half year results investor presentation · revenue up by 7% to £17.3m organic growth 7% healthcare...

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November 2013 Half Year Results Investor Presentation Strong strategic progress achieved and quality of earnings continues to improve right people. right place. right time.

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Page 1: Half Year Results Investor Presentation · Revenue up by 7% to £17.3m Organic growth 7% Healthcare revenue up by 13% to £14.4m Recurring revenue up by 11% to £9.1m and to 53% of

November 2013

Half Year Results Investor Presentation

Strong strategic progress achieved and quality of

earnings continues to improve

right people.

right place. right time.

Page 2: Half Year Results Investor Presentation · Revenue up by 7% to £17.3m Organic growth 7% Healthcare revenue up by 13% to £14.4m Recurring revenue up by 11% to £9.1m and to 53% of

Table of contents

Section Page

I. Business Overview & Highlights 3

II. Financial Results 9

III. Business Outlook 18

IV. Appendices 23

2

Page 3: Half Year Results Investor Presentation · Revenue up by 7% to £17.3m Organic growth 7% Healthcare revenue up by 13% to £14.4m Recurring revenue up by 11% to £9.1m and to 53% of

Ian Bowles

CEO

Business Overview & Highlights

3

right people.

right place. right time.

Page 4: Half Year Results Investor Presentation · Revenue up by 7% to £17.3m Organic growth 7% Healthcare revenue up by 13% to £14.4m Recurring revenue up by 11% to £9.1m and to 53% of

Allocate Software: A quick recap

Successful execution of Healthcare growth strategy

Double-digit Healthcare revenue and subscription

revenue growth

Robust penetration of new solutions in Healthcare

sector

Allocate is well positioned and aligned with market drivers to leverage future growth

4

Page 5: Half Year Results Investor Presentation · Revenue up by 7% to £17.3m Organic growth 7% Healthcare revenue up by 13% to £14.4m Recurring revenue up by 11% to £9.1m and to 53% of

Half year to November 2013 financial highlights

Revenue up by 7% to £17.3m

Organic growth 7%

Healthcare revenue up by 13% to £14.4m

Recurring revenue up by 11% to £9.1m and to 53% of total revenue

Subscription revenue up by 14% to £3.3m

Adjusted EBITDA up by 17% to £0.7m (H1 2012: £0.6m)

Diluted adjusted EPS 1.3p (H1 2012: 0.1p loss)

Net cash balance £7.4m (H1 2012: £2.1m)

Total debt balance of £4.0m repaid in full

5

Page 6: Half Year Results Investor Presentation · Revenue up by 7% to £17.3m Organic growth 7% Healthcare revenue up by 13% to £14.4m Recurring revenue up by 11% to £9.1m and to 53% of

Business highlights:Revenue growth driven by multiple solutions

HealthRoster

Increasing demand for our core applicationNew: Four including three Trusts in period, 154 in totalRenewal: Ten in period, 43 in total, 100% rateCompetitive displacements: Two in period, 28 in the last five yearsHealthRoster V10: 42 to date

SafeCare Medics PF and ED applications

High levels of interest from customer base

New: Nine in period, 13 in total

Strong renewals and client wins

New: Eight in period, 147 in total

Considerable interest in real-time application set for patient flow and emergency departments

Cloud

Strong growth in incremental revenueNew: Nine in period, 33 in total

Newer applications continue to boost and improve qu ality of earnings

6

Page 7: Half Year Results Investor Presentation · Revenue up by 7% to £17.3m Organic growth 7% Healthcare revenue up by 13% to £14.4m Recurring revenue up by 11% to £9.1m and to 53% of

International business continues to grow

Nordics

Another successful period of growth

First V10 customer now in deployment

Pipeline is strong

One third of licence revenue coming from new customers

Cloud deployment currently being planned

Aditro – the partnership is improving and the pipeline is growing

Australia

Significant revenue growth over prior year in both HealthRoster related and RosterOn related solutions and services

Very large RosterOn agreement secured in the period

Good pipeline for new HealthRoster deals

Services pipeline is strong

7

Page 8: Half Year Results Investor Presentation · Revenue up by 7% to £17.3m Organic growth 7% Healthcare revenue up by 13% to £14.4m Recurring revenue up by 11% to £9.1m and to 53% of

Defence and Maritime

Defence Maritime

UK MOD

Australian Defence Force

NATO

US

8

We maintain a strong position in both the defence and maritime sectors with long-term key customers in the UK and Australia.

