practice are set out in the
statement of directors’ responsibilities
our responsibility is to audit the
financial statements in accordance with
relevant legal and regulatory
requirements and international
standards on auditing uk and ireland
we report to you in our opinion as to
whether the financial statements give a
true and fair view and are properly
prepared in accordance with the
companies act 1985 and whether the
information given in the director’s
report is consistent with those financial
statements we also report to you if in
our opinion the company has not kept
proper accounting records if we have
not received all the information and
explanations we require for our audit or
if information specified by law regarding
directors’ remuneration and other
transaction is not disclosed
we read other information contained in
the annual report and consider
whether it is consistent with the audited
financial statements the other
information comprises only the report
of the directors the remuneration
report the chairman’s statement the
chief executive statement the financial
review and the corporate governance
statement we consider the implications
for our report if we become aware of
any apparent misstatements or material
inconsistencies with the financial
statements our responsibilities do not
extend to any other information
our report has been prepared pursuant
to the requirements of the companies
act 1985 and for no other purpose no
person is entitled to rely on this report
unless such a person is a person entitled
to rely upon this report by virtue of and
for the purpose of the companies act
1985 or has been expressly authorised
to do so by our prior written consent
save as above we do not accept
responsibility for this report to any other
person or for any other purpose and we
hereby expressly disclaim any and all
such liability
basis of audit opinion
we conducted our audit in accordance
with international standards on auditing
uk and ireland issued by the auditing
practices board an audit includes
examination on a test basis of evidence
relevant to the amounts and disclosures
in the financial statements it also
includes an assessment of the
significant estimates and judgements
made by the directors in the preparation
of the financial statements and of
whether the accounting policies are
appropriate to the group’s
circumstances consistently applied and
adequately disclosed
we planned and performed our audit so
as to obtain all the information and
explanations which we considered
necessary in order to provide us with
sufficient evidence to give reasonable
assurance that the financial statements
are free from material misstatement
whether caused by fraud or other
irregularity or error  in forming our
opinion we also evaluated the overall
adequacy of the presentation of
information in the financial statements
opinion
in our opinion
 the group financial statements give
a true and fair view in accordance
with united kingdom generally
accepted accounting practice of
the state of the group’s affairs as at
31 december 2006 and of its profit
for the year then ended
 the parent company financial
statements give a true and fair
view in accordance with united
kingdom generally accepted
accounting practice of the state of
the parent company’s affairs as at
31 december 2006
 the financial statements have been
properly prepared in accordance
with the companies act 1985 and
 the information given in the
directors’ report is consistent with
the financial statements
bdo stoy hayward llp
chartered accountants
and registered auditors
london
21 march 2007
13534tikitgro13534tikitgro  12407  0842  page 27 135 13534 30032007 proof 7
for the year ended 31 december 2006
as restated
2006 2005
note £’000 £’000
turnover 3 23517 20162
cost of sales 17479 15459
gross profit 6038 4703
administrative expenses
goodwill amortisation 629 1341
share option charges 127 126
other administrative expenses 3207 2639
total administrative expenses 3963 4106
operating profit 4 2075 597
interest receivable 67 46
interest payable and similar charges 7 10 7
profit on ordinary activities before taxation and amortisation of
goodwill and share option charges 2888 2103
amortisation of goodwill and share option charges 756 1467
profit on ordinary activities before taxation 2132 636
taxation on profit from ordinary activities 8 629 413
profit on ordinary activities after taxation 20 22 1503 223
earnings per share 10
basic 120p 17p
diluted 113p 17p
all amounts relate to continuing activities
the notes on pages 33 to 50 form part of these financial statements
 consolidated profit and loss account
13534tikitgro13534tikitgro  12407  0842  page 28 13534 30032007 proof 7
for the year ended 31 december 2006
 consolidated statement of total recognised gains and losses
as restated
group group
2006 2005
£’000 £’000
profit for the financial year 1503 223
currency translation differences on foreign currency net investments — 4
total recognised gains and losses relating to the year 1503 219
prior year adjustment — on adoption of frs 20 “share based payments” 4
total gains and losses recognised since last financial statements 1507
the notes on pages 33 to 50 form part of these financial statements
2829
tikit group plc
annual report 2006
13534tikitgro13534tikitgro  12407  0842  page 29 at 31 december 2006
 consolidated balance sheet
as restated as restated
2006 2006 2005 2005
note £’000 £’000 £’000 £’000
fixed assets
intangible assets 12 4835 4510
tangible assets 13 478 458
5313 4968
current assets
stocks 15 22 41
debtors 16 7174 6661
cash at bank and in hand 4149 2325
11345 9027
creditors amounts falling due within one year 17 8851 7 782
net current assets 2494 1245
total assets less current liabilities 7807 6213
provisions for liabilities 18 1610 1056
6197 5157
capital and reserves
called up share capital 1920 1276 1277
treasury share reserve 20 234 —
shares to be issued 20 44 33
share premium account 20 1481 1308
merger reserve 20 1264 1075
ebt share reserve 20 10 162
capital redemption reserve 20 124 104
profit and loss account 20 2252 1522
shareholders’ funds 2022 6197 5157
the financial statements were approved by the board of directors and authorised for issue on
p giuffredi
director
the notes on pages 33 to 50 form part of these financial statements
135 13534 30032007 proof 7
13534tikitgro13534tikitgro  12407  0842  page 30 at 31 december 2005
 company balance sheet
as restated as restated
2006 2006 2005 2005
note £’000 £’000 £’000 £’000
fixed assets
investments 14 7206 5983
current assets
debtors 16 12 10
cash at bank 98 65
110 75
creditors amounts falling due within one year 17 1270 2027
net current liabilities 1160 1952
total assets less current liabilities 6046 4031
provisions for liabilities 18 1445 559
4601 3472
capital and reserves
called up share capital 1920 1276 1277
treasury share reserve 20 234 —
shares to be issued 20 44 33
share premium account 20 1481 1308
ebt share reserve 20 10 162
capital redemption reserve 20 124 104
profit and loss account 20 1920 912
shareholders’ funds 2022 4601 3472
the financial statements were approved by the board of directors and authorised for issue on
p giuffredi
director
the notes on pages 33 to 50 form part of these financial statements
3031
tikit group plc
annual report 2006
13534 30032007 proof 7
13534tikitgro13534tikitgro  12407  0842  page 31 for the year ended 31 december 2006
 consolidated cash flow statement
2006 2006 2005 2005
note £’000 £’000 £’000 £’000
net cash inflow from operating activities 25 3579 2102
returns on investments and servicing of finance
interest received 67 46
interest paid 10 7
net cash inflow from returns on investments
and servicing of finance 57 39
corporation tax paid 582 527
capital expenditure and financial investment
purchase of tangible fixed assets 240 354
sale of tangible fixed assets — 1
net cash outflow from capital expenditure and financial investment 240 353
acquisitions and disposals
purchase of subsidiary undertakings 200 1870
cash acquired with subsidiaries — 438
net cash outflow from acquisitions and disposals 200 1432
equity dividends paid 376 270
cash inflowoutflow before financing 2238 441
financing
exercise of share options 212 3
purchase of own shares 626 —
purchase of own shares by employee benefit trust — 20
cash outflow from financing 414 17
increasedecrease in cash in the year 27 1824 458
the notes on pages 33 to 50 form part of these financial statements
135 13534 30032007 proof 7
13534tikitgro13534tikitgro  12407  0842  page 32 for the year ended 31 december 2006
 notes forming part of the financial statements
1 accounting policies
basis of preparation
