Atlantic Lithium Regulatory News (ALL)

6 May 2010

ALLOCATE SOFTWARE PLC

("Allocate" or "the Company")

Acquisition of Dynamic Change

The Board of Allocate (the "Board") announces that it has agreed the terms of an acquisition by the Company of Dynamic Change Limited ("Dynamic Change"), a UK-based software-as-a-service ("SaaS") provider of regulatory compliance, corporate governance, risk and performance management for the UK healthcare market, for up to £9.0 million over three years (the "Acquisition"), which includes £1.6 million of cash and receivables acquired with the business on completion.

Overview of Dynamic Change and the Acquisition

§ SaaS provider with over 98 per cent. of revenues from healthcare - multi-tenant hosted platform

§ Customer numbers have grown from 54 as at 31 March 2008 to 125 as at 31 March 2010

§ Approximately 70 per cent. of Dynamic Change's total revenues of £3.2 million for the financial year ended 31 March 2010 are contractually recurring from subscriptions. These have grown by approximately 40% over the last financial year

§ Upfront consideration of £4.9 million in cash and £100,000 in shares in the Company

§ Dynamic Change is being acquired with cash balances and receivables of approximately £1.6 million, largely reflecting deferred income which arises from subscriptions paid annually in advance

§ Further contingent consideration of up to a maximum of £4.0 million payable in cash and in full if Dynamic Change achieves at least 25 per cent. compound annual growth in run-rate subscription revenues in the three year period to March 2013

§ The Acquisition is expected by the Directors to be significantly earnings enhancing in the first full financial year of ownership by Allocate

Information on Dynamic Change

Dynamic Change was founded in 2001 and is based in Keele, Staffordshire. Dynamic Change is a leading provider of regulatory compliance, corporate governance, risk and performance management for the UK healthcare market. Dynamic Change has developed the "Performance Accelerator" SaaS software platform that is used by its customers to monitor and manage regulatory compliance, corporate governance, business objectives, risks and controls, performance indicators and financial targets. The platform incorporates all applicable regulatory standards and obligations for Dynamic Change's healthcare customers and such content is maintained by Dynamic Change on an ongoing basis.

Financial Overview

Dynamic Change has 44 employees, of which 14 are involved in product management and development, and, in the financial year ended 31 March 2010 (based on Dynamic Change's unaudited monthly management accounts for that period), generated total revenues of approximately £3.2 million, and achieved earnings before interest, tax, depreciation and amortisation ("EBITDA") of approximately £0.5 million, representing an EBITDA margin of approximately 16 per cent.

In the financial year ended 31 March 2010, total product development costs, which are all written off as incurred, were £0.6 million, representing some 18 per cent. of the revenues in that financial period.

Customer Base

All of Dynamic Change's customers are based in the UK and all revenues are generated in pounds Sterling.

As at 31 March 2010, Dynamic Change had 121 healthcare customers. This is highly complementary to Allocate's own current installed base of over 230 healthcare customers.

Technical Environment

Performance Accelerator is a multi-tenant, single platform accessed via a web browser and has been developed by Dynamic Change with standard Microsoft development tools, using Microsoft SQL Server. Allocate has conducted detailed technical due diligence and believes that the technology architecture is robust and scalable for significant organic growth.

Management and employees of Dynamic Change

The Company does not expect a complex integration of Dynamic Change into the Allocate group and key members of Dynamic Change's management team are expected to remain in place after the Acquisition.

Acquisition Rationale

The Board believes that an acquisition-led strategy is the most beneficial for the Company when entering the regulatory compliance, corporate governance, risk and performance management market for healthcare. Accordingly, the Board concluded that the acquisition of a local provider of governance, risk and corporate performance management software with an established and growing installed base in the UK healthcare market would be an appropriate market entry strategy.

The Acquisition is expected by the Directors to be significantly earnings enhancing in the first full financial year of ownership by Allocate. Further, the Board believes that the SaaS nature of Dynamic Change's business model, with high levels of recurring revenue, will provide the enlarged Allocate group with improved visibility on future revenues.

