Atlantic Lithium Regulatory News (ALL)

21 July 2014

Allocate Software plc

("Allocate" or the "Company")

Final Results for the Year Ended 31 May 2014

Record year with strong recurring revenues and EBITDA performance

Record 147 UK Healthcare transactions secured for major products

Allocate Software plc (AIM: ALL), the leading provider of workforce and compliance optimisation solutions, announces its final audited results for the year ended 31 May 2014.

Financial Highlights

§ Total revenue increased organically by 8% to £40.0m (2013: £37.1m)

§ Recurring revenue increased by 7% to £18.8m representing 47% of total revenue (2013: 47%)

§ Healthcare revenue increased organically by 18% to £34.7m (2013: £29.3m)

§ Healthcare bookings* were £41.2m, £6.5m greater than Healthcare revenue

§ Adjusted EBITDA** rose 44% to £6.9m and 17% of revenue (2013: £4.8m and 13%)

§ Diluted adjusted EPS*** was 9.0p (2013: 5.6p)

§ Net cash balance was £13.7m (2013: £9.1m)

§ Proposed dividend up 10% to 1.45p (2013:1.32p) per share

§ Statutory Profit before tax rose to £2.9m (2013: loss £2.4m)

* Bookings are defined as the total value of contracts received in the period

** Adjusted EBITDA refers to earnings before interest, tax, depreciation, amortisation, impairment, share based payments and non-recurring costs

*** Diluted adjusted EPS excludes amortisation of intangible assets, acquisition costs, non-recurring costs, impairment charges and share-based payments, adjusted for taxation

Business Highlights

§ 147 major agreements across the applications portfolio in the UK led to UK Healthcare revenue growth of 19% over 2013, exceeding management expectations

§ 16 customers selected HealthRoster, all on a term licence basis

§ The HealthRoster win rate increased to 90% (2013: 88%) with the 16 new agreements including six competitive displacements

§ 36 NHS Trusts renewed HealthRoster contracts in 2014, 32 on a term licence basis. This continues the 100% success rate and is a clear demonstration of the value the application is delivering, now reinforced by the NHS Safe Staffing agenda

§ 39 customers selected the Allocate Cloud, bringing the total number of customers for the Cloud service to 63, which is 37% of the HealthRoster installed base

§ 33 new SafeCare agreements secured, bringing the total to date to 37

§ 12 NHS Trusts selected the HealthMedics applications for the first time. There were 23 transactions for the HealthMedics products. The total number of NHS Trusts using the HealthMedics applications is now 155

§ 59 customers are now live on HealthRoster V10, including 21 customers who have migrated from HealthRoster V9 to HealthRoster V10. In addition a further 37 customers are contracted to migrate

§ The Nordics operations performed very well and Australia Healthcare business performed in line with expectations, driving increases in both revenue and profit

Ian Bowles, Chief Executive Officer of Allocate, commented:

"We have delivered a very strong performance in 2014 with growth in our core product areas and in multiple geographies. Revenue, EBITDA and cash increased to their highest ever levels with the EBITDA margin progressing by four percentage points over 2013. The number of new healthcare customer agreements for HealthRoster, Cloud and SafeCare exceeded management expectations, primarily because our suite of applications is so closely aligned with the needs of the NHS. The NHS focus on safe staffing has increased the level of interest from Trusts seeking support as they continue to focus on driving efficiencies and improving the quality of care delivered. Our international operations continue to strengthen providing an additional platform for future growth.

We closed the 2014 financial year well, carry a strong momentum in to 2015 and look forward to continued success in the future."

Enquiries:

Chairman's Statement

I am pleased to report that our 2014 financial year exceeded City expectations for revenue, EBITDA and cash. Our response to the safe staffing agenda of the NHS has been met very enthusiastically, we more than doubled the number of Cloud customers and we grew recurring revenues significantly as we continued to drive the evolution of the Company's business model.