the financial statements have been prepared in accordance with applicable accounting standards and under the historical
cost convention the group has adopted frs 20 “share based payments” and uitf 44 “group and treasury share
transactions” in preparing the current year’s accounts see note 2
the principal accounting policies are
basis of consolidation
the consolidated financial statements incorporate the results of tikit group plc and its subsidiary undertakings together
referred to as the ‘group’ for the year ended 31 december 2006
acquisition accounting
where the acquisition method is used the results of the subsidiary are included from the date of acquisition the purchase
consideration is allocated to assets and liabilities on the basis of fair value at the date of acquisition in the company financial
statements of tikit group plc advantage has been taken of the merger relief rules shares issued as consideration for
acquisitions are accounted for at nominal value
merger accounting
where merger accounting is used the investment is recorded in the company’s balance sheet at the nominal value of shares
issued together with the fair value of any additional consideration paid
in the group financial statements merged subsidiary undertakings are treated as if they had always been a member of the
group the results of such a subsidiary are included for the whole period in the year it joins the group the corresponding
figures for the previous year include its results for that period the assets and liabilities at the previous balance sheet date and
the shares issued by the company as consideration as if they had always been in issue any difference between the nominal
value of the shares acquired by the company and those issued by the company to acquire them is taken to reserves
share options
when shares and share options are granted to employees a charge is made to the profit and loss account and a reserve
created in capital and reserves to record the fair value of the awards at the date of grant in accordance with frs 20 “share
based payments” this charge is spread over the vesting period
when shares and share options are granted to employees of subsidiary companies the fair value of the awards is treated as a
capital contribution and spread over the period of performance relating to the grant the corresponding entry is made in
reserves
goodwill
goodwill arising on an acquisition of a subsidiary undertaking is the difference between the fair value of the consideration
paid and the fair value of the assets and liabilities acquired in calculating goodwill the total consideration both actual and
deferred is taken into account where the deferred consideration is contingent and dependent upon future trading
performance an estimate of the value of likely consideration payable is made the contingent deferred consideration is
reassessed annually and a corresponding adjustment is made to the goodwill arising on acquisition
goodwill is capitalised and amortised through the profit and loss account over the directors’ estimate of its
useful economic life of 10 years impairment tests on the carrying value of goodwill are undertaken
 at the end of the first full financial year following acquisition
 in other periods if events or changes in circumstances indicate that the
carrying value may not be recoverable
3233
tikit group plc
annual report 2006
13534 30032007 proof 7
13534tikitgro13534tikitgro  12407  0842  page 33 for the year ended 31 december 2006
 notes forming part of the financial statements
1 accounting policies continued
during the period the directors reviewed the useful economic life of goodwill as a result it was revised and goodwill is now
amortised through the profit and loss account over 10 years 2005 5 years this has resulted in the amortisation charge for
the year to 31 december 2006 being reduced by £1021000 to £629000 2005 £1341000 there has been no restatement
of the comparatives
turnover and income recognition
turnover represents the amounts receivable net of value added tax on the provision of the group’s software maintenance
consultancy and other services such as training when a sale of the group’s software is made to a customer the price
normally includes the provision of third party maintenance and support provided by the group the support element is
deferred and recognised over the period that the support is provided the licence element of the sale and third party
maintenance is recognised as income when the following conditions have been satisfied
1 the software has been provided to the customer in a form that enables the customer to utilise it
2 there is a contractual relationship between the customer and the group
3 the ongoing obligations of the group to the customer  aside from the support are minimal
4 the amount payable by the customer is determinable and there is a reasonable expectation of payment
sales of hardware and consultancy are recognised at the point of delivery to the customer 
depreciation
depreciation is provided to write off the cost less estimated residual values of all tangible fixed assets evenly over their
expected useful lives it is calculated at the following rates
leasehold improvements — over length of lease
computer equipment — 33 per annum
office equipment — 25 per annum
investments
investments held as fixed assets are stated at cost less any provision for impairment in value
impairment of fixed assets and goodwill
the need for any fixed asset impairment writedown is assessed by comparison of the carrying value of the asset against the
higher of its net realisable value and value in use
stocks
stocks are valued at the lower of cost and net realisable value cost of raw materials consumables and goods purchased for
resale means actual purchase price including transport and handling and is determined using the fifo method net
realisable value means estimated net selling price less further costs to completion
leased assets
payments made in respect of operating leases are charged to the profit and loss account on a straightline basis over the
lease term the group has no finance leases or hire purchase contracts
research and development
expenditure on product development is charged to the profit and loss account in the year in which it is incurred
deferred taxation
deferred tax balances are recognised in respect of all timing differences that have originated but not reversed by the balance
sheet date except that the recognition of deferred tax assets is limited to the extent that the company anticipates to make
sufficient profit in the future to absorb the reversal of the underlying timing differences deferred tax balances are not
discounted
135 13534 30032007 proof 7
13534tikitgro13534tikitgro  12407  0842  page 34 1 accounting policies continued
pension costs
contributions to the group personal pension scheme are charged to the profit and loss account in the period in which they
become payable the group does not operate any defined benefit pension plans
foreign currency
foreign currency transactions of individual companies are translated at the rates ruling when they occurred foreign currency
monetary assets and liabilities are translated at the rate of exchange ruling at the balance sheet date any differences are
taken to the profit and loss account
the results of overseas operations and the balance sheets are translated into sterling at the closing rate of exchange ruling
on the balance sheet date exchange differences which arise from translation of the opening net assets of foreign subsidiary
undertakings are taken to reserves
financial instruments
in relation to the disclosures made in note 21
 shortterm debtors and creditors are not treated as financial assets and liabilities and
 the group does not hold or issue derivative financial instruments for trading purposes
employee benefit trust
the balance sheets include the assets and liabilities of the employee benefit trust amounts paid and received by the trust for
transactions in the company’s own shares are reported directly in shareholders’ funds shares held by the ebt are treated as
cancelled for the purposes of calculating earnings per share
treasury shares
consideration paid or received for the purchase or sale of the company’s own shares for holding in treasury is taken directly
to shareholders’ funds the difference between the consideration received on the sale of the treasury shares and the
weighted average cost of shares sold is taken to the share premium account
all shares held in treasury are treated as cancelled for the purposes of calculating earnings per share
2 changes to accounting policies
