Chief Executive’s reviewIn less than five years, <strong>Group</strong> turnover, including the recentacquisition of <strong>Computer</strong> <strong>Software</strong> Holdings, has grown from£7.3m to over £190.0m* and adjusted EBITDA from £2.1m tomore than £40.0m*Vin MurriaChief Executive Officer<strong>Advanced</strong> has achieved a great deal in the firstfive years of its history. We have created a strong,stable and cash generative business that has beentested against an economic backdrop which othershave found challenging, and which has succeededin growing both organically and by way of sensibleand strategic acquisitions.<strong>Advanced</strong> Health & Care has performed extremelywell with many new products and services addedto the portfolio, including solutions addressing thegrowing mental health and community health markets.The division won and implemented contracts with2 key community health trusts and became the majorsupplier of software and services to approximately85% of providers to the new NHS 111 service.The adoption of mobile technologies for healthcare isseeing significant growth and <strong>Advanced</strong> is the leaderin this field. We continue to invest heavily in this areawith new versions of iConnect on the Gentag phoneand iNurse on the Android phone being releasedat regular intervals and, later in the year, our newAndroid tablet and smartphone version of iConnect.<strong>Advanced</strong> Business Solutions has grown its customerbase with many new business wins. The division wasthe largest operator in the UK mid-market for financesystems and the market leader for NHS finance systemsin Northern Ireland and Scotland. Several large contractssigned in 2012 have successfully reached importantmilestones, illustrating the large-scale IT programmemanagement capabilities of the division.Our Business Solutions and 365 Managed Servicesdivisions have both benefited from opportunities createdby organisations looking to reduce costs and improveefficiency during the economic downturn. Procurement,budgeting and forecasting solutions are popular withlocal authorities which are increasingly turning to sharedservices to further improve cost savings. Shared servicesallow a group of local authorities to join together touse one shared software solution, thereby paying onesupport fee and one installation fee. The solution canadditionally be delivered as a hosted managed service,to provide further infrastructure cost savings.8<strong>Advanced</strong> <strong>Computer</strong> <strong>Software</strong> <strong>Group</strong> <strong>plc</strong><strong>Annual</strong> Report <strong>2013</strong>
Overview<strong>Advanced</strong> 365 Managed Services delivered anotherstrong performance and key contract wins withcustomers such as Ruffer, South Downs National Parksand Doncaster Metropolitan Borough Council haveresulted in a steady increase in revenue under contract.The <strong>Group</strong> has invested in overseas development centresto ensure that its products remain technically aheadof the competition and in many instances we havedeveloped innovative products that are leading edge,such as our mobile solutions for healthcare. Offshoreheadcount has grown from 45 in February 2012 to76 as at February <strong>2013</strong> and continues to expandto support key areas of technology, includingandroid-based mobile applications.Our acquisitions, which complement our organic growth,have been selected by measuring against our keycriteria of high recurring revenue, a good fit with ourexisting businesses, own IP, business critical applications,a broad, good quality, customer base to facilitatecross-selling and, most importantly, the right price.We have taken advantage of low interest rates to fundour acquisitions and have steadily reduced net debtby maintaining our strong cash generation and, in 2012,disposing of a non-core part of the business.Acquisitions in FY13During the year we made three strategic acquisitions.> > Fabric Technologies – providing managed servicesand unified communications. Fabric has been fullyintegrated into the <strong>Advanced</strong> 365 Managed Servicesdivision where it extends the range of services itscustomers can purchase from one supplier,underpinning our ‘one stop shop’ approach.> > Strand Technology– a leading supplier of clinical caremanagement solutions to providers of mental healthservices. Strand, highly regarded by clinicians andused by leading NHS trusts and private providersof mental health care, has been integrated into theHealth & Care division to provide a specialist mentalhealth patient administration system capable ofbeing incorporated into our wider communityhealthcare portfolio.> > Serco Learning – a leading supplier of back officesoftware and services to the education sector.Now rebranded <strong>Advanced</strong> Learning, this acquisitionbuilds upon the <strong>Group</strong>’s existing relationships in theeducation sector. Pre-acquisition, millions of poundshad been invested in the development of a newsoftware product, Progresso, to run alongside its currentproduct Facility, but this had not been completed.<strong>Advanced</strong> plans to finish the development of thenew product over the next six months to providean upgrade path for existing customers and givenew customers the best new technology. <strong>Advanced</strong>has begun the integration of <strong>Advanced</strong> Learningand is expecting to complete the transition byFebruary 2014.Acquisition of <strong>Computer</strong> <strong>Software</strong> HoldingsFollowing the year end we commenced the next phaseof our growth plan by acquiring <strong>Computer</strong> <strong>Software</strong>Holdings (CSH) in March <strong>2013</strong>.CSH was grouped into four divisions, each broadlyserving a common end user market:> > Accountancy and Business Solutions (ABS) – providingaccounting, ERP and business management softwareto small and medium sized entities> > Legal and Case Solutions (LCS) – legal software andforms provision for solicitors, barristers and coroners> > Not for Profit (NFP) – software solutions for charities,membership organisations and educationalestablishments> > Information, Technology and Compliance (ITC)– comprising IT modernisation services andticketing solutions.Michael Jackson, Vin Murria and Barbara Firth wereall directors of CSH up to the time it was taken privateby HgCapital in April 2007 for a consideration of £100.0m,when the results for the year ended 28 February 2007showed revenue of £43.9m and EBITDA of £6.0m.CSH underwent several transformations under differentowners but ultimately returned to HgCapital’s ownershipin December 2011 until it was sold to <strong>Advanced</strong> inMarch <strong>2013</strong> for £107.0m, when the results for the yearto 28 February <strong>2013</strong> showed revenue of £61.2m andEBITDA of £13.1m.Business review Governance Financials<strong>Advanced</strong> <strong>Computer</strong> <strong>Software</strong> <strong>Group</strong> <strong>plc</strong><strong>Annual</strong> Report <strong>2013</strong>9
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