The strength of Allocate can be seen in the Statement of Financial Position which shows this year's repayment of all of the Company's debt, the continuing increase in deferred revenue, well-managed working capital and the record cash balance of £13.7m.

I was delighted to welcome to the Board Dr Graham Rich who joined us in December 2013. Dr Rich is an experienced former Chief Executive of NHS hospitals including a Foundation Trust and a primary care trust (PCT) as well as formerly holding a position as Director of Commissioning. He has also previously worked on national policy formulation and implementation at the Department of Health. He has particular interest in patient empowerment, the use of IT in healthcare, improved transparency of outcomes and patient satisfaction to drive performance improvement.

In February, Chris Gale, our Chief Financial Officer, announced his intention to step down from his post to pursue other interests. On behalf of the Board, I want to thank Chris for his considerable contribution to Allocate's growth and success over the last four and a half years. During his tenure as CFO the Company has made significant changes which greatly strengthened its business model and much improved its business systems and IT infrastructure. Chris leaves behind him a very competent team and the Board is in advanced discussions with several candidates to fill the CFO role. Allocate's excellent financial health owes much to Chris and we all wish him well for the future.

This will also be my last Chairman's Statement as, given my impending retirement, I will be stepping down from the Board later in 2014. I joined as the Company's Chairman in October 2005 and in that near 10-year period have seen the transformation of Allocate from a loss-making company focused on the Maritime and Defence sectors with revenues of £4 million to a profitable, international business which has also successfully developed a market leading position in the Healthcare industry. I am very proud of what Allocate and the team have achieved and am confident in their ability to continue to grow in the future.

I would like once more to thank Allocate's customers for their partnership and business. Finally, I would like to recognise and thank all of the Company's employees throughout the world for another year of hard work and commitment in support of the Company's success.

As an indication of our confidence in the business, the Directors are pleased to propose a dividend in respect of the full financial year of 1.45 pence per share.

We remain confident of our prospects for the 2015 financial year, and of the fundamental strength of the business.

Terry Osborne

Chairman

18 July 2014

Chief Executive Officer's Statement

Overview

2014 was another very successful year for Allocate in which we grew worldwide revenue by 8% to £40.0m organically. Healthcare revenue grew by 18% to £34.7m, again organically, contributing 87% of total revenue. EBITDA rose to £6.9m (2013: £4.8m). Profit before tax rose to £2.9m (2013: loss £2.4m).

Our business model continues to evolve with recurring revenue at 47% of total revenue and repeatable revenue this year reaching 66% of total revenue. Repeatable revenue is defined as recurring revenue plus term licence revenue. This high level of repeatability significantly enhances the Company's visibility and predictability of future revenue.

Allocate's offering is closely aligned with the needs of the NHS and the broader healthcare community. As has been widely reported and outlined in the Government's Quality, Innovation, Productivity and Performance initiative (QIPP), the rising demand for care, flat or reducing budgets and the ongoing upward pressure on costs has meant that the NHS in England has been tasked with finding large year-on-year efficiency savings. The savings target that has been identified equates to every Trust making 4% per annum efficiency gains, which is part of the c. £30 billion funding gap, whilst at the same time improving care. Allocate has many success stories where its products have enabled Trusts to make significant savings.

For the second year running, in June 2014, Allocate was a key supporter of the NHS Confederation's Annual Conference and Exhibition (CONFED). This event is the largest and most influential meeting of healthcare leaders, decision-makers, partners and stakeholders. This year as well as supporting the event, Allocate provided speakers, with subject matter expertise and hosted the workshop 'Delivering safe and sustainable services 24×7 by aligning the workforce to patient need and activity'.

Our suite of products is designed to help all Healthcare providers to deliver effective care whilst ensuring the optimal use of resources. In particular NHS Trusts who are our largest community of customers. The high levels of engagement that we receive at key industry conferences like CONFED and the Foundation Trust Conference suggests that Allocate's healthcare offerings are well positioned to support further growth in our domestic and overseas markets.