Current activities include:

McDermott

Technip

Subsea 7

NCL

Page 9: Half Year Results Investor Presentation · Revenue up by 7% to £17.3m Organic growth 7% Healthcare revenue up by 13% to £14.4m Recurring revenue up by 11% to £9.1m and to 53% of

Chris Gale

CFO

Financial Results

9

right people.

right place. right time.

Page 10: Half Year Results Investor Presentation · Revenue up by 7% to £17.3m Organic growth 7% Healthcare revenue up by 13% to £14.4m Recurring revenue up by 11% to £9.1m and to 53% of

Financial highlights

RevenueGrowth derived from all territories and revenue typesLed by recurring revenue and Australia

CostsGrowth in costs £1.1m

Staff incentivisationGrowth in service and delivery costs in line with revenue increase

Additionally, £0.4m non recurring costsPrincipally relocation of Head Office from London to Richmond

EBITDA17% year-on-year growth, £0.7m (H1 2012 £0.6m)

Net CashBalance £7.4m from £2.1m, DSO is 67 days, £4m debt paid off

Quality of earning continues to improve

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Page 11: Half Year Results Investor Presentation · Revenue up by 7% to £17.3m Organic growth 7% Healthcare revenue up by 13% to £14.4m Recurring revenue up by 11% to £9.1m and to 53% of

H1 2014 worldwide revenue breakdown

H1 2014 Revenue by typeH1 2014 Revenue by geographyH1 2014 Revenue by sector

21%

19%

34%

26%

Licence Perm/TermSubscriptionsSupport & MaintenanceServices

53%

24%

19%

4%

UK

Europe

Australia

RoW

82%

11%

7%

Healthcare

Defence

Maritime/LG&E/Other

£ 17.3 million £ 17.3 million £ 17.3 million

Revenue base continues to broaden

11

Page 12: Half Year Results Investor Presentation · Revenue up by 7% to £17.3m Organic growth 7% Healthcare revenue up by 13% to £14.4m Recurring revenue up by 11% to £9.1m and to 53% of

H1 2014 UK Healthcare revenue

HealthRoster63%

HealthMedics20%

HealthAssure7%

Cloud5%

Safecare3%

PatientFlow2% CAM

12

Strong platform in HealthRoster

Progress being made in newer solutions

Solution sales drive future growth

£ 8.5 million – 49% of worldwide revenue

Page 13: Half Year Results Investor Presentation · Revenue up by 7% to £17.3m Organic growth 7% Healthcare revenue up by 13% to £14.4m Recurring revenue up by 11% to £9.1m and to 53% of

H1 2014 worldwide revenue by type and recurring rev enue

6.33.1 3.5 3.6

1.7

2.5 3.0 3.3

3.7

4.95.3 5.8

4.3 5.5 4.34.6

15.9 16.0 16.117.3

37%

46%

51%53%

2011A (H1) 2012A (H1) 2013A (H1) 2014A (H1)

Licence Perm/Term Subscriptions Support & Maintenance Services % Recurring Revenue

Improving Half Year revenue mix

13

£ m £ m £ m £ m

Page 14: Half Year Results Investor Presentation · Revenue up by 7% to £17.3m Organic growth 7% Healthcare revenue up by 13% to £14.4m Recurring revenue up by 11% to £9.1m and to 53% of

