Allocate Software

Workforce and compliance optimisation specialist Allocate offers exposure to fast-paced organic and acquisitive growth at a very reasonable price indeed.

Bossed by enthusiastic CEO Ian Bowles, the AIM-listed group’s technological solutions help healthcare, maritime and defence sector clients with large workforces deploy workers with the right skills to the right place at the right time.

Allocate has just delivered its fourth consecutive record annual numbers to May, despite sluggish economic conditions. Sales increased almost 40% to £22m, the bulk of the uplift delivered organically, while operating profits powered ahead 38% to £3.5m.

During another strong year, Allocate, with 353 NHS Trusts as clients and healthcare customers spanning New Zealand, Australia, America and Malaysia, strengthened its healthcare presence with the help of two acquisitions. Time Care, acquired for £8.7m, brought a Nordic region footprint whilst Dynamic Change, a UK-based software-as-a-service (SaaS) provider snared for up to £9m, took Allocate into the compliance and regulatory space.

Although government spending cuts are a concern, Bowles insists demand for Allocate’s products should hold up, given the measurable investment returns they provide. Meanwhile, the company continues to make inroads into both the maritime sector, as well as defence, where revenues rose 50% to £4.5m last year on the back of a deal with the Royal Australian Army.

This year, research house Edison sees profits pushing ahead from £3.5m to £5m pre-tax, with the cash-generative Allocate closing the year with £5m of net cash. First recommended by Growth Company Investor at 39.5p in 2009, the shares, swapping hands for around 12.5 times forecast EPS of 5.9p, look undervalued given Allocate’s growth track record and profit prospects. Keep buying.