half year results investor presentation · revenue up by 7% to £17.3m organic growth 7% healthcare...
TRANSCRIPT
November 2013
Half Year Results Investor Presentation
Strong strategic progress achieved and quality of
earnings continues to improve
right people.
right place. right time.
Table of contents
Section Page
I. Business Overview & Highlights 3
II. Financial Results 9
III. Business Outlook 18
IV. Appendices 23
2
Ian Bowles
CEO
Business Overview & Highlights
3
right people.
right place. right time.
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
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
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
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
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
Chris Gale
CFO
Financial Results
9
right people.
right place. right time.
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
10
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
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
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
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%
13
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%
15
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)
16
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%
Ian Bowles
CEO
Business Outlook
18
right people.
right place. right time.
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
19
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.
20
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
22
Appendices
23
right people.
right place. right time.
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
24
Comprehensive solutions portfolio to address Health care
SafeCare
25
Allocate Vision
26
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%
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
28
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%