The turnaround at financial software play Patsystems seems to have gone to plan, with pre-tax losses massively reduced. New chief executive David Webber is looking to extract further improvements and profits. ‘I am excited by the breadth of opportunities that Patsystems can promote to deliver further business and profit growth in 2006,’ he explains. ‘Over the last year Patsystems has matured as a software vendor and this process of evolution and growth will continue over the coming years.’

August acquisition Tamesis, a derivatives-focused software business, has been integrated and sales of its products should be converted into revenue in the first half of 2006. And, as regards the existing products, Patsystems believes that as the focus on risk management within its target customer base continues to increase, ‘the need for risk solutions will provide further opportunities [for the company]’. A £1.5m fundraising shortly followed the acquisition, leaving the group with £2.6m cash at year-end.

For the full year 2005, pre-tax losses were whittled down from £2.9m to £777,000, and if tax, exceptionals and amortisation are all excluded, a profit of £523,000 was made. Net cash inflow of £330,000 was a substantial improvement.

For 2006, independent broker Corporate Synergy forecasts profits before tax of £1.5m from £15.5m of sales (of which £13.7m are recurring revenues), which should filter through to EPS ‘just shy of 1p’.

Back in May 2003 GCI advocated buying the shares at 6p. They hit a peak of 26.25p in February 2004 and have oscillated between 12p and 15p ever since. Anticipating good progress this year and a pre-tax profit, we reckon it's time to get back into the shares.

Patsystems	AIM	£41.24m	23.00p	0.00p
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Other company articles:
Deal delays dampen Patsystems			07/08/2008
Banks weigh on Patsystems			06/06/2008
Customer wins help Patsystems			03/03/2008
Customer wins help Patsystems			11/02/2008
Futures deal for Patsystems			14/11/2007