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annual report 2007
annual report 2007 patsystems        annual report 2007
directors and advisers
directors
stewart millman chairman and nonexecutive director
david webber chief executive
martin orneycro finance director 
richard last nonexecutive director chairman of the audit commiee 
steve sparke nonexecutive director
john priestley nonexecutive director chairman of the combined remuneration  
 and nominations commiee
company secretary
daljit kaurkhela
advisers
broker and nominated adviser seymour pierce limited
lawyers dla pipers
 vedder price kaufman  kammholz
registered auditors pricewaterhousecoopers llp 
principal bankers barclays bank plc
registrars computershare services plc
 po box 82
 e pavillions
 bridgewater road
 bristol
 bs99 7nh
corporate details
registered oce coons centre hays lane london se1 2qp
company number 4498002
country of incorporation england and wales
website wwwpatsystemscom
stock exchange symbol pts
ps2234  ar07 back aw06indd   69 10308   130038
highlights 01
patsystems’ 2007  nancial and 
operational results at a glance 
business pro le 02
a concise overview of patsystems’ 
history products and services
 
chairman’s statement 04
stewart millman’s review of the 
company and its results for 2007
chief executive’s report 08
david webber’s report on business 
in 2007 and the company objectives 
for 2008
finance director’s review 14
martin  orneycro ’s summary 
of the 2007 results
our board 18
biographies of the board members 
who served through 2007
directors’ report 20
statement of corporate governance 23
report of the board on 
directors’ remuneration and on 
group remuneration policy 25
independent auditors’ report 29 
consolidated income statement 30
consolidated balance sheet 31
consolidated cash flow statement 32
reconciliation of net pro t to net 
cash flows from operating activities 33
notes to the financial statements 34
independent auditors’ report 61
company balance sheet 62
notes to the financial statements 63
directors and advisers ibc
we’ll never try to push a onesize tsall trading 
system onto you we’ll work with you to deliver 
tailored solutions built from modular components 
that maximise the investment you’ve already made 
and align with your business strategies
from a single plugandplay module to address a 
speci c issue to complete high performance trading 
systems with global market access our solutions 
are designed to enhance derivatives trading 
performance and trade processing
we call it flexability
contents 
patsystems        annual report 2007
ps2234  ar07 front aw05indd   1 10308   143702 highlights
profitloss  
before t ax £ m
financial highlights 
revenue up 11 to £17 million 2006 – £153 million 
operating profit as a percentage of sales up to 123  
2006 – 103
adjusted pret ax profit up 43 to £3 million 2006 –  
£21 million
proposed full year dividend of 033p 2006 – 030p  ‘03 ‘04 ‘05 ‘06 ‘07
3000
2000
1000
0
1000
2000
3000
 profit before tax after adjusting for share option costs marking to market of  
 derivatives used to hedge cash flows and amortisation of intangibles other than  
 internally developed software
operational highlights
375 promark screens deployed 2006 – 129 
significant customer wins 
r j o’brien  associates – one of the largest independent  »
futures brokerages in the us
the macquarie group – the international provider of banking  »
financial advisory and investment services first adopter of 
global t rading
promark version 40 launched with functionality specifically  
designed for energy traders
1 patsystems        annual report 2007 patsystems        annual report 2007
business profile
02
patsystems our business 
patsystems’ longstanding reputation has been established through both 
outstanding customer partnerships and proven technology patsystems was 
established in 1994 as one of the original independent software vendors 
isvs to develop electronic trading solutions t oday we are one of the world’s 
leading software providers for professional technical and retail traders 
patsystems sets the standard for technology solution partnerships within 
the exchangetraded derivatives sector with our extensive global market 
connectivity exceptional customer support scalable trading solutions and 
market leading risk technology we continue to set a benchmark for other isvs 
to attain 
build it your way 
we offer solutions at every step in the trading cycle our experienced 
development team delivers excellence in both performance and innovation 
a choice of three market leading frontend trading screens provide  
flexible functionality to cater for all traders’ needs whether professional 
technical or retail 
a proven core system provides high speed order routing and straight  
through processing 
sophisticated pre and posttrade risk management across multiple assets  
in realtime our posttrade risk solutions are selected by global financial 
institutions looking for a highlycapable reliable and efficient solution 
and our pretrade risk solutions have been adopted by the major futures 
clearing merchants 
our exchangematching engine has been adopted by six exchanges  
worldwide and is fully integrated to our trading and risk solutions
patsystems complements this superior risk and trading technology by providing 
extensive access to global liquidity this access spans across multiple asset 
classes and exchanges in over 20 countries 
at patsystems our customers’ needs are at the core of our business success and 
future growth
we have moved quickly to benefit from the growth in derivatives 
trading global exchange numbers vs global traded volume show that 
exchange volumes are growing rapidly
to t al number of  
fut ures cont ract s  
t raded globally m il
3600
3100
4200
5800
‘03 ‘04 ‘05 ‘06
pat sy st ems ex change 
connect ivity
30
24
36
49
‘07 ‘06 ‘05 ‘04 patsystems        annual report 2007
case studies newedge takes risk in fo rme r 
newedge is a global brokerage and clearing firm providing institutional clients 
with efficient access to financial and commodity markets around the world with 
memberships on the major worldwide futures and options exchanges it consistently 
ranks among the largest in customer volume
by implementing patsystems’ risk informer newedge has introduced real time post
trade risk management giving it the capability to take on additional clients with a range 
of risk profiles and complex trading styles
the challenge
newedge was using a number of isvspecific pretrade risk management applications 
to monitor its clients’ trading activity this approach had several major limitations 
first it offered no way to risk manage clients with direct market access second it 
often meant maintaining multiple pretrade risk filters for a single client third setting 
position limits for options traders was a labour intensive task and yielded a flawed 
picture of their true risk profile 
the s olution
newedge identified the need for a more intelligent across the board margin 
calculation a review of available systems was conducted in which risk informer was 
evaluated alongside offerings from established backoffice vendors risk informer was 
selected on the basis that it was more capable more flexible and simpler to deploy 
than the competition 
while other systems use batch processing in some cases assessing data only once 
every fifteen minutes risk informer’s eventdriven architecture triggers a new margin 
calculation after every trade “we needed a system capable of monitoring high volume 
high velocity traders ” said leslie sutphen newedge’s global head of esolutions 
“when you consider how many trades an algorithmic black box can generate in 
fifteen minutes it is clear that a batch processing system would provide inadequate 
protection potentially triggering alerts only after it was too late to act with risk 
informer’s real time monitoring we can step in the moment a limit is breached ”
newedge signed the deal with patsystems in march 2006 and by august client 
simulations were running for trades on numerous global exchanges and the system has 
been in full production mode since january 2007 coverage has since been expanded 
to include asian exchanges
“patsystems worked hard to deliver a smooth and timely installation and ensure all 
of our objectives were met ” said sutphen “ongoing production support from their 
highly responsive team has also been excellent ” impressed with the flexibility of risk 
informer and its ability to handle multiple asset classes newedge has also selected the 
system for its foreign exchange business
business benefits
with the risk informer installation in chicago newedge now has the capability to risk 
manage its clients worldwide on a real time posttrade basis as well as effecting a 
major improvement in the risk management of existing business this has enabled the 
firm to expand by offering clearing services to a wider range of clients
“risk informer has given us the scalability to continue growing our business ” 
commented sutphen “the system is currently being used to risk manage ten major 
clients with combined daily margins of well over 200m and we’re signing up new 
clients all the time by enabling us to monitor much more effectively dma traders and 
options traders risk informer gives us the opportunity to fully service clients that 
because of high volume electronic trading are essentially a new class of risk profile ”
t radin g solution s t rader’s tools and frontends
promark
jt rader
iqt rader
t rading a pi
patsystems api
fix t rading gateway
risk solutio ns risk informer
risk monitor
e x chan ge solutio ns exchange solutions
patsystems matching engine
clearing system patsystems        annual report 2007
chairman’s statement
shareholders may recollect that the 2006 a nnual r eport had 
the theme “soaring to new heights”  hopefully the outcome for 
patsystems in 2007 has justified the high level of confidence which 
we showed a year ago
the strong financial results summarised below have been achieved while we 
have had to contend with an unforeseen level of trauma in some sectors of the 
global financial markets and adverse exchangerate movements against sterling 
the decline in the average us dollar and yen exchange rates have together 
reduced pretax profit by an estimated £390000
as david’s report describes in detail while achieving these results 2007 has 
seen us move our trading systems product range to demonstrable market 
leadership with our professional frontend promark and a new core platform 
global t rading which will be stateofthe art for many years to come risk 
informer is achieving growing sales success as the current more riskaverse 
external environment motivates our customers to make a more sophisticated 
analysis of their immediate and potential market exposures
we have continued to add significant new customers such as global investment 
bank the macquarie group as the first adopter of global t rading and 
r  j o’brien  associates one of the largest independent futures brokerages 
in the united states in addition we have continued to extend the products 
and services we provide to our existing customer base via the adoption of risk 
informer and new trading installations within the asia region
f inan cial r esults
pretax profit for the full year ended 31 december 2007 was £219 million 
compared to £163 million in 2006 and £036 million in 2005 fully diluted eps 
excluding the impact of deferred tax grew to 12p per share from 08p per 
share last year 
02
stewart millman 
chairman  
nonex ecut ive direct or patsystems        annual report 2007 05
adjusted pretax profit profit before tax after adjusting for share option costs 
marking to market of derivatives used to hedge cash flows and amortisation of 
intangibles other than internally developed software for the full year ended 
31 december 2007 was £30 million compared to £21 million in 2006 fully diluted 
eps on this basis and excluding the impact of deferred tax grew to 16p per share 
from 11p per share last year details of these calculations are set out in the earnings 
per share section of the finance director’s review on page 15
cash flows from operating activities have remained steady at £265 million 
2006 £269 million 
with 83 of revenue in 2007 of a recurrent nature the business has an excellent 
financial foundation for 2008 and the stability of revenues in turn assists us to plan 
the business with a high degree of comfort
the initial tamesis earn out period concluded on 31 july 2007 and 12159 million 
ordinary shares were issued as consideration to the vendors of t amesis in 
september 2007 under the sale and purchase agreement a further and final issue 
of approximately 1092 million shares will be issued in february 2008
dividend
following the dividend of 03p per share approved by shareholders at the annual 
general meeting on 19 april 2007 relating to the results for 2006 the board 
declared an interim dividend of 012p payable in september 2007 based on the 
interim results for the year
as a continued tangible expression of our confidence the board is recommending 
the payment of a final dividend of 021p based on the results for 2007 as a whole 
bringing the total dividend for the year to 033p per share compared to a total of 
03p for 2006 
subject to confirmation at the annual general meeting the final dividend will be 
paid on 23 may 2008 to shareholders on the register as at 25 april 2008 the 
shares are expected to be quoted exdividend on 23 april 2008
management and s taff
i must start this section commending david and his team on their achievements 
during 2007 during the last two years patsystems has emerged as a company that 
is achieving consistent forecastable profits and cashflow whilst delivering  
a significantly broader range of services and products to its target market place
under david webber and martin thorneycroft’s leadership the business has 
continued to evolve to the benefit of customers shareholders and staff while 
reinforcing the important attributes of the patsystems style and approach that 
differentiate it from its competitors the operational structure which they have 
built is aimed at being robust enough to withstand the vicissitudes that the world 
financial markets seem destined to throw at us 
one member of the executive management committee emc left during the 
year when barry white was promoted to head of asia region replacing kazuaki 
t akabatake the chief executive’s report details the emc and their respective 
responsibilities the stability of our senior management team is a benefit to our 
customers and contributes to the excellent collegiate spirit within the whole firm 
led by the emc and is a vital asset in serving a global industry
2007 has seen us move our 
trading systems product 
range to demonstrable 
market leadership with 
our professional frontend 
promark and a new core 
platform global t rading
patsystems has emerged as 
a company that is achieving 
consistent forecastable 
profits and cashflow whilst 
delivering a significantly 
broader range of services 
and products to its target 
market place patsystems        annual report 2007 06
chairman’s statement
the board regularly engages with as many of the senior 
management team as possibe including travelling to our 
major locations outside london on behalf of the board i can 
say that we continue to be impressed by the commitment 
professionalism and enthusiasm of all patsystems’ people
they should all feel justifiably proud of the business they 
have built
board
alongside my thanks to david and martin i must thank 
richard last steve sparke and john priestley both for their 
effort and the quality of their wise counsel during 2007
richard’s long involvement with a broad range of technology 
businesses steve’s 18 years of experience at ubs and john’s 
experience as a director of syntegra together provide a range 
of expertise and knowledge highly relevant to the board’s 
deliberations as well as being of direct support on various 
matters to the executive directors i have personally enjoyed 
working with them enormously
however all good things must come to an end i was 
appointed to the patsystems board as chairman in february 
2003 i hope and believe that patsystems is demonstrably a 
very much better and stronger company now than then in 
this positive condition i am happy to hand over the chair to 
richard last after the forthcoming annual general meeting 
when i will also retire from the board having known richard 
for many years and worked professionally with him for most 
of them i can commend him highly to you 
f uture
t rading from 1 january 2008 and prospects for 2008 are in 
line with business plans and hence we remain comfortable 
with current market expectations for 2008
in 2008 we expect to see continued success in promoting 
both existing products and the new products that we have 
developed and to identify further complementary businesses 
or technologies that can be acquired and developed by our 
existing management team 
the acquisition of tamesis in 2005 and the subsequent 
business success that the risk informer product has enjoyed 
demonstrates the value that can be created by promoting 
and supporting a new product through the patsystems 
global infrastructure
we believe the fundamental strength of our balance sheet 
strong cash generation and resilient share price are to our 
benefit when looking for potential acquisitions during a 
period of market and economic turbulence
as a result we believe that the long term opportunities 
for our business are outstanding despite the uncertainty 
of the economic climate we view the prospects for the 
company with continued optimism
customers and shareholders
i would like to thank all of our customers for their support 
during 2007 the adoption of our new products and 
services by an increasingly wide group of customers is 
testament to the trust they are putting in us to deliver future 
joint business success
the board continues to believe that the transparency of both 
operational plans and financial figures afforded by having a 
key technology partner that is a quoted company is valued by 
both our existing and prospective customers and serves as a 
differentiator from our main competitors
i would like to thank our shareholders for their continued 
support and we look forward to their involvement 
as patsystems’ business continues to go from strength 
to strength
stewart millman 
chairman  
nonex ecut ive direct or
8 february 2008
continued t radi ng solutio ns e x cha nge solutio ns risk solutio ns case studies ra nd f i na ncial s e rvi ces rand financial services executes and clears futures and options on behalf of the world’s 
premier banks institutional clients hedge funds ct as and nonclearing fcms
founded in 1993 as a wholly owned subsidiary of the bermudabased t ewksbury 
investment fund ltd rand is a member of all major futures exchanges with its principal 
office located in chicago
by implementing patsystems’ jt rader front end rand can provide its clients with 
electronic access to a growing range of exchanges around the world over a period of 
years patsystems has time and again delivered the solutions rand requires to maintain 
a leading position in the evolving market environment patsystems remains rand’s sole 
trading system provider
a solid dec ision
the advent of electronic trading allowed fcms to offer their clients access to exchanges 
without the need for a presence on the floor but in order to do this the firms needed 
to invest in systems that could deliver that access in a reliable and costeffective way
when rand first decided to provide electronic access via a thirdparty systems 
provider it hired an independent consultant to evaluate the available vendors 
and patsystems was selected based on that evaluation by providing a reliable and 
responsive service that has kept pace with the rapidly changing market landscape 
patsystems has never given rand cause to regret its initial decision or to consider 
systems from other vendors
acc ess all areas
one of the key services patsystems has enabled rand to deliver to its clients is 
connectivity to an everwidening range of markets
“we have many hedge fund and ct a clients who are always interested in expanding 
into new markets – striving to stay ahead of the curve” explains mike manning 
president and ceo of rand financial services “consequently there is a regular 
requirement from them for connectivity to new exchanges we have to be responsive 
to that because if we don’t provide that connectivity the competition will working 
with patsystems we have been able to keep pace with that demand and satisfy our 
clients’ voracious appetite for new trading opportunities ”
rand currently offers access to sixteen marketplaces via patsystems as well as the “big 
four” the list includes idem in italy meff in spain and most recently dubai mercantile 
exchange patsystems even offers electronic order routing to the remaining open outcry 
trading venues enabling rand clients to trade all markets from the same screen 
t radin g solution s t rader’s tools and frontends
promark
jt rader
iqt rader
t rading a pi
patsystems api
fix t rading gateway
risk solutio ns risk informer
risk monitor
e x chan ge solutio ns exchange solutions
patsystems matching engine
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patsystems        annual report 2007 04
chief executive’s report
i am delighted to be able to report on a further year of successful 
business development for patsystems
in my report for 2006 i stated our ambition to become a key technology 
provider to the electronic trading industry and the results for the financial year 
ended 31 december 2007 demonstrate the success that we have achieved in 
fulfilling that ambition
our performance for the year has continued the trend established in 2006 for 
profit growth with an operating profit of £21 million a 32 growth over last 
year’s £16 million
revenue has also risen 11 to £170 million compared to £153 million
we have continued to contain increases in our cost base despite significant 
pressure on salary costs in all our key areas of operation with operating 
expenses being only 9 higher at £145 million when compared to 
£133 million in 2006
a fuller analysis of the changes in the cost base is included within the finance 
director’s review but the main contributing factors were the planned 
headcount increases 
trading systems and market conne ctivity
t rading systems revenue increased by 75 to £143 million for the year 
compared to £133 million in 2006
during the year we achieved new customer wins with r j o’brien  associates 
one of the largest independent futures brokerages in the united states 
of america and the macquarie group the australian headquartered 
international provider of banking financial advisory and investment services 
david w ebber 
chief execu t ive patsystems        annual report 2007
the addition of macquarie as a customer was particularly pleasing given that 
our new global t rading product played an important part in their decision to 
select patsystems with macquarie having identified the benefits that its global 
order book and continuous trading provides
macquarie represents the first installation of our new global t rading core and 
following an initial deployment in europe will roll out the systems capabilities 
within their operations in the united states of america australia and asia 
we will deliver the global t rading software and all the other associated 