Healthcare - UK

· UK Healthcare revenue up 19% to £22.5 million

· Repeatable revenue 81% of UK Health revenue

· Further improved competitive position with new HealthRoster contracts win rate over 90%

· Record number of new and renewal HealthRoster agreements signed, 92% on a term-licence basis

· Launch of SafeCare, our new safe staffing application matching patient demand to available staff skills

 Recurring revenue rose to £10.5m and repeatable revenue rose to £18.3m which is 81% of UK Health revenue (2013: £14.9m and 73%). Total UK Healthcare bookings were £30.0m, exceeding revenue of £22.5m by £7.5m. These bookings demonstrate the strength of Allocate's depth of customer engagement and provide increased levels of forward visibility.

This year has seen a major focus on safe staffing throughout the NHS as a result of the Francis Report and subsequent initiatives by the Department of Health and NHS England to provide transparent staffing data.

HealthRoster, Allocate's flagship solution, remains the UK's most widely-used e-rostering solution and in 2014 we improved further HeathRoster's competitive position. In addition to securing agreements with 16 new customers, the Company's win rate was over 90%, which is higher than in prior years.

The continued adoption of HealthRoster by NHS Trusts in both England and Scotland positions Allocate strongly to introduce other applications to customers in the future.

The number of NHS Trusts utilising HealthRoster has now reached 165 (out of 170 total UK HealthRoster customers), representing 61% of the 272 Trusts at the year-end. The Company secured its first HealthRoster customer in Scotland. This agreement was signed under a new framework agreement which will enable the other 11 Scottish Health Boards to contract with Allocate under the same framework, terms and conditions.

Significantly, six Trusts moved away from competitive solutions to HealthRoster, leaving 41 Trusts with competitive products. There are still 61 Trusts that do not use any electronic rostering system.

The Company also secured 36 HealthRoster renewals in 2014 bringing the total number renewed to date to 69, continuing the previously reported 100% success rate. Of the 36 renewals, 32 were contracted on an average four to five year term licence basis. All were renewed at average values consistent with those of the original agreements.

In 2014 therefore, the Company secured a total of 52 new and renewal HealthRoster agreements, a record performance. Of these, 48 or 92% were secured on a term licence basis, versus an average of 70% in the past, which significantly improves the Company's visibility of future, repeatable revenue streams.

During the year we released the first product in our SafeCare application which is a significant development for our customers and ultimately patients. The application focuses on meeting the safe staffing challenge post the Francis Report by matching patient demand to the available staff. In 2014, we secured 33 contracts (37 to date) for SafeCare Ward, the first product to be shipped within our SafeCare application, significantly exceeding management expectations. SafeCare Ward will continue to be shipped in 2015 but it will be supplemented by the recently announced SafeCare Live and SafeCare Assure, the Cloud delivered service that will enable Trusts to match patient demand against staffing resources in real time, by using a wide range of hand-held devices within a Trust, ensuring staff are correctly deployed to meet patient needs. The level of customer engagement with SafeCare at the close of 2014 was significant.

The performance of the Allocate Cloud exceeded management expectations in 2014 with 39 new contracts closed, bringing the cumulative number to 63. Nine of the 16 new HealthRoster agreements secured in 2014 also included an agreement for Cloud. Of the 39 new contracts closed, nine were contracted with new HealthRoster customers and 16 with HealthRoster renewals. The Annual Contract Value (ACV) of Cloud contracts rose over 2013, driven by average contract size. The Cloud pipeline on closing the year stood at over 70 prospects with a bookings value close to £10.0m.

The performance of our Medics application met overall management expectations in 2014, with 12 new customers secured. The ACV of these agreements remains at a level consistent with 2013.

Health Assure sales this year remain short of expectations but nevertheless eight new agreements were secured.

Sales of the Patient Flow and Emergency Department product lines, which were acquired with Real Time, remain slower than expected and the Company has not yet secured a new customer with these applications since the acquisition. Whilst we have seen and continue to see interest in the functionality of the products, we have found that decision making cycles for clinical decision support applications are considerably longer than originally anticipated.