in preparing these financial statements the group has adopted for the first time frs 20 ‘sharebased payments’ which
requires the recognition of sharebased payments at fair value at the date of grant prior to the adoption of frs 20 the
group recognised the financial effect of the sharebased payment in the following way when shares and share options were
awarded to employees a charge was made to the profit and loss account based on the difference between the market value
of the company’s shares at the date of grant and the option exercise price in accordance with uitf abstract 17 revised 2003
‘employee share schemes’ the credit entry for this charge was taken to the profit and loss reserve and reported in the
reconciliation of movements in shareholders’ funds
in accordance with transitional provisions of frs 20 the standard was applied retrospectively to all grants of equity
instruments after 7 november 2002 that were unvested as of 1 january 2006
the change in accounting policy has resulted in a net increase in profit for the year ended 31 december 2005
of £4000 sharebased payments expense net of deferred tax impact of £nil and net of reversal
of the 2005 charge under uitf 17
in the company financial statements the fair value of the awards is treated as a
capital contribution the change in accounting policy has resulted in an increase
of £207 000 in the cost of investment in group undertakings and reserves
3435
tikit group plc
annual report 2006
13534 30032007 proof 7
13534tikitgro13534tikitgro  12407  0842  page 35 135 13534 30032007 proof 7
3 turnover
2006 2005
£’000 £’000
turnover by destination
united kingdom 18463 16658
continental europe 4113 2914
rest of the world 941 590
23517 20162
turnover  net profit and net assets are attributable to the principal activity of the group and derive from operations located
in the uk france and spain as follows
turnover pretax profit net assets
as restated as restated
2006 2005 2006 2005 2006 2005
£’000 £’000 £’000 £’000 £’000 £’000
uk 20694 18419 1860 595 5893 5036
france 2001 1189 254 21 266 99
spain 822 554 18 20 38 22
23517 20162 2132 636 6197 5157
4 operating profit
restated
2006 2005
£’000 £’000
this is arrived at after chargingcrediting
research and development 254 275
depreciation 220 145
amortisation of goodwill 629 1341
share option charges 127 126
operating leases — rent of buildings 202 205
— motor leases 45 45
profit on sale of investment — 5
loss on disposal of fixed assets — 1
auditors’ remuneration — audit services company £28000 2005 £10000 59 56
— nonaudit services taxation 13 8
auditors’ remuneration for nonaudit services included within the cost of investment of group companies acquired in the year
is £nil 2005 £18000
for the year ended 31 december 2006
 notes forming part of the financial statements
13534tikitgro13534tikitgro  12407  0842  page 36 13534 30032007 proof 7
5 directors
2006 2005
£’000 £’000
the remuneration of directors is set out below
directors’ emoluments 415 385
pension costs — amounts paid to defined contribution scheme 13 12
gains on exercise of share options 198 —
626 397
emoluments of the highest paid director
emoluments 154 154
pension costs — amounts paid to defined contribution scheme 8 8
gains on exercise of share options 198 —
360 162
three directors 2005 two were accruing benefits under defined contribution schemes
directors’ emoluments are detailed by director  in the remuneration report
the share options of the directors under the tikit group emi and unapproved share option scheme are set out below
31 december 31 december
2006 2005 exercise earliest date
number number price of exercise
p giuffredi 100000 100000 187 5p 1 august 2008
the above unexercised options were granted on 1 august 2005 and following achievement of a minimum basic earnings per
share in the subsequent three year period they are exercisable from 1 august 2008 the options expire on 1 august 2015
no options lapsed during the year  the market price of the shares at 31 december 2006 was 2565p and the range during
the financial year was 166p to 262p
£29769 2005 £35377 of the group’s share option charges were in respect of options granted to directors
3637
tikit group plc
annual report 2006
13534tikitgro13534tikitgro  12407  0842  page 37 135 13534 30032007 proof 7
for the year ended 31 december 2006
 notes forming part of the financial statements
6 employees
the average number of employees of the group during the year  including executive directors was as follows
group group company company
2006 2005 2006 2005
number number number number
services 146 120 5 5
sales 20 18 — —
administration 24 23 — —
190 161 5 5
staff costs for all employees including executive directors consist of
group group company company
2006 2005 2006 2005
£’000 £’000 £’000 £’000
wages and salaries 7625 6686 379 385
social security costs 1085 922 46 43
pension costs 205 197 13 12
8915 7 805 438 440
7 interest payable and similar charges
2006 2005
£’000 £’000
bank charges 10 7
8 taxation on profit from ordinary activities
a analysis of charge in year
2006 2006 2005 2005
£’000 £’000 £’000 £’000
current tax
uk corporation tax on profits for the year 603 451
adjustments in respect of previous periods 1 —
total current tax note 8b 602 451
deferred tax
origination and reversal of timing differences — 23
adjustment in respect of previous periods 37 —
utilisation of tax losses 60 —
short term timing differences on share option charges 4 61
total deferred tax note 16 27 38
tax on profit on ordinary activities 629 413
13534tikitgro13534tikitgro  12407  0842  page 38 3839
tikit group plc
annual report 2006
13534 30032007 proof 7
8 taxation on profit from ordinary activities continued
b factors affecting tax charge for the year
the tax assessed for the year differs from that obtained by applying the standard rate of corporation tax in the uk 30
the differences are explained below
as restated
2006 2005
£’000 £’000
profit on ordinary activities before tax 2132 636
profit on ordinary activities multiplied by standard rate of uk corporation tax of 30 2005 30 639 191
effects of
expenses not deductible for tax purposes primarily goodwill amortisation 244 454
exercised share options 190 2
difference between capital allowances for period and depreciation 5 27
utilisation of tax losses 95 149
tax differences 10 —
marginal relief — 4
claim for research and development tax credit — 12
adjustments in respect of previous periods 1 —
current tax charge for year note 8a 602 451
c factors affecting future tax charges
the group has approximately £nil 2005 £375000 of tax losses available for relief against future profits
9 dividends
2006 2005
£’000 £’000
interim paid of 125p 2005 075p per share 157 98
final paid of 175p 2005 14p per share relating to the previous year’s results 219 172
376 270
the directors are recommending a proposed final dividend of £351000 275p per share for the year 
13534tikitgro13534tikitgro  12407  0842  page 39 135 13534 30032007 proof 7
for the year ended 31 december 2006
 notes forming part of the financial statements
10 earnings per share
the calculation of earnings per ordinary share is based on profit after tax and the weighted average number of ordinary
shares in issue during the year 
the weighted average number of ordinary shares used in the calculation of earnings per share is as follows
2006 2005
no’000 no’000
weighted average ordinary shares in issue during the year 12537 12528
potentially dilutive share options under the group’s share option schemes 405 410
deferred consideration to be satisfied in shares 340 277
weighted average ordinary shares for diluted earnings per share 13282 13215
an adjusted earnings per share has also been calculated in addition to the basic earnings per share and is based on
earnings adjusted to eliminate the effects of goodwill amortisation and share option charges it has been calculated to allow
shareholders to gain a clearer understanding of the trading performance of the group
as restated as restated as restated
2006 2006 2006 2005 2005 2005
basic pence diluted pence basic pence diluted pence
£’000 per share per share £’000 per share per share
basic earnings
profit after tax 1503 120 113 223 17 17
adjustments
goodwill amortisation 629 50 47 1341 108 101
share option charges 127 10 10 126 10 10
deferred tax on share option charges 4 00 00 61 05 05
adjusted earnings 2263 180 170 1629 130 123
11 profit for the financial year
the company has taken advantage of the exemption allowed under section 230 of the companies act 1985 and has not
presented its own profit and loss account in these financial statements the group profit for the year includes a profit after
