Advanced Computer Software FY figures show success of acquisition strategy

In its full-year results statement, Advanced Computer Software (LON:ASW) (ACS) revealed significant growth as the acquisitive healthcare-focused IT group’s impressive financials underline the progress made since it was formed 18 months ago.

"Our strategy to be a leading consolidator of healthcare IT companies is clearly working”, ACS Chief Executive Vin Murria commented. “From its inception 18 months ago, Advanced has grown to become a group with annualised pro forma revenues of £91.5m generating EBITDA of £21.7m”.

For the twelve months, ended 28 February 2010, the company increased revenues by 312% to £30.2m (FY09: £7.3m) including 55% recurring revenues, and pre-tax profits grew 281% to £4.2m (FY09: £1.1m). During this expansive period ACS successfully acquired 5 companies, meanwhile through its day-to-day operations the company reported organic growth of 8%. Including the COA Solutions business, the company reported pro-forma revenues of £91.5m.

 

ACS said that in the first full year, its Adastra acquisition which closed in August 2008 made a strong contribution to the period’s revenue growth, with the addition of the other business boosting revenues as the year progressed.

During the financial year, ACS first acquired Business Systems Group in June 2009, followed by StaffPlan Ltd in July, Oak Labs in September, Healthy Software Ltd in November and COA Solutions in February 2010.

In order to fund part of its £100m cash acquisition of COA, the group negotiated a new lending facility of £55m, of which £3m had been remaining and available for further acquisitions, together with the cash in hand of £10m, at year-end.

ACS said it is confident that additional funding will be available should another significant acquisition opportunity arise. Indeed, shortly after year-end, the company acquired community care focused software firm, Cerrus ltd, for 0.37m in cash. Cerrus designs software to manage the delivery of care, resource planning and operations for more than 60 community health and social care providers.

Among its 5 acquisitions, the deal for COA Solutions clearly stands out. The transformative £100m deal was closed towards the end of the reporting period, in February. Significantly, the acquisition adds £58m in annual revenue to the group. ACS noted that approximately £30m of this revenue is derived from public sector customers in healthcare, emergency services and not-for-profit organisations.

The acquisition of COA has transformed ACS into a group with three distinct divisions. ACS said that although each division is managed separately, they all have a common cross-selling strategy which aims to maximise the group’s overall results.

Further to the additional revenues, the company highlighted that in the first four months of the current financial year, it has already identified more than £2m in annualised savings and synergies as it integrates the COA business.

In reference to the current financial year, ACS said that the company’s performance is meeting the board's challenging expectations across all divisions. Highlighting the company’s strong position in the healthcare market, ACS pointed to recent deals including a contract with Pfizer only announced yesterday to supply a SaaS (Software as a Service) hosted software. 

"There are many opportunities for the group to grow, both organically by entering new markets - as demonstrated by the recent contract with Pfizer to provide a hosted solution for NHS vascular health checks in pharmacies - and through carefully selected acquisitions that enhance shareholder value. We look forward to the future with confidence," Murria said

ACS said that its forward order book, already standing at £27.3m on 28 February 2010, is compelling evidence of Advanced's growth potential for the current year.