There are expected to be opportunities to generate incremental revenues from the penetration of Allocate's customer base with Dynamic Change's Performance Accelerator product. The Board believes that there is significant potential for growth within the UK healthcare market, through new customer wins as well as continuing to grow the number of users at existing customers. In addition, the Board believes there is the potential for Allocate to use its global reach to take the product, in due course, to certain international markets. The Directors expect that, over time, the acquisition of Dynamic Change will also generate limited cost savings for the enlarged Allocate group, particularly with regard to finance, administration and product support.

Consideration

The acquisition agreement provides for the purchase of the entire issued and to be issued share capital of Dynamic Change from the vendors for a total consideration of up to £9.0 million over three years (subject to a completion accounts adjustment). Initial consideration of £4.9 million in cash and £100,000 in shares of the Company (being 156,250 new ordinary shares of 5p each in the capital of the Company ("Ordinary Shares") issued at a price of 64 pence per Ordinary Share) will be payable on completion (the "Initial Consideration") on the basis of net assets of £nil. On this basis, cash balances and receivables of approximately £1.6 million will be acquired with the business, largely reflecting deferred income.

Deferred, contingent consideration of up to £4.0 million in cash is payable based on the financial performance of Dynamic Change for the 12 month periods ending 31 March 2011, 31 March 2012 and 31 March 2013 (the "Contingent Consideration"). No Contingent Consideration will be payable unless Dynamic Change achieves at least 15 per cent. compound annual growth in run-rate subscription revenues over run-rate subscription revenues as at 31 March 2010. Full payment of the Contingent Consideration will only be made if Dynamic Change achieves at least 25 per cent. compound annual growth in run-rate subscription revenues in the three year period to 31 March 2013.

£1.25 million of the Contingent Consideration is attributable to the financial performance of Dynamic Change in respect of the 12 month period to 31 March 2011 and £1.75 million is attributable to the financial performance of Dynamic Change in respect of the 12 month period to 31 March 2012. If the full payment of £1.25 million of the Contingent Consideration attributable to the performance in respect of the 12 month period to 31 March 2011 is not made it remains available to be paid in respect of the financial performance for the subsequent 12 month period to 31 March 2012 (but not thereafter). £1.0 million of the Contingent Consideration is attributable to the financial performance of Dynamic Change in respect of the 12 month period to 31 March 2013.

The Initial Consideration plus deal costs will be funded from existing cash resources and a 2-year term loan from HSBC. The Company expects to fund the Contingent Consideration, if applicable, through the internal cash generation of the enlarged Allocate group.

Application has been made for the 156,250 new Ordinary Shares to be admitted to AIM and it is expected that dealings in the shares will commence on 11 May 2010. Upon Admission, the Ordinary Shares will rank pari passu in all respects with the existing Ordinary Shares in issue. Following Admission, the total number of Ordinary Shares in the Company with voting rights in issue will be 60,553,399.

Commenting on the Acquisition, Ian Bowles, CEO of Allocate, said: "With this Acquisition we continue to broaden Allocate's application portfolio for the healthcare sector which will now include regulatory compliance corporate governance, risk and performance management. We will also gain domain expertise in Software-as-a-Service. We believe this is an attractive opportunity to achieve additional visibility in our top-line growth and increase our recurring revenue base."

Mil Milojevic and Hugh Ashley, Founders and Managing Directors of Dynamic Change, said: "The strategic fit between Allocate and Dynamic Change is excellent for both customers and staff. Regulatory compliance and business intelligence are rapidly emerging as some of the most exciting areas of the software market for healthcare and the enlarged group is well positioned to exploit this opportunity. We look forward to contributing to Allocate's continued strong growth."

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About Allocate Software plc

Allocate Software plc is the leading workforce optimisation software applications provider for world-wide organisations with large, multi-skilled workforces. With a blue chip client base spanning the public and private sector, its key vertical markets include: Defence, Maritime, Healthcare and Government & Education.

At the core of the business is Allocate's workforce optimisation software application, which organisations use to deploy the right people with the right skills, to the right place at the right time.

Headquartered in London, Allocate provides services and support to its increasing international customer base through regional offices in the UK, Sweden, USA, Australia and Malaysia.

Allocate is quoted on the London Stock Exchange (AIM: ALL). For further information please visit www.allocatesoftware.com.