tax and before dividends of £1782000 note 22 2005 profit of £313000 which is dealt with in the financial statements of
the parent company
12 intangible fixed assets
goodwill
group £’000
cost
at 1 january 2006 7 301
adjustment to deferred contingent consideration note 18 954
at 31 december 2006 8255
amortisation
at 1 january 2006 2791
charge for the period 629
at 31 december 2006 3420
net book value
at 31 december 2006 4835
at 31 december 2005 4510
13534tikitgro13534tikitgro  12407  0842  page 40 12 intangible fixed assets continued
the adjustment to deferred contingent consideration relates to the increase in cash due to the vendors of lecsoft sas and
the increase in cash and shares due to the vendors of shamrock marketing limited under the earnout arrangements the
company exercised its right to increase the proportion of cash and decrease the proportion of shares due to the vendors of
lecsoft sas under the earnout arrangements
the company has no intangible fixed assets
13 tangible fixed assets
leasehold computer office
improvements equipment equipment total
group £’000 £’000 £’000 £’000
cost
at 1 january 2006 121 1159 488 1768
additions 15 215 10 240
at 31 december 2006 136 137 4 498 2008
depreciation
at 1 january 2006 42 881 387 1310
provision for year 21 168 31 220
at 31 december 2006 63 1049 418 1530
net book value
at 31 december 2006 73 325 80 478
at 31 december 2005 79 278 101 458
the company has no tangible fixed assets
4041
tikit group plc
annual report 2006
13534 30032007 proof 7
13534tikitgro13534tikitgro  12407  0842  page 41 14 fixed asset investments
investment
in group
undertakings total
loans shares
company £’000 £’000 £’000
at 1 january 2006 as previously stated 698 5078 5776
prior year adjustment in respect of share options granted to subsidiary employees — 207 207
at 1 january 2006 as restated 698 5285 5983
adjustment to deferred contingent consideration note 18 — 1097 1097
share options granted to subsidiary employees — 126 126
at 31 december 2006 698 6508 7206
subsidiary undertakings
the following were subsidiary undertakings at the end of the year and have all been included in the consolidated financial
statements
proportion of
voting rights
country of and ordinary
name incorporation share capital held nature of business
tikit limited uk 100 it services and
software
aurra consulting limited uk 100 nontrading
granite  comfrey limited uk 100 nontrading
tikit nis limited uk 100 nontrading
lecsoft sas france 100 it services and
software
tikit solutions sl spain 100 it services and
software
shamrock marketing limited uk 100 marketing data
services
all subsidiaries are directly held by the company
15 stocks
group group
2006 2005
£’000 £’000
consumables 22 28
finished goods and goods held for resale — 13
22 41
there is no material difference between the replacement cost of stocks and the amounts stated above
135 13534 30032007 proof 7
for the year ended 31 december 2006
 notes forming part of the financial statements
13534tikitgro13534tikitgro  12407  0842  page 42 16 debtors
as restated
group group company company
2006 2005 2006 2005
£’000 £’000 £’000 £’000
trade debtors 6583 6058 — —
prepayments and accrued income 496 481 12 10
deferred taxation 95 122 — —
7174 6661 12 10
all amounts fall due for payment within one year  with the exception of deferred taxation
provision for deferred taxation
as restated
group group company company
2006 2005 2006 2005
£’000 £’000 £’000 £’000
depreciation in excess of capital allowances 38 1 — —
tax losses — 60 — —
shortterm timing differences on share option charges 57 61 — —
95 122 — —
amounts in brackets denote a deferred tax asset a deferred tax asset amounting to £nil 2005 £53000 arising from
trading losses acquired in the prior year is not recognised in the accounts
group company
£’000 £’000
balance at 1 january 2006 as previously stated 122 61
prior year adjustment on adoption of frs 20 — 61
balance at 1 january 2006 as restated 122 —
credited to profit and loss account note 8 27 —
balance at 31 december 2006 95 —
4243
tikit group plc
annual report 2006
13534 30032007 proof 7
13534tikitgro13534tikitgro  12407  0842  page 43 135 13534 30032007 proof 7
17 creditors amounts falling due within one year
group group company company
2006 2005 2006 2005
£’000 £’000 £’000 £’000
trade creditors 3620 3418 74 42
amounts due to group undertakings — — 825 1802
tax and social security 1504 1218 61 11
corporation tax 352 331 — 8
accruals and deferred income 3375 2815 310 164
8851 7 782 1270 2027
18 provisions for liabilities
provision for deferred contingent consideration
amount to be satisfied in
cash shares total
group £’000 £’000 £’000
at 1 january 2006 528 528 1056
adjustment to deferred contingent consideration note 12 1110 156 954
amounts paid 200 — 200
amounts transferred to shares to be issued — 200 200
at 31 december 2006 1438 172 1610
amount to be satisfied in
cash shares total
company £’000 £’000 £’000
at 1 january 2006 528 31 559
adjustment to deferred contingent consideration 1110 13 1097
amounts paid 200 — 200
amounts transferred to shares to be issued — 11 11
at 31 december 2006 1438 7 1445
the adjustments to deferred contingent consideration are in respect of the acquisition of lecsoft sas and shamrock
marketing limited
in respect of shamrock marketing limited the amounts payable are contingent on it achieving certain performance criteria
in the period to 31 august 2007 up to a maximum of £800000
in respect of lecsoft sas the amounts payable are contingent on it achieving certain performance criteria in the period to
31 december 2006 up to a maximum of £1266000
the amounts are to be settled by cash and shares in the relative proportions agreed with the vendors provisions for
liabilities include the directors’ current estimate of the amounts which will become payable
for the year ended 31 december 2006
 notes forming part of the financial statements
13534tikitgro13534tikitgro  12407  0842  page 44 13534 30032007 proof 7
19 share capital
2006 2006 2005 2005
number £’000 number £’000
authorised
ordinary shares of 10p each 19490000 1949 19490000 1949
preference shares of £1 each 51000 51 51000 51
allotted called up and fully paid
ordinary shares of 10p each 12763318 1276 12769434 1277
preference shares of £1 each included in creditors from 2006 1000 1 1000 1
issue of ordinary shares
197 413 ordinary shares of 10p each were issued during the year to satisfy the exercise of employee share options at prices
ranging from 15p to 115p
cancellation of ordinary shares
during the year the company purchased 203535 ordinary shares in the market for cancellation for a consideration of
£392000 representing approximately 16 of the issued share capital
purchase of ordinary shares into treasury see note 20
during the year the company purchased 100000 ordinary shares in the market for treasury for a consideration of
£234000
preference shares see note 17
there are £1000 preference shares in issue these have been included in creditors from 2005 in accordance with frs 25
the holders of the preference shares have the right to receive a fixed cumulative dividend of 5 per annum calculated on
the amount paid up
the company will redeem any unredeemed preference shares on 31 december 2010
the shares are redeemable at par and carry no voting rights they rank in priority to the ordinary shares for repayment in
the event of the company being wound up
4445
tikit group plc
annual report 2006
13534tikitgro13534tikitgro  12407  0842  page 45 19 share capital continued
share options
at 31 december 2006 the following share options were outstanding in respect of the ordinary shares
date from which
number options are first price per
date of grant of shares exercisable lapse date share
inland revenue approved
company share option plan
31 march 2002 3057 31 march 2005 31 march 2011 1145p
30 june 2003 617 42 30 june 2006 30 june 2013 810p
28 april 2006 16984 28 april 2009 28 april 2016 1695p
14 june 2006 1220 14 june 2009 14 june 2016 2015p
3 july 2006 8035 3 july 2009 3 july 2016 1940p
enterprise management
incentive scheme
29 october 2004 20000 29 august 2006 29 october 2014 1335p
10 february 2005 32349 10 february 2008 10 february 2015 100p
11 february 2005 133778 11 february 2008 11 february 2015 1345p
23 may 2005 41350 23 may 2008 23 may 2015 1500p
1 july 2005 46721 1 july 2008 1 july 2015 700p
1 august 2005 53333 1 august 2008 1 august 2015 187 5p
31 january 2006 20000 30 june 2008 31 january 2016 1660p
14 june 2006 20000 14 june 2009 14 june 2016 1695p
unapproved options
11 february 2005 133542 11 february 2008 11 february 2015 1345p
1 august 2005 46667 1 august 2008 1 august 2015 187 5p
frs 20 disclosures
the number of options outstanding at the beginning of the year was 1116300 2005 614197 which had a weighted
