Advanced Computer Software Group plc Annual report 2013

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Notes to the consolidatedfinancial statements1 General informationAdvanced Computer Software Group plc (AIM: ASW, ‘Advanced’, ‘the Company’ or ‘the Group’), a leading providerof software and IT services to the healthcare, public and private sectors, is a limited liability company listed on AIM(a market of the London Stock Exchange). The Company’s registered address is Munro House, Portsmouth Road,Cobham, Surrey KT11 1TF and the Company’s registration number is 5965280.The Group financial statements consolidate those of the Company and its subsidiaries (together referred to asthe ‘Group’).The Company financial statements present information about the Company as a separate entity and not aboutits Group.The consolidated financial statements have been prepared in accordance with International Financial ReportingStandards (IFRSs) as adopted by the European Union. The Company has elected to prepare its Company financialstatements in accordance with UK GAAP. The Company’s subsidiaries are prepared in compliance with UK GAAP.The principal accounting policies used in preparing the financial results are detailed in note 3.2 Basis of preparationMeasurement conventionThe financial statements are prepared on the historical cost basis.Subsidiary basis of consolidationSubsidiaries are entities controlled by the Group. Control exists when the Group has the power, directly or indirectly, togovern the financial and operating policies of an entity so as to obtain benefits from its activities. In assessing control,potential voting rights that are currently exercisable or convertible are taken into account. The financial statementsof subsidiaries are included in the consolidated financial statements from the date that control commences until thedate that control ceases.Functional and presentation currencyThe financial information is presented in sterling, which is the functional currency of the Group. All financialinformation presented in sterling has been rounded to the nearest thousand.Going ConcernOn 7 March 2013 the Group negotiated a banking facility of £105.0m, with HSBC, Royal Bank of Scotland andSilicon Valley Bank. The facility is structured as a £55.0m term loan and a £50.0m revolving credit facility, bothfalling due for repayment in September 2016.The interest rate on both the term loan and revolving credit facility varies between 2.25% and 3% over LIBORdepending on the Group’s net debt to EBITDA ratio.The previous facility was cancelled on 27 February 2013 and the outstanding balance at the balance sheet dateof £2.5m was repaid on the 6 March 2013.In May 2013, an agreement was reached with Royal Bank of Scotland to hedge two-thirds of the term debt for theperiod of the loan by way of a cap on LIBOR of 1%.The Group’s forecasts and projections, taking account of reasonably possible changes in trading performance, showthat the Group will continue to operate within the level of these facilities.The directors are confident that the Group will continue to meet its financial covenants and has adequate resourcesto continue in operational existence for the foreseeable future and therefore they continue to adopt the going concernbasis in preparing the annual financial statements.40Advanced Computer Software Group plcAnnual Report 2013
3 Significant accounting policiesThe accounting policies adopted in the preparation of the financial statements are consistent with those followed inpreparation of the Group’s annual financial statements for the year ended 29 February 2012.There were no relevant new standards and amendments to standards which were mandatory for the first time forthe financial year beginning 1 March 2012.Property, plant and equipmentProperty, plant and equipment are stated at cost less accumulated depreciation and impairment losses. Where partsof an item of property, plant and equipment have different useful lives, they are accounted for as separate items ofproperty, plant and equipment.DepreciationDepreciation is charged to the income statement on a straight-line basis over the estimated useful lives of each partof an item of property, plant and equipment. The depreciation policies for each class of asset are as follows:Leasehold improvements – over the period of the leaseOffice equipment and furniture – 20% to 331⁄3% straight-lineComputer equipment – 20% to 25% straight-lineLand & buildings – 2% straight-lineDepreciation methods, useful lives and residual values are reviewed at each reporting date.Overview Business review Governance FinancialsIntangiblesGoodwillGoodwill is recognised on the acquisition of a subsidiary and is the difference between the cost of the acquisitionand the fair value of tangible and intangible assets acquired. The carrying value of goodwill is reviewed at eachreporting date, with any impairment charged to the income statement.Research and developmentDevelopment activities involve a plan or design for the production of new or substantially improved computersoftware. Development expenditure is capitalised only if development costs can be measured reliably, the softwareprogram is technically and commercially feasible, future economic benefits are probable, and the Group hassufficient resources available to complete development and to use, lease or sell the asset. The expenditure capitalisedincludes only the cost of gross direct labour that is directly attributable to preparing the asset for its intended use orthird party costs incurred directly on the development activities above.Capitalised development expenditure is measured at cost less accumulated amortisation and accumulatedimpairment losses. Other research and development expenditure not meeting the above criteria is recognisedin the income statement as incurred.Acquired intangiblesFollowing business combinations (see note 11) the assets acquired are classified into tangible and intangible assetsand fair values applied using the principles of IFRS3. This leads to the creation of intangible assets recognised onthe consolidated balance sheet which will be amortised over their estimated useful lives. The assets typicallyrecognised were:1. Brand name2. Customer contracts and relationships3. Technology assets4. Contractual arrangements5. In-progress research and developmentAdvanced Computer Software Group plcAnnual Report 201341
Page 2: ProfileAdvanced Computer Software G
Page 5 and 6: Revenue£26.2m(2012: £22.7m)EBITDA
Page 7 and 8: During the year Advanced commenced
Page 9 and 10: Strand Technology, with annual reve
Page 11 and 12: OverviewAdvanced 365 Managed Servic
Page 13: Operating reviewOverviewThe rolling
Page 18 and 19: Financial review continuedFinancing
Page 21 and 22: The Group actively participates in
Page 23 and 24: 1 2Michael JacksonChairmanMichael b
Page 25 and 26: Directors’ reportPrincipal activi
Page 27 and 28: employment from disabled people and
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Page 32 and 33: Audit Committee report continuedExt
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Page 44 and 45: Notes to the consolidatedfinancial
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Page 78 and 79: Notes76Advanced Computer Software G
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Advanced Computer Software Group plc Annual report 2013

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