Advanced Computer Software Group plc Annual report 2013

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Chairman’sstatementIn less than five years, Advanced has grown from a companyformed to consolidate the fragmented healthcare software marketto become one of the largest listed UK-based software companiesMichael JacksonChairman£120.9mRevenue up 23%£27.0mAdjusted EBITDA up 12%5.6pAdjusted EPS up 12%This year saw Advanced continue its unbroken recordof organic growth and the selection and acquisitionof businesses, both in the healthcare sector and fromthe accounting and back office sector, that are agood fit with the Group’s existing structure and whichoffer significant opportunity for cross-selling goodsand services.The Group achieved strong organic growth* of 9%and completed three strategic and complementaryacquisitions.Group revenue from continuing operations was£120.9m, up 23%, and adjusted EBITDA** rose12% to £27.0m. Basic earnings per share increasedby 44% to 2.6p per share (2012: 1.8p). Adjusted earningsper share increased by 12% to 5.6p per share. Theseexcellent results were again underpinned by strongcash conversion ‡ of 108%.Approximately 57% of Group revenue was contractedand recurring, a clear signal of the quality and robustnature of future revenue and profitability. In addition,the customer retention rate remained high – a directresult of the Group’s focus on delivering products andservices that are key to customers’ operations.In April 2012 Fabric Technologies was acquiredfor £4.6m. Fabric, with annual revenue of £11.2m,provides unified communications, linking togethervarious different forms of communication, such asPCs, telephones and video conferencing, in a singleintegrated infrastructure that promotes collaboration;thus helping businesses to be more agile and responsive.6Advanced Computer Software Group plcAnnual Report 2013
Strand Technology, with annual revenue of £1.0m,was acquired for £2.0m in September 2012 toprovide specialist mental health clinical and patientadministration capabilities to complement the Group’snew product, Advanced Community. Strand is aleading supplier of clinical care management solutionsto community and mental health organisations.In December 2012, Advanced’s public sector customerbase was extended by the acquisition of Serco Learningfor £7.3m. Serco Learning has annual revenue ofapproximately £13.5m and supplies business solutionsto the education sector. Now renamed AdvancedLearning, the business has become part of Advanced’sBusiness Solutions division to gain best advantage fromcross-selling opportunities.Since the year end, the Group has acquired ComputerSoftware Holdings (CSH) for £107.0m in cash. CSHrevenue for the 12 months to February 2013 was £61.2m,mostly arising from the supply of accounting and backoffice solutions to SMEs, and EBITDA before synergies was£13.1m. Advanced’s relationship with CSH dates back tobefore its private equity ownership, when it was knownas Computer Software Group and was led by currentAdvanced directors Michael Jackson, Vin Murria andBarbara Firth. The Board’s familiarity with CSH’s productsand markets is seen as a significant advantage to itssuccessful integration, as is the Board’s experience ofsuccessfully integrating COA Solutions, acquired inFebruary 2010 for £100.0m.Advanced has grown considerably in the last 12 monthsand has ambitious plans to expand further in comingyears. The composition of the Board has been enhancedto support the next stage in the Group’s development.Non-executive director Guy Millward took up his positionas Chief Financial Officer on 10 June 2013, taking overfrom Barbara Firth who has become Chief OperatingOfficer responsible for acquisitions and integration.Paul Gibson remains Chief Operating Officer responsiblefor the day-to-day operations of the Group. The Group isalso seeking to appoint two new non-executive directorsto join Mike McGoun and Michael Jackson on the Board.A maiden dividend of 0.4p per share is proposed tobe paid in October 2013. The Group’s dividend policyis to balance the distribution of profits with the Group’sworking capital requirements, the ongoing needsof the business, and its plans for merger and acquisitionactivities with the focus firmly remaining on growingthe business.I am pleased to look back on another excellent year forAdvanced. I thank my fellow directors and all employeesfor their contribution to the Group’s continued successin the certainty that their enthusiasm and dedicationwill ensure further remarkable achievements in 2014.Michael JacksonChairman25 June 2013Overview Business review Governance Financials***Calculated on a like-for-like basis.Before acquisition costs, share-based payments and amortisation of acquiredintangible assets.‡ Cash generated from continuing operating activities as a percentageof adjusted EBITA.Advanced Computer Software Group plcAnnual Report 20137
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Advanced Computer Software Group plc Annual report 2013

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