Atlantic Lithium Regulatory News (ALL)

31 January 2011

Allocate Software plc

("Allocate" or the "Company")

Interim results for the six months ended 30 November 2010

Allocate Software plc (AIM: ALL), the leading provider of workforce and compliance optimisation solutions, today announces its results for the six months ended 30 November 2010.

Financial Highlights

§ Revenue increased by 77% to £15.9m (2009: £9.0m)

- Licence revenue increased by 120% to £7.7m (2009: £3.5m)

- Services and support revenue increased by 45% to £8.0m (2009: £5.5m)

- Healthcare revenue increased by 107% to £12.6m (2009: £6.1m)

- Recurring revenue was £5.5m, 35% of total revenue

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§ Trading profit* increased by 227% to £3.6m (2009: £1.1m)

§ Trading profit* margin increased to 22.6% (2009: 12.5%)

§ Effective tax rate of 25% (2009: 6%)

§ Diluted adjusted EPS** increased by 168% to 5.1p (2009: 1.9p)

§ Operating cash flows increased significantly to £2.7m (2009: £1.1m)

§ Net cash balances of £5.4m (2009 £4.5m)

* Trading profit defined as profit before amortisation of intangible assets, share-based payments, interest and tax.

** Excludes amortisation of intangible assets and share-based payments.

Business Highlights

§ Successful completion of the initial components of the previously announced large Australian healthcare project has driven revenue and profit significantly upwards in the period

§ 30 new customer wins including 14 new customers for Healthroster of which 12 were new NHS Trusts, six new NHS Trusts for Dynamic Change and 10 new customers for Time Care in Sweden. Total Healthcare customers worldwide now number 428

§ Healthroster gained 12 new NHS Trust customers, making 131 Trusts with Healthroster in total at the period end (representing over one third of Acute, Mental Health and Primary Care Trusts (PCTs) in England and Wales)

§ Organic revenue growth, which excludes revenues generated from Dynamic Change and Time Care, was 33% in the period.

Ian Bowles, Chief Executive Officer of Allocate, commented:

"I am delighted with our results for this half year period, our seventh consecutive reporting period showing sustained improvements in our business and higher market penetration. Allocate continues to develop business in its key markets of Healthcare, Defence and Maritime both in the UK and overseas. The results this half year reflect the benefit of a high proportion of the income due under the previously announced large Australian healthcare contract. Whilst this contract will continue to contribute to our revenue growth in the future, I do not expect that the amounts of revenue and profit realized in this period will be repeated at these levels in future periods.

"Worldwide, Allocate has closed 14 new Healthroster deals, a number with which I am pleased, as it is only slightly below the 17 we closed in the same period last year, despite the structural changes being made in the NHS. I am also pleased that Dynamic Change closed six new customers in this period, including our first cross sale to an existing Healthroster customer. However, as previously announced in the half year contracts update, Dynamic Change has suffered a number of contract terminations due to the impact of the Government's White Paper on PCTs and in particular on the commissioning element of those organisations.

"Our Defence and Maritime businesses continue to execute satisfactorily although neither contributed significant new business revenue in the first half.

"Finally, as was indicated in the half year contracts update, taking into account both the positive effect of our overseas expansion and the negative impact of the Government's White Paper outlining the re-structure of the NHS, we remain on track for our full year revenue and profit targets."

Enquiries:

Interim results for the six months ended 30 November 2010

Interim Statement

The six month period ended 30 November 2010 has been one of continued success for Allocate. Revenue, profits and EPS have all grown materially over the comparable year six month period to 30 November 2009.

Revenue in the period was £15.9m (2009: £9.0m), an increase over the prior year of 77%.

The key drivers of this revenue performance were as follows:

§ The major Australian healthcare contract announced on 3 June 2010 is performing in line with management's expectation and has produced a significant revenue contribution in this period.

§ Allocate closed 14 new Healthroster contracts in the period including 12 new contracts with NHS Trusts and in addition, four existing NHS Trusts extended their contracts. This compares to 17 new NHS Trusts and no contract extensions in the same period of the prior financial year. Of the 12 new Trusts, three were competitive wins where Healthroster replaced an incumbent product.