average exercise price of 1006p 2004 717p during the year  397 419 2005 3432 options were exercised 146346
2005 124991 were forfeited and 66239 2005 630526 were issued
the weighted average exercise price of options exercised in the year was 534p 2005 783p the weighted average share
price at the date of exercise was 1846p 2005 1830p
the weighted average exercise price of options forfeited in the year was 1313p 2005 1192p the weighted average price of
options granted in the year was 1887p 2005 1323p
for share options granted during the period the weighted average fair value of the options was 523p 2005 587p and the
weighted average share price at grant date was 1763p 2005 1660p
the following information is relevant in the determination of the fair value of the options granted during the current and
prior year
option pricing model binominal
expected volatility 28
expected dividend growth rate 15
riskfree interest rate 46
the volatility assumption is based upon a statistical analysis of daily share prices over the past three years
the group did not enter into any sharebased payment transactions with parties other than employees during the current
or previous period
135 13534 30032007 proof 7
for the year ended 31 december 2006
 notes forming part of the financial statements
13534tikitgro13534tikitgro  12407  0842  page 46 20 reconciliation of movement in share capital and reserves
capital
ordinary treasury shares share redemp profit ebt
share share to be premium merger tion and loss share
capital reserve issued account reserve reserve account reserve t otal
group £’000 £’000 £’000 £’000 £’000 £’000 £’000 £’000 £’000
at 1 january 2006 1277 — 33 1308 1075 104 1522 162 5157
shares cancelled after buy backs 20 —— —— 20 392 — 392
shares purchased into treasury — 234 —— —— —— 234
exercise of share options note 19 19 —— 173 —— 132 152 212
profit after taxation for the year—— —— —— 1503 — 1503
dividends paid —— —— —— 376 — 376
deferred consideration —— 11 — 189 —— — 200
credit in respect of
share option charges —— —— —— 127 — 127
at 31 december 2006 1276 234 44 1481 1264 124 2252 10 6197
capital
ordinary treasury shares share redemp profit ebt
share share to be premium merger tion and loss share
capital reserve issued account reserve reserve account reserve total
company £’000 £’000 £’000 £’000 £’000 £’000 £’000 £’000 £’000
at 1 january 2006 1277 — 33 1308 — 104 766 162 3326
prior year adjustment in respect of
share options granted to subsidiary
employees —— —— —— 207 — 207
deferred tax on share options —— —— —— 61 — 61
at 1 january 2006 restated 1277 — 33 1308 — 104 912 162 3472
shares cancelled after buy backs 20 —— —— 20 392 — 392
shares purchased into treasury — 234 —— —— —— 234
exercise of share options note 19 19 —— 173 —— 132 152 212
deferred consideration —— 11 —— —— — 11
profit after taxation for the year—— —— —— 1782 — 1782
dividends paid —— —— —— 376 — 376
share options granted to
subsidiary employees —— —— —— 126 — 126
at 31 december 2006 1276 234 44 1481 — 124 1920 10 4601
the ‘shares to be issued’ reserve relates to shares expected to be issued in order to satisfy deferred
consideration on the acquisition of lecsoft sas and shamrock marketing limited
the deferred contingent consideration increase in the year of £11000 relates to the change
in the number of ordinary shares to be issued to the previous shareholders of shamrock
marketing limited
4647
tikit group plc
annual report 2006
13534 30032007 proof 7
13534tikitgro13534tikitgro  12407  0842  page 47 135 13534 30032007 proof 7
20 reconciliation of movement in share capital and reserves continued
ebt share reserve
the employee benefit trust ebt was established on 26 september 2002 in order to provide for the future obligations of
the company for shares awarded under its share option schemes under the scheme the trustees purchase the company’s
ordinary shares using funds supplied under a loan agreement with the company
shares held in trust
cost
number £’000
cost
at 1 january 2006 213456 162
disposals 200000 152
at 31 december 2006 13456 10
market value at 31 december 2006 35
market value at 31 december 2005 375
at 31 december 2006 £148500 2005 £148000 had been loaned by the company to the ebt to finance the purchase of
ordinary shares the balance of cash held by the trust £80000 2005 £65000 is included in the balance sheet as cash
at bank and in hand none of the above shares have vested unconditionally to employees
21 financial instruments
the only significant financial asset the group has is cash at bank cash is held either on current or on short term deposits at
floating rates of interest determined by the relevant bank’s prevailing base rate part of the cash at bank is held in euro and
us dollar accounts
the table below shows the group’s currency exposures that give rise to the net currency gains and losses recognised in the
profit and loss account such exposures comprise the monetary assets and monetary liabilities of the group that are not
denominated in the operating ‘functional’ currency of the operating unit involved as at 31 december 2006 these
exposures were as follows
net foreign currency monetary assetsliabilities
2006 2005
£’000 £’000
us dollar 829 851
euro 417 505
australian dollars 25 37
all amounts have sterling as the functional currency there are no currency exposures in any other functional currency the
group’s french and spanish subsidiaries’ functional currency is euros and they have no significant exposure to other
currencies
the group’s financial liabilities consist of preference shares the preference shares pay a fixed coupon of 5 per annum on
amounts paid up
the fair value of the group’s currency forwards as at 31 december 2006 was £10000 2005 £nil and the book value £nil
2005 £nil market rates have been used to determine current values the market value of the group’s other financial
assets and liabilities does not differ materially from the carrying value
the group does not hold any derivative financial instruments
the group’s policy as regards liquidity is to ensure sufficient cash resources are maintained to meet shortterm liabilities
the group’s treasury policy is discussed in the financial review on pages 16 and 17 
for the year ended 31 december 2006
 notes forming part of the financial statements
13534tikitgro13534tikitgro  12407  0842  page 48 4849
tikit group plc
annual report 2006
13534 30032007 proof 7
22 reconciliation of movements in shareholders’ funds
as restated
group group company company
2006 2005 2006 2005
£’000 £’000 £’000 £’000
profit for the year 1503 223 1782 313
dividends 376 270 376 270
shares cancelled on buy back 392 — 392 —
shares purchased into treasury 234 — 234 —
reclassification on adoption of frs 25 — 355 — 23
shares issued on acquisition — 400 — 27
exercise of share options note 19 212 2 212 2
deferred consideration on acquisition — 180 — 8
adjustment to contingent consideration note 20 200 2 11 —
translation difference on foreign investments — 4 — —
purchase of own shares by ebt — 20 — 20
share options granted to subsidiary employees — — 126 125
credit in respect of share option charges 127 126 ——
net addition to shareholders’ funds 1040 284 1129 162
opening shareholders’ funds as restated 5157 4873 3472 3310
closing shareholders’ funds 6197 5157 4601 3472
opening shareholders’ funds as previously stated — — 3326 3228
prior year adjustment in respect of share
options granted to subsidiary companies — — 207 82
prior year adjustment in respect of
deferred tax in respect of share options — — 61 —
opening shareholders’ funds as restated 6197 5157 3472 3310
23 related party transactions
all transactions were conducted on an arm’s length basis on normal trading terms
mr d sturdy is a director of granite  comfrey limited and owns premises in yorkshire which are leased to a group
company during the year £6700 2005 £6700 was charged in respect of the lease at 31 december 2006 £3167 2005
£3167 was outstanding
since his resignation the company paid mr a pearson £6000 in respect of consultancy fees
the group finances employees’ including directors’ train travel costs by way of shortterm interest free loans
the balances outstanding tofrom directors at 31 december were
13534tikitgro13534tikitgro  12407  0842  page 49 23 related party transactions continued
2006 2005
£’000 £’000
owed tofrom the company
m mcgoun — 9
d lumsden 2 4
a pearson — 3
p giuffredi — —
£’000
the maximum amounts outstanding during the year were
d lumsden 4
a pearson 3
24 commitments under operating leases
annual commitments under operating leases for land and buildings amount to £201801 2005 £204995 and motor leases