Healthcare - Nordic & Australia

Allocate's international operations continue to strengthen, providing a solid growth platform for the future.

The Nordics business has grown revenue and profits for the fourth year in succession and has secured contracts with a significant number of new customers for both Time Care Pool and Time Care Planning.

Average order values have risen slightly in the period due to transaction size. The average value per services day has also risen slightly, contributing not only to the excellent Nordics performance but also to the improved services performance Company wide. In 2015, Allocate will deploy its V10 platform into the Nordics and we are confident that this will support continuing strong growth in the geography.

The Australian Healthcare revenue has increased by 41% over 2013, principally as a result of better integration of the acquired RosterOn organisation which has led to improved execution of both licence and services contracts. In addition, as we closed 2014, we were negotiating an agreement with our major customer in Australia for a large, multi-year services engagement to provide enhancements to their HealthRoster deployment. As part of this agreement, we will make an incremental investment in our R&D team located in Australia.

Defence and other commercial markets

Allocate's main division and primary growth driver is Healthcare. The Company has strong credentials and continues to maintain a position in the Defence and Maritime sectors. Both of these divisions are profitable and cash-generative.

The Defence environment remains very challenging with western nations looking for reductions in government spending. As a consequence, we have not been successful in securing new licence agreements this year. However, we retain a significant customer base in Australia, the UK and Europe for whom we continue to provide both services and support at levels that contribute positively to the Company's financial position. Post period end we secured a significant commitment from the Australian Defence Forces for a multi-year support agreement which underlines the commitment to the Allocate Defence Suite.

For offshore oil and gas organisations around the globe, the task of finding, deploying and managing highly skilled workforces in the marine environment is increasingly complex. Whilst we have not been successful in closing any new licence contracts this year, several customers have extended their use of our products. McDermott has gone live globally and has rolled out Allocate Onboard for their barges and vessels. Subsea 7 has extended the use of the system to cover activity time capture and skills. As noted with Defence, the Maritime business continues to maintain strong services and support relationships with our clients and the business remains a positive contributor to Allocate's financial position.

Services

As planned in 2014, we reorganised the Services team. The focus has been on right-sizing capacity, improving the utilisation of the delivery teams and meeting customer quality standards. Our objective is to develop a sustainable world-class services organisation, delivering high quality outcomes in projects delivered to customer requirements with improved margins. In the UK the team has been enhanced through the recruitment of a number of experienced individuals including key director roles. The new team has made significant progress and has established an improved implementation methodology for the delivery of the core HealthRoster application. This has both reduced the cost and improved the quality of project outcomes.

In addition to delivering increasing new business driven services, the team has delivered a considerable amount of post-sale services for benefits realisation.

In the UK there has been a surge in demand from customers seeking support in migrating from HealthRoster V9 to V10. To satisfy this demand a dedicated team was created and the migration process reengineered to reduce lead time and increase project throughput, thereby improving customer satisfaction. The team is now staffed, trained and in a position to migrate the balance of the V9 installed base to V10 in 2015.

The focus in Australia is very much the same as the UK with recruitment improving the capability of the team. Project results have improved and service revenues have improved significantly over 2013.

In the Nordics, the services team continue to build on the success of their Planning Academy Consulting proposition. The success of this programme has resulted in non-product related services revenue rising to a material proportion of Nordics services revenue and is a key contributor to the fourth consecutive year of Nordics revenue and profit growth.

There is now positive momentum in our services business and we are confident that 2015 will bring further improvements in revenue, delivery and margins.

Products

Product strategy is focused on strengthening our key differentiators and enabling easier adoption of additional applications.

Allocate's current portfolio of Healthcare products has been designed and developed specifically to enable healthcare organisations to make significant real-time efficiency gains whilst at the same time ensuring the appropriate level of care is provided to patients. The market's appetite and confidence in our products is demonstrated by the 90% competitive win rate for HealthRoster over the year and 100% renewal rates. Allocate's reputation in the UK has positioned the Company well for further international growth and following the strong adoption of HealthRoster V10 in the UK, in 2014, the Company is deploying V10 into the Swedish market.

