Allocate Software stays on the takeover trail

The loss incorporates acquisition costs of £1.7m (last year it was £64,000) following two all-cash takeovers. In addition the slow restructuring of NHS Primary Care Trusts led to a £3.9m impairment hit at Allocate's Dynamic Change division. Many of these trusts no longer exist as organisations and their replacements have yet to be established which has hit renewals for risk management modules.

Still, there's plenty of good news to underpin the share price including the first dividend for more than a decade and a recurring income stream up by more than a third to £15.6m. That latter figure is similar to total annual sales only three years ago. And swapping the sale of permanent licences for subscriptions and term licences has dramatically improved cash flow visibility and gives the company the funds to make frequent cash acquisitions. Last year Allocate Software paid £2.2m for an Aussie provider of workforce management software and up to £6.4m for supplier of internet rotas for junior doctors. That fits in well with its main product providing rotas for nurses, porters and other hospital staff.

Broker Numis forecasts 2012-13 sales of £39.2m, adjusted profits up £400,000 to £6.1m and EPS of 7.4p (2012: 7.4p).