£35894 2005 £45388 these commitments expire between two and five years
25 reconciliation of operating profit to net cash inflow from operating activities
2006 2005
£’000 £’000
operating profit 2075 597
amortisation of goodwill 629 1341
share option charges 127 126
impairment of investment — —
depreciation charge 220 145
loss on disposal of fixed assets — 1
decease in stocks 19 73
increase in debtors 540 2179
increase in creditors 1049 1998
net cash inflow from operating activities 3579 2102
26 reconciliation of net cash flow to movement in net funds
2006 2005
£’000 £’000
increase in cash in the year 1824 458
1824 458
net funds at 1 january 2325 2783
net funds at 31 december 4149 2325
27 analysis of changes in net funds
at at
start cash end
of year flow of year
£’000 £’000 £’000
cash in hand and at bank 2325 1824 4149
net funds 2325 1824 4149
135 13534 30032007 proof 7
for the year ended 31 december 2006
 notes forming part of the financial statements
13534tikitgro13534tikitgro  12407  0842  page 50 notice is hereby given that the annual general meeting of the tikit group plc will be held at africa house 64–78 kingsway london
wc2b 6ah on 3 may 2007 at 300 pm for the following purposes
1 to receive the audited financial statements for the year ended 31 december 2006 and the directors’ and auditors’ reports
thereon
2 to declare a final ordinary dividend of 275p per share for the year ended 31 december 2006
3 to reelect mr david lumsden a director retiring by rotation
4 to reappoint mr paul giuffredi a director who has been appointed since the last agm pursuant to article 88 and is retiring at
this agm according to that article
5 to reappoint bdo stoy hayward llp as auditors and authorise the directors to determine the remuneration of the auditors
special business
to consider and if thought fit pass the following resolutions which will be proposed as ordinary or special resolutions as
indicated below
6 as an ordinary resolution
that the directors be and they are hereby generally and unconditionally authorised in accordance with section 80 of the
companies act 1985 “the act” to exercise all the powers of the company to allot relevant securities as defined in section
802 of the act of the company to such persons at such times and on and subject to such terms and conditions as the
directors may determine the maximum aggregate nominal amount of relevant securities which may be allotted pursuant to
this authority shall be £421190 this authority shall expire on the earlier of 3 august 2008 and the conclusion of the annual
general meeting of the company to be held in 2008 save that the company may before such expiry make any offer or
agreement which would or might require relevant securities to be allotted after such expiry and the directors may allot
relevant securities in pursuant of such an offer or agreement as if the authority conferred hereby had not expired
7 as a special resolution subject to the passing of the previous resolution
that the directors be and they are hereby empowered pursuant to section 951 of the companies act 1985 “the act” to allot
equity securities within the meaning of section 94 of the act pursuant to the general authority conferred by resolution 6 as if
section 891 of the act did not apply to any such allotment provided that this power shall be limited
a to the allotment of equity securities in connection with a rights issue or other issue in favour of holders of ordinary shares
where the equity securities respectively attributable to the interests of all holders of ordinary shares are proportionate as
nearly as practicable to the respective numbers of ordinary shares held or deemed to be held by them subject only to
such exclusions or other arrangements as the directors may deem necessary or expedient to deal with fractional
entitlements legal or practical problems arising in any overseas territory or by virtue of shares being represented by
depositary receipts the requirements of any regulatory body or stock exchange or any other matter and
b to the allotment otherwise than pursuant to subparagraph a above of equity securities for cash up to an aggregate
nominal value of £63817 60
and this power shall unless renewed varied or revoked expire on the earlier of 3 august 2008 or the conclusion of the
annual general meeting of the company to be held in 2008 save that the company may before such expiry make any
offer or agreement which would or might require equity securities to be allotted after such expiry and the directors
may allot equity securities in pursuance of such an offer or agreement as if the power hereby conferred had
not expired
8 as a special resolution
that in accordance with chapter vii of part v of the companies act 1985 “the act” the company
be generally and unconditionally authorised to make market purchases as defined in section
1633 of the act of its own ordinary shares on such terms and in such manner as the
directors may from time to time determine provided that
5051
tikit group plc
annual report 2006
13534 30032007 proof 7
 notice of annual general meeting
13534tikitgro13534tikitgro  12407  0842  page 51 13534 30032007 proof 7
a the maximum aggregate number of ordinary shares hereby authorised to be purchased is 1276332
b the minimum price which may be paid for an ordinary share is 10p excluding expenses
c the maximum price which may be paid for an ordinary share is an amount equal to 105 per cent of the average of the
middle market quotations for an ordinary share as derived from the london stock exchange daily official list for the five
business days immediately preceding the day on which the share is contracted to be purchased excluding expenses and
d the authority hereby conferred shall expire on the earlier of 3 august 2008 or the conclusion of the annual general
meeting of the company to be held in 2008 but a contract of purchase may be made before such expiry which will or may
be executed wholly or partly thereafter and a purchase of shares may be made in pursuant of any such contract
9 as an ordinary resolution
that
a the tikit group plc share option scheme 2007 “2007 option scheme” the main features of which are summarised in the
appendix to the circular to shareholders dated 21 march 2007 and being in substantially the same form as in the draft rules
submitted to the meeting and signed by the chairman thereof for the purpose of identification be and is hereby approved
and adopted
b the directors be and are hereby authorised to vote and be counted in the quorum at any board meeting on any matter
connected with the 2007 option scheme notwithstanding that they may be interested in that matter and the provisions of
the articles of association of the company be relaxed accordingly to that extent except that no director may be counted in
a quorum or vote in respect of his own participation in the option scheme and
c the directors be and are hereby authorised to do all acts and things that they consider necessary or desirable to give effect
to the operation of the 2007 option scheme
by order of the board registered office
africa house
64–78 kingsway
london
wc2b 6ah
p giuffredi
company secretary
21 march 2007
important notes for shareholders
1 a form of proxy is enclosed a member entitled to attend and vote at the meeting convened by the notice set out above is
entitled to appoint one or more persons of your choice to act as your proxy a proxy may attend the meeting and on a poll
vote in respect of the shares you hold a proxy need not be a shareholder of the company you may use the enclosed form of
proxy to nominate your proxy to be valid forms of proxy must reach the company’s registrar no later than 300 pm on 1 may
2007  completing and returning a form of proxy to the registrar will not preclude you from attending and voting at the
meeting in person
2 pursuant to regulation 41 of the uncertificated securities regulations 2001 the company specifies that only those shareholders
registered in the company’s register of members at 300 pm on 1 may 2007 shall be entitled to attend or vote at this annual
general meeting in respect of the number of shares registered in their names at that time changes to entries on the register
after 300 pm on 1 may 2007 will be disregarded in determining the rights of any person to attend or vote at the meeting
3 copies of the memorandum and articles of association of the company and the draft rules of the 2007 option scheme will be
available at the registered office of the company during normal business hours on each business day from the date of this
document until the date of the annual general meeting and together with nonexecutive directors’ service contracts and the