A majority of Allocate's customers initially enter into a contract with the Company for one of our four core products. The development of the Allocate Cloud has enabled our customers to benefit from additional solutions and applications. Future services to be offered to Cloud customers could address customer needs in the area of data management.

Allocate is committed to investing in R&D to maintain and extend its market position. Mobile applications utilising tablet and mobile devices across our core applications is now a key focus. During the period, the Company launched SafeCare Mobile which is changing the way healthcare organisations manage the day to day requirements of complex staff deployment in their organisations, enabling staff to record information and review data in real time at the point of care.

Organisation

The number of employees at the end of the year was 296 (2013: 305). This slight fall in headcount is a reflection of the Company's increased focus on productivity and margin improvement.

Financial report

Revenue in the financial year was £40.0m (2013: £37.1m), an increase over the prior year of 8%, all organic. EBITDA was £6.9m and 17% of revenue (2013: £4.8m and 13% of revenue) an increase in value of 44% and four percentage points in margin over the prior year.

Diluted adjusted EPS (excluding amortisation of intangibles, impairment, share-based payments, acquisition costs and non-recurring costs, adjusted for tax) was 9.0p (2013: 5.6p) a 61% increase over the prior year. The growth in EPS reflects a tax credit to this year's income statement, driven by the tax benefits of significant R&D tax credits as well as the exercise of stock options.

Profit before tax rose to £2.9m from a pre-tax loss of £2.4m in 2013.

Recurring revenue increased by £1.2m or 7% to £18.8m and 47% of total revenue (2013: £17.6m and 47%). Within recurring revenue, subscription revenue grew by 13% to £7.1m (2013: £6.3m) and support and maintenance increased by 3% to £11.6m (2013: £11.3m).

Healthcare revenue in the period increased by 18% to £34.7m, all organic, (2013: £29.3m), driven largely by the growth of repeatable revenues and by growth in Nordics. Defence revenues were £3.6m (2013: £5.0m). Maritime revenue was £1.7m (2013: £2.8m).

UK Healthcare revenues have grown 19% over 2013 driven principally by increases in revenue from the Cloud and from HealthRoster renewals.

Total costs in 2014 were £33.1m (2013: £32.2m) an increase of 3% or £0.9m. This is the smallest increase in costs for several years and has been achieved in spite of increases in elements of variable costs such as Cloud hosting and services.

EBITDA margins were 17% (2013: 13%), growth of four percentage points driven principally by improvements in the core UK Healthcare market. Gross margin has improved by one percentage point and total operating expenses as a percentage of revenue have improved by three percentage points. Profit before tax rose to £2.9m (2013: loss £2.4m).

Cash generated from operations was £5.9m (2013: £8.7m). This result has been principally driven by £1.6m increase (2013: £1.6m reduction) in trade and other receivables, reflecting increased revenues notwithstanding a reduction in Days Sales Outstanding to 60 days (2013: 64 days) driven not only by tight management but also influenced by high levels of customer satisfaction.

The total acquisition related cash spending was nil (2013: £1.9m) dividend paid in the year was £0.7m (2013: £0.7m), shares purchased for the LTRP were £0.1m (2013: £0.6m), capital expenditure was £1.3m driven by the office moves and by Cloud (2013: £0.5m) and cash proceeds from exercise of stock options was £2.2m.

Taxes paid were £1.0m (2013: £0.7m), the increase arising in Sweden and Australia. We paid no taxes in the UK as a result of losses brought forward, R&D tax credits and the tax offset benefit of the stock option exercises. The overall corporate tax rate this year is a tax credit. In future years the Company anticipates that its overall tax rate will be in the range of 15%-20%.