H1 Income statement trend

(£ in ‘000)H1

2013AH1

2014AH1

ChangeH1

% Change

Revenue 16,079 17,276 1,197 7%

COGS 5,237 5,810 573 11%

Gross Margin 10,842 11,466 624 6%

R&D 3,766 4,129 363 10%

Sales, Mktg, G&A 6,514 6,644 130 2%

Total Costs 15,517 16,583 1,066 7%

EBITDA 562 263 (299) (53%)

Exceptional Items 0 431 431

EBITDA pre exceptional items 562 694 132 23%

Gross Margin as % of Revenue 67.4% 66.4%

EBITDA as % of Revenue 3.5% 1.5%

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Page 15: Half Year Results Investor Presentation · Revenue up by 7% to £17.3m Organic growth 7% Healthcare revenue up by 13% to £14.4m Recurring revenue up by 11% to £9.1m and to 53% of

H1 2014 Balance Sheet

(£ ‘000) 2013A 2014A Change % Change

Accrued income 3,600 3,312 (288) (8%)Trade & other receivables 9,189 8,272 (917) (10%)

Cash & cash equivalents 6,089 7,449 1,360 22%Borrowings (4,000) - 4,000 100%Net cash 2,089 7,449 5,360 257%

Trade & other payables 5,667 6,005 338 6%Deferred revenue 11,841 11,952 111 1%

Net assets 13,083 14,368 1,285 10%

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Page 16: Half Year Results Investor Presentation · Revenue up by 7% to £17.3m Organic growth 7% Healthcare revenue up by 13% to £14.4m Recurring revenue up by 11% to £9.1m and to 53% of

H1 2014 Cashflow Summary

(£ ‘000) H1 2013A H1 2014A Change

Net cash inflow / (outflow) from operating activities before acquisition costs & interest

882 (1,517) (2,399)

Net cash inflow / (outflow) from operating activities after acquisition costs & interest

(23) (1,826) (1,803)

Acquisition of subsidiary (1,163) - 1,163Capital Expenditure (336) (985) (649)Repayment of borrowings - (4,000) (4,000)Issue of shares 26 1,434 1,408Dividend (682) - 682

Net increase / (decrease) in cash (2,249) (5,685) (3,43 6)Net Cash & cash equivalents at end of period 2,089 7,4 49 5,360

Days Sales Outstanding 71 67 (4)

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Page 17: Half Year Results Investor Presentation · Revenue up by 7% to £17.3m Organic growth 7% Healthcare revenue up by 13% to £14.4m Recurring revenue up by 11% to £9.1m and to 53% of

2014 Revenue predictability

Revenue predictabilityFY14 Outlook

(% total)

H1 revenue 43%

Deferred revenue 14%

Existing customers, Subscriptions and Support and Maintenance 8%

Existing customers, from Purchase Orders in hand 9%

17

74%

Page 18: Half Year Results Investor Presentation · Revenue up by 7% to £17.3m Organic growth 7% Healthcare revenue up by 13% to £14.4m Recurring revenue up by 11% to £9.1m and to 53% of

Ian Bowles

CEO

Business Outlook

18

right people.

right place. right time.

Page 19: Half Year Results Investor Presentation · Revenue up by 7% to £17.3m Organic growth 7% Healthcare revenue up by 13% to £14.4m Recurring revenue up by 11% to £9.1m and to 53% of

Demand drivers for Allocate solutions in UK Healthc are

Francis II report on the Mid Staffordshire TrustRecommends evidence-based tools for establishing the staffing needs for each service

Keogh report on patient care across NHS TrustsOur applications address many of the recommendations

Safe staffing focus from the Secretary of State, NHS England and CQC

Continuing pressure to reduce all expenditure

Pressure on A&E departments RealTime ED & Patient Flow applications address many of the issues

Well positioned with customer drivers

with Allocate’s solutions well

aligned

Right people, right place, right time

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Page 20: Half Year Results Investor Presentation · Revenue up by 7% to £17.3m Organic growth 7% Healthcare revenue up by 13% to £14.4m Recurring revenue up by 11% to £9.1m and to 53% of