register of directors’ interests will be available for inspection at the place of the annual general meeting from 15 minutes prior
to its commencement until its conclusion
4 the holders of preference shares are entitled to receive this notice of meeting but are not entitled to attend speak or vote at
the meeting
 notice of annual general meeting
13534tikitgro13534tikitgro  12407  0842  page 52 13534 30032007 proof 7 13534 30032007 proof 7
2002 2003 2004 2005 2006
£’000 £’000 £’000 £’000 £’000
 turnover 8231 9558 11903 20162 23517
 pretax profit 648 1177 1512 2103 2888
 before goodwill amortisation and share option charges
highlights 01
about us 02
chairman’s statement 06
chief executive’s statement 12
financial review 16
directors 18
corporate governance statement 20
remuneration report 22
report of the directors 24
statement of directors’ responsibilities 26
report of the independent auditors 27
consolidated profit and loss account 28
consolidated statement of total recognised
gains and losses 29
consolidated balance sheet 30
company balance sheet 31
consolidated cash flow statement 32
notes forming part of the financial statements 33
notice of agm 51
directors and advisors 53
 contents
 consultancy 31
 services 34
 software 31
 other 4
percentage split of 2006 revenues
 5 year performance
professional it for law firms
and accountancy practices
 directors and advisers
tikit group plc
annual report 2006
5253
directors m mcgoun bsc msc chairman
d lumsden managing director
p giuffredi aca finance director
r price bsc econ fca fcca cta independent senior nonexecutive
n briant llb independent nonexecutive
secretary and registered office p giuffredi aca
africa house
64–78 kingsway
london
wc2b 6ah
telephone 020 7 400 3737
facsimile 020 7 400 3738
website wwwtikitcom
company number 4164203
auditors bdo stoy hayward llp
8 baker street
london
w1u 3ll
solicitors tlt llp faegre  benson llp
sea containers house 7 pilgrim street
20 upper ground london
london ec4v 6lb
se1 9lh
brokers and nominated adviser charles stanley  company limited
25 luke street
london
ec2a 4ar
principal bankers national westminster bank plc
98 st paul’s churchyard
london
ec4m 8bu
registrars capita registrars
northern house
woodsome park
fenay bridge
huddersfield
hd8 0la
13534tikitgrocvrlayout 1  12407  0840  page 2 13534 30032007 proof 7 13534 30032007 proof 7
annual report and financial statements 2006
tikit group plc annual report and financial statements 2006
professional it for law firms
and accountancy practices
tikit
africa house 6478 kingsway t 44 0 20 7 400 3737 wwwtikitcom
london wc2b 6ah f 44 0 20 7 400 3738
wwwtikitcom
13534tikitgrocvrlayout 1  12407  0840  page 1


Summary:
 135 13534 30032007 proof 7
during 2006 the group achieved
record sales and profits
introduction
i am pleased to be able to announce
excellent results for tikit group plc for
the year ended 31 december 2006 the
group undertook a number of
acquisitions during late 2004 and 2005
and the focus for 2006 was to secure
good organic growth from the enlarged
group and at the same time improve
operating margins across all of the
business areas
we achieved overall revenue growth of
17 in 2006 compared with 2005 and
operating margins improved from 104
to 123 profit before taxation goodwill
amortisation and share option charges
increased by 38 to £29 million
compared with 2005 £21 million
good progress has been made
throughout the business including major
project wins with our existing large legal
clients and significant success from our
recent move into the accountancy sector 
our operations in france and spain
performed ahead of plan
results
turnover for the period increased by
17 to £235 million 2005 £202
million within this consultancy and
managed services businesses increased
by 13 to £153 million 2005 £135
million of which £80 million 2005
£7 2 million related to managed
services turnover  representing
recurring revenues of 34 of our 2006
turnover  the improvement of operating
margins from 104 to 123 reflects
higher utilisation rates of our
chargeable staff and efficiencies gained
through the integration of managed
services operations and reducing some
lower margin business in nonstrategic
areas such as hardware sales
the group improved profits by 38
achieving a profit before taxation
goodwill amortisation and share option
charges for the period of £29 million
2005 £21 million
the figure for pretax profit after share
option charges and goodwill
amortisation increased by 233 to £21
million 2005 £06 million following a
review by the board of the group’s
goodwill amortisation accounting policy
the goodwill charge for 2006 was made
on the basis of a tenyear amortisation
period 2005 five years as a result
goodwill amortisation in the year was
£064 million 2005 £134 million
share option charges during the period
as required by frs 20 were £127 000
2005 £126000
earnings per share before goodwill
amortisation and share option charges
increased by 38 to 180 pence 2005
130 pence basic earnings per share
were 120 pence 2005 17 pence
chairman’s statement
 mike mcgoun
13534tikitgro13534tikitgro  12407  0841  page 6 13534 30032007 proof 7
cash generated from operations was
£36 million 2005 £21 million our
balance sheet remains strong with net
assets at 31 december 2006 at £62
million 2005 £52 million including
cash balances of £42 million 2005
£23 million
during the year  we took the opportunity
to use £392000 of our cash resources
to purchase 203535 tikit shares in the
market for cancellation as we believed
this to be immediately earnings
enhancing
in order to facilitate a proposed new
long term incentive plan ltip for key
personnel the implementation of which
is subject to shareholder approval
100000 tikit shares were purchased in
the market during 2006 at a cost of
£234000 and these together with a
further 100000 purchased in january
2007 at a cost of £258500 are
available to satisfy the award of shares
under the proposed ltip
dividends
given the ongoing strength of the
business and our excellent record of
cash generation from operations the
board has decided upon a more
progressive dividend policy a final
dividend of 275 pence per share is
proposed it is to be paid on 7 may 2007
to shareholders on the register on
30 march 2007  this when taken with
the interim dividend of 125 pence
2005 075 pence brings total
dividends for the year to 40 pence
2005 25 pence an increase of 60
over the previous year 
employees
i would like to take the opportunity to
thank the directors and employees of
the group for their contribution in
delivering this excellent set of results
executive long term incentive plan
ltip
since its public listing in june 2001 tikit
has been very successful in generating
not only profits but also more
importantly cash from its operations
this generation of cash has enabled us to
make acquisitions and fund our growth
without recourse to the capital markets
although an issue of new tikit shares has
sometimes been used partially to fund
acquisitions the rate of growth of the
issued share capital has been
significantly less than the rate of growth
of the company as a result the ability of
the company to grant share options
within the abi guidelines which restrict
the issue of options over a ten year
period to a maximum of 10 of the
issued share capital is severely limited
the proposed long term incentive plan
ltip is performance related and
provides incentives to key executives and
staff to remain with the business and
share in the increase in shareholder
value over the next three years
the proposed ltip requires shareholder
approval at the company’s annual
general meeting to be held on 3 may
2007  in the notice convening the
group’s annual general meeting the
necessary resolution is set out together
with explanatory details of the proposed
scheme it is proposed that share
options over 250000 tikit group plc
shares are granted to the senior
management team with a nominal grant
price there are currently 200000
67
tikit group plc
annual report 2006
13534tikitgro13534tikitgro  12407  0841  page 7 135 13534 30032007 proof 7
the overriding group objective is to continue to
focus on the provision of it systems and support
to large law firms
shares held in treasury an additional
50000 shares will if required be
purchased in the market and held in
treasury these options may vest at the
end of a threeyear period and will be
subject to an earnings per share growth
target over three years for the
maximum number of shares to vest
under this scheme a compound growth
rate of 20 per annum in normalised
earnings per share has to be achieved
for this purpose normalised means the