Deferred income was £14.8m an increase of £0.2m (2013: £14.6m). This modest increase masks an increase of £1.5m in the current year deferred revenue for UK Healthcare subscriptions which is offset by lower long term deferred revenue from lower non-current subscription billings.

In summary, after taking into account the above, closing net cash on the Statement of Financial Position was £13.7m (2013: £9.1m).

As previously stated, we propose to pay a dividend in respect of the full financial year of 1.45 pence per share (2013: 1.32 pence).

Outlook and future developments

2015 will be another significant year for Allocate.

The priority is to drive further growth in the Healthcare business, principally by accelerating both Cloud and SafeCare adoption to support our customers and prospects as they respond to the NHS safe staffing agenda.

The demand for Allocate's products is clear and evidenced by the fact that we closed 2014 with very high levels of customer interest and engagement in all of the applications in HealthSuite.

Our V10 migrations were capacity constrained in 2014, but we have now overcome these challenges and we have the resources in place required to migrate at least 85% of our customer base to V10 in 2015.

Our overseas businesses continue to grow and they remain strong. We look forward to another positive year in these territories.

Operating margin expansion in 2015 is an important priority. We have expanded margins in 2014 by four percentage points and we are confident that we will see a further, albeit smaller, improvement in 2015, driven principally by improved services margins and by improved efficiency in R&D.

Our Balance Sheet and cash generation are again very strong and this gives us the confidence as well as the capacity to invest further in a strategy that is proving successful.

I would like to add my personal thanks to two of my colleagues who plan to leave the Company during our next financial year.

Chris Gale, our CFO, is leaving us after four and a half years. His contribution to the evolution of the business model has been significant and he leaves behind a strong team that will carry the business through the next phase of our growth. I wish him every continued success for the future.

Terry Osborne, who plans to retire later this year, has been Chairman for nine years and has had a very significant impact on the business. He has provided constructive challenge to the executives, run a very effective board and, at the same time, he has been a great personal mentor.

On behalf of the Board and the broader team, I thank them both for their contributions to our success.

Whilst I remain confident about the prospects for Allocate in 2015 there are challenges that we will continue to face as we drive the business forward. I am confident that as a team we can face up to both the challenges and opportunities presented and look forward to another successful year.

Our success is predicated on the collaborative relationships we develop with our customers and would not be possible without the support of our partners and the outstanding international team at Allocate. Thank you all for the ongoing support and commitment, which I never take for granted.

Ian Bowles

Chief Executive Officer

18 July 2014

ALLOCATE SOFTWARE PLC

CONSOLIDATED INCOME STATEMENT FOR THE YEAR ENDED 31 MAY 2014

ALLOCATE SOFTWARE PLC

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME FOR THE YEAR ENDED 31 MAY 2014

ALLOCATE SOFTWARE PLC

CONSOLIDATED STATEMENT OF FINANCIAL POSITION AS AT 31 MAY 2014

ALLOCATE SOFTWARE PLC

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY FOR THE YEAR ENDED 31 MAY 2014

ALLOCATE SOFTWARE PLC

CONSOLIDATED CASH FLOW STATEMENT FOR THE YEAR ENDED 31 MAY 2014

ALLOCATE SOFTWARE PLC

NOTES TO THE FINANCIAL INFORMATION

1. Publication of Non-Statutory Accounts

The financial information, which comprises the Consolidated Income Statement, Consolidated Statement of Comprehensive Income, Consolidated Statement of Financial Position, Consolidated Statement of Changes in Equity, Consolidated Cash Flow statement and related notes, does not constitute full accounts within the meaning of s435 of the Companies Act 2006.

The auditors have reported on the Group's statutory accounts for the year ended 31 May 2014 under s495 of the Companies Act 2006. The auditor's report does not contain statements under s498(2) or s498(3) of the Companies Act 2006 and is unqualified. The statutory accounts for the year ended 31 May 2014 will be filed with the Registrar of Companies, sent to shareholders and published on the Company's website at www.allocatesoftware.com in due course.