software services to macquarie offices and clients globally by way of a fully 
hosted service
as part of our commitment to provide customers with further choice of how 
they receive our software services we have announced the provision of our 
application service provider “asp” solution and the first customer is now live 
on this service
during the year our existing customers have added four further installations 
in sydney singapore and two in hong kong underlining the importance of 
asia as an area of growth for the business going forward
in 2008 we expect the main opportunities for further trading systems 
installations and additional screen deployment to be in the emerging market 
economies of south america the middle east and asia particularly hong 
kong malaysia and indonesia
in july 2007 promark version 40 was launched with functionality specifically 
designed for energy traders which enables them to access multiple energy 
markets version 40 followed on from the successful release of version 39 
earlier in the year which provided support for option strategies best execution 
and advanced charting
at the start of 2007 the promark billable user numbers were 129 and as  
at 31 december 2007 this has risen to 375 the majority of these users  
are either converts from our major competitors or traders new to  
electronic trading
during the year the ability to trade foreign exchange in partnership with  
gain capital was added to the jt rader product and charting capability  
was added 
patsystems’ global connectivity has been extended with the chicago climate 
futures exchange dubai mercantile exchange hong kong exchanges and 
clearing and the united states futures exchange all being added in 2007 
there have also been changes to our existing exchange connectivity all trading 
system customers are now supported through significant upgrades for the 
major exchanges as well as additional capability such as the support of carry 
trades on the london metal exchange and an extended product set on the 
chicago board of options futures exchange
09
4000
3000
2000
1000
0
t otal exchange volume  
adv  a verage daily volume
liffe derivatives 
market – histori cal 
annual  monthly data
‘05
2955
‘04
3030
‘06
2864
‘07
3722
the following graph 
indicat es t he cont inued 
growt h and ex panding 
business development wit hin 
t he derivat ives indust ry patsystems        annual report 2007
chief executive’s report
r isk systems
revenue from our risk systems business grew by 100 
to £14 million from £07 million in 2006 there has been 
continued success for our post trade risk margining product 
risk informer during the year with mf global implementing 
the product in their london operation across all asset classes 
as the initial phase of a global roll out in addition calyon 
financial now newedge after their merger with fimat are 
completing a project to extend risk informer to risk margin 
spot and forward fx and f x options trading
as anticipated there has been a significant level of 
interest in the product from investment banks and brokers 
of all sizes and the volatility in the markets during the 
summer highlighted the relevance of effective real time 
risk management
we remain confident in the opportunities for risk informer 
and anticipate further customer wins in 2008
as we announced in our interim results in the summer we 
launched the beta version of our pretrade risk product 
risk monitor risk monitor is a low latency tool designed to 
monitor proposed trades across a range of markets ahead of 
the exchange and if necessary prevent restrict or provide 
alerts in respect of individual electronic trades
with the increasing volumes of trades being executed either 
by black box trading systems or by systems that are trading 
directly into an exchange without an intervening broker 
the need for real time but very high performance risk 
management is expected to grow
ex change systems
on 4 january 2008 t okyo grain exchange successfully 
launched three futures products arabica and robusta 
bean coffee contracts and raw sugar on the new continuous 
exchange system provided by patsystems
the tokyo grain exchange continues to offer markets in a 
broad range of contracts on their existing sessionbased 
trading system that is also provided by patsystems but further 
contracts are anticipated to be launched or migrated to the 
new platform during 2008
during the year national commodity exchange limited in 
pakistan successfully commenced electronic trading with the 
launch of their gold futures contract
we believe that our ability to provide a straight through 
processing solution from the trader through to matching and 
clearing the transaction at an exchange with dynamic real 
time risk management throughout is a differentiated offering 
in the market place 
we continue to identify potential opportunities in asia 
particularly in china where we have chinese character set 
versions of our trading screens but these opportunities arise 
infrequently and the decision processes can be very lengthy 
with significant political hurdles
brand and marketing
one of our nonfinancial objectives in 2007 was to establish the 
patsystems flexability brand within our target market place of 
the investment banks brokers and futures clearing merchants
independent commissioned research has confirmed that 
our objective for patsystems to be acknowledged as a key 
technology supplier to our customers and prospects rather 
than just a vendor of trading screens has been achieved
as well as reinforcing our key brand message we have also 
changed the strap line beneath our logo so that it reflects 
exactly what we deliver as a business
“powers trades builds exchanges manages risk ”
strategy and produ ct develo pment
the first sale of global t rading to a new customer the 
success of risk informer sales and the development of risk 
monitor are all successful steps in fulfilling our strategy to be 
the preferred supplier of technology solutions to our target 
market place
during 2007 we have demonstrated our ability to sell hosted 
technology solutions to major customers with the signing 
of a contract to provide global t rading to macquarie the 
launch of our application service provider asp solution has 
ensured that we can provide new customers with a full choice 
of means of technology deployment depending on their 
business requirements
in addition to continued investment in developing the risk 
monitor and risk informer products along with supporting 
the roll out of the global t rading solution there are a 
number of key product investments planned for 2008
10
continued patsystems        annual report 2007
these include the delivery of further capability within our algorithmic server 
a new higher performance version of our trading api that allows third parties 
to use the patsystems order processing engine and market connectivity and 
extended charting and best execution capability for the trading screens
our strategy of developing all new product components in accordance with 
the financial information exchange fi x  protocol a messaging standard 
developed specifically for the realtime electronic exchange of securities 
transactions will ensure that those organisations that have adopted a best 
of breed approach to technology are able to purchase just those system 
components they require from patsystems
we continue to view the support of asset classes outside of exchange 
traded derivatives as important to our business evolution and with 
jt rader’s extension to support trading of currency pairs we have made 
some progress towards this objective
we will continue to explore in 2008 either by partnership or acquisition the 
solution to further extend the support by our trading systems of multiple 
product classes
exe cutive management committee
kieron o’t oole joined patsystems at the start of 2007 as client services 
director with responsibility for software support software releases and trading 
and risk system installations
with kieron’s appointment andy edwards product and development director 
took responsibility for product strategy in addition to his existing responsibility 
for product development andy has been key in defining the product road 
map for 2007 and 2008 and will be instrumental in identifying technology 
acquisitions that the business may require to fulfil our strategy
patrick kenny has continued his leadership of our north american operations 
with additional marketing sales and support resources added during the year 
as detailed below
graeme neilly as director of european sales and global accounts has grown 
his department and continues to work closely with jon regan head of new 
business sales europe
i am delighted to announce that lorna blane who joined patsystems in april 
2007 as global head of human resources joined the executive management 
committee in the summer
11
all major product lines up over 20 
annually for two constructive years
cagr 27 – from 2001 to 2006
adv up 65 – jan 2008 vs jan 2007
contracts in millions
2007
interest rates 23
equities 47
fx 26
commalt investments 20
cme products
cbot products
annual growth rates
the following graph 
indicat es t he cont inued 
growt h and ex panding 
business development wit hin 
t he derivat ives indust ry
68
86
‘06 ‘05
110
‘07
143
‘08
ytd
25 28
15
10
5
0
consistent a nnual volume g rowth  
cme group adv by year patsystems        annual report 2007
in may 2007 barry white replaced kazuaki t akabatake as 
head of asia barry joined patsystems in 2006 as managing 
director of australia and brings 17 years of exchange and 
exchangetraded derivatives experience to the business
t o take full advantage of the opportunities for growth within 
the asia region and to be better placed to take advantage 
of nascent opportunities in china barry has relocated to 
singapore and made the singapore office of patsystems the 
regional headquarters barry has also opened an office in hong 
kong and instigated representation on the ground in shanghai 
business evolution and staff
as i announced at the start of the year we have during 2007 
extended our capability in every region that we operate 
so that patsystems staff are available to provide support to 
customers wherever in the world they are trading
we have also invested in additional resources in north 
america and asia to support the sale and promotion of our 
extended product set these investments have meant that our 
overall headcount at the start of 2008 is 150 compared to 
132 at the start of 2007
we are comfortable that these increases in headcount are 
necessary to both support our planned sales effort and also 
to improve customer service delivery to both our current and 
future customers
i would like to take the opportunity to thank all of our staff 
for their efforts in 2007 they have built a business with a 
track record for delivery of complex technology solutions and 
have been credited in the third party research we undertook 
with our customers this year as “going the extra mile” when 
compared to our peers
business obje ctives and outlook
our key objectives for 2008 are as follows
grow the promark installed base and encourage  
investment bank customers to convert their jt rader 
professional user base to promark
build on the success of risk informer being selected and  
rolled out by mf global by identifying opportunities 
within the investment banks and other major future 
clearing merchants as well as selling a “productised” 
version of the offering to smaller organisations
leverage the success of the first sale of global t rading  
to macquarie by converting the opportunities within the 
current customer base
initiate the all important breakthrough in sales for risk  
monitor our pretrade risk product
t o extend the capability of jt rader to support  
additional assets classes so that our customers can extend 
their retail trading user base
t rading subsequent to the yearend has progressed in line 
with our expectations and we are confident that our business 
is well positioned to take advantage of market conditions
david w ebber 
chief execu t ive 
8 february 2008
12
chief executive’s report
continued case studies caboto caboto is the securities arm of banca intesa italy’s second largest banking group 
since 2000 caboto’s london office has been home to the group’s consolidated listed 
derivatives business its clients include european banks financial institutions and 
online brokers
using patsystems jt rader and x link products caboto has been able to expand 
the customer base of its futures and options operation by offering easy low cost 
access to a broad range of exchanges t hanks to the scalability of the technology 
caboto has leveraged its local expertise to become the dominant italian broker in 
the futures market
partnershi ps for mutual growth
caboto has been faced with customers requesting access to a growing list of 
exchanges around the world while providing an expanded service is crucial to 
retaining these customers purchasing new exchange memberships is not always 
an economical way to keep pace with demand the solution is x link a powerful 
software tool that enables multiple patsystems users to interconnect and utilise each 
other’s exchange memberships
caboto has memberships to six futures exchanges and by using x link to establish 
partnerships with other banks around the world it is able to offer access to a further 
five exchanges with another three in the pipeline in return caboto’s partner banks are 
able to provide their customers with access to borsa italiana’s idem market all without 
any additional strain on the end users who simply see the additional markets on their 
familiar trading screens
“using x link we see benefits in two directions ” caboto says “we provide our 
customers with a single access point to the expanding range of markets they want to 
trade without the need for additional memberships at the same time we leverage the 
memberships we do have to attract flow from around the world ”
s ystem of choi ce
the vast majority of caboto’s futures business is routed via the patsystems j t rader 
caboto conducts regular reviews of its vendor relationships and jt rader has 
consistently come out on top when compared to the other futures trading systems on 
the market 
“the critical factors for our customers are ease of use and ease of installation and 
on these criteria patsystems wins hands down ” caboto states “we can have jt rader 
installed via the internet a matter of hours after signing a new customer and the 
interface is so simple to use we can offer them training over the telephone ”
business benefits
through its xlink connection to other members of the patsystems user community 
caboto has developed a cost effective way to broaden their service offering it is thus 
able to combine global exchange access with local expertise and relationships – a 
compelling proposition that enables caboto to compete with much larger institutions 
and even outperform them in its home market
“jt rader and x link have enabled us to build out our remote connectivity while 
keeping the organisation lean” caboto reports “in a climate of narrowing margins and 
increasing competition we have not only held our own against the larger players but 
aggressively grown our business the scalability capabilities and ease of deployment of 
patsystems technology have been integral to that growth ”
t radin g solution s t rader’s tools and frontends
promark
jt rader
iqt rader
t rading a pi
patsystems api
fix t rading gateway
risk solutio ns risk informer
risk monitor
e x chan ge solutio ns exchange solutions
patsystems matching engine
clearing system minibh eu feugiat aliquisi 
eliscid uissecte dolorerilit 
la commodo lortincidunt 
ut am adipis doluptat alis 
ad ea faccumsan enim 
etum in eniatet ut nonullan 
ulputetue delenis at volesto 
core euguer sed sed sed 
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faccumsan
patsystems        annual report 2007
finance director’s review
04
i am delighted to report significant improvements across most of 
our financial key performance indicators
revenue up 11 to £17 million 
operating profit as a percentage of sales up to 123 2006 – 103 
profit before t axation pbt  up 35 to £22 million 
fully diluted eps 10p 2006 – 41p 
fully diluted eps adjusted for deferred tax 12p 2006 – 08p 
net cash flow from operating activities £265 million   
2006 – £269 million
375 promark screens deployed 2006 – 129 
1360 professional jt rader screens deployed on average during 2007  
2006 – 1462
r evenue
t otal group revenue grew by £17 million 11 to £1696 million from 
£1526 million last year the underlying performance of the business was even 
more impressive after taking into account the impact of the strength of sterling 
against the us dollar and the japanese yen if the 2006 average exchange rate 
for both the us dollar and the japanese yen had been used to translate the 
2007 revenues then they would have been £070 million higher
trading s ystems
t rading systems revenue grew from £133 million in 2006 to £143 million in 
2007 – an increase of 75 
ex change s ystems
exchange systems revenue was unchanged at £13 million
r isk s ystems
revenues from our risk systems business grew by 100 to £14 million from 
£07 million last year
martin thorney croft 
finance direct or  patsystems        annual report 2007
op erating ex penses
operating expenses increased by £12 million to £145 million from £133 million 
in 2006 the majority of this increase is attributable to staff costs which increased 
by £08 million as a result of salary increases new recruits and less time being 
capitalised into development projects
we ended the year with150 permanent staff 2006 – 132 and 12 contractors 
2006 – 12
all other cost categories were broadly consistent with the previous year
the strength of sterling against the dollar and the yen has reduced our reported costs 
in these regions if these costs had been translated at last years average rate then costs 
would have been £031 million higher in 2007
profit on ordinary a ctivities before taxation
the profit on ordinary activities before taxation increased to £22 million from 
£16 million in 2006
t axation
the group has tax losses carried forward of £244 million and will not be in 
a corporation tax paying position for a number of years small amounts of 
withholding tax may or may not arise from time to time depending on the 
geographical locations of customers with whom the group does business 
the tax charge shown on the face of the income statement of £03 million 
comprises of a deferred tax charge of £03 million mainly in respect of the usage of 
trading losses in the year withholding tax of £76000 and a foreign corporation tax 
credit of £40000 last year’s large deferred tax credit was the result of the group 
being able to recognise deferred tax assets in respect of accumulated unrelieved 
losses for the first time as subsidiary companies achieved profitability
profit for the year
profit for the year fell to £18 million 2006 – £79 million after adjusting for the 
current year’s deferred tax charge and the prior year’s deferred tax credit profit for 
the year increased to £22 million from £15 million in 2006
earnings p er share
as a result of the large deferred tax credit last year and the likelihood of other 
smaller deferred tax assets being recognised over the next few years as loss making 
subsidiaries become profitable combined with a deferred tax charge as prior year 
losses are utilised in profitable subsidiaries the standard basic and fully diluted 
eps calculations will show a high level of volatility 
excluding deferred tax basic eps has grown by 44 to 13p from 09p and fully 
diluted eps has grown 50 to 12p from 08p last year
including deferred tax basic eps is 11p 2006 – 49p and fully diluted eps is 10p 
2006 – 41p 
the board also monitors the company’s performance by reference to pretax profit 
adjusted for share option costs marking to market of derivatives used to hedge cash 
flows and amortisation of intangibles other than internally developed software 
15
t rading systems revenue 
grew from £133 million in 
2006 to  £143 million in 
2007 r evenues from our 
risk s ystems business grew 
by 100 to £14 million patsystems        annual report 2007
finance director’s review
adjusted pretax profit and eps on this basis were as follows 
2007 2006
profit for the year attributable to equity holders of the company £1844000 £7906000
t axation £344000 £6280000
profit on ordinary activities before taxation £2188000 £1626000
share option costs £210000 £230000
movement in fair value of hedging instruments £97000 £170000
amortisation of intangibles £483000 £449000
adjusted profit on ordinary activities £2978000 £2135000
weighted average number of shares 168090000 162794000
effect of dilutive share options 16062000 15020000
effect of contingent share consideration 1092000 14267000
185244000 192081000
adjusted eps 18p 13p
adjusted diluted eps 16p 11p
intangible and tangible fixed assets
goodwill
goodwill has increased by £149 million this increase relates 
solely to goodwill generated on the t amesis acquisition the 
earnout period has now finished and the final number of 
shares to be issued as consideration for the acquisition has 
been calculated and agreed in 2006 we anticipated that 
14267000 patsystems plc shares would be issued at a market 
price of 15p each the final earnout consisted of 12159000 
shares at a market price of 275p these shares having been 
issued and a final deferred payment of 1092240 shares at 
an estimated market price of 265p 
the final value of the tamesis consideration has been estimated 
but is dependent on the company’s share price at the time of 
issue of the consideration shares the increase in goodwill is the 
difference between the anticipated value of final consideration 
provided for in the 2006 accounts and the revised estimate 
based on the actual number of shares to be issued
intangible assets
during the year the group spent £18 million on intangible 
assets this total includes £14 million of capitalised 
development costs in respect of new products that 
will generate revenues in future years these costs will 
be amortised over three to five years from the date of 
completion reflecting the expected lives of the assets
t angible assets
during the year the group purchased fixed assets totalling 
£04 million the majority of this consisted of computer hardware
current assets
t rade debtors
t rade debtors have increased slightly to £27 million from 
£26 million in 2006 the average number of days sales 
outstanding in debtors throughout the year was 43 2006 – 38
f inancial assets – derivative financial instruments
financial assets represent the “marked to market“ value of 
derivatives used to hedge our currency exposures the 
derivatives used are forward contracts and currency options 
these derivatives are marked to market monthly and the 
resulting “profit or loss” is taken to the income statement
current liabilities
the only significant movement between the years is in 
contingent consideration which has fallen from £21 million 
in 2006 to £03 million in 2007 this is as a result of the final 
determination of the number of shares to be issued in respect 
of the t amesis earnout 
business risks
the principal business risks remain the same as in previous years
competition
the group operates in a growing but competitive market 
there are three major software suppliers in the global 