fully diluted earnings per share of the
company taxed at the standard
corporation tax rate of the company and
before goodwill amortisation and share
option charges
most of the cost to the company will be
fixed at the outset as 80 of the
maximum number of shares to vest
under this scheme have already been
purchased and held in treasury no
dilution of the existing issued share
capital through the issue of new shares
will occur 
as at 31 december 2006 there were
unexercised options granted over
638778 shares under existing group
share options schemes representing
approximately 50  of the existing
issued share capital of the company if
the proposed ltip is approved and
implemented share options over an
additional 250000 shares representing
approximately 19 of the company’s
existing issued share capital will be
granted
business review and prospects
the purpose of this section is to give
shareholders a summary of the
prospects of the business the
performance in 2006 is a good indicator
of the skills that currently exist within
the group and the financial results show
how effectively those skills are
employed
the overriding group objective is to
continue to focus on the provision of it
systems and support to large law firms
and accountancy practices tikit has
established itself as a leading supplier to
this market in the uk and remains
focused on expanding its market share
in addition we seek to become the
chairman’s statement
13534tikitgro13534tikitgro  12407  0841  page 8 13534 30032007 proof 7
leading supplier of these services and
products to the large firms in mainland
europe
the large uk law firms and accountancy
practices have announced significant
recent growth in their businesses and
are investing commensurately in their it
systems tikit is ideally positioned to
provide consultancy services and
products to help these firms derive
maximum benefit from their it
investment in 2006 we estimate that
the top one hundred law firms in the uk
spent approximately £500 million on it
products and services the top fifty
accountancy firms spent an estimated
£300 million at this stage of our
development we do not believe that the
size of our chosen market is a limit to
our growth
tikit’s competitive advantage is that it is
a specialised business focused on the
large legal and accountancy markets
this differentiates us from general it
consultancy organisations our
relationship with clients is from a service
perspective in that we understand how
large law firms and accountancy
practices work their language and
culture we understand their business
issues and can help them identify
potential itbased solutions to those
issues we differentiate ourselves from
software vendors by our independence
and whilst we have strong relationships
with our software partners our strength
is that we endeavour to select the best
of breed software appropriate to our
clients’ needs and are not committed to
providing standard solutions there may
be some shortterm risk associated with
this strategy given that new software
developments may render existing
partnership arrangements
inappropriate this may lead to short
term direct competition from software
vendors
our focus remains on achieving strong
organic growth at the same time we
continue to look for businesses products
or services that can further expand our
current portfolio we also believe that
tikit is well positioned to participate in
the consolidation that is taking place in
both the legal and accountancy sectors
the average size of the top one hundred
uk law firms continues to rise faster
than the overall market because of
merger activity we believe that the large
uk law firms will lead consolidation
across europe and that tikit with its
strong client base among those firms
will benefit from this
the group’s pipeline of consultancy and
implementation projects should provide
the opportunity to schedule resources
more efficiently and improve utilisation
the managed services group will
continue to streamline its services so
that clients can benefit from the full
range of support offerings from
hardware and infrastructure support to
onsite support for complex applications
in addition the introduction of a number
of new software products during 2006 is
expected to result in additional sales in
2007 and beyond
the key performance indicators kpi’s
used by your board to measure the
success of the business remain those
that have underpinned our success to
date the most important of these is
89
tikit group plc
annual report 2006
13534tikitgro13534tikitgro  12407  0841  page 9 135 13534 30032007 proof 7
when your board considers risk issues
going forward the prominent element
is dependence on our people
customer retention especially reflected
in support contract renewal rates
following our first year in business
some 13 years ago we have had annual
renewal rates in excess of 90 with 92
of the top one hundred uk law firms as
clients and 18 of the top fifty
accountancy practices it is essential
that we retain existing clients at the
same time as winning new ones
the second kpi is the organic growth of
our revenues and this should be at least
as great as that of the top one hundred
firms in addition we seek to add
additional services so that our actual
revenue growth is higher  the third kpi
is the operating margin that we are able
to achieve since inception in 1994 tikit
has had operating margins in excess of
10 with the exception of the year
ended 31 december 2002 where
operating margin was 65 we aim to
have operating margins of 125 a final
kpi is our ability to generate cash from
our operating activities — in our view
the true measure of profit this is an
area where tikit has excelled over the
years we aim to achieve a conversion
ratio of profit before tax to cash of at
least 100
in commenting upon the capital
structure of the company i draw
attention to the acquisitions made by us
that have largely been funded by the
cash generated by the business we have
been able to act quickly without incurring
the time and costs associated with equity
or debt fundraisings the company has
had no debt since its inception in 1994
however  we continue to consider the
most appropriate capital structure given
the outlook for interest rates on long
term debt there is a determination not
to hold surplus cash and we will return
such cash to shareholders by a
combination of the progressive dividend
policy where it is our intention to provide
shareholders with a yield over 2
combined with the purchase of shares in
the market for cancellation
business review — risks
when your board considers risk issues
going forward the prominent element is
the dependence on our people we
recognise the value of their
chairman’s statement
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commitment and are conscious that we
must keep the reward systems both
financial and motivational in place to
minimise this area of risk our proposed
ltip is an example of this a second risk
issue competition arises in relation to
our strong position with the large law
firms given that there is no external
direct competition of any size in this
market we must be careful not to abuse
our position the main competition issue
in any project proposal is whether a law
firm’s internal it department may wish
to undertake the assignment itself
accordingly our services are designed
to complement and assist internal staff
rather than replace them finally we are
aware of the supply risk of losing key
software partners this would have a
shortterm impact as we sought to
identify and then train our staff in a
suitable alternative product we have an
excellent record of maintaining good
relationships with our software partners
and usually get notice of impending
changes in time to minimise the impact
on tikit
environmental policies
the group acknowledges the
importance of environmental matters
and where possible utilises environment
friendly policies in its offices such as
recycling and energy efficient practices
summary and prospects
in summary 2006 was an excellent year
for the group we enter 2007 with a
good order book of projects to be
implemented reflecting a blend of
consultancy support and software
business sold in the last quarter  the
targets we have set ourselves for 2007
and 2008 are challenging and if met
will lead to further significant
improvements in the trading
performance of the group and to
earnings per share tikit’s opportunities
are many and your board continues to
be optimistic about the trading
prospects of the group
mike mcgoun
chairman
tikit group plc
21 march 2007
1011
tikit group plc
annual report 2006
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