2. Basis of Preparation

The Group's accounting policies are consistent with those applied in the year to 31 May 2013, amended to reflect any new standards. The adoption of new standards in the year has not resulted in a significant impact to the Group's accounting policies.

3. Segmental Reporting

Management has determined the operating segments based on the revenue streams within the reports reviewed by the strategic decision maker comprising the board of Directors. These segments are consistent with how the business is structured, managed and its resources are deployed by the board.

Licence and subscription revenue represents revenue from the sale of non-cancellable software licence agreements and subscriptions associated with that software. Support and service revenue represents revenue from the provision of installation, consulting, training and product support.

(*) includes non-recurring costs, acquisition costs, amortisation, impairment of intangible assets and share-based payment charges.

Under IFRS 8 there is a requirement to show operating profit and total assets for the operating segments, however, attributable expenses and total assets cannot be allocated on a reasonable basis and, as a result, the analysis is limited to the Group revenue less costs of goods sold which is then reconciled to the profit before tax.

There are no material inter-segment revenues.

Revenues from external customers in the Group's domicile, the United Kingdom, as well as its major markets, the European Union, Australia and the USA, have been identified on the basis of the customer's geographical location. Non-current assets are allocated based on their physical location.

Revenue arises from customers in the following locations:

In addition to the requirements of IFRS 8, the Directors present a schedule of revenue analysed by vertical business sector:

There were no customers (2013: nil) who contributed in excess of 10% of total revenues.

The internal reporting of the Group's performance does not require that statement of financial position information is gathered on the basis of the business streams 'Licences', 'Subscriptions', 'Support', 'Services' and 'Other' reported above. This information is therefore not accessible and, as a result, the segmental analysis does not include statement of financial position details. However, the Group operates within discrete geographical markets and the non-current assets of the Group are split between these locations:

4. Income Tax

Amounts recognised directly in equity

Aggregate current and deferred tax arising in the reporting period and not recognised in net profit or loss or other comprehensive income but directly debited or credited to equity:

The tax assessed for the year differs from the standard rate of corporation tax as applied in the respective trading domains where the Group operates. The differences are explained below:

5. Earnings/(Loss) per Ordinary Share

Adjusted earnings per ordinary share

An adjusted earnings per share has been calculated in addition to the post tax earnings per share which eliminates the effects of share-based payments, impairment and amortisation of intangibles, acquisition costs and is adjusted for tax. It has been calculated to allow shareholders to gain a clearer understanding of the trading performance of the Group. The basis of the calculation of the basic and diluted adjusted earnings per share is set out below:

6. Business Combinations

Acquisitions have been accounted for by the purchase method of accounting. The goodwill arising on these acquisitions is subject to annual impairment reviews.

There were no acquisitions during the year ended 31 May 2014.

RealTime Health Limited

During the year ended 31 May 2013 the Group acquired 100% of the share capital of RealTime Health Limited. The maximum consideration, of up to £7,162,000 was structured as an initial payment of £1,162,000 and an earn-out of up to £6,000,000 in tranches. The initial consideration of £1,162,000 was paid in cash during the year ended 31 May 2013. Deferred consideration of up to £6,000,000, payable in cash, is contingent upon the meeting of conditions, including achieving a number of demanding billings targets and key staff retentions, during the 24 months following acquisition.

The initial accounting for the acquisition was completed during the year ended 31 May 2013, resulting in the recognition of goodwill of £64,000 and an intangible asset of £1,533,000 in relation to the software product acquired. The useful life of the intangible asset has been assessed as 8 years and this asset will therefore be amortised over 8 years

For accounting purposes IFRS3 'Business Combinations' required the £6,000,000 deferred consideration to be treated as remuneration and not consideration. Consequently an expense of the expected amount of consideration would be taken to the Income Statement on a straight line basis over the 24 month period. The targets triggering the payment of contingent consideration have not been met and are not expected to be met and so no charge has been recognised in the Income Statement.

7. Directors' Remuneration