electronic trading systems market for futures and options of 
which patsystems is one there are many smaller companies 
who supply screens but not market connectivity in such a 
market there is always a risk that customers could move to 
16
continued patsystems        annual report 2007
other competitors and there is always downwards pressure on margins patsystems 
mitigates this risk by supporting its brands with appropriate marketing activity and 
by consistently extending its market connectivity as well as improving its software 
customer support and customer care
customer consolidation
consolidation within the financial services industry has occurred over the past few 
years and further consolidation remains a risk where consolidation takes place the 
risk to our business is typically to the revenues associated with market connectivity 
and support and maintenance patsystems mitigates this risk by actively adding new 
customers products and asset categories to our portfolio 
as a case in point in august 2007 calyon and fimat announced the merger of 
their brokerage businesses globally to form a new business called newedge the 
combination of their business activities concluded formally on 2 january 2008 
and their operational functions are expected to be rationalised during 2008 the 
combination of these two existing customers will have an impact on our anticipated 
revenues in 2008 but this has been factored into our business plans for the year
r evenue profile
83 of patsystems revenue is recurring in nature and in stark contrast to many 
technology companies this gives a level of guarantee for a minimum level of 
operating profit for the business on an annual basis
however with products such as risk informer key to our future growth expectations 
and the significant revenues from these opportunities being nonrecurring in nature 
the propensity for organisations such as the investment banks to defer technology 
investments during tougher economic climates is a risk to our business it remains 
too early for us to assess what impact the sub prime credit crisis will have on 2008 
purchasing decisions 
cash and treasury 
the group generated net cash inflows from operating activities of £265 million 
2006 – £269 million and £22 million was invested in intangible and tangible 
assets dividends of £07 million were paid during the year cash and cash 
equivalents remained at £32 million
the group is exposed to foreign currency risk on sales purchases and cash 
balances that are denominated in a currency other than sterling the principal 
currency giving rise to this risk is the us dollar patsystems’ policy is to carry forward 
cover for 75 of us£ net anticipated exposure for 12 months forward that level 
of cover is in place and is comprised of a mixture of forward contracts and options 
the average us£ exchange rate used in the 2007 income statement was 201 the 
average rate of the hedges in place for 2008 is 199
martin thorney croft 
finance direct or 
8 february 2008
17
t otal group revenue grew 
by £17 million 11 
to £1696 million from 
£1526 million last year
83 of patsystems revenue is 
recurring in nature and this 
gives a level of guarantee 
for a minimum level of 
operating profit for the 
business on an annual basis 18
1
3
5
2
4
6
our board
patsystems        annual report 2007 1  stewart millman
chairman nonexecutive d irector a ge 59
stewart has over 30 years’ experience in investment 
management and corporate finance he was part of the 
senior management of bzw natwest markets and hsbc 
investment bank in 2002 he became selfemployed and 
since then he has acted as a consultant to various companies 
in the uk and abroad stewart is also nonexecutive 
chairman of a publicly traded company providing network 
related services to the global telecommunications industry 
and a nonexecutive director of other companies he 
has broad experience with technology and financial 
sector companies stewart a fellow of the securities and 
investment institute holds a ma oxon
3  martin thorney croft
f inance director a ge 46
martin joined patsystems as finance director in july 2004 
he was previously finance director of profile media 
group plc martin a member of the institute of chartered 
accountants having qualified with ernst and young in 1986 
holds a b com from birmingham university
5  steve sparke
nonexecutive d irector a ge 49
steve has had a 28 year career in the city spanning interest 
rate trading and futures and options broking and is 
currently chairman of the futures and options association 
he was global head of ubs exchange t raded derivatives 
business until april 2006 and has driven a number of the 
technologyled changes within the fcm industry steve 
was a nonexecutive director of euronextliffe and chaired 
the exchange’s audit and risk committee until november 
2007 steve graduated with a law degree from nottingham 
university in 1979
2  david w ebber
chief executive a ge 42
david was appointed chief executive of patsystems in 
january 2006 he was formerly chief executive of attentiv 
systems group where his business leadership saw the 
company through significant expansion by both organic 
growth and acquisition he led the management buyout 
subsequent aim flotation of the business and was retained 
as chief executive when attentiv systems group plc was 
acquired by t ietoenator in may 2005 david a member of 
the institute of chartered accountants since 1989 holds a 
bsc economics from the london school of economics
4  r ichard l ast
nonexecutive d irector chairman of the audit 
committee a ge 50
richard is chairman and nonexecutive director of x pertise 
group plc an it training company and knowledge 
t echnology solutions plc a financial software business 
both listed on aim and chairman and nonexecutive 
director of the british smaller technology companies vct 
2 plc which is listed on the london stock exchange he 
is also a nonexecutive director of aim listed companies 
financial payments systems limited and lighthouse 
group plc and director of a number of private companies 
including sphinx cst limited and apd communications 
limited both it companies richard a fellow of the 
institute of chartered accountants holds a ba hons from 
sheffield university
6  john priestley
nonexecutive d irector chairman of the r emuneration 
and nomination committee a ge 58
john has over 30 years experience in the software and 
services sector and in 2003 concluded a 13 year career 
with british t elecommunications as director of business 
development for syntegra previously he was a director 
of kapiti and a divisional director with hoskyns he is 
currently managing director of fitzmaine limited
19 patsystems        annual report 2007 20 patsystems        annual report 2007
directors’ report
the directors present their report for patsystems plc and the audited financial statements for the year ended 31 december 2007
princi pal activities
the principal activities of the group are the development distribution and support of software enabling
the electronic trading of financial products on global trading exchanges 
real time trade capture valuation and risk management for the structured finance market 
r esults and dividends
the profit on ordinary activities attributable to shareholders after taxation amounted to £1844000 2006 £7906000 
the proposed dividend for the year is detailed in the chairman’s statement on page 4
r eview of business and future develo pments
the directors are pleased with the group’s performance during the year and its position at 31 december 2007 the directors are 
confident that performance will continue to improve in 2008 and beyond 
the review section of this report contains a detailed assessment of the business and future projects 
detailed reviews of the risks faced by the business are detailed in the chief executive’s report and the finance director’s review 
the finance director’s review also details the key performance indicators kpis for the year
proceeds from shares issues during the year
£112000 was received in proceeds from the exercise of share options during the year ended 31 december 2007
in addition shares with a market value of £3345000 were issued during the year in part settlement of the deferred consideration 
for the 2005 acquisition of t amesis limited
substantial shareholdings
on 5 february 2008 the following holdings of 3 or more of the issued share capital of patsystems plc were known to the company
beneficial owner as notified to the c ompany number of shares 
ion trading uk limited 47976191 2703
brandes investment partners lp 13687500 771
sedaf holdings sa 10389600 585
brewin dolphin securities limited 10230334 576
resolution asset management 7455200 420
herald investment management limited 6400000 361
credit agricole indosuez suisse sa 6321922 356
rathbone investment management limited 6000000 338
directors
the directors of the company together with those who served during the year are as follows
executive directors nonexecutive directors 
d webber s millman
m thorneycroft r last 
s sparke
j priestley appointed 1 january 2007
s douglasmann resigned 19 april 2007 continued
21 patsystems        annual report 2007
directors’ report
d irectors and their interests
o rdinary shares of 1p each in patsystems plc 5 february 2008 31 december 2007 31 december 2006
d webber 600000 600000 420000
m thorneycroft 40000 40000 40000
s millman 1192282 1192282 1192282
r last 786886 786886 786886
s sparke 250000 250000 150000
j priestley 91017 91017 91017
s douglasmann resigned 19 april 2007 829597 829597 863097
 or at date of appointment
save as disclosed in this report and note 29 there were no other contracts subsisting during or at the end of the financial year in 
which a director of the company is or was materially interested
employee involvement
the directors recognise the importance of employee involvement established by good communications and working relationships 
the decentralised nature of the group’s activities necessitates that the practical application of this policy is the responsibility of local 
management in a manner appropriate to their circumstances
employment p olicies
the group is committed to the terms of the codes of practice for the elimination of all or any discrimination and to the promotion  
of equality of opportunities in employment
it is group policy to afford equal opportunities to all employees and job applicants no employee or job applicant is less favourably 
treated than another on the grounds of their sex sexual orientation age marital status religion race nationality ethnic or national 
origin colour or disability and all appointments and promotions are determined solely by merit
it is also group policy to encourage and assist in the employment training retraining and career development of disabled persons 
where possible having regard to their suitability for a particular vacancy and the nature of the group’s activities in the event 
that employees become disabled during employment the group will where possible continue their employment and arrange 
appropriate training
responsibility for monitoring the effective working of these policies is vested in martin thorneycroft the finance director
f inancial instruments and financial risk management
the group’s activities expose it to a variety of financial risks and it has developed and operates an overall risk management 
programme that recognises the unpredictability of financial markets and seeks to minimise potential adverse effects on the group’s 
financial performance 
financial risk management is under the control of the finance director and is carried out centrally for the group in compliance with 
policies approved and monitored by the full board the board regularly reviews the effectiveness of these policies examining specific 
areas including foreign exchange risk interest rate risk credit risk and the extent to which financial instruments are being used to 
hedge certain risk exposures 
details of the group’s exposures to market credit and liquidity risks are set out in note 3 to the financial statements
r esearch and develo pment
during the year the company continued to invest in research and development rd all expenditure whether incurred through 
internal staff costs or through third party suppliers relating to rd that satisfies the criteria for capitalisation under ias 38 
‘intangible assets’  is capitalised otherwise it is written off to the income statement in the period incurred continued
22 patsystems        annual report 2007
directors’ report
c reditor p ayment p olicy
given the international nature of the group’s operations there is no standard code for the group in respect of payments to 
suppliers operating subsidiaries are responsible for agreeing terms and conditions for their business transactions when orders 
for goods and services are placed ensuring that suppliers are aware of the terms of payment and including the relevant terms in 
contracts where appropriate these arrangements are adhered to provided that suppliers meet their contractual commitments
creditor days have not been calculated for the company as it is an investment holding company
c haritable and political donations
the group made charitable contributions of £500 during the year 2006 £550 the donations were made to children of st mary’s 
intensive care no political donations were made in 2007 or 2006
d isclosure of information to auditors
for each of the persons who were directors at the time this report was prepared the following applies
so far as the directors are aware there is no relevant information of which the company’s auditors are unaware and 
the directors have taken all the steps that they ought to have taken as directors in order to make themselves aware of any  
relevant audit information and to establish that the company’s auditors are aware of that information
d isclosure and trans parency rules  dtr 
the company has complied with the dtr so far as they are applicable to aim listed companies
a nnual g eneral meeting
the notice convening the annual general meeting agm together with the proposed resolutions is being sent to shareholders the 
agm will be held on 17 april 2008
statement of d irectors’ res ponsibilities
company law requires the directors to prepare financial statements for each financial year which give a true and fair view of the state 
of affairs of the company and the group as at the end of the year and of the profit or loss of the group for the year 
in preparing those financial statements the directors are required to 
select suitable accounting policies and then apply them consistently 1 
make judgements and estimates that are reasonable and prudent 2 
state whether applicable accounting standards have been followed subject to any material departures disclosed and explained 3 
in the financial statements
prepare the financial statements on the going concern basis unless it is inappropriate to presume that the group will 4 
continue in business
the directors confirm that the financial statements comply with the above requirements
the directors are responsible for the maintenance and integrity of the patsystems website information published on the internet 
is accessible in many countries with different legal requirements legislation in the united kingdom governing the preparation and 
dissemination of financial statements may differ from legislation in other jurisdictions
the directors are responsible for maintaining proper accounting records which disclose with reasonable accuracy at any time 
the financial position of the company and the group and enable them to ensure that the financial statements comply with the 
companies act 1985 as amended from time to time the directors are also responsible for safeguarding the assets of the company 
and the group and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities
for and on behalf of the board of patsystems plc
daljit k aurk hela 
company secretary 
8 february 2008
r egistered office 
cottons centre  
hays lane  
london se1 2qp 23 patsystems        annual report 2007
statement of corporate governance
the following statement of corporate governance reflects the position of the company as at 31 december 2007
the board is responsible for the group’s corporate governance policy and recognises the importance of high standards of integrity 
and consistently seeks to apply the principles set out in the combined code on corporate governance the “code” to the extent 
that they are appropriate for and applicable to a company of patsystems’ size quoted on the alternative investment market “aim”
directors
details of the dates of appointment and resignation of directors within the year are shown in the directors’ report all directors 
are subject to reelection within a threeyear period the roles of the chairman and chief executive are separate and have been so 
throughout the year
the nonexecutive directors are considered to be ‘independent’ within the definition contained in the code the nonexecutive 
directors meet without the presence of the executive directors whenever it is appropriate for them to do so
all the directors have access to the advice of the company secretary and may in furtherance of their duties take independent legal 
and financial advice at the company’s expense they also have access to the minutes of the board in which any concerns expressed 
by them regarding matters pertaining to the group are recorded
while there is no formal process the performance and effectiveness of each director including the nonexecutive directors is 
assessed on an ongoing basis by the other members of the board
board meetings
the board generally meets monthly and at such other times as required and receives regular reports on a wide range of key issues 
including operational performance risk management and corporate strategy
the board’s accountability is demonstrated by the adoption of a formal schedule of matters specifically reserved to the board for its 
decision concerning all key areas across the group’s activities thereby ensuring that all major decisions affecting the group are taken 
at board level all the directors are free to bring any matter to the attention of the board at any time
c ommittees
the audit committee and the combined remuneration and nominations committee meet at least twice a year
audit committee
the audit committee is chaired by richard last and comprises all the nonexecutive directors the external auditors together with 
the finance director and other financial staff are invited to attend these meetings as and when required
in accordance with its terms of reference the principal function of this committee is to determine the appropriateness of accounting 
policies to be used in the group’s annual results in addition the committee is responsible for monitoring the independence of the 
group auditors assessing the group’s audit arrangements and the group’s system of internal controls and reviewing the halfyearly 
and annual results before publication
r emuneration and nominations committee
the remuneration and nominations committee comprises all the nonexecutive directors and is chaired by john priestley prior to  
19 april 2007 the committee was chaired by stewart douglasmann
in accordance with its terms of reference the committee determines the level and makeup of remuneration including bonuses and 
options of the executive directors and certain senior management this also includes formulation of remuneration policy throughout 
the group embracing both share options and bonuses
the committee also evaluates the balance of skills knowledge and experience on the board and considers all new board 
appointments and reappointments against this evaluation
the report of the board on directors’ remuneration and on group remuneration policy giving details of company policy and 
individual directors’ remuneration is set out on pages 25 to 28 the remuneration arrangements of the nonexecutive directors are 
determined by the board as a whole
the notice period provisions contained in the directors’ service agreements are summarised on page 27 of these accounts continued
24 patsystems        annual report 2007
statement of corporate governance
executive management committee
the executive management committee the “emc” under the chairmanship of the chief executive or in his absence the finance 
director meets monthly and is responsible for the daytoday running of the group the members of the emc are the two executive 
directors of the company together with the seven key business heads who are not directors
r elations with shareholders
the board welcomes the views of shareholders
the annual general meeting agm is used as an opportunity to communicate with shareholders all shareholders are encouraged 
to attend the company’s agm in order to take advantage of the opportunity to ask questions of the directors
shareholders may also contact the company in writing or via its website which is regularly updated additional information is 
supplied through the circulation of the quarterly trading updates the interim report and the annual report and accounts during 
the year the company issued a series of announcements to the stock exchange the chief executive finance director and the 
chairman from time to time meet individual and institutional shareholders and provide such information as is permissible in order  
to facilitate a better understanding of the group’s business and operations
internal control
the board of directors has overall responsibility both for the group’s system of internal controls which includes internal financial 
controls and for reviewing their effectiveness the directors recognise that no system of internal control can provide absolute 
assurance the group’s systems are designed to manage the risk of failure to achieve business objectives and therefore can only 
provide the directors with reasonable assurance against material misstatement or loss
the key elements of the group’s internal control system which have been operational for the whole of the financial year are as follows
management structure
the board has overall responsibility for the group and there is a formal schedule of matters specifically reserved for decision by 
the board each executive director has been given responsibility for specific aspects of the group’s affairs reporting to the chief 
executive is the emc which is responsible for the day to day running of the group’s affairs
monitoring systems used by the board
the board receives regular reports on the financial and business performance of the group the board is regularly advised through 
these reports on the working capital position and financial performance relative to the group’s approved budget
internal audit
the board reviews from time to time the need for an internal audit function and remains of the opinion that the systems of internal 
financial control are appropriate to the group’s present activities and that such a function is unnecessary
g oing concern
the directors have reasonable expectation that the company and the group have adequate resources to continue in operational 
existence for the foreseeable future for this reason they continue to adopt the going concern basis in preparing the financial statements
c om pliance statement
corporate governance procedures are subject to regular review by the board throughout the year the group has complied with 
the provisions as set out in section 1 of the code to the extent that they are appropriate for and applicable to a company of 