Positive Healthcare market dynamics

Global and growing market

UK A&E attendances up 50% on ten years ago

Routine operations jumped by 60% since the mid 1990s

Impact of rising life expectancies; 3 x more elderly people in 2050 than the beginning of century

People over 85 now accounting for a quarter of hospital beds, typically spending 11 days (vs. 3 for under 65s)

Pressure to increase efficiencies and cut costs throughout the Healthcare process

Quality of patient care and safe staffing levels a key area of focus

A&E in crisis - issues with bed management and target wait times

Importance of efficient patient flow –getting patients firstly out of A&E and then back into care in the community quickly

Innovation critical to addressing supply issues and providing Allocate with increased opportunity

Demand Supply

UK Healthcare IT market = approx. £1bn per yearSource: EHI and NHS Information Centre for Health and Social Care.

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Page 21: Half Year Results Investor Presentation · Revenue up by 7% to £17.3m Organic growth 7% Healthcare revenue up by 13% to £14.4m Recurring revenue up by 11% to £9.1m and to 53% of

2014 Outlook and key objectives

Our current solutions match customer needs

Actively engaging with an increasing number of Trusts to deploy Cloud, SafeCare and other solutions

Continuing growth of international business

Both by customer reach and market penetration

Maintaining focus on customer retention and recurring revenues

We believe we are on track to meet market expectations for the full year

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Page 22: Half Year Results Investor Presentation · Revenue up by 7% to £17.3m Organic growth 7% Healthcare revenue up by 13% to £14.4m Recurring revenue up by 11% to £9.1m and to 53% of

Appendices

23

right people.

right place. right time.

Page 23: Half Year Results Investor Presentation · Revenue up by 7% to £17.3m Organic growth 7% Healthcare revenue up by 13% to £14.4m Recurring revenue up by 11% to £9.1m and to 53% of

Company position and strengths

Leading provider of Healthcare software to the UK market- Comprehensive and complementary solution suite- Strong existing customer base around HealthRoster

1

Positive market dynamics- Growing demand and Healthcare sector efficiency needs- Technology change driving demand for cloud based solutions

2

Continuous solution innovation driving growth- Leveraging position as trusted advisor to upsell additional solutions (CAM, Realtime)- Improved delivery platforms (Allocate 10; The Allocate Cloud)

4

Management team with experience and ability to scale the business- Significant software and Healthcare experience- Proven track record of driving growth, both organic and through acquisition

5

Attractive financial profile- Improving recurring revenue profile and margin expansion- R&D and acquisition investment in place to support future growth

6

Powerful franchise in workforce optimisation- Dominant market position with the NHS with track record of displacing competition- ‘Sticky’ model once embedded with a customer

3

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Page 24: Half Year Results Investor Presentation · Revenue up by 7% to £17.3m Organic growth 7% Healthcare revenue up by 13% to £14.4m Recurring revenue up by 11% to £9.1m and to 53% of

Comprehensive solutions portfolio to address Health care

SafeCare

25

Page 25: Half Year Results Investor Presentation · Revenue up by 7% to £17.3m Organic growth 7% Healthcare revenue up by 13% to £14.4m Recurring revenue up by 11% to £9.1m and to 53% of

Allocate Vision

26

Page 26: Half Year Results Investor Presentation · Revenue up by 7% to £17.3m Organic growth 7% Healthcare revenue up by 13% to £14.4m Recurring revenue up by 11% to £9.1m and to 53% of

Cash flow statement

27

£’000 FY13 H1 FY14 H1 Change % ChangeEBITA 355 71 (284) (80.0%)

Depreciation 207 192 (15) (7.2%)

Working Capital

Change in trade and other receivables 2,235 2,152 (83) (3.7%)

Change in trade and other payables (1,915) (3,932) (2,017) (105.3%)

