Healthcare and business software group Advanced Computer Software (LON:ASW) is beefing up its cloud computing and managed services operations with the acquisition of Fabric Technologies for £4.6 million cash. 

Fabric has about 160 UK mid-market customers in banking and other professional services sectors and offers outsourced managed services and implementation and communications services.

ACS said the deal would be immediately earnings enhancing as Fabric has strong recurring revenues, while it would also strengthen its managed services division and gives cross-selling opportunities. 

Fabric, which has 95 employees, generated sales of £11.2m in 2010 and made £0.5 million profits. It will be integrated in ACS’s cloud-computing Advanced 365 Managed Services division based in London. The consideration includes £0.4 million depending on its performance.

Vin Murria, ACS’s chief executive, said: "This earnings-enhancing acquisition forms part of the group's strategy to identify and acquire high quality complementary businesses to strengthen its 365 Managed Services division. 

Fabric's market-leading offerings will help drive further cross-selling of managed services into the group's 7,000 strong customer base.” 

ACS has three divisions: Advanced Health & Care, which services the NHS and private healthcare sector; Advance Business Solutions and Advanced 365, which supplies managed services.

Murria added the company is looking for further acquisitions in the Health & Care and Business Solutions divisions.

Healthcare and business software supplier Advanced Computer Software (LON:ASW) was applauded by analysts after releasing an upbeat trading update this morning.

ACS said all of its divisions grew sales, with managed services up by 16 per cent, healthcare up by 8 per cent and business solutions by 6 per cent.

Broker Collins Stewart said although it had anticipated good growth in managed services, “the progress in health & care and business solutions is very pleasing against an uncertain economic backdrop”.

Collin Stewart said it was leaving forecasts for ACS unchanged but it expects to move them up in June when the preliminary results are released. 

ACS said that underlying profits increased by 9 per cent and will be at least £24m against £22.1 million.

The software company is also to consider paying dividends next year.

Ongoing revenue in the year to February rose by 10 per cent to £98 million from £89.2 million, with organic growth at 8 per cent.

ACS added it had benefited from cross selling of cloud-based solutions, which included a £17 million contract with the Northern Ireland Department of Health, Social care and Public Safety.

Vin Murria, ACS’s chief executive, said that the sales growth was also underpinned by growing demand for its mobile applications for the health and community care markets.

ACS’ iNurse and iConnect applications now have over 13,000 users in total, a 200 per cent rise on the previous year. 

This demand is being driven by continued expansion of the mobile solutions market and increasing demand for cost-effective, cloud-based shared services and outsourcing solutions, Murria added. 

Net debt at the year was down to £1 million from £31 million and Murria said the company will move into net cash position by the next half-year.

"The group is trading well and is positioned for further growth in the year ahead, both organically and by acquisition,” Murria added.

The share price rose by 2.5 per cent to 51.4 pence.

Ongoing revenue in the year to February rose by 10 per cent to £98 million from £89.2 million, with organic growth at 8 per cent.

Underlying profits have increased by 9 per cent and will be at least £24m against £22.1 million, ACS said.

The software group said all of its divisions grew sales, with managed services up by 16 per cent, healthcare up by 8 per cent and business solutions by 6 per cent.

ACS added it had benefited from cross selling of cloud solutions, which has included a £17 million contract with the Northern Ireland Department of Health, Social care and Public Safety.

Vin Murria, ACS’s chief executive, said that the growth was also underpinned by growing demand for its mobile applications for the health and community care markets.

ACS’ iNurse and iConnect applications now have over 13,000 users in total, a 200 per cent rise on the previous year 

This demand is being driven by continued expansion of the mobile solutions market and increasing demand for cost-effective, cloud-based shared services and outsourcing solutions, Murria added, 

Net debt at the year was down to £1 million from £31 million and Murria said the company will move into net cash position by the next half-year adding that the group will review its dividend policy at that time.

"The group is trading well and is positioned for further growth in the year ahead, both organically and by acquisition,” Murria added.