patsystems’ size quoted on aim
for and on behalf of the board of patsystems plc
daljit k aurk hela
company secretary
8 february 2008 25 patsystems        annual report 2007
report of the board on directors’ remuneration  
and on group remuneration policy
r emuneration committee
the remuneration committee which comprises all of and only nonexecutive directors determines group remuneration policy  
and the remuneration including bonuses and options of executive directors and certain other senior management
policy on g rou p r emuneration
the company’s policy is to set the remuneration of senior executives including executive directors at a level to attract and retain 
executives of appropriate ability and experience to manage the affairs of the company in this respect i would like to congratulate 
the management team on the introduction of a flexible benefits scheme that allows employees to chose from a range of benefits to 
suit their circumstances this approach contains costs improves employee benefits and increases the company’s competitiveness 
in the market for scarce skills in formulating its remuneration policy the remuneration committee is mindful of the competitive 
pressures inherent in a sector that straddles both the software and financial services industries it is the company’s policy that a 
significant element of total remuneration is related to the financial performance of the company remuneration is reviewed annually
the remuneration package
the remuneration package comprises base salary and benefits pension contributions annual bonus and long term incentive 
arrangements all senior employees of the group including the executive directors are remunerated using the policy 
described below
base salary and benefits
base salary takes into account the performance of the individual and information from independent sources on market levels of 
remuneration the executive directors’ basic salaries are reviewed by the committee prior to the beginning of each year the 
executive directors are also entitled to private medical death in service critical illness and permanent health insurance
pension contributions
the group operates a defined contribution pension scheme for eligible uk employees neither of the executive directors are 
members of this scheme the executive directors receive a company contribution to their individual pension arrangements
a nnual bonuses
bonus scheme arrangements are in place for all members of staff including the executive directors bonuses are linked to the financial 
performance of the group bonuses are calculated based on individual and group performance targets which are set at the start of 
the financial year
l ongterm incentives
share options
the group operates two share option plans – an enterprise management incentive share option scheme emi and a standard 
unapproved share option scheme all senior staff including the executive directors participate in both schemes
options awarded under the first of three main grants vested in full in 2006 an aggregate total of 20 of the options awarded 
under the second and third grants of both schemes vested on 14 february 2007 and a further 16 of these awards will vest on 
11 february 2008 the remaining 64 of the options will be carried forward into future years and the remuneration committee will 
determine what performance conditions to attach to them in 2008
the company has also made a number of special awards under both schemes to directors and senior employees which will vest in 
between one and three years from the date of grant subject to certain performance conditions 
the board is currently reviewing the ongoing effectiveness of its incentive schemes and is considering the introduction of a restricted 
stock unit scheme continued
26 patsystems        annual report 2007
report of the board on directors’ remuneration  
and on group remuneration policy
cashbased longterm incentive scheme
during 2007 the group introduced a new cashbased longterm incentive scheme “the cash scheme” the maximum conditional 
award allowable under the three year cash scheme is 100 of salary with each award vesting no earlier than the third anniversary 
from date of grant and vesting being subject to achievement of performance conditions and continued employment “the awards” 
when the awards to the directors vest they will be expected to use 50 of the net of tax amount in purchasing the company’s 
shares in the open market until such time as a total personal shareholding has been achieved which is equivalent to 100 of base 
salary in the event of a change of control eg a takeover the awards will vest provided the remuneration committee is satisfied 
that it is fair and reasonable for them to do so eg that the terms of a takeover implicitly reflect prospective performance on a scale 
that would have resulted in full vesting
the performance conditions attached to the awards require adjusted fully diluted predeferred tax eps growth from the 2006 
financial year to the 2009 financial year of between 10 compound per annum to 30 compound per annum for between 30 
and 100 of the award to vest the awards vest on a straight line basis between minimum and maximum thresholds 
d irectors’ emoluments
salaryfees 
£
bonus
£
benefits in kind
£
t otal 
2007
£
total
 2006
£
executive directors
d webber 230000 60000 2072 292072 291889
m thorneycroft 145000 40000 480 185480 180168
nonexecutive directors
s millman 45000 – – 45000 45000
r last 30000 – – 30000 27500
s sparke 30000 – – 30000 6346
j priestley 29167 – – 29167 –
s douglas mann 14167 – – 14167 27500
a aggarwal – – – – 25000
523334 100000 2552 625886 603403
 s sparke was appointed on 29 september 2006 j priestley was appointed on 1 january 2007
 s douglas mann resigned on 19 april 2007 a aggarwal resigned on 31 december 2006
pensions
the group operates a defined contribution pension scheme for eligible uk employees the executive directors that served 
during the year were not members of this scheme the following contributions to their private pensions were charged to the 
income statement
2007
£
2006
£
d webber 23000 21000
m thorneycroft 14500 13000
37500 34000 continued
27 patsystems        annual report 2007
report of the board on directors’ remuneration  
and on group remuneration policy
d irectors’ contractual terms
d w ebber m thorneycroft s m illman r l ast s s parke j priestley
date appointed 03jan06 05jul04 17feb03 17feb03 29sep06 01jan07
service contract  yes yes no no no no
notice period
– by company 12 months 6 months 3 months 3 months 3 months 3 months
– by director 12 months 6 months 3 months 3 months 3 months 3 months
benefits death in service death in service – – – –
pension 10 10 – – – –
 all the nonexecutive directors are engaged under “letters of appointment” 
in the event that an offer for the entire issued share capital of patsystems plc becomes wholly unconditional the executive and  
nonexecutive directors are entitled to 12 months notice
d irectors’ share o ptions
scheme type exercise price o utstanding 
options at 
31 december 2007
exercise date expiry date
d webber emi 1375p 727272 note 1 140216
unapproved 1375p 3272728 note 2 140216
unapproved 2900p 1000000 note 2 190417
5000000
m thorneycroft emi 1525p 655737 note 3 300714
unapproved 1525p 344263 note 4 300714
unapproved 1800p 500000 note 4 170315
1500000
d webber’s options include 1000000 that were granted during the year all other directors’ share options were outstanding at 
31 december 2006
the ifrs 2 charge to the income statement in relation to these options was £127000 continued
28 patsystems        annual report 2007
report of the board on directors’ remuneration  
and on group remuneration policy
note 1 these options were granted under a special award of the enterprise management incentive emi scheme one third of 
these options can be exercised after a period of three years after the date of the grant two thirds of these options can be 
exercised after a period of three years after the date of the grant but subject to the group achieving growth in adjusted fully 
diluted predeferred tax eps from the 2005 financial year to the 2008 financial year of 10 compound per annum
note 2 these options were granted under special awards of part b inland revenue unapproved of the patsystems plc 2003 share 
option scheme exercise conditions are as per note 1
note 3 options were granted under the second and third awards of the enterprise management incentive emi scheme 20 of 
these options vested on 14 february 2007 and 16 will vest on 11 february 2008
note 4 these options were granted under the second and third awards of part b inland revenue unapproved of the patsystems 
plc 2003 share option scheme the vesting status is the same as note 3
the midmarket price of the company’s shares at the end of the financial year was 265p and the range of market prices during the 
year was 17p to 3275p
d irectors’ awards under the cashbased longterm incentive scheme
date of award maximum amount 
of a ward
£
vesting date
d webber 190407 130000 190410
m thorneycroft 190407 85000 190410
the performance conditions attached to the awards require adjusted fully diluted predeferred tax eps growth from the 2006 
financial year to the 2009 financial year of between 10 compound per annum to 30 compound per annum for between 30 
and 100 of the award to vest the awards vest on a straight line basis between minimum and maximum thresholds 
when the awards to the directors vest they will be expected to use 50 of the net of tax amount in purchasing the company’s 
shares in the open market until such time as a total personal shareholding has been achieved which is equivalent to 100 of base 
salary in the event of a change of control eg a takeover the awards will vest provided the remuneration committee is satisfied 
that it is fair and reasonable for them to do so eg that the terms of a takeover implicitly reflect prospective performance on a scale 
that would have resulted in full vesting
the charge to the income statement for the year ended 31 december 2007 in relation to these awards was £25000
john priestley
chairman remunera tion committee
8 february 2008 29 patsystems        annual report 2007
independent auditors’ report to the members of patsystems plc
we have audited the group financial statements of patsystems plc for the year ended 31 december 2007 which comprise the 
consolidated income statement the consolidated balance sheet the consolidated cash flow statement the consolidated 
statement of recognised income and expense and the related notes these group financial statements have been prepared 
under the accounting policies set out therein
we have reported separately on the parent company financial statements of patsystems plc for the year ended 31 december 2007
r espective res ponsibilities of directors and auditors
the directors’ responsibilities for preparing the annual report and the group financial statements in accordance with applicable 
law and international financial reporting standards ifrss as adopted by the european union are set out in the statement of 
directors’ responsibilities
our responsibility is to audit the group financial statements in accordance with relevant legal and regulatory requirements and 
international standards on auditing uk and ireland this report including the opinion has been prepared for and only for the 
company’s members as a body in accordance with section 235 of the companies act 1985 and for no other purpose we do not  
in giving this opinion accept or assume responsibility for any other purpose or to any other person to whom this report is shown  
or into whose hands it may come save where expressly agreed by our prior consent in writing
we report to you our opinion as to whether the group financial statements give a true and fair view and whether the group financial 
statements have been properly prepared in accordance with the companies act 1985 we also report to you whether in our 
opinion the information given in the directors’ report is consistent with the group financial statements 
in addition we report to you if in our opinion 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 transactions is not disclosed
we read other information contained in the annual report and consider whether it is consistent with the audited group financial 
statements the other information comprises only the directors’ report the chairman’s statement the chief executive’s report the 
finance director’s review the statement of corporate governance and the report of the board on directors’ remuneration and  
on group remuneration policy we consider the implications for our report if we become aware of any apparent misstatements  
or material inconsistencies with the group financial statements our responsibilities do not extend to any other information
basis of audit o pinion
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 group financial 
statements it also includes an assessment of the significant estimates and judgments made by the directors in the preparation of 
the group 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 group 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 group financial statements
op inion
in our opinion
the group financial statements give a true and fair view in accordance with ifrss as adopted by the european union of the state  
of the group’s affairs as at 31 december 2007 and of its profit and cash flows for the year then ended
the group 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 group financial statements 
pricewaterhouse c oo pers ll p
chartered accountants and registered auditors
london
8 february 2008 30 patsystems        annual report 2007
consolidated income statement
for the year ended 31 december 2007
notes
2007
£’000
2006
£’000
revenue 4 16962 15255
cost of sales 336 387
gross profit 16626 14868
operating expenses 14539 13292
operating profit 5 2087 1576
finance income 101 54
finance costs – 4
finance income – net 7 101 50
profit on ordinary activities before taxation 2188 1626
t axation 8 344 6280
profit for the year attributable to equity holders of the company 1844 7906
earnings per ordinary share 10
 – basic 11p 49p
 – diluted 10p 41p
adjusted earnings per ordinary share 10
 – basic 13p 09p
 – diluted 12p 08p
 eps has been adjusted for deferred tax – see note 10 for a detailed explanation
the income statement has been prepared on the basis that all operations are continuing operations
2007 
£’000
2006 
£’000
profit for the year 1844 7906
foreign exchange adjustment on foreign currency net investments 144 144
t otal recognised income for the year 1988 7762
consolidated statement of recognised income and expense
for the year ended 31 december 2007 31 patsystems        annual report 2007
consolidated balance sheet
at 31 december 2007
notes
2007 
£’000
2006 
£’000
assets
noncurrent assets
goodwill 12 3237 1745
intangible assets 13 3674 2536
property plant and equipment 14 752 754
deferred tax assets 15 6673 6979
trade and other receivables 17 371 –
14707 12014
current assets
inventories 16 12 188
trade and other receivables 17 4366 4021
financial assets – derivative financial instruments 28 30 127
income tax 40 –
cash and cash equivalents 18 3191 3251
7639 7587
liabilities
current liabilities
trade and other payables 19 3240 3594
current income tax liabilities 20 101
contingent consideration 20 290 2140
3550 5835
net current assets 4089 1752
noncurrent liabilities
trade and other payables 19 44 –
provisions 21 58 34
102 34
net assets 18694 13732
equity
capital and reserves attributable to equity holders of the company
share capital 23 1775 1641
share premium account 25 7014 3691
other reserves 25 17348 17348
retained earnings 25 7443 8948
t otal equity 26 18694 13732
the financial statements on pages 30 to 60 were approved by the board of directors on 8 february 2008
david w ebber    martin thorneycroft
chief executive officer   finance director 32 patsystems        annual report 2007
consolidated cash flow statement
for the year ended 31 december 2007
2007
£’000
2006
£’000
cash flows from operating activities
cash flows from operations 2647 2694
 interest received 101 54
 interest paid – 4
 t ax paid 157 51
net cash flows from operating activities 2591 2693
cash from investing activities
purchase of intangible assets 1792 1689
purchase of property plant and equipment 423 344
acquisition of subsidiaries net of bank overdraft acquired – 10
net cash flows used in investing activities 2215 2043
cash flows from financing activities
net proceeds from issue of ordinary share capital 112 164
finance lease principal payments – 40
dividends paid to company’s shareholders 693 –
net cash used infrom financing activities 581 124
net decreaseincrease in cash and cash equivalents 205 774
cash and cash equivalents at beginning of the year 3251 2604
effect of exchange rates 145 127
cash and cash equivalents at end of the year 3191 3251 33 patsystems        annual report 2007
reconciliation of net profit to net cash flows from operating activities
2007
£’000
2006
£’000
net profit 1844 7906
tax 344 6280
depreciation of property plant and equipment 425 475
amortisation of intangible assets 668 632
share compensation expense 210 230
shares issued in lieu of payment – 53
interest income 101 54
interest expense – 4
decrease in inventories 176 106
increase in trade and other receivables 716 808
decreaseincrease in financial assets and liabilities 97 170
decreaseincrease in trade and other payables 324 836
increasedecrease in provisions 24 236
cash flows from operating activities 2647 2694
material non cash transactions
during the year the estimated contingent consideration for the acquisition of t amesis limited increased to £3633000 
2006 £2140000 and the company issued 12159000 ordinary shares of 1p each in part settlement of this liability these 
transactions do not have an effect on the cash flows of the group please see note 20 for details 34 patsystems        annual report 2007
notes to the financial statements
1 a ccounting policies
a summary of the more important group accounting policies is given below these policies have been consistently applied 
to all the years presented unless otherwise stated
11 accounting convention and basis of preparation
these financial statements have been prepared in accordance with international financial reporting standards ifrs and 
ifric interpretations endorsed by the european union eu and with those parts of the companies act 1985 applicable to 
companies reporting under ifrs 
the results and net assets of subsidiary undertakings acquired are included in the consolidated income statement and 
consolidated balance sheet using the acquisition method of accounting from the effective date of acquisition
these consolidated financial statements have been prepared under the historical cost convention with the exception of 
financial instruments which are stated in accordance with ias 39 financial instruments recognition and measurement
standards amendments and interpretations effective in 2007
ifrs 7 financial instruments disclosures and the complementary amendment to ias 1 presentation of financial statements – 
capital disclosures introduces new disclosures relating to financial instruments and does not have any impact on the 
classification and valuation of the group’s financial instruments
ifric 8 scope of ifrs 2 requires consideration of transactions involving the issue of equity instruments where the 
identifiable consideration received is less than the fair value of the equity instruments issued in order to determine whether 
or not they fall within the scope of ifrs 2 this interpretation does not have any impact on the group’s financial statements
ifric 10 interim financial reporting and impairment prohibits the reversal of impairment losses recognised in an interim 
period on goodwill and investments in equity instruments and in financial assets carried at cost at a subsequent balance 
sheet date this interpretation does not have any impact on the group’s financial statements
standards amendments and interpretations effective in 2007 but not relevant for the group’s operations
the following standards amendments and interpretations to published standards are mandatory for accounting periods 
beginning on or after 1 january 2007 but they are not relevant to the group’s operations
ifrs 4 insurance contracts
ifric 7 applying the restatement approach under ias 29 financial reporting in hyperinflationary economies and
ifric 9 reassessment of embedded derivatives  
standards amendments and interpretations to existing standards that are not yet effective and have not been 
adopted early by the group
the following standards amendments and interpretations to existing standards have been published and are mandatory 
for the group’s accounting periods beginning on or after 1 january 2008 or later periods but the group has not early 
adopted them
ifrs 8 ‘operating segments’ is effective for accounting periods commencing on or after 1 january 2009 and introduces 
new requirements for determining quantifying and disclosing information relating to the business segments in which 
group companies operate a segmental analysis of the group’s operations is given in note 4 to these financial statements in 
accordance with the requirements of ias 14 ifrs 8 will replace ias 14 the group will apply ifrs 8 from 1 january 2009 
the expected impact is still being assessed in detail by management but it appears likely that the number of reportable 
segments as well as the manner in which the segments are reported will change to be consistent with the group’s internal 
management reporting 
ias 23 amendment borrowing costs is effective from 1 january 2009 the amendment to the standard is still subject 
to endorsement by the european union it requires an entity to capitalise borrowing costs directly attributable to the 
acquisition construction or production of a qualifying asset one that takes a substantial period of time to get ready for use 
or sale as part of the cost of that asset the option of immediately expensing those borrowing costs will be removed the 
group currently has no directly attributable borrowings and it expected that ias 23 amendment will not apply 
  35 patsystems        annual report 2007
continued
notes to the financial statements
11 accounting convention and basis of preparation continued
interpretations to existing standards that are not yet effective and not relevant for the group’s operations 
the following  interpretations to existing standards have been published that are mandatory for the group’s accounting 
periods beginning on or after 1 january 2007 or later periods but are not relevant for the group’s operations
ifric 11 ifrs 2 group and treasury share transactions
as none of the group entities or their shareholders have entered into share based payment transactions that require the 
purchase of treasury shares ifric 11 is not relevant to the group’s operations
ifric 12 service concession arrangements 
as none of the group entities have entered into share public to private service concession arrangements ifric 12 is not 
relevant to the group’s operations
ifric 13 customer loyalty programmes
the nature of the group’s operations is such that it is not appropriate to include the grant of loyalty award credits within 
the terms of the contracts entered into by group entities with their customers ifric 13 is therefore not relevant to the 
group’s operations