§ For the first time, Allocate's recurring revenues are disclosed, standing at 35% of total revenues for the period and growing. Recurring revenue is now an important component of the growth of Allocate's total revenue. The stream is comprised principally of renewable support and maintenance but in addition, there is also a material amount of subscription licence revenue from Dynamic Change, some Allocate products and also from some of the Time Care products.

§ Licence revenue grew by 120% to £7.7m (2009: £3.5m), while services and support revenue grew by 46% to £8.0m (2009: £5.5m). By sector, Healthcare revenue in the period increased by 107% to £12.6m (2009: £6.1m), reflecting not only the Company's continued partnership with the NHS, but also the impact of the major Australian contract and the Time Care and Dynamic Change acquisitions.

§ Defence revenue grew by 14% to £1.6m (2009: £1.4m).

§ Maritime revenue has fallen by 17% to £1.0m (2009: £1.2m).

§ Clearly, the rise in Defence revenues strikes a more positive tone than the fall in Maritime revenues, but both of these lines of business contain income streams that from time to time may contain large deals that may not repeat in every reporting period, with the result that revenue may rise or fall from period to period. Having said that, both lines of business are performing to management's expectation.

§ Organic revenues (excluding the acquisitions of Dynamic Change and Time Care) grew by 33% to £12.0m (2009: £9.0m) during the period.

Selling and operational expenses in the period increased by 45% to £9.0m from £6.2m. Administrative expenses in the period increased by 100% to £3.2m from £1.6m, driven principally by the acquisition of Time Care and Dynamic Change. Total costs therefore rose by 56% to £12.2m from £7.8m, this being significantly lower than the 77% rate of increase in revenue for the period.

Trading profit for the period, before adjustments for share-based payments and amortisation of intangible assets, was £3.6m (2009: £1.1m), an increase over the prior year of 227%. The resulting trading profit margin was 22.6% (2009: 12.5%), a significant increase over the same period last year. Diluted adjusted EPS (excluding amortisation of intangibles and share-based payments) increased by 168% to 5.1p (2009: 1.9p).

Operating cash flows during the period were £2.7m (2009: £1.1m), reflecting a significant growth in profits over the same period last year. In addition, net cash balances at the period end were £5.4m (2009: £4.5m).

The tax rate has moved to an anticipated annual rate of 25% from an annual rate of 6% last year. This change has occurred because prior year tax losses have now been fully utilized.

Markets

Healthcare

§ The major healthcare contract in Australia is being implemented in line with management's expectations. As previously reported, the revenue impact in the period is highly material and whilst management expects further revenue from this agreement in future periods, it does not expect the revenue to continue at the levels reported in this period.

§ 12 NHS Trusts became new Healthroster customers in this period bringing the total number to 131.

§ Allocate now has a customer base of 362 NHS Trusts across the UK. This demonstrates the continuing recognition by the NHS of the value of our products and services.

§ Signed Dean Healthcare Systems Inc, our second US Healthroster customer and Malaysia also secured its second new Healthroster customer, Pantai Hospital, Ipoh.

§ A number of customers have continued to purchase additional Healthcare products with several new and existing customers extending agreements to include BSMS Trinity, our best in class temporary staff management product, Medical rostering, E-expenses and Roster Central. Allocate now has over 180 NHS Trusts utilizing the temporary staffing product.

§ In Europe, Time Care continues to trade well. The business is performing in line with management's expectations and in the period signed agreements with 10 new customers including not only healthcare institutions but also local authorities who have responsibility for care in the community. Additionally, Time Care increased its business in Belgium to a level double that of the prior year.

§ The performance of Dynamic Change has been below management's expectations in this period. This is primarily due to the continued negative impact in the public sector following the publication of the Government's White Paper which proposed restructuring PCTs. A material proportion of Dynamic Change's customers are commissioning PCTs, some 30-40%. As a result, a number of customers have already declined to renew their subscriptions and more are expected to follow suit. In addition, we have also seen a slowdown in the number of new customers being contracted. As a result, management have revised downwards their forecasts for both revenue and profits from Dynamic Change and in accordance with the provisions of IFRS3, they have re-assessed the provisional fair value of the business. This has resulted in several changes to the Consolidated Statement of Financial Position, namely reduced levels of intangible assets, goodwill, deferred tax and deferred payments. However, there is no impairment charge to the Income Statement. Further details of this can be seen in Note 4 of the Interim Report.

