Advanced Computer Software Group: profit up 14 per cent

Advanced Computer Software Group (LON:ASW) announced robust half-year results this morning in which the firm reported a seven per cent increase in revenue during the six months to August 31 and 14 per cent growth in adjust pre-tax profit. Its shares were up 2.7 per cent at 43.4 pence each in mid-morning trading.

Meanwhile, chief executive officer Vin Murria is excited about the iNurse deal that Advanced Computer Software signed in the summer with Vodafone that will help give the firm exposure to a market potentially worth more than £60 million.

Group revenue for the first half was £47.3 million (H1 2011: £44.2 million) while adjusted pre-tax profit came in at £10.4 million (H1 2011: £9.1 million). Adjusted earnings per share were up nine per cent at 2.4 pence.

Advanced Computer Software, which supplies IT systems and software to the health sector among other markets, put the performance down to strong organic growth across all of its divisions. The firm’s Health & Care division grew by five per cent, while the Business Solutions and Managed Services divisions saw growth of four per cent and nine per cent respectively.

“We have continued to grow revenue and profitability whilst also significantly reducing our net debt by over £30 million – from £41 million in February 2010 to approximately £10 million as of today’s date,” said Vin Murria in the firm’s results statement this morning. “We see good growth opportunities for our portfolio of products in both the public and private sectors as these organisations seek efficiency gains and cost reductions.”

Murria said that an integrated approach to how the firm supplies its systems and software was responsible for it increasing its order book from £78 million at the year-end stage to more than £100 million today, with the group having achieved more than £23 million of cross-selling so far this financial year.

Meanwhile, Murria added that the firm was confident that its deal with Vodafone, announced in July, will help it roll out its mobile solutions to the nursing and care community – a market she has high hopes for. The partnership sees Advanced Computer Software supplying its iNurse system to the mobile phone company’s mHealth Professional range of products.

Speaking to Proactive Investors later in the morning, Murria said that the firm’s iNurse product and relationship with Vodafone means “we are unique in the marketplace within the care community” and that there are potentially 500,000 nurses in the UK who can use Advanced Computer Software’s mobile system to manage their workflow. Health organisations would pay the firm between £125 and £150 per nurse to use its system, meaning it is a potential mobile market worth more than £60 million.

Elsewhere,  Murria pointed out that Advanced Computer Software’s £17 million deal with Northern Ireland’s Department of Health, Social Care and Public Safety was for a greater amount than similar previous deals the company has made on account of the fact that it can now take ‘managed service’ operations into its own data centres. Previously, while Advanced Computer Software would supply software and systems, a third party would be responsible for “managed service” provision. 

Broker Northland Capital Partners noted that Advanced Computer Software’s successful execution of its ‘buy and build’ strategy includes the efficient disposal of non-core assets. “The disposal of Cedar HR Software has substantially reduced net debt levels build-up during the acquisition phase,” it said.

House broker FinnCap added that it looked forward to further iNurse mobile health partnerships to boost its rollout beyond the current Vodagone relationship. FinnCap expects sales for the full year to improve to £97 million (2011: £95.4 million) while adjusted pre-tax profit for the year is estimated at £26.2 million (2001: £24.4 million).