ifric 14 ias 19 the limit on a defined benefit asset minimum funding requirements and their interaction 
the group’s employee benefits policies are disclosed in note 120 and none of the group entities operates a defined benefit 
post retirement or other long term incentive scheme accordingly ifric 14 is not applicable to the group’s operations
12 foreign currency translation
f unctional and presentation currency
items included in the financial statements of each of the group entities are measured using the currency of the primary 
economic environment in which the entity operates the ‘functional currency’ the consolidated financial statements are 
presented in pounds sterling which is the company’s functional and presentation currency
t ransactions and balances
foreign currency transactions are translated into the functional currency using the exchange rates prevailing at the dates 
of the transactions foreign exchange gains and losses resulting from the settlement of such transactions and from the 
translation at yearend exchange rates of monetary assets and liabilities denominated in foreign currencies are recognised 
in the income statement
group companies
the results and financial position of all group entities none of which has the currency of a hyperinflationary economy that 
have a functional currency different from the presentation currency are translated into the presentation currency as follows
assets and liabilities for each balance sheet presented are translated at the closing rate at the date of that balance sheet 
income and expenses for each income statement are translated at average exchange rates and 
all resulting exchange differences are recognised in reserves 
13 investments
investments in subsidiaries are stated at cost less any provision for impairment
14 goodwill
goodwill represents the excess of the cost of an acquisition over the fair value of the group’s share of the net identifiable 
assets of the acquired subsidiary at the date of acquisition goodwill is tested annually for impairment and carried at cost less 
accumulated impairment losses the carrying value of capitalised goodwill is reviewed if events or changes in circumstances 
indicate a potential impairment any impairment is charged to the income statement gains and losses on the disposal of an 
entity include the carrying amount of goodwill relating to the entity sold goodwill is allocated to cashgenerating units for 
the purpose of impairment testing notes to the financial statements
continued
36 patsystems        annual report 2007
15 intangible assets 
acquired computer software licences and software acquired in the t amesis acquisition are capitalised on the basis of the 
costs incurred to acquire and bring to use the specific software these costs are amortised over their estimated useful lives 
three years costs associated with maintaining computer software programs are recognised as an expense as incurred
16 impairment of assets
assets that have an indefinite useful life are not subject to amortisation and are tested annually for impairment and 
whenever events or changes in circumstance indicate that the carrying value may not be recoverable assets that are subject 
to amortisation are tested for impairment whenever events or changes in circumstance indicate that the carrying value 
may not be recoverable an impairment loss is recognised for the amount by which the assets carrying value exceeds its 
recoverable amount the recoverable amount is the higher of an asset’s fair value less costs to sell and value in use for the 
purposes of assessing impairment assets are grouped at the lowest levels for which there are separately identifiable cash 
flows cash generating units
17 research and development
research expenditure is recognised as an expense as incurred costs incurred on product development are capitalised as 
intangible assets when it is probable that the development will provide economic benefits considering its commercial and 
technical feasibility resources are available for the development and costs can be measured reliably other development 
expenditures are recognised as costs when incurred capitalised product development is amortised from completion of 
development over periods of between 3 and 5 years
18 property plant and equipment
property plant and equipment is shown at cost less subsequent depreciation cost includes expenditure that is directly 
attributable to the acquisition of the items
depreciation on assets is calculated using the straightline method to reduce the cost of each asset to its estimated residual 
value over its estimated useful life as follows
leasehold improvements – over the period of the lease
plant and equipment – over 3 years
office furniture fixtures and fittings – over 4 years
19 current and deferred income taxes
the current income tax charge is calculated on the basis of the tax laws enacted or substantively enacted at the balance 
sheet date in the countries in which the company and its subsidiaries operate and generate taxable income management 
periodically evaluates positions taken in tax returns with respect to situations in which applicable tax regulations are 
subject to interpretation and establishes provisions where appropriate on the basis of amounts expected to be paid to 
the tax authorities
deferred income tax is provided in full using the liability method on temporary differences arising between the tax bases 
of assets and liabilities and their carrying amounts in the consolidated financial statements the deferred income tax is not 
accounted for on the initial recognition of an asset or liability in a transaction other than a business combination that at the 
time of the transaction affects neither accounting nor taxable profit or loss deferred income tax is determined using tax rates 
and laws that have been enacted or substantially enacted by the balance sheet date and are expected to apply when the 
related deferred income tax asset is realised or the deferred income tax liability is settled
deferred income tax assets are recognised to the extent that it is probable that future taxable profits will be available against 
which the temporary differences can be utilised
deferred income tax is provided on temporary differences arising on investments in subsidiaries except where the timing of 
the reversal of the temporary difference is controlled by the group and it is probable that the temporary difference will not 
reverse in the foreseeable future
deferred income tax balances are not discounted
110 inventories
inventories are stated at the lower of cost and net realisable value  notes to the financial statements
continued
37 patsystems        annual report 2007
111 financial assets
the group classifies its financial assets between “assets at fair value through profit or loss” and “loans and receivables”  the 
classification depends on the purpose for which the financial assets were acquired management determines the classification 
of its financial assets at initial recognition 
financial assets at fair value through profit or loss are financial assets held for trading a financial asset is classified in this 
category if acquired principally for the purpose of selling in the short term derivatives are also categorised as held for 
trading unless they are designated as hedges assets in this category are classified as current assets
purchases and sales of financial assets are recognised on the tradedate – the date on which the group commits to purchase 
or sell the asset financial assets are initially recognised at fair value and transaction costs are expensed in the income 
statement financial assets are derecognised when the rights to receive cash flows from the investments have expired or have 
been transferred and the group has transferred substantially all risks and rewards of ownership 
gains or losses arising from changes in the fair value of the financial assets are presented in the income statement in the 
period in which they arise 
the group assesses at each balance sheet date whether there is objective evidence that a financial asset or a group  
of financial assets is impaired impairment testing of trade receivables is described in note 113
112 accounting for derivative financial instruments and hedging activities
the group enters into forward currency contracts and options in order to hedge against the cash flow risk of foreign 
currency exchange rate movements derivatives are initially recognised at fair value on the date the contract is entered 
into and subsequently remeasured in future periods at their fair value the movement in fair values is taken to the 
income statement
the fair value of forward contracts is determined using forward exchange market rates at the balance sheet date
113 trade receivables
trade receivables are recognised initially at fair value and subsequently measured at amortised cost using the effective 
interest method less provision for impairment a provision for impairment of trade receivables is established when there 
is objective evidence that the group will not be able to collect all amounts due under the original terms of the receivables 
significant financial difficulties of the debtor probability that the debtor will enter bankruptcy or financial reorganisation 
and default or delinquency in payments are considered indicators that the trade receivable may be impaired the amount 
of the provision is the difference between the asset’s carrying amount and the present value of estimated future cash 
flows discounted at the original effective interest rate the carrying amount of the asset is reduced through the use of an 
allowance account and the amount of the loss is recognised in the income statement within “operating expenses”  when a 
trade receivable is uncollectible it is written off against the allowance account for trade receivables subsequent recoveries 
of amounts previously written off are credited against “operating expenses” in the income statement 
114 cash and cash equivalents
cash and cash equivalents includes cash in hand cash in transit deposits held at call with banks other short term highly liquid 
investments with original maturities of three months or less and bank overdrafts
cash in transit represents the net amount of monies due to group companies that have been paid to independent clearing 
agents and are pending release by overseas withholding tax authorities
115 trade payables
trade payables are recognised initially at fair value and subsequently measured at amortised cost using the effective 
interest method
116 leases
costs in respect of operating leases are charged to the income statement on a straight line basis over the lease term 
assets purchased under finance leases are recorded as tangible fixed assets in the balance sheet the obligations to pay 
future capital instalments are shown in creditors and are analysed between amounts falling due within one year and amounts 
after more than one year the asset value is calculated at the inception of the contract as the purchase price of the asset and 
the finance charge is allocated to accounting periods on the sum of the digits basis notes to the financial statements
continued
38 patsystems        annual report 2007
117  provisions
provisions are measured at the present value of the expenditures expected to be required to settle the obligation using a 
pretax rate that reflects current market assessments of the time value of money and the risks specific to the obligation 
118 segment reporting
a business segment is a group of assets and operations engaged in providing products or services that are subject to risks 
and returns that are different from those of other business segments a geographical segment is engaged in providing 
products or services within a particular economic environment that are subject to risks and returns that are different from 
those of other economic environments
all direct costs of a segment are included in that segment’s result 
119 revenue recognition
revenue comprises the fair value of the sale of goods and services net of value added tax
revenue is recognised as follows
nonrefundable installation income this is invoiced in advance of installation work and is taken to the income statement  
in line with the performance of the work 
monthly end user or lot charges monthly maintenance and income on any rentals – these are credited to the income  
statement in the period in which the service is provided
income from consultancy software development projects and perpetual licences – this is recognised in the income  
statement when and to the extent that the company obtains the right to consideration in exchange for its performance  
in accordance with the terms for acceptance set out in the customer contracts
120 employee benefits 
pension obligations
the group operates a defined contribution scheme which is open to uk and us employees the group pays 
contributions to publicly or privately administered pension insurance schemes on a mandatory contractual or voluntary 
basis the group has no further payment obligations once the contributions have been paid the contributions are 
recognised as employee benefit expense when they are due
t ermination benefits
termination benefits are payable when employment is terminated before the normal retirement date or when an 
employee accepts voluntary redundancy in exchange for these benefits the group recognises termination benefits 
when it is demonstrably committed to either terminating the employment of current employees according to a detailed 
formal plan without possibility of withdrawal or providing termination benefits as a result of an offer made to encourage 
voluntary redundancy
sharebased benefits
the group operates two share options schemes the enterprise management incentive scheme and the 2003 share option 
scheme inland revenue unapproved 
the fair value of options is recognised as an employee benefit expense with a corresponding increase in reserves over the 
vesting period the proceeds received net of any directly attributable transaction costs are credited to share capital nominal 
value and share premium when the options are exercised a detailed explanation of how the fair values have been derived 
can be seen in note 24 notes to the financial statements
continued
39 patsystems        annual report 2007
120 employee benefits continued
c ashbased longterm incentive benefits
the group has introduced a new cashbased longterm incentive scheme “the cash scheme” and on 19 april 2007 awards 
were granted to the executive directors and to certain senior and key employees these awards are conditional upon the 
rate of growth in fully diluted predeferred tax eps over the period from 31 december 2006 to 31 december 2009 the 
cost of these awards has been estimated based on projected eps growth and is recognised as an employee benefit expense 
on a straight line basis over the period from grant to 31 december 2009
other benefits
uk employees are also entitled to private medical and death in service insurance and subsidised health club membership 
the costs of providing these benefits are recognised as employee benefit expense as they fall due
during the year the company has carried out a review of uk employee benefits and in 2008 core benefits are being 
extended to include critical illness and long term sickness insurance the company is also introducing a flexible benefits 
scheme that enables employees to tailor their total remuneration packages to meet their own individual lifestyle and 
family requirements
121 dividend distributions 
final dividend distributions to the company’s shareholders are recognised as liabilities in the group’s financial statements 
in the period in which the dividends are approved by the company’s shareholders interim dividend distributions to the 
company’s shareholders are recognised as liabilities in the group’s financial statements when paid
2 c ritical accounting estimates and judgements
estimates and judgements are continually evaluated and are based on historical experience and other factors including 
expectations of future events that are believed to be reasonable under the circumstances
the group makes estimates and assumptions regarding the future the resulting accounting estimates will by definition 
seldom equal the related actual results the estimates and assumptions that have a significant risk of causing a material 
adjustment to the carrying amounts of assets and liabilities within the next financial year are the assumptions used in 
calculating the contingent consideration for the purchase of t amesis limited detailed in note 20 and the assumptions used 
for recognising the deferred tax asset detailed in note 15
3 f inancial risk management
the group’s activities expose it to a variety of financial risks and it has developed and operates an overall risk management 
programme that recognises the unpredictability of financial markets and seeks to minimise potential adverse effects on the 
group’s financial performance 
financial risk management is under the control of the finance director and is carried out centrally for the group in 
compliance with policies approved and monitored by the full board the board regularly reviews the effectiveness of these 
policies examining specific areas including foreign exchange risk interest rate risk credit risk and the extent to which financial 
instruments are being used to hedge certain risk exposures  notes to the financial statements
continued
40 patsystems        annual report 2007
31 market risk 
the principal market risk to which the the group is exposed is foreign currency risk on sales purchases and cash balances 
that are denominated in a currency other than sterling the principal currency giving rise to this risk is the us dollar 
patsystems’ policy is to carry forward cover for 75 of us£ net anticipated exposure for 12 months forward forward 
cover is achieved through a mixture of forward contracts and options this policy has remained unchanged throughout 
both 2007 and 2006 although the level of cover and the exposure to risks on other foreign currencies are kept under 
regular review
the average usuk£ exchange rate used in the 2007 income statement was 201 2006 185 the average rate of the 
hedges in place at 31 december 2007 for 2008 was 199 2006 for 2007 183 the fair value of these hedges is recognised 
as a financial asset of £30000 2006 £127000 on the group balance sheet at the year end
the group has certain investments in foreign operations whose net assets are exposed to foreign currency translation 
risk this exposure is minimised by a group policy requiring individual subsidiaries to remit any surplus funds to the parent 
company to facilitate central management as set out above and to enable each individual subsidiary to match remaining 
assets and liabilities denominated in their specific functional currencies
during the year ended 31 december 2007 the usuk£ exchange rate fluctuated between 196 and 207 2006 between 
172 and 196 at 31 december 2007 if the us had weakened  strengthened by 5 against the uk£ with all other 
variables held constant post tax profit for the year would have been £143000 2006 £114000 lower higher mainly as a 
result of foreign exchange gains  losses on translation of us denominated trade receivables
the group is also exposed to interest rate risks on the fair values of the hedging instruments that it holds and on the cash 
flows arising from any interest bearing cash deposits these assets are regularly realised to settle trade and other payables as 
part of the group’s management of its liquidity risks the group has no material borrowings and accordingly exposures to 
interest rate risks are not regarded as significant
32  credit risk  
credit risk arises from cash and cash equivalents and from credit exposures to the group’s customers including outstanding 
receivables and committed transactions credit risk is managed centrally with regular reports of exposures reviewed by 
the board the group does not set individual credit limits but will seek to ensure that counterparties enter into legally 
enforceable contracts that include settlement terms that demonstrate the counterparties’ commitment to the transaction and 
minimise this risk exposure 
the board does not assess the credit quality of financial assets by reference to external credit ratings but will regularly 
examine the ageing of financial assets and individual counterparty historic default rates an aged analysis of trade receivables 
at 31 december 2007 is set out in note 17
33  liquidity risk 
the group has no borrowings or committed credit lines and its liquidity management policy is carried out at a local level 
and involves projecting cash flows in major currencies and considering the levels of liquid assets necessary to meet these 
requirements are overseen by the board with group levels of cash and cash equivalents reviewed on a monthly basis a 
maturity analysis of trade and other payables is shown in note 19
34  capital risk management
the group’s objectives when managing capital are to safeguard the group’s ability to continue as a going concern in order 
to provide returns for shareholders and benefits for other stakeholders consistent with others in the industry and of its size 
the group believes that an optimum capital structure is currently achieved entirely through equity and with no net debt 
t otal equity at 31 december 2007 was £18694000 2006 £13732000
in order to maintain or adjust the capital structure the group may adjust the amount of dividends paid to shareholders 
return capital to shareholders issue new shares or raise future funds through debt notes to the financial statements
continued
41 patsystems        annual report 2007
4 s egmental analysis
the group operates in one business segment that of the supply of software to financial institutions the operations are 
monitored by the geographical regions of europe north america and asia pacific
2007 europe
£’000
north a merica
£’000
a sia pacific
£’000
t otal
£’000
revenue by origin 7524 6219 3219 16962
revenue by destination 6822 6219 3921 16962
depreciation and amortisation 1011 33 49 1093
operating profit 1980 16 91 2087
finance income – net 25 69 7 101
profit before tax 2006 84 98 2188
capital expenditure on property  
plant and equipment 361 12 50 423
capital expenditure on intangible assets 1801 5 – 1806
t otal assets 16942 3460 1944 22346
t otal liabilities 2601 840 211 3652
2006 europe
£’000
north america
£’000
asia pacific
£’000
total
£’000
revenue by origin 6722 5555 2978 15255
revenue by destination 5543 5555 4157 15255
depreciation and amortisation 1007 31 69 1107
operating profit 1249 675 348 1576
finance income – net 27 22 1 50
profit before tax 1276 697 347 1626
capital expenditure on property  
plant and equipment 234 64 46 344
capital expenditure on intangible assets 1679 2 8 1689
t otal assets 15216 2481 1904 19601
t otal liabilities 4944 691 234 5869 notes to the financial statements
continued
42 patsystems        annual report 2007
5 op erating profit before interest and taxation
2007
£’000
2006
 £’000
operating profit is stated after chargingcrediting
staff costs 10004 9322
share compensation expense 210 230
t otal staff costs 10214 9552
less wages and salaries capitalised in accordance with ias 38 936 1115
9278 8437
depreciation – owned tangible assets 401 450
– under finance leases 24 25
– total tangible assets 425 475
amortisation – capitalised development costs 185 183
– other intangible assets 483 449
– total intangible assets 668 632
operating lease costs – plant and machinery 24 23
– other 357 380
– total operating lease costs 381 403
foreign exchange gainloss – movement in fair value  
 of hedging instruments 97 170
– other exchange gains and losses 87 49
– total foreign exchange lossgain 10 121
services provided by the group’s auditor and network firms
during the year the group including its overseas subsidiaries obtained the  
following services from the group’s auditor as detailed below
audit services – statutory audit group 76 82
– statutory audit company 8 6
non audit services – the audit of company’s subsidiaries 
pursuant to legislation 5 6
– tax compliance tax advice and transfer 
pricing review services 46 53
– other 10 6
operating expenses are all of an administrative nature notes to the financial statements
continued
43 patsystems        annual report 2007
6 staff costs
2007
£’000
2006
 £’000
staff costs including directors’ emoluments during the year amounted to
wages and salaries 8734 8200
share compensation expense 210 230
social security costs 914 820
pension costs 356 302
10214 9552
included in the above wages and salaries is £936000 2006 £1115000 in relation to development costs that were 
capitalised in accordance with ias 38
the average monthly number of persons included directors employed by the group during the year in full time 
equivalents was
2007
n umber
2006
number
sales account management and marketing 19 15
customer operations testing and technical 64 64
development and product development 39 38
finance administration and board 19 19
141 136
details of the emoluments of the directors are contained in the report of the board on directors’ remuneration and group 
remuneration policy on page 26 under the heading “directors’ emoluments” 
7 f inance income – net
2007
£’000
2006
 £’000
interest receivable bank interest receivable 101 54
interest payable and similar charges
on finance leases – 3
other interest payable – 1
– 4
finance income – net 101 50 notes to the financial statements
continued
44 patsystems        annual report 2007
8 t ax on profit on ordinary activities
2007
£’000
2006
 £’000
united kingdom 
withholding tax 76 111
foreign tax
corporation tax 40 41
t otal current tax 36 152
deferred tax
movement in deferred tax note 15 308 6432
t axation chargecredit 344 6280
the tax for the year is different from that which would result from applying the standard rate of corporation t ax in the uk 
30 the differences are explained below
2007
£’000
2006
 £’000
profit on ordinary activities before tax 2188 1626
profit on ordinary activities multiplied by standard rate  
of corporation t ax in the uk of 30 656 488
effects of
expenses not deductible for tax purposes 14 101
depreciation less thanin excess of capital allowances – 142
amortisation of intangibles not deductible 90 147
effect of differing tax rates on overseas earnings 168 16
withholding tax 76 111
relief claimed on withholding tax 23 33
us taxes overpaid in earlier years 40 –
recognition of deferred tax assets in respect of losses  
capital allowances and share options 1048 6432
t ax losses for which no deferred tax asset has been recognised 48 –
remeasurement of deferred tax on change of uk rate 403 –
t ax losses utilised – 820
t axation chargecredit 344 6280
during the year as a result of the change in uk corporation t ax rates which will be effective from 1 april 2008 deferred 
tax balances have been remeasured uk deferred tax relating to temporary differences which are expected to reverse 
prior to 1 april 2008 is measured at 30 and uk deferred tax relating to temporary differences expected to reverse after 
1 april 2008 is measured at the tax rate of 28 as these are the tax rates that will apply on reversal  
factors that may affect future tax charges
the group has unrelieved tax losses of £24397000 2006 £23378000 that are available for offset against future 
taxable profits in their respective territories a deferred tax asset amounting to £288000 2006 £240000 has not been 
recognised in respect of these losses as their future recovery is uncertain notes to the financial statements
continued
45 patsystems        annual report 2007
9 parent com pany accounts 
the parent company accounts are set out in pages 61 to 68
10 earnings per ordinary share
in accordance with ias 33 the calculation of earnings per ordinary share is based upon
a basic and adjusted basic eps
basic earnings per share is calculated by dividing the earnings attributable to ordinary shareholders by the weighted average 
number of ordinary shares in issue during the year
2007 2006
profit for the year attributable to equity holders of the company £1844000 £7906000
deferred tax movement note 8 £308000 £6432000
adjusted profit on ordinary activities £2152000 £1474000
weighted average number of shares 168090000 162794000
basic eps 11p 49p
adjusted basic eps 13p 09p
b diluted and adjusted diluted eps
diluted earnings per share is calculated by adjusting the weighted average number of ordinary shares outstanding to assume 
conversions of all dilutive potential ordinary shares
the group has two categories of dilutive potential ordinary shares share options and contingent shares note 20
for share options a calculation is performed to determine the number of shares that could have been acquired at fair value 
determined as the average annual market price of the group’s shares based on the monetary value of the subscription 
rights attached to the outstanding options
the number of shares calculated above is compared with the number of shares that would have been issued assuming the 
exercise of the share options
2007 2006
profit for the year attributable to equity holders of the company £1844000 £7906000
deferred tax movement note 8 £308000 £6432000
adjusted profit on ordinary activities £2152000 £1474000
weighted average number of shares 168090000 162794000
effect of dilutive share options 16062000 15020000
effect of contingent share consideration 1092000 14267000
185244000 192081000
diluted eps 10p 41p
adjusted diluted eps 12p 08p
 due to the material size of the deferred tax movement in 2006 and the significant effect it has on the reported eps  
 figure the directors consider that it is more appropriate to give adjusted eps calculations that exclude the effect of  
 deferred tax notes to the financial statements
continued
46 patsystems        annual report 2007
11 princi pal subsidiaries
the principal investments in subsidiary undertakings held by the parent company are as follows
a 100 investment in respect of voting rights and nominal value in patsystems holdings limited a company incorporated 1 
in england and wales
the historical cost of the investment in the shares of patsystems holdings limited is £11180000 under the scheme of 
arrangement the subsidiary undertaking returned capital to the company amounting to £9865000 and the cost of the 
investment has been reduced accordingly to reflect this
the following subsidiary undertakings are wholly owned by patsystems holdings limited in respect of voting rights and 
nominal value of issued shares and perform the sale and support of electronic trading systems
patsystems uk ltd  –  incorporated in england and wales
patsystems na llc  –  incorporated in united states of america
patsystems pte ltd   –  incorporated in singapore
patsystems pty ltd   –  incorporated in australia
patsystems gmbh   –  incorporated in germany
the following subsidiary is wholly owned by patsystems holdings limited in respect of voting rights and nominal value of 
issued shares and acts as a holding company
professional automated trading systems bv incorporated in the netherlands
professional automated trading systems bv owns 100 of voting rights and nominal value of issued shares in patsystems 
 japan kk incorporated in japan which performs the sale and support of electronic trading systems 
patsystems  japan kk owns 100 of voting rights and nominal value of issued shares in patsystems ireland ltd 
incorporated in the republic of ireland which acts as a holding company      
a 100 investment in t amesis limited a company incorporated in england and wales that develops distributes and 2 
supports software enabling real time trade capture valuation and risk management for the structured finance market 
all subsidiaries are included in the consolidation
12 g oodwill
2007
£’000
2006
£’000
cost and net book value
at 1 january 2007 1745 1552
additions 1492 193
at 31 december 2007 3237 1745
the additions in the year are in relation to the 2005 acquisition of t amesis limited and represent an increase in the 
estimated contingent consideration note 20
the goodwill is all held in europe
impairment review
the recoverable amount for the cash generating unit has been measured based on a value in use calculation the calculations 
use pretax profits based on budgets approved by management for the year 2008 cash flows beyond this are based on a 
growth rate of 225 a pretax discount rate of 10 has been applied to the calculations
as the value in use is greater than the carrying value there is no impairment in the period and the carrying value of goodwill 
represents the excess of the cost of acquisition over the fair value of the group’s share of the net identifiable assets of the 
acquired subsidiary at the date of acquisition notes to the financial statements
continued
47 patsystems        annual report 2007
13 intangible assets
2007 software licences
£’000
a cquired software
£’000
c apitalised 
development
£’000
t otal
£’000
cost
at 1 january 2007 1123 898 2127 4148
additions 450 – 1356 1806
disposals 300 – – 300
foreign exchange – – – –
at 31 december 2007 1273 898 3483 5654
amortisation
at 1 january 2007 959 424 229 1612
charge for the year 184 299 185 668
disposals 300 – – 300
foreign exchange – – – –
at 31 december 2007 843 723 414 1980
net book value
at 31 december 2007 430 175 3069 3674
at 31 december 2006 164 474 1898 2536
the acquired software is in relation to the risk informer software purchased as part of the t amesis limited acquisition in 2005 
2006 software licences
£’000
acquired software
£’000
capitalised 
development
£’000
total
£’000
cost
at 1 january 2006 992 898 577 2467
additions 139 – 1550 1689
foreign exchange 8 – – 8
at 31 december 2006 1123 898 2127 4148
amortisation
at 1 january 2006 817 125 46 988
charge for the year 150 299 183 632
foreign exchange 8 – – 8
at 31 december 2006 959 424 229 1612
net book value
at 31 december 2006 164 474 1898 2536
at 31 december 2005 175 773 531 1479 notes to the financial statements
continued
48 patsystems        annual report 2007
14 pro perty plant and equi pment
2007 l easehold 
improvements
£’000
plant and 
equipment
£’000
o ffice furniture 
fixtures and 
fittings
£’000
t otal
£’000
cost
at 1 january 2007 540 2766 452 3758
additions – 378 45 423
disposals – 14 – 14
foreign exchange 1 5 2 2
31 december 2007 539 3135 495 4169
depreciation
at 1 january 2007 233 2351 420 3004
charge for the year 100 302 23 425
disposals – 14 – 14
foreign exchange 1 5 2 2
at 31 december 2007 332 2644 441 3417
net book value
at 31 december 2007 207 491 54 752
at 31 december 2006 307 415 32 754
included in plant and equipment are assets held under finance leases at a net book value of £nil 2006 £24000  
the depreciation charge on these assets was £24000 2006 £25000
2006 leasehold 
improvements 
£’000
plant and 
equipment
£’000
office furniture 
fixtures and fittings
£’000
total
£’000
cost
at 1 january 2006 506 2599 463 3568
additions 41 290 13 344
disposals 3 39 – 42
foreign exchange 4 84 24 112
31 december 2006 540 2766 452 3758
depreciation
at 1 january 2006 145 2099 422 2666
charge for the year 93 362 20 475
disposals 3 39 – 42
foreign exchange 2 71 22 95
at 31 december 2006 233 2351 420 3004
net book value
at 31 december 2006 307 415 32 754
at 31 december 2005 361 500 41 902 notes to the financial statements
continued
49 patsystems        annual report 2007
15 d eferred tax assets
2007 t rading losses
£’000
c apital 
allowances
£’000
share options
£’000
other timing 
differences
t otal
£’000
at 1 january 2007 6747 200 32 – 6979
additional deferred tax assets in  
respect of group companies that  
have become profitable 984 – – – 984
adjustments in respect of prior years – 42 22 – 64
utilisation of losses against current  
year profits 657 – – – 657
charges  credits arising in the year – 424 78 50 296
remeasurement on change of uk rate 411 13 9 4 403
charged  credited to income statement 84 369 91 54 308
foreign exchange 2 – – – 2
at 31 december 2007 6665 169 123 54 6673
2006 trading losses
£’000
capital 
allowances
£’000
share options
£’000
other timing 
differences
total
£’000
at 1 january 2006 – – – – –
fair value adjustment in respect of tax 
losses in t amesis at date of acquisition 547 – – – 547
credited to income statement 6200 200 32 – 6432
at 31 december 2006 6747 200 32 – 6979
deferred tax assets in respect of group companies’ unrelieved trading losses are recognised when the specific company’s 
business has become profitable and to the extent that it is probable there will be future trading profits to utilise such losses 
16 inventories
2007
£’000
2006
£’000
goods for resale 12 188
£12000 2006 £14000 of inventory was recognised in cost of sales during the year 
£nil 2006 £96000 of inventory was expensed to cost of sales in the year to write down stock to its net realisable value  notes to the financial statements
continued
50 patsystems        annual report 2007
17 trade and other receivables
2007
£’000
2006
£’000
trade receivables 2798 2622
less provision for impairment of receivables 83 50
trade receivables – net 2715 2572
other receivables 327 329
prepayments and accrued income 1695 1120
4737 4021
less noncurrent portion – accrued income 371 –
current portion 4366 4021
noncurrent receivables are due as follows
2007
£’000
2006
£’000
within between one and two years 71 –
within between two and five years 190 –
after more than five but less than ten years 110 –
noncurrent receivables 371 –
the carrying values less impairment provisions of trade and other receivables approximate their fair values
the effective interest rates on noncurrent receivables were 6 2006 nil
the ageing of trade receivables is as follows
2007 not past due
£’000
up to 3 months
£’000
3 to 6 months
£’000
o ver 6 months
£’000
t otal
£’000
fully performing 1909 – – – 1909
past due but not impaired – 649 89 68 806
impaired and provided for – – – 83 83
1909 649 89 151 2798
2006 not past due
£’000
up to 3 months
£’000
3 to 6 months
£’000
over 6 months
£’000
total
£’000
fully performing 2186 – – – 2186
past due but not impaired – 252 51 83 386
impaired and provided for – – – 50 50
2186 252 51 133 2622
trade receivables that are less that three months past due are not considered impaired as of 31 december 2007 trade 
receivables of £806000 2006 £386000 were past due but not impaired these relate to a number of independent 
customers for whom there is no indication of financial difficulties or recent history of default the group is in contact with 
these customers and obtained assurances from which it believes that the amounts receivable will be collected in full with no 
additional cost to the group
provisions for the portion of individually impaired trade receivables assessed to be irrecoverable at 31 december 2007 
totalled £83000 2006 £50000 these relate to customers where there are indications of financial difficulties or disputes 
that are unlikely to be resolved without further costs to the group notes to the financial statements
continued
51 patsystems        annual report 2007
17 trade and other receivables continued
the carrying amounts of the group’s trade and other receivables are denominated in the following currencies
2007
£’000
2006
£’000
uk pound 2215 1765
us dollar 1967 1888
singapore dollar 204 137
japanese y en 144 158
australian dollar 114 62
other currencies 93 11
total 4737 4021
movements on the group provision for impairment of trade receivables are as follows 
2007
£’000
2006
£’000
at 1 january 50 120
provision for receivables impairment 83 50
receivables written off during the year as uncollectible 26 43
unused amounts reversed 24 77
at 31 december 83 50
the creation and release of provisions for impaired receivables has been included in “operating expenses” in the income 
statement amounts charged to the allowance account are generally written off when there is no expectation of recovering 
additional cash
the other classes within trade and other receivables do not contain impaired assets
the maximum exposure to credit risk at the reporting date is the fair value of each class of receivable mentioned above 
the group does not hold any collateral as security
18 c ash and cash equivalents 
2007
£’000
2006
£’000
cash at bank and on hand 1758 2263
shortterm deposits 1433 988
3191 3251
the credit quality of the group’s financial assets represented by cash and cash equivalents is not assessed by reference to 
external credit ratings but is regularly reviewed by the board monies are held with international banking organisations and 
where appropriate with well established local bankers that are able to provide the levels of security accessibility and service 
to meet local needs
the interest rates on interest bearing shortterm deposits are floating rates all financial assets represented by cash and cash 
equivalents mature within one year
the carrying values of cash and cash equivalents approximate their fair values notes to the financial statements
continued
52 patsystems        annual report 2007
18 c ash and cash equivalents continued
the carrying amounts of the group’s cash and cash equivalents are denominated in the following currencies
2007
£’000
2006
£’000
uk pound 307 823
us dollar 1749 1082
singapore dollar 276 168
japanese y en 699 1034
australian dollar 131 86
other currencies 29 58
total 3191 3251
19 trade and other payables
2007
£’000
2006
£’000
current liabilities
trade payables 316 635
other tax and social security 350 423
accruals 1187 1119
deferred income 1387 1417
3240 3594
noncurrent liabilities
deferred income 44 –
3284 3594
none of the payables are secured 
noncurrent liabilities mature within between one and two years all other trade and other payables mature within one year
the carrying amounts of the group’s trade and other payables are denominated in the following currencies
2007
£’000
2006
£’000
uk pound 2254 2621
us dollar 863 692
singapore dollar 13 7
japanese y en 100 219
australian dollar 30 22
other currencies 24 33
total 3284 3594
the carrying amounts of the group’s trade and other payables approximate their fair values notes to the financial statements
continued
53 patsystems        annual report 2007
20 c ontingent consideration
the contingent share consideration is in relation to the acquisition of t amesis limited which is payable entirely in 
patsystems plc ordinary shares during the year the company issued 12159000 ordinary shares of 1p each at a price of 
275p per share in part settlement of this liability the balance of the consideration is due to be settled by the issue of a 
further 1092240 ordinary shares of 1p each in february 2008
21 provisions 
at 1 january 2007
£’000
u tilised  
in year
£’000
movement  
in year
£’000
a t  
31 december 2007
£’000
due between one and two years
dilapidations provision 34 – 24 58
the dilapidations provision is in respect of work to be carried out at the end of the lease on property it is due to expire  
in the second half of 2009
22 c ommitments under o perating leases
the group leases various offices under noncancellable operating lease arrangements the leases have varying terms 
escalation clauses and renewal rights
the lease expenditure charged to the income statement during the year is disclosed in note 5
the future minimum lease payments under noncancellable operating leases are as follows
2007
£’000
2006
£’000
land and buildings
no later than one year 390 295
later than one year and less than five years 528 678
after five years – 13
918 986 notes to the financial statements
continued
54 patsystems        annual report 2007
23 c alled u p equity share ca pital
authorised
2007
£’000
2006
£’000
ordinary shares of 1p each
at 1 january and 31 december – 250000000 shares 2500 2500
deferred shares of 1p each
at 1 january and 31 december – 2 shares – –
redeemable preference shares of £1 each
at 1 january and 31 december – 49998 shares 50 50
allotted called up and fully paid 
ordinary shares of 1p each
at 1 january – 164154850 shares 1641 1605
allotted as consideration for acquisition of t amesis limited 122 –
allotted under share option schemes 12 32
allotted in lieu of payment – 4
at 31 december – 177496511 shares 1775 1641
the 1p ordinary shares are listed on the aim market they have one voting right per share
deferred shares of 1p each
at 1 january and 31 december – 2 shares – –
the deferred 1p shares are not listed they have no voting rights and no access to dividends notes to the financial statements
continued
55 patsystems        annual report 2007
24 s hare o ption schemes
the following options to purchase 1p ordinary shares in patsystems plc were granted exercised lapsed and outstanding 
during the year
exercise price 
in pence
o utstanding at  
1 january 2007
g ranted  
in year
exercised  
in year
l apsed  
in year
o utstanding at  
31 december 2007
exercisable at  
31 december 2007
effective 
dates
enterprise management incentive scheme 
508p 2162500 – 408250 18750 1735500 1735500 note a
950p 97500 – – – 97500 97500 note a
1350p 90000 – 18000 – 72000 14400 note b
1375p 727272 – – – 727272 – note d
1425p 669211 – 16500 71088 581623 110325 note b
1450p 1186606 – – – 1186606 237321 note b
1525p 775737 – – – 775737 155147 note b
1558p 2976500 – 331200 1228800 1416500 264100 note b
1750p 90000 – – – 90000 18000 note b
2775p – 250000 – – 250000 – note d
2900p – 444827 – – 444827 – note d
8775326 694827 773950 1318638 7377565 2632293
2003 share option scheme
100p – 776700 194175 – 582525 – note f
1375p 3272728 – – – 3272728 – note e
1425p 432851 – 60536 28070 344245 26035 note c
1450p 144494 – – – 144494 28899 note c
1525p 464263 – 12000 48000 404263 80853 note c
1558p 985500 – 53000 152000 780500 144100 note c
1600p 445000 – 89000 356000 – – note c
1800p 500000 – – – 500000 100000 note c
2775p – 1000000 – – 1000000 – note e
2900p – 1655173 – – 1655173 – note e
6244836 3431873 408711 584070 8683928 379887
t otal all 
schemes 15020162 4126700 1182661 1902708 16061493 3012180
note a these options were granted under the initial award of the enterprise management incentive emi scheme these 
options are now 100 exercisable
note b options were granted under the second and third awards of the enterprise management incentive emi scheme 
20 of these options vested on 14 february 2007 and 16 will vest on 11 february 2008 the remaining 64 
of the options will be carried forward into future years and the remuneration committee will determine what 
performance conditions to attach to them in 2008
note c these options were granted under the second and third awards of part b inland revenue unapproved of the 
patsystems plc 2003 share option scheme the vesting status is the same as note b notes to the financial statements
continued
56 patsystems        annual report 2007
24 s hare o ption schemes continued
note d these options were granted under a special award of the enterprise management incentive emi scheme one 
third of these options can be exercised after a period of three years after the date of the grant two thirds of 
these options can be exercised after a period of three years after the date of the grant but subject to achieving 
company performance targets
note e these options were granted under a special award of part b inland revenue unapproved of the patsystems plc 
2003 share option scheme exercise conditions are as per note d
note f these options were granted under a special award of part b inland revenue unapproved of the patsystems plc 
2003 share option scheme 25 of these options became exercisable on 31 december 2007 with the remaining 
75 exercisable one year thereafter
the weighted average fair value per share at the measurement date of options granted during the year was 140p 
2006 59p
the weighted average share price at the date of grant of options granted during the year was 281p 2006 135p 
for the options that were exercised during the year the weighted average share price at the date of exercise was 26p 
2006 14p
the weighted average remaining contractual life of options outstanding at the year end is 8 years 2006 8 years
the total fair value that was charged to the income statement in relation to the share options was £210000 
2006 £230000 all of which related to equity settled share based payment transactions
the fair values of the options have been calculated using the binomial model the model takes into account the following 
factors in determining the fair value of an option
share price and exercise price  a 
share prices are closing share prices as at the date of grant exercise prices are listed in the above schedule
expected t erm of the options b 
it is assumed that the expected life of the options under consideration is 5 years 
volatility c 
volatility of the company’s share price has been calculated as the annualised standard deviation of daily continuously 
compounded returns on the company’s stock derived from the company’s historical share prices adjusted for splits 
over 5 years back from each date of grant
riskfree interest rate d 
the riskfree rates of interest are assumed to be the yield to maturity on a uk gilt strip with the term to maturity equal  
to the expected life of the option 
dividends e 
the valuations take account of the expected future dividend yield at the date of each grant notes to the financial statements
continued
57 patsystems        annual report 2007
24 s hare o ption schemes continued
the table below sets out the volatilities riskfree interest rates and dividend yields applied in each valuation
date of grant
volatility 

riskfree interest rate 

dividend yield 

24 february 2003 778009 46922 000
13 march 2003 783590 47175 000
30 june 2003 784194 46412 000
27 october 2003 798321 57891 000
01 january 2004 786748 54125 000
30 july 2004 736821 58602 000
27 august 2004 717764 56660 000
16 november 2004 589201 52789 000
04 february 2005 566301 51507 000
17 march 2005 524971 54148 000
06 october 2005 549819 47689 200
23 november 2005 498819 48322 200
14 december 2005 500097 48764 200
14 february 2006 501501 47515 200
19 april 2007 484035 52980 100
7 december 2007 300527 45550 100
31 december 2007 309369 56204 100
25 s hare ca pital and reserves
a t 
1 january 2007
£’000
shares issued 
in the year
£’000
earnings for 
the year
£’000
dividends 
paid
£’000
foreign 
exchange 
movement
£’000
share 
compensation 
expense
£’000
a t 
31 december 2007
£’000
paid up share 
capital 1641 134 – – – – 1775
share premium 3691 3323 – – – – 7014
other reserves 17348 – – – – – 17348
retained earnings 8948 – 1844 693 144 210 7443
13732 3457 1844 693 144 210 18694
at 
1 january 2006
£’000
shares issued 
in the year
£’000
earnings for 
the year
£’000
dividends 
paid
£’000
foreign 
exchange 
movement
£’000
share 
compensation 
expense
£’000
at 
31 december 2006
£’000
paid up share 
capital 1605 36 – – – – 1641
share premium 3510 181 – – – – 3691
other reserves 17348 – – – – – 17348
retained earnings 16940 – 7906 – 144 230 8948
5523 217 7906 – 144 230 13732 notes to the financial statements
continued
58 patsystems        annual report 2007
25 s hare ca pital and reserves continued
investments in own shares 
the group has an investment in own shares of 71856 shares 2006 71856 shares as a result of employees leaving the all 
employee share scheme the nominal value of these shares is £719 2006 £719 the market value at 31 december 2007  
is £19000 2006 £12000 
26 statement of changes in shareholders’ equity 
2007
£’000
2006
£’000
profit on ordinary activities after taxation 1844 7906
dividends paid 693 –
foreign exchange adjustment 144 144
share compensation expense 210 230
shares issued in part settlement of the deferred  
consideration for the 2005 acquisition of t amesis limited 3345 –
proceeds from the issue of ordinary share capital 112 217
4962 8209
shareholders’ funds at 1 january 13732 5523
shareholders’ funds at 31 december 18694 13732
27 d ividends per share 
the dividends paid in the year were as follows
2007
£’000
2006
£’000
final dividend in respect of the year ended 31 december 2006 at 03p per share 495 –
interim dividend at 012p per share 198 –
693 –
a final dividend in respect of the year ended 31 december 2007 of 021p per share amounting to a total dividend of 
£375000 is to be proposed at the annual general meeting on 17 april 2008 these financial statements do not reflect this 
dividend payable 
28 f inancial instruments
281 financial risk management
the group’s financial instruments comprise cash and liquid resources trade and other debtors and creditors arising 
directly from the operations of the group and forward exchange contracts the main risks arising from the group’s financial 
instruments are interest rate risk and foreign currency risk the board reviews and agrees policies for managing each of these 
risks and they are summarised in note 3 above  notes to the financial statements
continued
59 patsystems        annual report 2007
282 accounting policies
the group’s accounting policies for financial instruments are detailed in note 1 above and have been applied to the line 
items below
2007
a ssets as per balance sheet
l oans and 
receivables
£’000
a ssets at fair  
value through the 
profit and loss
£’000
t otal
£’000
trade and other receivables 4737 – 4737
derivative financial instruments – 30 30
income tax 40 – 40
cash and cash equivalents 3191 – 3191
7968 30 7998
2007
liabilities as per balance sheet
l iabilities at fair 
value through the 
profit and loss
£’000
other financial 
liabilities
£’000
t otal
£’000
trade and other payables 3284 – 3284
current income tax liabilities – 20 20
contingent consideration – 290 290
3284 310 3594
2006
assets as per balance sheet
loans and 
receivables
£’000
assets at fair  
value through the 
profit and loss
£’000
total
£’000
trade and other receivables 4021 – 4021
derivative financial instruments – 127 127
cash and cash equivalents 3251 – 3251
7272 127 7399
2006
liabilities as per balance sheet
liabilities at fair 
value through the 
profit and loss
£’000
other financial 
liabilities
£’000
total
£’000
trade and other payables 3594 – 3594
current income tax liabilities 101 – 101
contingent consideration – 2140 2140
3695 2140 5835
the group had no borrowings as at 31 december 2007 or 31 december 2006   notes to the financial statements
continued
60 patsystems        annual report 2007
283 foreign currency exposure 
the group’s principal exposure to exchange rate fluctuations arises on the translation of overseas net assets and profits into 
sterling for accounting purposes 
analyses of the group’s financial assets and liabilities denominated in foreign currencies are given in notes 17 18 and 19 
the group has a net earnings exposure to the us dollar together with an exposure to the translation of the balance sheet 
of its us subsidiary during the year the board authorised the hedging of us dollar exposures at 31 december 2007 the 
company has the following hedges in place
f orward contracts
forward contract value maturity date effective forward rate
150000 31 january 2008 1954
350000 29 february 2008 1918
300000 30 september 2008 2028
600000 31 october 2008 2024
500000 28 november 2008 2022
900000 31 december 2008 1984
c urrency options
forward contract value maturity date effective forward rate
550000 27 march 2008 2000
600000 28 april 2008 2000
500000 28 may 2008 1990
500000 28 may 2008 1970
650000 29 july 2008 2010
620000 27 august 2008 1990
at the year end the fair value of the above contracts is an asset of £30000 2006 £127000 the movement in fair values  
of £97000 has been charged to the income statement in the year
29 r elated party transactions
revenue includes £358000 2006 £366000 in respect of banca caboto spa london branch a member of a group of 
companies which include cai suisse a shareholder of the company at 31 december 2007 the amount owing to group 
companies by banca caboto spa london branch was £68000 2006 £nil
key management remuneration
details of the remuneration of key management are detailed below
2007
£’000
2006
£’000
salaries and short term employee benefits 1648 1394
share based payments 174 180
1822 1574 61 patsystems        annual report 2007
independent auditors’ report to the members of patsystems plc
we have audited the parent company financial statements of patsystems plc for the year ended 31 december 2007 which comprise 
the balance sheet and the related notes these parent company financial statements have been prepared under the accounting 
policies set out therein 
we have reported separately on the group financial statements of patsystems plc for the year ended 31 december 2007
r espective res ponsibilities of directors and auditors
the directors’ responsibilities for preparing the annual report and the parent company 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 parent company financial statements in accordance with relevant legal and regulatory requirements 
and international standards on auditing uk and ireland this report including the opinion has been prepared for and only for the 
company’s members as a body in accordance with section 235 of the companies act 1985 and for no other purpose we do not 
in giving this opinion accept or assume responsibility for any other purpose or to any other person to whom this report is shown or 
into whose hands it may come save where expressly agreed by our prior consent in writing
we report to you our opinion as to whether the parent company financial statements give a true and fair view and whether the 
parent company financial statements have been properly prepared in accordance with the companies act 1985 we report to you 
whether in our opinion the information given in the directors’ report is consistent with the parent company financial statements 
in addition we 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 
transactions is not disclosed
we read other information contained in the annual report and consider whether it is consistent with the audited parent company 
financial statements the other information comprises only the directors’ report we consider the implications for our report if 
we become aware of any apparent misstatements or material inconsistencies with the parent company financial statements our 
responsibilities do not extend to any other information
basis of audit o pinion 
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 parent company 
financial statements it also includes an assessment of the significant estimates and judgments made by the directors in the 
preparation of the parent company financial statements and of whether the accounting policies are appropriate to the company’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 parent company 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 parent company financial statements
op inion
in our opinion
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 company’s affairs as at 31 december 2007
the parent company 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 parent company financial statements 
pricewaterhouse c oo pers ll p
chartered accountants and registered auditors
london
8 february 2008 62 patsystems        annual report 2007
company balance sheet
at 31 december 2007
notes
2007
£’000
2006
£’000
fixed assets
investments 4 5106 3614
current assets
debtors 5 4880 4575
cash at bank and in hand 4 5
4884 4580
creditors amounts falling due within one year 7 341 2175
net current assets 4543 2405
net assets 9649 6019
capital and reserves
share capital 9 1775 1641
share premium account 11 7014 3691
other reserves 11 50 50
retained earnings 11 810 637
equity shareholders’ funds 11 9649 6019
the financial statements on pages 62 to 68 were approved by the board of directors on 8 february 2008
david w ebber    martin thorneycroft
chief executive officer   finance director notes to the financial statements
63 patsystems        annual report 2007
1 a ccounting policies
the financial statements have been prepared under the historical cost basis of accounting and in accordance with applicable 
accounting standards in the united kingdom 
a summary of the more important accounting policies is given below these policies have been consistently applied to all 
the years presented unless otherwise stated
11 investments 
investments in subsidiaries are stated at cost less any provision for impairment where an acquisition satisfies the provisions 
of sections 131 to 134 of the companies act 1985 merger relief is available and the investment is stated at nominal value  
of shares issued plus the value of any other consideration
12 hire purchase obligations finance leases and operating leases
costs in respect of operating leases are charged to the profit and loss account on a straight line basis over the lease term 
assets purchased under hire purchase contracts and finance leases are recorded as tangible fixed assets in the balance sheet 
the obligations to pay future capital installments are shown in creditors and are analysed between amounts falling due 
within one year and amounts after more than one year the asset value is calculated at the inception of the contract as the 
purchase price of the asset and the finance charge is allocated to accounting periods on the sum of the digits basis
13 current and deferred income taxes
the current income tax charge is calculated on the basis of the tax laws enacted or substantively enacted at the balance sheet 
date management periodically evaluates positions taken in tax returns with respect to situations in which applicable tax 
regulations are subject to interpretation and establishes provisions where appropriate on the basis of amounts expected to 
be paid to the tax authorities
deferred taxation is recognised in respect of timing differences that have originated but not reversed at the balance sheet 
date where transactions or events that result in an obligation to pay more tax in the future or a right to pay less tax in the 
future have occurred at the balance sheet date
a net deferred tax asset is regarded as recoverable and therefore recognised only when on the basis of all available 
evidence it can be regarded as more likely than not that there will be sufficient taxable profits to utilise carried forward tax 
losses and against which the reversal of underlying timing differences can be deducted
deferred tax is measured at the average tax rates that are expected to apply in the periods in which the timing differences 
are expected to reverse based on tax rates and laws that have been enacted or substantively enacted by the balance sheet 
date deferred tax is measured on a nondiscounted basis
14 related party transactions
financial reporting standard frs 8 “related party transactions”  requires the disclosure of the details of material 
transactions between the reporting entity and related parties the company has taken advantage of exemptions under frs 
8 not to disclose transactions between group companies
15 sharebased payments
the group operates two share options schemes the enterprise management incentive scheme and the 2003 share option 
scheme inland revenue unapproved 
the fair value of options is recognised as an employee benefit expense with a corresponding increase in reserves over the 
vesting period the proceeds received net of any directly attributable transaction costs are credited to share capital nominal 
value and share premium when the options are exercised 
16 cash flow statement 
the company is the parent company of the patsystems plc group and is included in the consolidated financial statements 
of patsystems plc consequently the company has taken advantage of the exemption from preparing a cash flow statement 
under the terms of financial reporting standard 1 revised 1996
17 dividend distributions
final dividend distributions to the company’s shareholders are recognised as liabilities in the company’s financial statements 
in the period in which the dividends are approved by the company’s shareholders interim dividend distributions to the 
company’s shareholders are recognised as liabilities in the company’s financial statements when paid
2 d irectors and em ployees
the parent company does not employ any directors or employees notes to the financial statements
continued
64 patsystems        annual report 2007
3 profit and loss account 
the profit for the year dealt with in the accounts of the company was £656000 2006 £287000
the directors have taken advantage of the exemption available under section 2304 of the companies act 1985 and have 
not presented a profit and loss account for the company alone 
4 investments  
investment in subsidiary undertaking
£’000
at 1 january 2007 3614
additions 1492
at 31 december 2007 5106
the additions in the year are an increase in the estimated contingent consideration in respect of the 2005 acquisition of 
t amesis limited see note 8
the investment in subsidiary undertakings represents
a 100 investment in respect of voting rights and nominal value in patsystems holdings limited a company incorporated 1 
in england and wales
the historical cost of the investment in the shares of patsystems holdings limited is £11180000 under the scheme of 
arrangement the subsidiary undertaking returned capital to the company amounting to £9865000 and the cost of the 
investment has been reduced accordingly to reflect this
the following subsidiary undertakings are wholly owned by patsystems holdings limited in respect of voting rights and 
nominal value of issued shares and perform the sale and support of electronic trading systems
patsystems uk ltd  –  incorporated in england and wales
patsystems na llc  –  incorporated in united states of america
patsystems pte ltd   –  incorporated in singapore
patsystems pty ltd   –  incorporated in australia
patsystems gmbh   –  incorporated in germany
the following subsidiary is wholly owned by patsystems holdings limited in respect of voting rights and nominal value of 
issued shares and acts as a holding company
professional automated trading systems bv incorporated in the netherlands
professional automated trading systems bv owns 100 of voting rights and nominal value of issued shares in patsystems 
 japan kk incorporated in japan which performs the sale and support of electronic trading systems 
patsystems  japan kk owns 100 of voting rights and nominal value of issued shares in patsystems ireland ltd 
incorporated in the republic of ireland which acts as a holding company      
a 100 investment in t amesis limited a company incorporated in england and wales that develops distributes and 2 
supports software enabling real time trade capture valuation and risk management for the structured finance market
5 d ebtors
 
2007
£’000
2006
£’000
amounts owed by group undertakings 4877 4538
deferred tax asset – 32
other debtors 1 3
prepayments and accrued income 2 2
4880 4575 notes to the financial statements
continued
65 patsystems        annual report 2007
6 d eferred tax asset
the deferred tax asset relates to future tax deductions in relation to the share option expense the amount charged to the 
income statement in the year was £32000 2006 credit £32000 
7 c reditors amounts falling due within one year 
2007
£’000
2006
£’000
trade creditors 1 3
contingent consideration 290 2140
other creditors 2 2
accruals and deferred income 48 30
341 2175
none of the creditors are secured 
8 c ontingent consideration
the contingent share consideration is in relation to the acquisition of t amesis limited which is payable entirely in 
patsystems plc ordinary shares during the year the company issued 12159000 ordinary shares of 1p each at a price of 
275p per share in part settlement of this liability the balance of the consideration is due to be settled by the issue of a 
further 1092240 ordinary shares of 1p each in february 2008
9 c alled u p equity share ca pital
authorised
2007
£’000
2006
£’000
ordinary shares of 1p each
at 1 january and 31 december – 250000000 shares 2500 2500
deferred shares of 1p each
at 1 january and 31 december – 2 shares – –
redeemable preference shares of £1 each
at 1 january and 31 december – 49998 shares 50 50
allotted called up and fully paid 
ordinary shares of 1p each
at 1 january – 164154850 shares 1641 1605
allotted in consideration for the acquisition of t amesis limited 122 –
allotted under share option schemes 12 32
allotted in lieu of payment – 4
at 31 december – 177496511 shares 1775 1641
the 1p ordinary shares are listed on the aim market they have one voting right per share
deferred shares of 1p each
at 1 january and 31 december – 2 shares – –
the deferred 1p shares are not listed they have no voting rights and no access to dividends notes to the financial statements
continued
66 patsystems        annual report 2007
10 s hare o ption schemes
the following options to purchase 1p ordinary shares in patsystems plc were granted exercised lapsed and outstanding 
during the year
exercise price 
in pence
o utstanding at
 1 january 2007
g ranted 
in year
exercised 
in year
l apsed 
in year
o utstanding at 
31 december 2007
exercisable at
31 december 2007
effective 
dates
enterprise management incentive scheme 
508p 2162500 – 408250 18750 1735500 1735500 note a
950p 97500 – – – 97500 97500 note a
1350p 90000 – 18000 – 72000 14400 note b
1375p 727272 – – – 727272 – note d
1425p 669211 – 16500 71088 581623 110325 note b
1450p 1186606 – – – 1186606 237321 note b
1525p 775737 – – – 775737 155147 note b
1558p 2976500 – 331200 1228800 1416500 264100 note b
1750p 90000 – – – 90000 18000 note b
2775p – 250000 – – 250000 – note d
2900p – 444827 – – 444827 – note d
8775326 694827 773950 1318638 7377565 2632293
2003 share option scheme
100p – 776700 194175 – 582525 – note f
1375p 3272728 – – – 3272728 – note e
1425p 432851 – 60536 28070 344245 26035 note c
1450p 144494 – – – 144494 28899 note c
1525p 464263 – 12000 48000 404263 80853 note c
1558p 985500 – 53000 152000 780500 144100 note c
1600p 445000 – 89000 356000 – – note c
1800p 500000 – – – 500000 100000 note c
2775p – 1000000 – – 1000000 – note e
2900p – 1655173 – – 1655173 – note e
6244836 3431873 408711 584070 8683928 379887
t otal all 
schemes 15020162 4126700 1182661 1902708 16061493 3012180
note a these options were granted under the initial award of the enterprise management incentive emi scheme these 
options are now 100 exercisable
note b options were granted under the second and third awards of the enterprise management incentive emi scheme 
20 of these options vested on 14 february 2007 and 16 will vest on 11 february 2008 the remaining 64 
of the options will be carried forward into future years and the remuneration committee will determine what 