Defence

§ Substantial new consultancy contract completed with NATO (DART).

§ Continued MAPS Defence Suite enhancements for the British Army under their FARRIER Programme.

§ Major new Australian Army project commenced, in partnership with CSC.

Maritime

§ Phase 1 of Maersk Oil Qatar project completed.

§ Norwegian Cruise Lines upgrade commenced.

Development

The principal development efforts in this period have been focussed on progressing the Columbus project. The project will see the complete redevelopment of our architecture from the ground up, delivering improved performance, scalability and enhanced functionality.

In addition, the following updated products were released:

§ MAPS Maritime Suite v6.4 released giving rostering functionality to Maritime clients

§ Farrier Timebox7 - new functionality in Blenheim product for British Army to provide resource budget management

§ Beta version of BSMS Trinity v1.3 released (Bank Software Management System)

Directors' Responsibilities

The half-yearly financial report is the responsibility of, and has been approved by, the directors. The directors are responsible for preparing the half-yearly financial report in accordance with the AIM Rules for Companies which require that the financial information must be presented and prepared in a form consistent with that which will be adopted in the company's annual financial statements.

As disclosed in note 2, the annual financial statements of the group are prepared in accordance with IFRSs as adopted by the European Union. The condensed set of financial statements included in this half-yearly financial report has been prepared in accordance with the basis of preparation set out in Note 2 of the Interim Report.

Terry Osborne

Executive Chairman

Ian Bowles

Chief Executive Officer

Condensed Consolidated Income Statement

Condensed Consolidated Statement of Comprehensive Income

Condensed Consolidated Statement of Financial Position

Condensed Consolidated Statement of Changes in Equity

Condensed Consolidated Cash Flow Statement

Notes to the Interim Financial Information

1. Legal status and activities

The principal activities of the group are the sale and support of workforce optimisation solutions, and the provision of related IT services to major government, industrial and commercial customers.

The principal trading subsidiaries of the group are: Allocate Software Worldwide Limited, Allocate Software Technology Systems Limited, Allocate Software Sdn Bhd and Time Care AB, companies which are involved in the sale, implementation and support of workforce optimisation solutions, Allocate Software Inc, a company which is involved in the sale and support of workforce optimisation solutions and Dynamic Change Limited which is a provider of regulatory compliance, corporate governance, risk and performance management for the UK healthcare market.

The company is a public limited liability company, incorporated and domiciled in England and Wales. The address of its registered office is 180 Piccadilly, London, W1J 9ER.

The company has its listing on the Alternative Investment Market ("AIM") of the London Stock Exchange.

2. Basis of preparation

These unaudited interim condensed consolidated financial statements are for the six month period ended 30 November 2010. They do not include all the information required for full annual financial statements and should be read in conjunction with the consolidated financial statements of the group for the year ended 31 May 2010, which were prepared under IFRS as adopted by the European Union (EU).

The accounting policies adopted in this report are consistent with those of the annual financial statements for the year ended 31 May 2010 as described in those financial statements.

The interim financial statements have not been audited, nor have they been reviewed under ISRE 24 10 of the Auditing Practices Board. The financial information presented does not constitute statutory accounts as defined by section 434 of the Companies Act 2006. The group's statutory accounts for the year ended 31 May 2010 have been filed with the Registrar of Companies. The auditors, Grant Thornton UK LLP reported on these accounts and their report was unqualified and did not contain a statement under section 498 of the Companies Act 2006.

3. Earnings per 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 and amortisation of intangibles. 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 adjusted profit per share is set out below:

The weighted average number of shares is the same as above.

4. Reassessment of provisional fair values - Dynamic Change Limited

On 5 May 2010, the Company acquired Dynamic Change Limited, 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 initial consideration was £4.9 million in cash and £100,000 in shares of Allocate plc. In addition, deferred consideration of up to £4.0 million in cash would become payable based on the financial performance of Dynamic Change for the periods 12 months ending 31 March 2011, 31 March 2012 and 31 March 2013.

As at 31 May 2010, the group carried out a provisional fair value exercise recognising values for intangible assets and goodwill and offset by a deferred tax liability and deferred payments. Management have now revised those provisional fair values by re-examining the underlying assumptions in the valuation model. As a result of this exercise, the provisional fair values have been reassessed as follows: