Allocate Software plc
LSE : ALL

Allocate Software plc

August 03, 2009 02:00 ET

Final Results: Allocate Software Reports Record Results for the Year Ended 31 May 2009

                                               
3 August 2009

                                   Allocate Software plc ("the company")

                                 Allocate Software Reports Record Results
                                      for the Year Ended 31 May 2009

Allocate Software plc (AIM: ALL), the leading provider of workforce optimisation solutions, today announces
its results for the year ended 31 May 2009.

Financial Highlights

- Revenue increased by 36% to £15.8m (2008: £11.6m)
  - Licence revenue increased by 32% to £7.6m (2008: £5.8m)
  - Services revenue increased by 37% to £8.0m (2008: £5.8m)
  - Healthcare revenue increased by 69% to £11.1m (2007: £6.6m)
- Trading profit* increased by 37% to £2.53m (2008: £1.85m)
- Trading profit* margin increased to 16.05% (2008: 15.98%)
- Diluted adjusted EPS** increased by 31% to 5.36p (2008: 4.1p)
- Cash balances at the year-end of £3.7m (after £2.1m cost of investment in Baum Hart & Partners)

*  Trading profit defined as profit before amortisation of intangible assets, share-based payments,
   interest and tax
** Excludes amortisation of intangibles, share-based payments and deferred tax adjustment

Business Highlights
- Total  Healthcare  customer base has now reached over 180 NHS Trusts in the UK  and  four  Private
  Healthcare Providers
- MAPS Healthroster gained 46 new NHS Trust customers, making 81 in total at the year-end (which
  represents 21% of the total number of Acute, Mental Health and Primary Care Trusts in England and Wales)
- Successful integrations of Key Information Technology Services ("KITS") and Baum Hart & Partners("BHP")
- NATO extended its use of MAPS to provide access by all NATO Allies; it is now the defined standard
  for all national contributions for Force Generation across NATO
- MAPS Maritime selected by Maersk Oil Qatar for its shoreside and offshore operations
- Directors confident of another successful year

Post-period events

- Name changed to Allocate Software plc on 28 May 2009
- Geographic expansion continues with second sale of MAPS Healthroster into Malaysia
- Launched  new Doctor Rostering module and the first sale of this module to an existing  NHS  Trust
  customer has already been made
- Two additional sales of MAPS Healthroster in the UK
- Launched Next Generation BSMS, temporary staffing solution to the market
     

Ian Bowles, Chief Executive Officer of Allocate Software, commented:

"FY09  was a significant year for Allocate Software, outperforming our original targets and achieving  more
consistent  revenues.   We  continued  to strengthen our position in  the  UK  Healthcare  market,  winning
considerable  market  share  and  securing our second private healthcare customer  in  Malaysia.   In  both
Maritime  and Defence we secured new orders, showing that even in difficult economic environments customers
value  the applications we deliver.  We remain committed to improving the performance of all areas  of  the
business as we focus on growth and delivering enhanced shareholder value."

Enquiries:

Allocate Software                                                   
Ian Bowles - Chief Executive Officer                                Tel: +44 (0) 20 7355 5555
Simon Thorne - Chief Financial Officer

Numis Securities                                                    
Nominated adviser - Michael Meade / Brent Nabbs                     Tel: +44 (0) 20 7260 1000
Corporate Broking - James Black
                                                                    
Hansard Group                                                       
Justine James                                                       Tel: +44 (0) 20 7245 1100
John Bick                                                           Tel: +44 (0) 7525 324431
                                                                    

CHAIRMAN'S STATEMENT

The  2008/9  financial  year has been another year of considerable success for  Allocate  Software,  as  we
continue to deliver on our strategy to be the leading supplier of workforce optimisation solutions  in  our
chosen markets.

Results

Revenue in the financial year was £15.8m (2008: £11.6m), an increase over last year of 36%.  Trading profit
for the year, before adjustments for share-based payments and amortisation of intangible assets, was £2.53m
(2008:  £1.85m), an increase over last year of 37%.  The resulting trading profit margin was 16.05%  (2008:
15.98%),  consistent  with  the previous year.  However, this includes £0.4m costs  incurred  in  the  2009
financial  year  on  the projected two year development of our new product platform.  This  cost  has  been
written  off  in  full.   Excluding this, the net operating margin would have been  18.25%,  a  significant
improvement  over  last  year.   Diluted adjusted EPS (excluding amortisation of  intangibles,  share-based
payments and the deferred tax adjustment) increased by 31% to 5.36p (2008: 4.1p).

Licence  revenue  grew by 32% to £7.6m (2008: £5.8m), while Services revenue grew by 37%  to  £8.0m  (2008:
£5.8m).   By  sector, Healthcare revenue in the period increased by 69% to £11.1m (2008: £6.6m), reflecting
the  company's  continued expansion within the NHS and its position as the supplier  of  choice  for  nurse
rostering  products.  Defence revenues were flat at £3.0m (2008: £3.1m), reflecting a  continued  level  of
spend by existing customers in this market sector.  Maritime revenues were 20% less than the prior year  at
£1.6m  (2008:  £1.9m).  Shortly before the year-end, the company signed new licence agreements  with  three
companies in the Maritime sector and the majority of licence fees from these will be recognised in 2010.

Selling and operational expenses in the period increased from £7.7m to £10.7m.  This planned increase
reflected the continued development of the Services business, the expansion of our Sales capability and, in
particular, investment in the development of our product platform.

Administrative expenses in the period were £2.5m (2008: £2.0m), the increase reflecting additional costs
arising as a result of the acquisitions of KITS in April 2008 and BHP in December 2008.

Cash balances at the year-end were £3.7m (2008: £4.3m).  This reflects:

    -   an increase in debtors of £3.3m subsequent to increased sales activity in the second half of the
        year;
    -   an increase in trade and other payables of £2.4m, reflecting new support contracts, consultancy
        services pre-paid by customers and monies owed as deferred consideration for the acquisition of BHP; and
    -   £2.1m acquisition costs (£1.7m initial cost of investment and £0.4m professional fees) relating to
        the business and assets of BHP.

Organic growth

Excluding the acquisitions of KITS made in April 2008 and BHP in December 2008:

    -   Revenue in the 2008/9 financial year was £14.2m (2008: £11.5m), an increase over the previous year
        of 23%;
    -   Licence revenue grew 22%, in comparison to the prior year;
    -   Services revenue grew by 20%, compared with the prior year; and
    -   Healthcare revenue increased 48%, compared with the prior year.

Both  KITS and BHP are now an integral part of the company's business.  As a result, the costs of KITS  and
BHP are not identified separately and it is not possible to state how much of the year's trading profit and
margin were separately attributable to these businesses.

Significant activity

In  addition  to  the company's best ever financial results, a number of significant milestones  were  also
achieved during the year.

    -   Allocate Software now has a customer base of more than 180 NHS Trusts across the UK.  This is an
        important recognition by our customers of the strengths of our software and constitutes an under-recognised
        source of shareholder value.
        
    -   46 NHS Trusts became new MAPS Healthroster customers, up from 23 in the previous year.  In addition
        five NHS Trusts became new customers for our Bank Staff Management Solution (BSMS).

    -   Since the year-end, a further four contracts have been closed: two contracts for the sale of MAPS
        Healthroster to NHS Trusts, one for the first sale of our new Doctor Rostering module (part of MAPS
        Health Suite) to an existing NHS customer, and a second sale of MAPS Healthroster to a customer in
        Malaysia.

    -   We continue to introduce and invest in new products and therefore expand our addressable market
        within the NHS and overseas healthcare markets.
    
    -   The acquisition of the business, goodwill and certain assets of BHP secured our position as the
        most commonly used temporary staffing solution in the NHS.
        
    -   We have established the foundations for the next phase of our growth strategy, which we expect will
        include new product introductions that target both new customers and the existing installed base,
        further acquisitions and continued geographic expansion with the sales of MAPS Health Suite into
        Malaysia and other territories.

Matching commercial and financial objectives

We  continue to combine a resolute focus on the four core financial and structural elements of a successful
software business, with rapid commercial development:
    -   Consistency of revenue growth through consecutive periods
    -   Strong margins in services and support revenues
    -   Investments directed only in high productivity activities
    -   Diligent expense management

Consistency of revenue growth through consecutive periods
To  achieve  consistency  of revenue through consecutive periods, management has  focussed  on  eliminating
lumpiness of Iicence revenues caused by a small number of very large contracts and the elapsed time between
them.   The high volume of Healthcare contracts smoothes the impact of the larger and less frequent Defence
and  Maritime  contracts.  This high volume of licence revenue contracts, combined with  recurring  support
revenues  and  long  term services revenue agreements, gives excellent visibility for  future  periods.   A
strong forward pipeline exists for the current financial year.

Strong margins in service and support revenues
Revenues  from services and support account for approximately 50 per cent of total group revenues and  grew
by  37%  in  FY09,  delivering strong operating margins across the financial year as  well  as  significant
recurring revenue.

Investments in high productivity activities
The close monitoring of performance and use of appropriate incentive structures throughout the company have
helped  drive investment that achieves customer satisfaction and secures revenue growth in areas  that  can
support  high operating margins.  In addition, the acquisitions of KITS and BHP also provide an  additional
source of recurring revenue and growth prospects.

Diligent expense management
The  company has established long-term targets for all categories of expenditure.  Investments in sales and
marketing,  services  and  support, and research and development are carefully managed  to  enable  revenue
growth and margin improvements, whilst fulfilling the criteria which the Board believes are appropriate for
a  world  class  software  company.  We are currently undertaking an accelerated development  programme  to
enhance our product platform.  This will increase scalability, improve productivity and quality, and enable
wider  and  faster  product development to support higher potential growth.  Additional  development  costs
incurred  in relation to this programme during the year amounted to £0.4m (2008: £nil).  These  costs  have
been  written off in full in accordance with our accounting policies.  We expect to incur further costs  in
this  respect  during  2010  amounting to £0.6m.  These are one-time  costs  above  our  normal  levels  of
expenditure on development.

Achievements  with  each  of  these important structural aspects have ensured the  company's  profitability
across all parts of its business, while also achieving exceptionally high levels of customer satisfaction.

Acquisitions

The  company made its first acquisition in April 2008 when it purchased Key Information Technology  Systems
Ltd  ("KITS").   The  acquisition of KITS established our position in the NHS temporary staffing  solutions
market,  bringing  with it 90 new sites and enabling us to offer a fully integrated  e-rostering  and  bank
staffing solution to both our own customers and those of KITS.

In  December  2008,  we  made our second acquisition when we purchased the business, goodwill  and  certain
assets  of Baum Hart & Partners ("BHP").  The acquisition of BHP has consolidated our position in  the  NHS
temporary staffing solutions market, given that we have acquired the technology platform StaffBank.

While  we  remain focused on strong organic growth, further acquisition opportunities are being  considered
against well defined criteria that support our strategic objectives.

Share buy-back and capital reduction

At  the company's last Annual General Meeting ("AGM") in December 2008 we received shareholder authority to
make  purchases from time to time of up to a maximum of 15% of the company's issued ordinary share capital.
Any  buy-back of shares and the timing of such purchases will depend, inter alia, on market conditions  and
when  the  Board determines that share repurchases are in the interests of the company and its shareholders
as a whole.  Under the Companies Act 1985, a company may only finance the purchase of its own shares out of
distributable  reserves or the proceeds of a fresh issue of shares made for the purpose.  Consequently,  at
the  AGM we also received shareholder authority to cancel the share premium account and an application  has
been made to the UK courts to confirm and approve a Capital Reduction to create distributable profits.

Deferred tax

The  group  has  historical  tax  losses, which are available for offset against  future  trading  profits,
amounting to £4.3m.  Under IAS 12, a deferred tax asset should be recognised in the balance sheet  when  it
is  probable  that the future economic benefits will flow to the entity and the asset has a cost  or  value
that  can be measured reliably.  In addition, a deferred tax asset should also be recognised on the IFRS  2
share-based  payment charge. This is due to the fact that the accounting charge is made  over  the  vesting
period but the tax deduction is not received until the employee exercises his/her share options.  
Accordingly, in the financial statements this year we have recognised a deferred tax asset of £1.4m in 
respect of these items.

Outlook

The result for the 2008/9 financial year was excellent and the outlook for 2009/10 is for a further year of
progress.

Management has established firm foundations for continuing growth.  There is a strong sales pipeline and we
continue  to  expand our addressable markets both within the UK and overseas.  In addition,  following  the
successful  integrations of KITS and BHP, we are looking to acquire further complementary  businesses  that
are  synergistic  and earnings enhancing.  Despite the global economic climate, the directors  believe  the
company is well positioned for another successful year.

I  would  like  to  thank our customers for their business, enthusiastic use of our workforce  optimisation
solutions  and unstinting support for our growth strategies. Finally, I would like to recognise  and  thank
Allocate  Software's  employees for their unbounded commitment, energy and  enthusiasm  for  the  company's
success.



Terry Osborne
CHAIRMAN
3 August 2009



CHIEF EXECUTIVE OFFICER'S STATEMENT

Operational review

FY09 was a significant year for Allocate Software.  We continued to strengthen our position in the UK
Healthcare market, winning considerable market share.  In Malaysia we secured our second Healthcare
customer.  In both Maritime and Defence we secured new orders, showing that even in difficult economic
environments, customers value the applications we deliver.  We remain committed to improving the
performance of all areas of the business, as we focus on growth and delivering enhanced shareholder value.

During the year, we achieved significant results in each of our three primary market sectors, although  our
operating  results were tempered by planned high levels of investment in our core product  capability.   We
have  continued  to  strengthen the management and operational teams, attracting talented  and  experienced
individuals to the company.

We  have  now  successfully  integrated two acquired businesses and  we  are  looking  to  acquire  further
complementary  businesses  that  are  synergistic with our  existing  capabilities  and  will  be  earnings
enhancing.  We will continue to invest in and grow those areas of the business which show the most positive
momentum.   With  continued  improvement in execution and a relentless expense management  focus,  we  will
continue the drive to improve shareholder value into FY10 and beyond.

Everything  is measured.  Everyone contributes.  Increasing customer satisfaction and improving shareholder
value remain our goals.

Markets

Despite  being  in  the middle of a severe worldwide economic recession, the company's performance  in  its
chosen market sectors has been exceptional.

Healthcare

Healthcare  is  our  largest  market sector, accounting for 70% of total  revenues.   The  ability  of  our
rostering  and  temporary staffing applications to reduce healthcare costs and improve  standards  of  care
enabled considerable success in 2009 and underpins prospects for further expansion in the years ahead, both
within the NHS and Private Healthcare internationally.

In  the  UK we have now established a substantial customer base, which extends across over 180 NHS  Trusts.
We  have  further  routes  of  expansion, both within those Trusts  and  throughout  the  NHS  and  Private
Healthcare.  This installed base and addressable market constitute a fundamental strength and a significant
source of shareholder value.

We  continued to expand this base of NHS Trusts in the year, with the addition of 46 new NHS customers  for
MAPS  Healthroster,  five for our market leading Bank Staff Management Solution ("BSMS")  and  two  private
healthcare providers, one in the USA and one in Malaysia.

Licence  revenues grew strongly, both organically and overall.  In addition, Allocate Software has  entered
the  current financial year (ending 31 May 2010) with a strong pipeline of further opportunities within the
NHS.   Since  the  year-end, a further four contracts have been closed, including one sale to  an  existing
customer  of  our  new  solution for Doctor Rostering and a second sale of MAPS Healthroster  in  Malaysia.
Domestic  NHS  new  licence sales will be increasingly supplemented by sales into international  healthcare
markets.

MAPS  Healthroster is now installed in 83 NHS Trusts in England and Wales.  This is more  than  double  the
number of customers we had twelve months ago (2008: 35) and it represents 21% of the total number of Acute,
Mental  Health and Primary Care Trusts in England and Wales.  There are also 15 Health Boards  in  Scotland
and five Provider Trusts in Northern Ireland, each of which is a potential customer for MAPS Healthroster.

BSMS,  our  temporary staffing solution which empowers NHS Trusts by automating the planning  of  bank  and
agency staff and reporting across hospitals, is now installed in 113 NHS Trusts.  This level of penetration
can expand still further with the launch of the Next Generation Bank/Temporary Staffing Solution.

We  have  broadened the addressable market and now supply MAPS Healthroster to acute and primary  care  NHS
Trusts for nurses, junior doctors and ancillary staff.  Key to choosing MAPS Healthroster is its ability to
provide  a  better  understanding of demand versus supply of clinical staff, how this is  balanced  against
efficient  use of available budgets and how it helps reduce the administrative burden for HR, clinical  and
payroll  staff.   MAPS Healthroster reduces costs significantly and maintains Clinical Governance,  thereby
helping  to improve patient care.  As reported previously, two of our customers have been selected  by  the
National Audit Office as examples of good practice in managing the use of temporary nursing staff.

In  October  2008  we  announced the sale of MAPS Healthroster to our first customer  in  Malaysia,  Sunway
Medical  Centre  ("SMC").  This was a significant milestone in our efforts to extend our market  reach  for
workforce  optimisation and electronic rostering solutions into other markets.   Since the  period-end,  we
have  now  secured  a  second  contract in Malaysia with Penang Adventist  Hospital  ("PAH").   PAH  is  an
independent not for profit medical centre, one of 500 in the Adventist network, of which 160 centres are in
the USA and 35 in SE Asia.

During  the year, we also extended our reach overseas with a sale to Boston University Radiology Associates
in  the USA.  As well as being a first sale into a substantial overseas market, the USA, it is also a  sale
to a new workgroup, radiologists.

Building on the successful development of interfaces between Healthroster and ESR (Electronic Staff  Record
-  HR  system  for the NHS in England and Wales) we now have over 200,000 shifts being processed  via  this
interface each month across our customer base.  This delivers significant benefits for our users  in  terms
of  reduced  administration and improved pay accuracy.  It also offers opportunities for future modules  to
utilise this existing foundation.

We  are  also  increasing our coverage in the NHS as we move from nurse rostering into  all  medical  staff
groups.

Our  commitment  to  the NHS has been strengthened by the acquisition of Baum Hart  &  Partners.   Allocate
Software  is  now  the  leading provider of rostering solutions to both the permanent and  temporary  staff
markets  within  the  NHS.  The company's combined Healthcare customer base has now reached  over  180  NHS
Trusts in the UK and four Private Healthcare providers, of which three are overseas.

In  the  NHS, Healthroster and BSMS are the most commonly used systems for e-rostering and temporary  staff
management,  where  our  customers  are  generating significant referenceable  results.   More  Trusts  are
evaluating  our rostering and temporary staffing solutions under contract.  We have increased  further  the
resources allocated to the Healthcare sector to take continuing advantage of the momentum in the market for
MAPS  Health Suite.  There is a strong pipeline of opportunities for the current year.  During the  current
fiscal  year  we  will  launch three additional applications, which will deliver additional  value  to  our
customers.  The first of these, MAPS Doctor Rostering, has already been purchased by its first customer.

We  anticipate  that  the increasing spotlight on improving productivity throughout  the  NHS,  controlling
expenditure  on  the use of temporary staff and improving patient care, allied with new  products  and  our
increased geographical expansion will lead to continued growth in sales.

Defence

The  Defence  sector is our heritage and continues to be a major focus point for the company.   During  the
year  there  were  several significant developments in the use of MAPS Defence Suite  by  our  British  and
overseas customers.

HQ  Land Forces now use enhanced MAPS products across their integrated business processes, from Distributed
Individual Training for Reserves, through Collective Training with resource and cost data capture,  feeding
into  the Operational Commitments Plot.  Over 6,000 British Army personnel have been trained on the use  of
MAPS so far, through a comprehensive and continuing training and education activity.

The Royal Navy is now using MAPS to underpin its "Global Squad Pooling Trial", which is designed to enhance
efficiencies in manpower utilisation across the Fleet.

The  Royal  Fleet  Auxiliary has recently completed a major and successful migration  to  the  latest  MAPS
Defence  Suite  V6  product, working with Allocate Software to incorporate a number of unique  features  to
support all their required ship and shore-side business processes.

In  Europe, NATO uses MAPS for its Force Generation process and this capability has recently been  extended
to  provide access by all NATO Allies.  MAPS is the single authoritative system that holds current data  on
all national contributions for NATO operations and the NATO Response Forces.  Through MAPS, NATO Allies can
monitor  the  assignment  of all force offerings and manage their own contributions  to  ensure  equitable,
transparent burden sharing.

NATO  has  also  chosen MAPS Defence Suite V6 to manage operations and training at the NATO Special  Forces
Coordination Centre, based at SHAPE in Mons, Belgium.  The system is now being used for Operations Planning
and Training Management.

After a successful pilot scheme, the Royal Australian Navy is in the process of rolling MAPS out across its
entire Fleet.

We  are  also pleased to report that, following the year end, we were selected after a long and competitive
procurement process as the preferred supplier for a major Defence project, which we believe will lead to  a
contract  being  signed  in  FY10.   We believe that this contract, if signed,  could  deliver  significant
services  revenues  over  the following two years and will serve to reinforce our market  leading  position
within the Defence community.

Also,  in July 2009 we commenced a funded pilot study with a Commonwealth army.  We expect this pilot study
to complete during the 2009 calendar year.

Maritime

During  the year, Maersk Oil Qatar AS ("MOQ") selected MAPS Maritime Suite to manage its offshore personnel
across  all  production operations including platforms, drilling rigs, offshore accommodation vessels,  and
storage vessels.  The solution will improve effectiveness, streamline tasks and integrate personnel data to
optimise  performance  of offshore operations ensuring compliance with health and  safety  policies.   MAPS
Maritime  Suite  will  replace  MOQ's  multiple sources of personnel movement  information  with  a  single
integrated  system  for both shoreside and offshore operations for the scheduling of  personnel.   It  will
allow  managers  to  have a consolidated, real-time accurate view of personnel on board, accommodation  and
lifeboat  availability on any offshore location.  This is of major importance to MOQ  in  helping  them  to
maintain the highest quality in health and safety compliance across the Al Shaheen oil field.

We  believe the offshore oil and gas sector provides the best opportunity to grow our maritime revenues and
client base during the course of the next two years.

One of the world's leading organisations in family entertainment has placed an order with Allocate Software
for  MAPS  Maritime Suite and implementation services for its cruise line.  The client made the  choice  of
MAPS Maritime Suite after an open selection process and an exhaustive evaluation of potential suppliers and
their product solutions. The requirements include a system to improve the productivity and efficacy of  its
shoreside  crew  planners and to provide an effective job scheduling solution for both current  and  future
cruise  liners.   Key  to  this  customer's  choosing of  MAPS  Maritime  Suite  was  its  "out-of-the-box"
functionality, the flexibility to customise the solution to meet precise requirements and the  strength  of
Allocate Software as a reliable, professional and solid supplier.

Also, our existing customer, Norwegian Cruise Line, has purchased new software licences and support for its
ship, the Norwegian Epic.  These will be delivered during FY10.

Partnerships

Our  partner  strategy  again  produced  positive results during  FY09.   In  our  Healthcare  sector,  our
partnership with PricewaterhouseCoopers has resulted in an increased pipeline and contracts with NHS  Trust
customers.   In  the  USA  and Canada, ACS Healthcare Solutions and Interbit Data  have  begun  introducing
Allocate Software into their respective client-lists for the MAPS Healthroster application.

We  have entered into an alliance partnership with NHS Shared Business Services ("SBS"), a leading provider
of  payroll,  finance  and accounting services to the NHS.  The purpose of the agreement  is  to  help  NHS
organisations realise financial benefits through reduced administration and automatic entry of data to  the
Electronic  Staff  Record  system,  thereby improving payroll  accuracy.   SBS  works  with  over  100  NHS
organisations to provide outsourced payroll services, which reduce management overheads and allow Trusts to
focus on the delivery of quality patient care.  We believe the ability to combine payroll services with the
scheduling  and  employment of staff using MAPS Healthroster will create an additional revenue  opportunity
for the company.

In  Defence,  we  signed a worldwide partnership agreement with a renowned, blue chip software  integrator.
Initially,  the  agreement is focussing on opportunities for the company's defence products  in  the  Asia-
Pacific region.  The partner is already working with us on the pilot project for the Commonwealth army,  as
mentioned above.

We  anticipate  that these partnerships will deliver significant benefits to the company  over  the  coming
years.   We  will  continue to select important partnerships to deliver our MAPS software suites  into  new
geographical territories.

Client Services

Client  Services  continues to be a fast growing and profitable part of our business.  We expect  continued
growth  in  the current fiscal year as there is a strong pipeline of work to be delivered across all  three
market sectors.

The  Healthcare installed base provides a significant source of on-going services work.  There are  now  83
NHS  Trusts  which  have  signed contracts for MAPS Healthroster implementations  in  wards,  theatres  and
intensive  care  areas.   We also have successfully deployed MAPS into other disciplines,  with  particular
reference  to  Doctor Rostering, with excellent results as our location based rostering  gives  us  greater
flexibility to cover a plethora of healthcare disciplines and specialties.

The  Defence sector has many installations throughout the British Armed Forces, where there are over  6,000
users  of  MAPS  Defence Suite.  Other worldwide installations include NATO and the Royal Australian  Navy,
which  is  now in the process of rolling out MAPS to its entire Fleet and supported from our new office  in
Sydney.

The  MAPS  Maritime Suite continues to be used by some of the world's largest shipping and cruise lines  to
manage  the workforce planning and associated costs of over 100,000 personnel operating on over 500 vessels
throughout  the  world.   The sector has expanded into Offshore Oil and Gas Exploration  with  new  clients
Acergy and Maersk Oil Qatar.

At  the  same time as managing the expansion of our client base, we have maintained high levels  of  client
satisfaction with regards to our staff, products and effective approach to implementation.

Local Government & Education

As  a  result  of the acquisition of BHP, we are in a position to focus on a fourth vertical sector,  Local
Government  &  Education.  As we progress through FY10 we will invest in the sector to  capitalise  on  our
current  position.  We believe this market has the opportunity to benefit from all our applications  and  a
small dedicated team has been established as of 1 June 2009.

In  Education  we have 53 customers, the most recent being University of Sussex which selected  our  Higher
Education Solution, pFACT and became the 38th University to select the fEC (full economic costing)  project
management  costing  and  financial appraisal solution for higher education  research  establishments.   We
expect to secure additional customers for our Education products in FY10.

In  Local Government our MESaLS application is used by 14 local authorities in conjunction with the NHS  to
manage their Community Equipment Stores.

Research & Development

The  MAPS software platform continues to provide the foundation for our product portfolio, with MAPS Health
Suite,  MAPS  Defence  Suite  and MAPS Maritime Suite customised and branded for  their  particular  market
sector.  In each core sector, enhanced releases of the MAPS software platform have been developed, with  an
increasing focus on delivering functionality to users via the web.

We  have  begun to redesign our software platform fully on web technology, a programme of investment  which
will  continue into FY10.  This new state-of-the art platform will enable us to provide the rich  graphical
user interface experience that our customers value across a fully web-enabled environment, as well as enter
new  geographical  territories  with  localised language versions of  the  applications.   As  we  seek  to
accelerate  the  transition of our product portfolio onto this new software architecture,  we  continue  to
satisfy the demands of our current markets by continued development of our current product portfolio.

Acquisitions

During  the  year,  we  completed  the integration of KITS.  The acquisition  significantly  increased  our
existing customer base, and expanded our recurring revenues.  It has also enabled us to improve the quality
of  support  we  provide  to  our core NHS customer base and reduce costs,  since  we  have  relocated  our
Healthcare support function out of the London head office.

In  December  2008,  we  made our second acquisition when we purchased the business, goodwill  and  certain
assets of BHP.

As a result of the acquisition of BHP, we have acquired the following key benefits:

    -   A significant, recurring revenue stream in the form of support and maintenance fees, hosting and
        transaction-based services, together approximately £1m;
    -   The technology platform (StaffBank) that is used by NHS Professionals;
    -   The opportunity to expand Allocate Software's MAPS Health Suite through further development of
        certain products of BHP; and
    -   The acquisition of BHP was immediately earnings enhancing to the company.
    
The  staff  of  BHP are now contributing to the development of the enlarged organisation  and  its  product
offerings.

Outlook

As we begin the new financial year FY10, which will be my third year as CEO of Allocate Software, I am more
confident  than ever that we are well positioned to continue to deliver increasing shareholder value.   The
company  is  well  balanced with revenues no longer dependent on a small number of high value  licence  fee
transactions.

Our  growing and referenceable customer base enjoys a significant and rapid return on its investment in our
applications  and  services.   This demonstrable ROI helps reduce costs and  improve  both  efficiency  and
standards of service at a time when the global economic outlook remains uncertain.

Allocate  Software  has  established a track record of premium growth rates and  financial  ratios,  has  a
significant  installed  base of over 180 NHS and overseas healthcare customers, and  a  base  of  recurring
revenues  and  increasing  visibility  therefor  from its market  leading  position  in  e-rostering.   The
opportunity for increasing sales in our Healthcare business and the continued engagement in the Defence and
Maritime  market  sectors  will  together maintain our growth momentum.  We believe  these  strengths  will
continue to deliver further growth for the company and lead to enhanced shareholder value.

We will continue to attract and retain the very best talent as we deliver against our objective of being  a
world class software company, respected by our shareholders and admired by our customers.

Ian Bowles
CHIEF EXECUTIVE OFFICER
3 August 2009



CONSOLIDATED INCOME STATEMENT
                                                                   Year to        Year to
                                                                    31 May         31 May
                                                                      2009           2008
                                                     
                                                                     £'000          £'000
                                                     
                                                        Note                     
                                                                                 
                                                                                 
                                                                                 
Revenue                                                    4        15,774         11,578
                                                                                 
Selling and operational expenses                                   (10,702)        (7,700)
                                                                   --------        -------
                                                                                 
Gross profit                                                         5,072          3,878

-------------------------------------------------------------------------------------------
Administrative expenses                                             (2,541)        (2,028)
                                                                   --------        -------
                                                                                 
Profit before amortisation,                                          2,531          1,850
share-based payment, interest
and tax
                                                                                 
Amortisation of intangible assets                                     (678)           (50)

Share-based payment                                                    (97)          (104)
-------------------------------------------------------------------------------------------
                                                                                 
Total administrative expenses                                       (3,316)        (2,182)
                                                                   --------        -------
                                                                                 
Operating profit                                                     1,756          1,696
                                                                                 
Finance income                                                          80            132
Finance charge                                                          (6)             -
                                                                   --------        -------
                                                                                 
Net finance income                                                      74            132
                                                                   --------        -------
                                                                                 
Profit for the year before                                           1,830          1,828
taxation
                                                                                 
Tax on profit for the year                                 9         1,217            (44)
                                                                   --------        -------
                                                                                 
Profit for the year                                                  3,047          1,784
                                                                   --------        -------
                                                                   --------        -------

                                                                              
Earnings per share                                         5                       
Basic (pence per share)                                               6.8p           4.0p
Diluted (pence per share)                                             6.5p           3.8p
                                                                   -----------------------
                                                                                 
                                                                                 




CONSOLIDATED BALANCE SHEET
                                                                                31 May          31 May
                                                                                  2009            2008
                                                               
                                                                                 £'000           £'000
                                                              
                                                                                                    
                                                         Note                                         


Non-current assets                                                                            
Intangible assets                                                                2,723             795
Property, plant and equipment                                                      673             521
Trade and other receivables                                 8                        -             102
Deferred tax asset                                                               1,386               -
                                                                                -------         -------
                                                                                              
Total non-current assets                                                         4,782           1,418
                                                                                              
Current assets                                                                                
Trade and other receivables                                                      5,939           2,566
Cash and cash equivalents                                                        3,664           4,317
                                                                                -------         -------
                                                                                              
Total current assets                                                             9,603           6,883

                                                                                -------         -------
                                                                                              
                                                                                              
Total assets                                                                    14,385           8,301
                                                                                -------         -------
                                                                                -------         -------
                                                                                              
Equity and liabilities                                                                        
Equity                                                                                        
Share capital                                                                    2,235           2,235
Share premium account                                                            6,493           6,493
Shares to be issued                                                                213             159
Share-based payment reserve                                                        328             314
Foreign exchange reserve                                                            84              63
Retained earnings                                                               (1,885)         (5,099)
                                                                                -------         -------
                                                                                               
Total equity                                                                     7,468           4,165
                                                                                              
Non-current liabilities                                                                       
Borrowings                                                                         180             196
                                                                                -------         -------
                                                                                              
Total non-current liabilities                                                      180             196
                                                                                              
Current liabilities                                                                           
Trade and other payables                                                         6,690           3,893
Corporation tax                                                                     47              47
                                                                                -------         -------
                                                                                              
Total current liabilities                                                        6,737           3,940
                                                                                -------         -------
                                                                                              
Total liabilities                                                                6,917           4,136
                                                                                -------         -------
                                                                                                
Total equity and liabilities                                                    14,385           8,301
                                                                                -------         -------
                                                                                -------         -------
                                                                                              

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

                               Share       Share    Shares to  Share-based      Foreign     Retained       Total
                             capital     premium    be issued      payment     exchange     earnings      equity
                                                                   reserve      reserve
                               £'000       £'000        £'000        £'000        £'000        £'000       £'000

                                                                                                          
                                                                                                          
At 1 June 2007                 2,227       6,465            -          210           75       (6,883)      2,094
                                                                                                               
                                                                                                               
Exchange differences on                                                                                      
opening reserves                   -           -            -            -          (12)           -         (12)
                           ----------  ----------  -----------  -----------  -----------  -----------  ----------
                                                                    
Net income recognised              -           -            -            -          (12)           -         (12)
directly in equity                                                  
Result for the period              -           -            -            -            -        1,784       1,784
                           ----------  ----------  -----------  -----------  -----------  -----------  ----------
                                                                                  
Total recognised income            -           -            -            -          (12)       1,784       1,772
and expense                                                         
Issue of shares                    8          28          159            -            -            -         195
                                                                                             
Equity settled share        
options                            -           -            -          104            -            -         104
                           ----------  ----------  -----------  -----------  -----------  -----------  ----------
                                                
At 31 May 2008                 2,235       6,493          159          314           63       (5,099)      4,165
                                                                                                               
                                                                                                               
Exchange differences on            
opening reserves                   -           -            -            -           21            -          21
                           ----------  ----------  -----------  -----------  -----------  -----------  ----------
                                                   
Net income recognised              -           -            -            -           21            -          21
directly in equity                                                                                             
                                                                                                         
Result for the period              -           -            -            -            -        3,047       3,047
                           ----------  ----------  -----------  -----------  -----------  -----------  ----------
                                                                                   
Total recognised income            -           -            -            -           21        3,047       3,068
and expense                                                                                                    
Options transfer                   -           -            -          (83)           -           83           -
                                                                                  
Deferred consideration             -           -           54            -            -            -          54
                                                                                                              
Share based payment                -           -            -            -            -           84          84
deferred tax excess                                                                              
recognised in equity

Equity settled share               -           -            -           97            -                       97
                           ----------  ----------  -----------  -----------  -----------  -----------  ----------
options                                                
At 31 May 2009                 2,235       6,493          213          328           84       (1,885)      7,468
                           ----------  ----------  -----------  -----------  -----------  -----------  ----------
                           ----------  ----------  -----------  -----------  -----------  -----------  ----------
                                                                                                               



CONSOLIDATED CASHFLOW STATEMENT
                                                                                Year to         Year to
                                                                                 31 May          31 May
                                                                                   2009            2008
                                                                                  £'000           £'000
                                                               
Cash flow from operating activities                                                           
Profit for the period                                                             3,047           1,784
Adjustments for:                                                                              
Finance charges                                                                     (74)           (132)
Income tax                                                                           85              44
Deferred tax                                                                     (1,302)              -
Depreciation                                                                        169              99
Amortisation                                                                        678              50
Share-based payment                                                                  97             104
Increase in trade and other receivables                                          (3,271)           (614)
Increase in trade and other payables                                              2,381             957
                                                                                 -------         -------
                                                                                              
Net cash generated from operations                                                1,810           2,292
                                                                                              
                                                                                              
Interest expense                                                                     (6)              -
Income tax (expense) / refund                                                       (85)              3
                                                                                 -------         -------
                                                                                              
Net cash generated by operating activities                                        1,719           2,295
                                                                                              
Cash flows from investing activities                                                          
Interest received                                                                    80             132
Payments for intangible assets                                                   (2,136)              -
Investment to acquire subsidiary (net)                                                -            (386)
Payments for property, plant and equipment (net of                                 (321)           (154)
                                                                                 -------         -------
capital contribution)
                                                                                              
Net cash used in investing activities                                            (2,377)           (408)
                                                                                              
Cash flows from financing activities                                                          
Repayment of borrowings                                                             (16)             (4)
Proceeds from the issue of equity shares                                              -              36
                                                                                              
                                                                                 -------         -------

Net cash generated by financing activities                                          (16)             32
                                                                                              
Net increase in cash and cash equivalents                                          (674)          1,919
Foreign exchange differences                                                         21             (11)
Cash and cash equivalents at the start of the year                                4,317           2,409
                                                                                 -------         -------
                                                                                              
Cash and cash equivalents at the end of the year                                  3,664           4,317
                                                                                 -------         -------
                                                                                 -------         -------
                                                                                              



NOTES TO THE PRELIMINARY ANNOUNCEMENT
For the year to 31 May 2009

1       PUBLICATION OF NON-STATUTORY ACCOUNTS
           
The financial information, which compromises the consolidated income statement, consolidated balance sheet,
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 2009 under s495 of
the Companies Act 2006.  The auditor's reports 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 2009 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.

The auditors have reported on the group's statutory accounts for the year ended 31 May 2008 under s235 of
the Companies Act 1985.  The auditor's report does not contain statements under s237(2) or s237(3) of the
Companies Act 1985 and is unqualified.  The statutory accounts for the year ended 31 May 2008 have been
delivered to the Registrar of Companies.


2       BASIS OF PREPARATION
           
The consolidated financial information has been prepared in accordance with IFRS as adopted for use in the
European Union (including International Accounting Standards ("IAS") and International Financial Reporting
Interpretations Committee ("IFRIC") interpretations) and with those parts of the Companies Act 2006
applicable to companies reporting under IFRS as adopted for use in the European Union.

3       SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
           
Consolidation
Subsidiaries are all entities over which the group has the power to govern the financial and operating
policies generally accompanying a shareholding of over one-half of the voting rights.  The existence and
effect of potential voting rights that are currently exercisable or convertible are considered when
assessing whether the group controls another entity.  Subsidiaries are fully consolidated from the date
on which control is transferred to the group.  They are deconsolidated on the date control ceases.

The group uses the purchase method of accounting for the acquisition of a subsidiary.  The cost of an
acquisition is measured by the fair value of the assets given, equity instruments issued and liabilities
incurred or assumed at the date of exchange, plus costs directly attributable to the acquisition.
Identifiable assets acquired and liabilities and contingent liabilities assumed in a business
combination are measured initially at their fair values at the acquisition date irrespective of the
extent of any minority interest.  The excess of the cost of acquisition over the fair value of the
group's share of the identifiable net assets acquired is recorded as goodwill.  If the cost of the
acquisition is less than the fair value of the net assets of the subsidiary acquired the difference is
recognised directly in the income statement.

Inter-company transactions, balances and unrealised gains and losses on transactions between group
companies are eliminated.

Investments
Investments held as non-current assets comprise investments in subsidiary undertakings and are stated at
cost less any provision for any impairment.

Revenue recognition

General

Revenue is the fair value of the total amount receivable by the group for supplies of services which are
provided in the normal course of business.  VAT or similar local taxes and trade discounts are excluded.

Revenue from the provision of services is recognised by reference to the stage of completion of the
transaction at the balance sheet date.  The outcome of a transaction can be estimated reliably when all
the following conditions are satisfied:

(a)  the amount of revenue can be measured reliably;
(b)  it is probable that the economic benefits associated with the transaction will flow to the entity;
(c)  the stage of completion of the transaction at the balance sheet date can be measured reliably; and
(d)  the costs incurred for the transaction and the costs to complete the transaction can be measured
     reliably.

Licensing

The group licenses software under non-cancellable licence agreements.  Licence fee revenues are
generally recognised when a non-cancellable licence agreement has been signed, there are no
uncertainties surrounding product acceptance, there are no significant vendor obligations, the fees are
fixed and determinable and collection is considered probable.  Where licence fees are attributable to
contracts extending over more than one period, revenue is taken based upon the stage of completion when
the outcome of the contract can be foreseen with reasonable certainty and after allowing for costs to
completion.

Where appropriate, the group allocates a portion of contracted fees to post-contract activities covered
under the contract, which may include installation assistance, training services and first year
maintenance.

Support services

The group provides support services which include installation, consulting, training and product
support.  Revenues for training or consulting services are recognised as the services are performed.
Revenues from support agreements are recognised rateably over the support period.

Segmental reporting
A business segment is a group of assets and operations engaged in production that is subject to risks
and returns that are different from those of other business segments.  A geographical segment is also a
group of assets and operations engaged in production but in a particular economic environment that is
different from those of other economic environments.

The group's primary reporting analysis is by business stream.  The group's principal activities are:

a)      the provision of software under a licence agreement; and
b)      the provision of services such as installation, consulting, training and product support.

The group's secondary reporting analysis is geographical.  As the activities of the group are
predominantly all within the UK, the directors do not provide additional analysis.

Foreign currency translation
a)  Functional and presentational currency

    Items included in the financial statements of each of the group's entities are measured using the
    currency of the primary economic environment in which the entity operates (the functional
    currency).  The company's functional currency and the group's presentational currency is Sterling.

b)  Transactions 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 reporting period-end exchange rates of
    monetary assets and liabilities denominated in foreign currencies are recognised in the income
    statement.

c)  Group companies

    The results and financial position of all group entities 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 the balance sheet;
-    income and expenses for each income statement are translated at actual rates, the average exchange
     rate is an acceptable approximation; and
-    on consolidation, exchange differences arising from the translation of the net investment in
     foreign entities are taken to a separate component of equity.

Intangible assets
Internally generated intangibles
An internally generated intangible asset arising from the development of software is recognised only if
all of the following conditions are met:
-       it is probable that the asset will create future economic benefits;
-       the development costs can be measured reliably;
-       the technical feasibility of completing the intangible asset can be demonstrated;
-       there is the intention to complete the asset and use or sell it;
-       there is the ability to use or sell the asset; and
-       adequate technical, financial and other resources to complete the development and to use or sell
        the asset are available.

Intangible assets are amortised over their estimated useful lives, which is between 3-6 years.  Where no
intangible asset can be recognised, development expenditure is charged to the income statement in the
period in which it is incurred.

Research expenditure is recognised as an expense in the period in which it is incurred.

Intangibles acquired as part of a business combination
In accordance with IFRS 3 Business Combinations, an intangible asset acquired in a business combination is
deemed to have a cost to the group of its fair value at the acquisition date.  The fair value of the
intangible asset reflects market expectations about the probability that the future economic benefits
embodied in the asset will flow to the group.  Where an intangible asset might be separable, but only
together with a related tangible or intangible asset, the group of assets is recognised as a single asset
separately from goodwill where the individual fair values of the assets in the group are not reliably
measurable.  Where the individual fair value of the complementary assets are reliably measurable, the group
recognises them as a single asset provided the individual assets have similar useful lives.

Subsequent to initial recognition, intangible assets are reported at cost less accumulated amortisation
and accumulated impairment losses. Amortisation is provided to write off the cost of each intangible
asset over its useful economic life.

Goodwill
Goodwill arising from business combinations is the difference between the fair value of the consideration
paid and the fair value of the assets acquired and liabilities and contingent liabilities assumed. It is
recognised initially as an intangible asset at cost and is subject to impairment testing on an annual basis
or more frequently if circumstances indicate that the asset may have been impaired. Details of impairment
testing are described in the accounting policies.

Property, plant and equipment
Property, plant and equipment are recorded at cost net of accumulated depreciation and any provision for
impairment.  Depreciation is provided using the straight line method to write off the cost of the asset
less any residual value over its useful economic life as follows:

Computer equipment                       33%
Short leasehold improvements             25%
Other assets                             25%

Impairment
The group's goodwill, other intangible assets and property, plant and equipment are subject to impairment
testing.

For the purposes of assessing impairment, assets are grouped at the lowest levels for which there are
separately identifiable cash flows (cash generating units). Goodwill is allocated to those cash generating
units that are expected to benefit from synergies of the related business combination and represent the
lowest level within the group at which management controls the related cash flows.

Individual assets or cash generating units are tested for impairment whenever events or changes in
circumstances indicate that the carrying amount may not be recoverable.

An impairment loss is recognised for the amount by which the assets or cash generating unit's carrying
amount exceeds its recoverable amount. The recoverable amount is the higher of fair value, reflecting
market conditions less costs to sell and value in use, based on an internal discounted cash flow
evaluation. Impairment losses recognised for cash generating units, to which goodwill has been allocated,
are credited initially to the carrying amount of goodwill. Any remaining impairment loss is charged pro
rata to the other assets in the cash generating unit. With the exception of goodwill, all assets are
subsequently reassessed for indications that an impairment loss previously recognised may no longer exist.

Leases
Finance leases are recognised as being those that transfer substantially all the risks and rewards of
ownership.  Assets held under finance leases are capitalised and the outstanding future lease
obligations are shown in payables at the present value of the lease payments.  They are depreciated over
the term of the lease or their useful economic lives, whichever is the shorter.  The interest element
(finance charge) of lease payments is charged to the income statement over the period of the lease.

All other leases are regarded as operating leases and the payments made under them are charged to the
income statement in the period in which they are incurred.  The company does not act as a lessor.

Financial assets
Financial assets consist of cash and financial instruments.  Financial instruments consist of trade and
other receivables.  Financial assets are assigned to their different categories by management on initial
recognition, depending on the purpose for which the investment was acquired.  The designation of
financial assets is re-evaluated at every reporting date at which a choice of classification or
accounting treatment is available.

Derecognition of financial instruments occurs when the rights to receive cash flows from the investments
expire, or are transferred, and substantially all of the risks and rewards of ownership have been
transferred.  An assessment for impairment is undertaken at least at each balance sheet date, whether or
not there is objective evidence that a financial asset or a group of financial assets is impaired.

Financial liabilities
The group's financial liabilities include trade and other payables and borrowings (bank overdraft).

Financial liabilities are recognised when the group becomes a party to the contractual agreements of the
instrument.  All interest related charges are recognised as an expense in the income statement.

Trade payables are recognised initially at their nominal value and subsequently measured at amortised
costs less settlement payments.

Income taxes
Current income tax assets and liabilities comprise those obligations to fiscal authorities in the
countries in which the group carries out its operations.  They are calculated according to the tax rates
and tax laws applicable to the fiscal period and the country to which they relate.  All changes to
current tax liabilities are recognised as a component of tax expense in the income statement.

Deferred income taxes are calculated using the liability method on temporary differences.  This involves
the comparison of the carrying amount of assets and liabilities in the consolidated financial statements
with their respective tax bases.

Deferred tax liabilities are always provided for in full.  Deferred 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 tax assets and liabilities are calculated at tax rates that are
expected to apply to their respective period of realisation, provided they are enacted or substantively
enacted at the balance sheet date.

Cash and cash equivalents
Cash and cash equivalents include cash at bank and in hand as well as short term bank deposits.

Share-based employee compensation
The group operates equity settled share-based compensation plans for remuneration of its employees.

All employee services received in exchange for the grant of any share-based compensation are measured at
their fair values.  These are indirectly determined by reference to the share option awarded.  Their
value is appraised at the grant date and excludes the impact of any non-market vesting conditions (e.g.
profitability or sales growth targets).

All share-based compensation is ultimately recognised as an expense in the income statement with a
corresponding credit to additional paid in capital, net of deferred tax where applicable.  If vesting
periods or other vesting conditions apply, the expense is allocated over the vesting period, based on
the best available estimate of the number of shares options expected to vest.  Non market vesting
conditions are included in assumptions about the number of options that are expected to become
exercisable.  Estimates are subsequently revised if there is any indication that the number of share
options expected to vest differs from previous estimates.  No adjustment to expenses recognised in prior
periods is made if fewer share options ultimately are exercised than originally estimated.

Upon exercise of share options, the proceeds received, net of any directly attributable transaction
costs, up to the nominal value of the shares issued are reallocated to share capital with any excess
being recorded as additional share premium.

Equity
Equity comprises the following:
-   "Issued capital" represents the nominal value of equity shares.
-   "Share premium" represents the excess over nominal value of the fair value of consideration
    received for equity shares, net of expenses of the share issue.
-   "Shares to be issued" represents both the nominal value and premium of shares still to be issued at
    the balance sheet date.
-   "Share-based payment reserve" represents equity-settled share-based employee and non-employee
    remuneration until such share options are exercised.
-   "Retained earnings" represents retained profits and losses.

Use of accounting estimates and judgements
Many of the amounts included in the financial statements involve the use of judgement and/or estimation.
These judgements and estimates are based on management's best knowledge of the relevant facts and
circumstances, having regard to prior experience, but actual results may differ from the amounts
included in the financial statements.  Information about such judgements and estimation is contained in
the accounting policies and/or the notes to the financial statements and the key areas are summarised
below.

Judgements in applying accounting policies:

The acquisition of Key Information Technology Systems Limited has required the directors to make
judgements regarding the value of the net assets that have been acquired.  Specifically, to value the
amount of future service revenues that are likely to flow from the current customer base.

The directors have judged that a litigation arising against Key Information Technology Systems Limited
after its acquisition by the company, in respect of an event occurring prior to the acquisition is fully
indemnified in the sale and purchase agreement and, therefore, they have not made a provision to cover
any possible resulting loss.

The directors have decided that, due to the uncertainty of quantifying probable future profitability,
they will not recognise a deferred tax asset in these accounts.


Sources of estimation uncertainty:

Depreciation rates are based on estimates of the useful lives and residual values of the assets
involved.

Estimates are required as to asset carrying values and impairment charges.

The estimation of share-based payment costs requires the selection of an appropriate valuation model and
consideration as to the inputs necessary for the valuation model chosen. The group has made estimates as
to the volatility of its own shares, the probable life of options granted and the time of exercise of
those options. The model used by the group is a Black-Scholes valuation model.


4           SEGMENTAL REPORTING
           
The group's primary reporting analysis is by business stream based on products, as follows:

                                                                                2009           2008
                                                                               £'000          £'000

                                                                                              
Licences                                                                       7,599          5,756
Services                                                                       7,984          5,822
Hardware and consumables                                                                      
                                                                                 191              -
                                                                              ------         ------
                                                                                              
                                                                                              
                                                                              15,774         11,578
                                                                              ------         ------
                                                                              ------         ------

Under IAS 14 there is a requirement to show operating profit for the primary segmental analysis on the
basis of the business stream as above.  However, attributable expenses cannot be allocated on a reasonable
basis and, as a result, the segmental analysis is limited to the group revenue.

In addition to the requirements of IAS 14 the directors present a schedule of revenue analysed by vertical
business sector:
                                                                                2009           2008
                                                                               £'000          £'000

                                                                                              
Defence                                                                        3,007          3,082
Healthcare                                                                    11,073          6,551
Maritime                                                                       1,555          1,945
Local Government and Education                                                   139              -
                                                                              ------         ------
                                                                                              
                                                                                              
                                                                              15,774         11,578
                                                                              ------         ------
                                                                              ------         ------

THE INTERNAL REPORTING OF THE GROUP'S PERFORMANCE DOES NOT REQUIRE THAT BALANCE SHEET INFORMATION IS
GATHERED ON THE BASIS OF THE BUSINESS STREAMS 'LICENCES' AND 'SERVICES' REPORTED ABOVE.  THIS INFORMATION
IS THEREFORE NOT ACCESSIBLE AND AS A RESULT THE SEGMENTAL ANALYSIS DOES NOT INCLUDE BALANCE SHEET DETAILS.

5       EARNINGS PER SHARE
           
                                                                                    31 May           31 May
                                                                                      2009             2008
                                                                                     £'000            £'000

                                                                                               
                                                                                               
Profit for the year                                                                  3,047            1,784
                                                                               -----------     ------------
                                                                               -----------     ------------

                                                                                               
Earnings per share                                                                             
Basic (pence per share)                                                               6.8p             4.0p
Diluted (pence per share)                                                             6.5p             3.8p
                                                                                               
                                                                                               
Weighted average number of shares                                                   Number           Number
                                                                                 of shares        of shares
                                                                                               
                                                                                               
Shares in issue at opening                                                      44,702,625       44,539,813
Shares issued during the period                                                          -          162,812
                                                                               ----------------------------
                                                                                               
Shares at closing                                                               44,702,625       44,702,625
                                                                               ----------------------------
                                                                               ----------------------------
                                                                                               
Weighted average shares for basic earnings per share                            44,702,625       44,621,541
Effect of dilutive potential ordinary shares                                     2,348,181        2,859,416
                                                                               ----------------------------
                                                                                               
Weighted average shares for diluted earnings per share                          47,050,806       47,480,957
                                                                               ----------------------------
                                                                               ----------------------------
                                                                                               

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 amortisation of intangibles, share-based payments and the deferred tax
adjustment.  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:

                                                                                    2009             2008
                                                                                   £'000            £'000
                                                                             
                                                                                                           
                                                                                                           
Profit for the year attributable to shareholders                                   3,047            1,784
Amortisation of intangibles                                                          678               50
Share-based payment                                                                   97              104
Deferred tax adjustment                                                           (1,302)               -
                                                                                  -------          -------
Adjusted profit for the year attributable to shareholders                          2,520            1,938
                                                                                  -------          -------
                                                                                  -------          -------
                                                                                               
Basic adjusted earnings per share                                                  5.64p             4.3p
Diluted adjusted earnings per share                                                5.36p             4.1p




6         BUSINESS COMBINATION
          
On 4 April 2008 the Group acquired 100% of the issued share capital of Key Information Technology Systems
Ltd ("KITS") for a maximum consideration of £798,000.  However, the sellers of KITS indemnified the company
that, should the net assets of KITS at the date of the transaction when valued under UK GAAP be below
£29,395, the consideration should be reduced by the amount of the shortfall.  During the year, the company
and the Sellers of KITS have agreed that the shortfall in net assets acquired amounted to £240,000.
Accordingly, the maximum consideration payable is £558,000 plus allowable costs of £46,155, giving a total
consideration for the purposes of the acquisition of £604,155.

The consideration is to be settled as follows: (a) an initial payment in cash of £345,000; and (b)
contingent consideration to be paid in shares up to a maximum value of £213,000 should certain targets for
the renewal of customer support contracts be met.

Subsequent to the acquisition of KITS, this company is being sued by a competitor company based on a
dispute of an agreement entered into prior to the acquisition date.  The likelihood of litigation arising
was not made known to the directors prior to the acquisition date.  As a result the costs incurred in
defending the litigation will be subject to the terms of the sale and purchase agreement between the
company and the sellers of KITS which include a full indemnity in respect of the claim arising.  As a
result the directors do not consider that any provision in respect of the litigation is required.

The net assets acquired and the resultant fair value adjustments are shown below:

                                         2008             2008       Total 2008         2009            2008
                                        £'000            £'000            £'000        £'000           £'000
                                   Book value     Estimated FV                    Updated FV      Fair value
                                                    adjustment                    adjustment

Cash with subsidiary                        5                -                5                            5
Intangibles - identified at                 -              845              845          (30)            815
acquisition **
Property, plant and equipment              28                -               28                           28
Long leasehold property                   285                -              285                          285
Receivables                               315                -              315                          315
Trade payables and other                 (928)               -             (928)          84            (844)
payables                           --------------------------------------------------------------------------
Net assets                               (295)             845              550           54             604
                                                                                                 
Goodwill on this acquisition                                                  -            -               -
                                                                           ----------------------------------
                                                                                                 
Consideration                                                               550           54             604
                                                                           ----------------------------------
                                                                           ----------------------------------
                                                                                                 
Net consideration satisfied by:                                                                  
Share issue                                                                 159         (159)              -
                                                                                                 
Cash                                                                        345            -             345
Shares to be issued                                                           -          213             213
Professional fees paid                                                       46            -              46
                                                                           ----------------------------------
                                                                                                
                                                                            550           54             604
                                                                           ----------------------------------
                                                                           ----------------------------------



**The  intangibles  identified at acquisition comprised those contractual relationships  which,  in  future
periods from 2009 to 2013, would generate service revenues.  The group has estimated the attrition rate for
the service revenues and amortisation is provided in line with this attrition rate.


7       PURCHASE OF ASSETS
        
On 17 December 2008 the company acquired the business and certain of the assets of Baum Hart & Partners
Limited ("BHP").

The net assets acquired and the allocation of costs are as follows:

                                                              2009                 2009               2009
                                                             £'000                £'000              £'000
                                                        Book value          Adjustments         Fair Value
Assets acquired:                                                                                   
Intangibles                                                      -                2,636              2,636
                                                  ---------------------------------------------------------
                                                                                           
Net assets                                                       -                2,636              2,636
                                                  ---------------------------------------------------------
                                                  ---------------------------------------------------------
                                                                                               
                                                                                               

Consideration:
Paid in cash                                                                                         1,700
Contingent consideration payable in cash                                                               500
Professional fees                                                                                      436
                                                                                               ------------
                                                                                               
Total consideration                                                                                  2,636
                                                                                               ------------
                                                                                               ------------
                                                                                               
Contingent consideration payable in cash

There are two contingent payments, payable dependent upon a former partner of BHP remaining in employment
with the company.  The first payment is due 62 days after the first anniversary of the acquisition and is
for £200,000 payable in cash plus an additional amount of £50,000 payable in cash or shares at the
company's option.  The second payment is due 62 days after the second anniversary of the acquisition and is
also for £200,000 payable in cash plus an additional amount of £50,000 payable in cash or shares at the
company's option.


8     DEFERRED TAX

Deferred tax is calculated in full on temporary differences under the liability method using a tax rate of
28% for UK differences.  The movements in deferred tax assets and liabilities during the period are shown
below.

                                          Accelerated               Losses                 Share              
                                              capital      carried forward        based payments              
                                           allowances                £'000                 £'000         Total
                                                £'000                                                    £'000
At 1 June 2007 and 31 May 2008                      -                    -                     -             -
Recognised in the income statement                156                1,054                    92         1,302
Excess recognised in equity                         -                    -                    84            84

---------------------------------------------------------------------------------------------------------------
At 31 May 2009                                    156                1,054                   176         1,386
---------------------------------------------------------------------------------------------------------------
---------------------------------------------------------------------------------------------------------------



9     TAX
                                                                               2009           2008
                                                                              £'000          £'000
                                                                             
                                                                                                           
                                                                                                           
Corporation tax on profit for the year                                          (85)           (44)
Deferred tax                                                                  1,302              -

                                                                             -------        -------
                                                                              1,217            (44)
                                                                             -------        -------
                                                                             -------        -------


Contact Information

  • Allocate Software plc