performance conditions to attach to them in 2008 notes to the financial statements
continued
67 patsystems        annual report 2007
10 s hare o ption schemes continued
note c these options were granted under the second and third awards of part b inland revenue unapproved of the 
patsystems plc 2003 share option scheme the vesting status is the same as note b
note d these options were granted under a special award of the enterprise management incentive emi scheme one  
third of these options can be exercised after a period of three years after the date of the grant two thirds of these 
options can be exercised after a period of three years after the date of the grant but subject to achieving company 
performance targets
note e these options were granted under a special award of part b inland revenue unapproved of the patsystems plc 
2003 share option scheme exercise conditions are as per note d
note f these options were granted under a special award of part b inland revenue unapproved of the patsystems plc 
2003 share option scheme 25 of these options became exercisable on 31 december 2007 with the remaining 
75 exercisable one year thereafter
the weighted average fair value per share at the measurement date of options granted during the year was 140p 2006  59p
the weighted average share price at the date of grant of options granted during the year was 281p 2006 135p 
for the options that were exercised during the year the weighted average share price at the date of exercise was 26p 
2006 14p
the weighted average remaining contractual life of options outstanding at the year end is 8 years 2006 8 years
the total fair value that was charged to the income statement in relation to the share options was £210000 
2006 £230000 all of which related to equity settled share based payment transactions
the fair values of the options have been calculated using the binomial model the model takes into account the following 
factors in determining the fair value of an option
share price and exercise price  a 
share prices are closing share prices as at the date of grant exercise prices are listed in the above schedule
expected t erm of the options b 
it is assumed that the expected life of the options under consideration is 5 years 
volatility c 
volatility of the company’s share price has been calculated as the annualised standard deviation of daily continuously 
compounded returns on the company’s stock derived from the company’s historical share prices adjusted for splits 
over 5 years back from each date of grant
riskfree interest rate d 
the riskfree rates of interest are assumed to be the yield to maturity on a uk gilt strip with the term to maturity equal to 
the expected life of the option 
dividends e 
the valuations take account of the expected future dividend yield at the date of each grant notes to the financial statements
continued
68 patsystems        annual report 2007
10 s hare o ption schemes continued
the table below sets out the volatilities riskfree interest rates and dividend yields applied in each valuation
date of grant
volatility 

riskfree interest rate 

dividend yield 

24 february 2003 778009 46922 000
13 march 2003 783590 47175 000
30 june 2003 784194 46412 000
27 october 2003 798321 57891 000
01 january 2004 786748 54125 000
30 july 2004 736821 58602 000
27 august 2004 717764 56660 000
16 november 2004 589201 52789 000
04 february 2005 566301 51507 000
17 march 2005 524971 54148 000
06 october 2005 549819 47689 200
23 november 2005 498819 48322 200
14 december 2005 500097 48764 200
14 february 2006 501501 47515 200
19 april 2007 484035 52980 100
7 december 2007 300527 45550 100
31 december 2007 309369 56204 100
11 s hare ca pital and reserves
a t 1 january 
2007
£’000
shares issued 
in the year
£’000
profit for 
the year
£’000
dividends 
paid
£’000
share compensation 
expense
£’000
a t 
31 december 2007
£’000
paid up share capital 1641 134 – – – 1775
share premium 3691 3323 – – – 7014
other reserves 50 – – – – 50
retained earnings 637 – 656 693 210 810
6019 3457 656 693 210 9649
12 d ividends per share 
the dividends paid in the year were as follows
2007
£’000
2006
£’000
final dividend in respect of the year ended 31 december 2006 at 03p per share 495 –
interim dividend at 012p per share 198 –
693 –
a final dividend in respect of the year ended 31 december 2007 of 021p per share amounting to a total dividend of 
£375000 is to be proposed at the annual general meeting on 17 april 2008 these financial statements do not reflect this 
dividend payable  patsystems        annual report 2007
directors and advisers
directors
stewart millman chairman and nonexecutive director
david webber chief executive
martin thorneycroft finance director 
richard last nonexecutive director chairman of the audit committee 
steve sparke nonexecutive director
john priestley nonexecutive director chairman of the combined remuneration  
 and nominations committee
c om pany s ecretary
daljit kaurkhela
a dvisers
broker and nominated adviser seymour pierce limited
lawyers dla pipers
 vedder price kaufman  kammholz
registered auditors pricewaterhousecoopers llp 
principal bankers barclays bank plc
registrars computershare services plc
 po box 82
 the pavillions
 bridgewater road
 bristol
 bs99 7nh
c or porate d etails
registered office cottons centre hays lane london se1 2qp
company number 4498002
country of incorporation england and wales
website wwwpatsystemscom
stock exchange symbol pts europe
london
cottons centre 
hays lane
se1 2qp 
tel 44 020 7940 0490 
fax 44 020 7940 0499 
usa
chicago 
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annual report 2007
annual report 2007


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patsystems        annual report 2007 04
chief executive’s report
i am delighted to be able to report on a further year of successful 
business development for patsystems
in my report for 2006 i stated our ambition to become a key technology 
provider to the electronic trading industry and the results for the financial year 
ended 31 december 2007 demonstrate the success that we have achieved in 
fulfilling that ambition
our performance for the year has continued the trend established in 2006 for 
profit growth with an operating profit of £21 million a 32 growth over last 
year’s £16 million
revenue has also risen 11 to £170 million compared to £153 million
we have continued to contain increases in our cost base despite significant 
pressure on salary costs in all our key areas of operation with operating 
expenses being only 9 higher at £145 million when compared to 
£133 million in 2006
a fuller analysis of the changes in the cost base is included within the finance 
director’s review but the main contributing factors were the planned 
headcount increases 
trading systems and market conne ctivity
t rading systems revenue increased by 75 to £143 million for the year 
compared to £133 million in 2006
during the year we achieved new customer wins with r j o’brien  associates 
one of the largest independent futures brokerages in the united states 
of america and the macquarie group the australian headquartered 
international provider of banking financial advisory and investment services 
david w ebber 
chief execu t ive patsystems        annual report 2007
the addition of macquarie as a customer was particularly pleasing given that 
our new global t rading product played an important part in their decision to 
select patsystems with macquarie having identified the benefits that its global 
order book and continuous trading provides
macquarie represents the first installation of our new global t rading core and 
following an initial deployment in europe will roll out the systems capabilities 
within their operations in the united states of america australia and asia 
we will deliver the global t rading software and all the other associated 
software services to macquarie offices and clients globally by way of a fully 
hosted service
as part of our commitment to provide customers with further choice of how 
they receive our software services we have announced the provision of our 
application service provider “asp” solution and the first customer is now live 
on this service
during the year our existing customers have added four further installations 
in sydney singapore and two in hong kong underlining the importance of 
asia as an area of growth for the business going forward
in 2008 we expect the main opportunities for further trading systems 
installations and additional screen deployment to be in the emerging market 
economies of south america the middle east and asia particularly hong 
kong malaysia and indonesia
in july 2007 promark version 40 was launched with functionality specifically 
designed for energy traders which enables them to access multiple energy 
markets version 40 followed on from the successful release of version 39 
earlier in the year which provided support for option strategies best execution 
and advanced charting
at the start of 2007 the promark billable user numbers were 129 and as  
at 31 december 2007 this has risen to 375 the majority of these users  
are either converts from our major competitors or traders new to  
electronic trading
during the year the ability to trade foreign exchange in partnership with  
gain capital was added to the jt rader product and charting capability  
was added 
patsystems’ global connectivity has been extended with the chicago climate 
futures exchange dubai mercantile exchange hong kong exchanges and 
clearing and the united states futures exchange all being added in 2007 
there have also been changes to our existing exchange connectivity all trading 
system customers are now supported through significant upgrades for the 
major exchanges as well as additional capability such as the support of carry 
trades on the london metal exchange and an extended product set on the 
chicago board of options futures exchange
09
4000
3000
2000
1000
0
t otal exchange volume  
adv  a verage daily volume
liffe derivatives 
market – histori cal 
annual  monthly data
‘05
2955
‘04
3030
‘06
2864
‘07
3722
the following graph 
indicat es t he cont inued 
growt h and ex panding 
business development wit hin 
t he derivat ives indust ry patsystems        annual report 2007
chief executive’s report
r isk systems
revenue from our risk systems business grew by 100 
to £14 million from £07 million in 2006 there has been 
continued success for our post trade risk margining product 
risk informer during the year with mf global implementing 
the product in their london operation across all asset classes 
as the initial phase of a global roll out in addition calyon 
financial now newedge after their merger with fimat are 
completing a project to extend risk informer to risk margin 
spot and forward fx and f x options trading
as anticipated there has been a significant level of 
interest in the product from investment banks and brokers 
of all sizes and the volatility in the markets during the 
summer highlighted the relevance of effective real time 
risk management
we remain confident in the opportunities for risk informer 
and anticipate further customer wins in 2008
as we announced in our interim results in the summer we 
launched the beta version of our pretrade risk product 
risk monitor risk monitor is a low latency tool designed to 
monitor proposed trades across a range of markets ahead of 
the exchange and if necessary prevent restrict or provide 
alerts in respect of individual electronic trades
with the increasing volumes of trades being executed either 
by black box trading systems or by systems that are trading 
directly into an exchange without an intervening broker 
the need for real time but very high performance risk 
management is expected to grow
ex change systems
on 4 january 2008 t okyo grain exchange successfully 
launched three futures products arabica and robusta 
bean coffee contracts and raw sugar on the new continuous 
exchange system provided by patsystems
the tokyo grain exchange continues to offer markets in a 
broad range of contracts on their existing sessionbased 
trading system that is also provided by patsystems but further 
contracts are anticipated to be launched or migrated to the 
new platform during 2008
during the year national commodity exchange limited in 
pakistan successfully commenced electronic trading with the 
launch of their gold futures contract
we believe that our ability to provide a straight through 
processing solution from the trader through to matching and 
clearing the transaction at an exchange with dynamic real 
time risk management throughout is a differentiated offering 
in the market place 
we continue to identify potential opportunities in asia 
particularly in china where we have chinese character set 
versions of our trading screens but these opportunities arise 
infrequently and the decision processes can be very lengthy 
with significant political hurdles
brand and marketing
one of our nonfinancial objectives in 2007 was to establish the 
patsystems flexability brand within our target market place of 
the investment banks brokers and futures clearing merchants
independent commissioned research has confirmed that 
our objective for patsystems to be acknowledged as a key 
technology supplier to our customers and prospects rather 
than just a vendor of trading screens has been achieved
as well as reinforcing our key brand message we have also 
changed the strap line beneath our logo so that it reflects 
exactly what we deliver as a business
“powers trades builds exchanges manages risk ”
strategy and produ ct develo pment
the first sale of global t rading to a new customer the 
success of risk informer sales and the development of risk 
monitor are all successful steps in fulfilling our strategy to be 
the preferred supplier of technology solutions to our target 
market place
during 2007 we have demonstrated our ability to sell hosted 
technology solutions to major customers with the signing 
of a contract to provide global t rading to macquarie the 
launch of our application service provider asp solution has 
ensured that we can provide new customers with a full choice 
of means of technology deployment depending on their 
business requirements
in addition to continued investment in developing the risk 
monitor and risk informer products along with supporting 
the roll out of the global t rading solution there are a 
number of key product investments planned for 2008
10
continued patsystems        annual report 2007
these include the delivery of further capability within our algorithmic server 
a new higher performance version of our trading api that allows third parties 
to use the patsystems order processing engine and market connectivity and 
extended charting and best execution capability for the trading screens
our strategy of developing all new product components in accordance with 
the financial information exchange fi x  protocol a messaging standard 
developed specifically for the realtime electronic exchange of securities 
transactions will ensure that those organisations that have adopted a best 
of breed approach to technology are able to purchase just those system 
components they require from patsystems
we continue to view the support of asset classes outside of exchange 
traded derivatives as important to our business evolution and with 
jt rader’s extension to support trading of currency pairs we have made 
some progress towards this objective
we will continue to explore in 2008 either by partnership or acquisition the 
solution to further extend the support by our trading systems of multiple 
product classes
exe cutive management committee
kieron o’t oole joined patsystems at the start of 2007 as client services 
director with responsibility for software support software releases and trading 
and risk system installations
with kieron’s appointment andy edwards product and development director 
took responsibility for product strategy in addition to his existing responsibility 
for product development andy has been key in defining the product road 
map for 2007 and 2008 and will be instrumental in identifying technology 
acquisitions that the business may require to fulfil our strategy
patrick kenny has continued his leadership of our north american operations 
with additional marketing sales and support resources added during the year 
as detailed below
graeme neilly as director of european sales and global accounts has grown 
his department and continues to work closely with jon regan head of new 
business sales europe
i am delighted to announce that lorna blane who joined patsystems in april 
2007 as global head of human resources joined the executive management 
committee in the summer
11
all major product lines up over 20 
annually for two constructive years
cagr 27 – from 2001 to 2006
adv up 65 – jan 2008 vs jan 2007
contracts in millions
2007
interest rates 23
equities 47
fx 26
commalt investments 20
cme products
cbot products
annual growth rates
the following graph 
indicat es t he cont inued 
growt h and ex panding 
business development wit hin 
t he derivat ives indust ry
68
86
‘06 ‘05
110
‘07
143
‘08
ytd
25 28
15
10
5
0
consistent a nnual volume g rowth  
cme group adv by year patsystems        annual report 2007
in may 2007 barry white replaced kazuaki t akabatake as 
head of asia barry joined patsystems in 2006 as managing 
director of australia and brings 17 years of exchange and 
exchangetraded derivatives experience to the business
t o take full advantage of the opportunities for growth within 
the asia region and to be better placed to take advantage 
of nascent opportunities in china barry has relocated to 
singapore and made the singapore office of patsystems the 
regional headquarters barry has also opened an office in hong 
kong and instigated representation on the ground in shanghai 
business evolution and staff
as i announced at the start of the year we have during 2007 
extended our capability in every region that we operate 
so that patsystems staff are available to provide support to 
customers wherever in the world they are trading
we have also invested in additional resources in north 
america and asia to support the sale and promotion of our 
extended product set these investments have meant that our 
overall headcount at the start of 2008 is 150 compared to 
132 at the start of 2007
we are comfortable that these increases in headcount are 
necessary to both support our planned sales effort and also 
to improve customer service delivery to both our current and 
future customers
i would like to take the opportunity to thank all of our staff 
for their efforts in 2007 they have built a business with a 
track record for delivery of complex technology solutions and 
have been credited in the third party research we undertook 
with our customers this year as “going the extra mile” when 
compared to our peers
business obje ctives and outlook
our key objectives for 2008 are as follows
grow the promark installed base and encourage  
investment bank customers to convert their jt rader 
professional user base to promark
build on the success of risk informer being selected and  
rolled out by mf global by identifying opportunities 
within the investment banks and other major future 
clearing merchants as well as selling a “productised” 
version of the offering to smaller organisations
leverage the success of the first sale of global t rading  
to macquarie by converting the opportunities within the 
current customer base
initiate the all important breakthrough in sales for risk  
monitor our pretrade risk product
t o extend the capability of jt rader to support  
additional assets classes so that our customers can extend 
their retail trading user base
t rading subsequent to the yearend has progressed in line 
with our expectations and we are confident that our business 
is well positioned to take advantage of market conditions
david w ebber 
chief execu t ive 
8 february 2008
12
chief executive’s report
continued case studies caboto caboto is the securities arm of banca intesa italy’s second largest banking group 
since 2000 caboto’s london office has been home to the group’s consolidated listed 
derivatives business its clients include european banks financial institutions and 
online brokers
using patsystems jt rader and x link products caboto has been able to expand 
the customer base of its futures and options operation by offering easy low cost 
access to a broad range of exchanges t hanks to the scalability of the technology 
caboto has leveraged its local expertise to become the dominant italian broker in 
the futures market
partnershi ps for mutual growth
caboto has been faced with customers requesting access to a growing list of 
exchanges around the world while providing an expanded service is crucial to 
retaining these customers purchasing new exchange memberships is not always 
an economical way to keep pace with demand the solution is x link a powerful 
software tool that enables multiple patsystems users to interconnect and utilise each 
other’s exchange memberships
caboto has memberships to six futures exchanges and by using x link to establish 
partnerships with other banks around the world it is able to offer access to a further 
five exchanges with another three in the pipeline in return caboto’s partner banks are 
able to provide their customers with access to borsa italiana’s idem market all without 
any additional strain on the end users who simply see the additional markets on their 
familiar trading screens
“using x link we see benefits in two directions ” caboto says “we provide our 
customers with a single access point to the expanding range of markets they want to 
trade without the need for additional memberships at the same time we leverage the 
memberships we do have to attract flow from around the world ”
s ystem of choi ce
the vast majority of caboto’s futures business is routed via the patsystems j t rader 
caboto conducts regular reviews of its vendor relationships and jt rader has 
consistently come out on top when compared to the other futures trading systems on 
the market 
“the critical factors for our customers are ease of use and ease of installation and 
on these criteria patsystems wins hands down ” caboto states “we can have jt rader 
installed via the internet a matter of hours after signing a new customer and the 
interface is so simple to use we can offer them training over the telephone ”
business benefits
through its xlink connection to other members of the patsystems user community 
caboto has developed a cost effective way to broaden their service offering it is thus 
able to combine global exchange access with local expertise and relationships – a 
compelling proposition that enables caboto to compete with much larger institutions 
and even outperform them in its home market
“jt rader and x link have enabled us to build out our remote connectivity while 
keeping the organisation lean” caboto reports “in a climate of narrowing margins and 
increasing competition we have not only held our own against the larger players but 
aggressively grown our business the scalability capabilities and ease of deployment of 
patsystems technology have been integral to that growth ”
t radin g solution s t rader’s tools and frontends
promark
jt rader
iqt rader
t rading a pi
patsystems api
fix t rading gateway
risk solutio ns risk informer
risk monitor
e x chan ge solutio ns exchange solutions
patsystems matching engine
clearing system