Operating cash flow (before acquisition costs) 882 (1,517) (2,399) (272.0%)

Acquisition costs (420) - 420 100.0%

Operating cash flow (after acquisition costs) 462 (1,517) (1,979) (428.4%)

Tax (425) (289) 136 32.0%

Proceeds from disposal of intangible asset 50 50 - 0.0%

Capital expenditure (336) (985) (649) (193.2%)

Pre financing cashflow (249) (2,741) (2,492) (1000.8%)

Financing

Interest receivable 42 19 (23) (54.8%)

Interest payable (60) (20) 40 (66.7%)

Repayment of bank loan - (4,000) (4,000)

Investing Activities

Acquisition of RealTime (1,163) - 1,163

Cash acquired with RealTime 85 - (85)

LTRP Share Purchase (400) - 400

FY13 Final Dividend (682) - 682

Share issues 26 1,434 1,408 5415.4%

(2,401) (5,308) (2,907) (121.1%)

Foreign exchange 152 (377) (529) (348.02%)

Cash generated/(utilised) (2,249) (5,685) (3,436) (152.8%)

Opening Cash 8,338 13,134 4,796 57.5%

Closing Cash 6,089 7,449 1,360 22.3%

Page 27: Half Year Results Investor Presentation · Revenue up by 7% to £17.3m Organic growth 7% Healthcare revenue up by 13% to £14.4m Recurring revenue up by 11% to £9.1m and to 53% of

Allocate management team

Significant software and Healthcare experienceTerry Osborne Ian Bowles Chris Gale Allen Swan

Title

Chairman Chief Executive Officer Chief Financial Officer Business Development Director

ExperienceJoined Allocate in 2005 VP roles at IBM (UK & US) between 1967 and 1985Special Adviser to SSA LTD7

Joined Allocate in 2007 Previously COO of Clearswift Limited. Other senior positions held at Interwoven, Chordiant and Oracle

Joined Allocate in 2010Various previous senior financial roles held at Apple, Cooper and Chyan Inc, Cadence, Interwoven and Clearswift

Prime Response and Oracle Previous senior roles at Chordiant, Joined Allocate in 2008, previously acting as an adviser

Martin Jeffries Jan Watson Chris Farnath Iain Bishop

Title

Director of International Marketing HR Director International Support Director Chief Technology Officer

Experience

Joined Allocate in 2010 Joined Allocate in 2007Joined Allocate in 2010Over 20 years in technology services

Joined Allocate on 2011Over 25 years industry experience

Hugh Ashley Peter Croft Erik Stone

Title

Director of Customer Services Regional Director Sales Director of TimeCare

Experience

Former founder of Dynamic ChangeJoined Allocate as of 1/6/2011as the Acquisition was completed Appointed to current role 1/9/12

Was appointed to the role of Regional Director Joined 4/8/2010 Formerly GM of Asia Pacific for Clearswift

Erik was appointed to the role of Regional Director Nordics on 24/10/11

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Page 28: Half Year Results Investor Presentation · Revenue up by 7% to £17.3m Organic growth 7% Healthcare revenue up by 13% to £14.4m Recurring revenue up by 11% to £9.1m and to 53% of

Key statistics

� Shares in issue, 16 January: 67,222,539� Share price close, 16 January: 104.00p

� Major shareholders as of 31 December 2013:

29

Shares %

Herald Investment Management 10,536,477 15.67

Artemis Fund Managers Ltd 9,100,000 13.54

Kabouter Management LLC 7,522,641 11.19

BlackRock Investment Mgt (UK) 6,797,321 10.11

SVG Capital 5,841,535 8.69

Hargreave Hale 4,920,101 7.32

Jupiter Asset Management 3,004,104 4.47

Fidelity Worldwide Investment 2,647,561 3.94

Henderson Global Investors 2,339,401 3.48

Allianz Global Investors Europe GmbH 1,800,000 2.68

50.51%

81.09%