Chief Executive’s review continuedThe majority of CSH revenue will fall into the <strong>Advanced</strong>Business Solutions division with the remaining revenue,comprising managed service and hosting, moving to<strong>Advanced</strong> 365 Managed Services.The acquisition of CSH is very similar in terms of size,products, method of funding and price to the acquisitionof COA Solutions (COA) three years ago. COA requireda change of management style and product investmentto return to growth within 12 months but provided thecritical mass and ready-made and robust infrastructurethat the enlarged <strong>Group</strong> needed at that stage of itsdevelopment. CSH provides further critical mass andbrings a number of valuable senior people to the <strong>Group</strong>.More importantly, the business is well known to<strong>Advanced</strong>’s management team, who believe that theircombined knowledge and experience of the markets inwhich CSH operates not only significantly reduces anyrisk around the acquisition, but also provides substantialcompetitive advantage.In order to help fund the acquisition, successful placingsraised a total of £44.0m net in February and March <strong>2013</strong>.A bank loan for £105.0m was negotiated with HSBC,RBS and Silicon Valley Bank in March <strong>2013</strong> to fundthe balance of the consideration and provide workingcapital. At completion net debt was £62.5m.Current trading and outlook<strong>Advanced</strong> continues to trade well. Turnover isunderpinned by strong recurring revenue, givingexcellent revenue visibility, and low customer churn.There are opportunities for further organic growthin the core business, particularly in mobile solutions,collaboration, community healthcare, shared servicesand cloud enablement.Following the acquisition of CSH, the <strong>Group</strong> is ina strong position to exploit the increased numberof cross-selling and core product developmentopportunities. We will also continue to identifyand make earnings-enhancing acquisitions thatare complementary to our existing portfolio.Turnover of the enlarged <strong>Group</strong> is underpinned bystrong recurring revenue, giving excellent revenuevisibility and low customer churn. Including CSH,the <strong>Group</strong> has some £189.1m of future contractedrevenue of which £21.2m is in Health & Care, £119.9m inBusiness Solutions and £48.0m in 365 Managed Services.73% of the total will be recognised in FY14 and thebalance from FY15 onwards.The <strong>Group</strong> is developing well and I am delightedwith our progress this year. With the acquisition of CSH,I look forward to building on our success to date to createa stable, substantial and increasingly profitable businessof considerable scale.Vin MurriaChief Executive Officer25 June <strong>2013</strong>*<strong>Group</strong> turnover and EBITDA calculated on a pro-forma basis ie, as if allacquisitions had been present at 1 March 2012.10<strong>Advanced</strong> <strong>Computer</strong> <strong>Software</strong> <strong>Group</strong> <strong>plc</strong><strong>Annual</strong> Report <strong>2013</strong>
Operating reviewOverviewThe rolling out of the new NHS 111 service, to replaceand improve upon the old NHS Direct service,commenced during FY13 and the <strong>Group</strong>, through itsspecifically targeted call handling and CRM productAdastra 111, succeeded in becoming the IT supplierof choice to approximately 85% of the service providersto the new service.NHS 111 has <strong>report</strong>ed operational challenges with thenew service. However, the technical delivery of Adastra111 has been extremely successful with high levels ofavailability and performance from both the softwareand the managed services platform.Business review GovernanceInformation for Care. Everywhere.<strong>Advanced</strong> Health & Care<strong>Advanced</strong> Health & Care works with partners in theNHS, local government and the private sector to providemarket-leading clinical and non-clinical IT solutionsin support of safe, efficient care delivery for the patient,and greater information for the care provider.The division performed extremely well with revenuegrowth of 15%, of which 13% was organic, from allmajor revenue streams after adjusting for the impactof the acquisition of Strand in September 2012. Servicesrevenue, driven by the successful roll-out of NHS 111, andmobile applications with airtime performed particularlywell. This strong growth diluted the division’s recurringrevenue 4 ppts to 59%. EBITDA margin remained steadyat 27% (2012: 27%).The search by care providers to find the best andmost efficient way to manage patient care has driventhese impressive results. Over 1,300 providers in the UK,Middle East and Australasia now use our care solutions.Patient workflow management is at the heart of the<strong>Group</strong>’s portfolio of products supporting out-of-hours care(Adastra and Adastra 111), mobile patient managementand care in the community (iNurse, iConnect, Carenotes).Adastra is designed specifically to manage episodesof care quickly and safely in out-of-hours, walk-in andtelephone-based on-demand settings. The entire patientjourney is measured and analysed from the initialtelephone call or arrival, to triage, consultation,prescription and referring on to internal or externaldepartments or services, through to closure andautomatic <strong>report</strong>ing to the patient’s GP.Providing a greater level of care in the community iskey to meeting the demands of an ageing population.<strong>Advanced</strong> is at the forefront of using mobile technologyto optimise cost and patient care benefits. A range ofclinical and non-clinical solutions helps communitycare providers to reduce costs and improve the qualityof care given to patients by reducing time spenton administration, case management, home visitscheduling, referral management, planning andmessaging to other providers.Several NHS Community Trusts are successfullydeploying iNurse, the mobile variant of the coreAdastra product which enables community cliniciansto record and communicate patient care informationin real time, using smartphone and tablet technology,and iConnect. iConnect provides a point of care solutionfor community and social care providers using near fieldcommunication-enabled mobile phones and a specialtag fitted at the service user’s home to monitor careworkers’ visits. The mobile functionality enables careproviders to view and record patient data from anywhere,at any time, even when a mobile signal is not available,by using semi-connected environment technology.<strong>Advanced</strong> Mobile Communications (AMC) is one ofthe UK’s fastest growing mobilisation specialists, withits unique combination of patient management andworkforce rostering systems, together with the capabilityto provide highly competitive airtime solutions asone package. Originally formed to support the mobileactivities of the Health & Care division, AMC has grownrapidly and now offers an extensive telephony productfamily, customised to meet the needs of customers acrossa broad range of sectors.In September 2012, <strong>Advanced</strong> acquired StrandTechnology for £2.0m. Strand, through its productCarenotes, helps mental health clinicians to access fullmental health records. Mental illness is the largest causeof disability in the UK and Carenotes provides a fullyintegrated, web-based, electronic care record solutioncovering all aspects of community and mental healthcare to both community and mental health providers.Financials<strong>Advanced</strong> <strong>Computer</strong> <strong>Software</strong> <strong>Group</strong> <strong>plc</strong><strong>Annual</strong> Report <strong>2013</strong>11
Change language