Advanced Computer Software Group plc
www.advancedcomputersoftware.com
www.advancedcomputersoftware.com
Advanced Computer Software Plc comprises three main divisions: Business Solutions, Health & Care and Managed Services. Together, these divisions provide a range of software and IT services that enable public, private and third sector organisations to retain control, improve visibility and gain efficiencies through streamlined processes.
Advanced Computer Software: Consolidating the healthcare software industry
Whether the times are good or bad, it is a testament to entrepreneurialism that there are always a few people in the business world who believe that they can make a profit no matter what the circumstances. Vin Murria, the chief executive of AIM-quoted Advanced Computer Software is one of these people.
A veteran of the enterprise software sector, having spent 16 years at Kewill Systems (where she reached the position of chief operating officer), Murria made a name for herself as a chief executive when she significantly boosted returns for shareholders of fellow AIM-quoted firm Computer Software Group during her tenure in charge of the business.
Murria joined CSG in mid-2002 (when it was still known as ‘Software for Sport’) as a non-executive director representing the interests of substantial shareholder Elderstreet and byJan 2003 she had been appointed chief executive.
Although CSG had done one small acquisition, this activity was stepped up significantly after Vin Murria became chief executive. Her strategy involved focusing on acquiring firms that sold software into niche markets, such as ‘not for profit’ organizations and the legal sector resulting in managing the software for 100% of the Barristers, 90% of coroners as 70% of legal practices as well as large number of charities.
CSG was a business turning over less than £3m per year when Murria arrived in Jan2003, but by the time the group was sold four years later it had become a business with annualised proforma revenues of almost £80m. More importantly, it had changed from being a firm that was posting £1.4m per year in losses to a diversified group that was achieving an annualized proforma profit before tax of more than £10m+
Even more important as far as investors are concerned is that her involvement in the group coincided with its shares increasing from 150 20 pence each in jan 03150 pence each when CSG was finally bought out in the spring of 2007.
One of Murria’s key policies is her focus on buying profitable businesses for low multiples of their earnings – a fact she is proud of. “The average P/E on my last 17 acquisitions has been less than four ,” she says.
Such a goal is even easier to achieve today, given the current economic circumstances of many small, software companies. And Murria’s latest vehicle – Advanced Computer Software – has already embarked on its own run of acquisitions.
This time, Murria is focusing on the healthcare software industry. “If you want to be anywhere [at the moment], you want to be in sector that has high level of defensiveness, generally supported by the Government funding, in our case either defence or health,” she says and ACS’s first acquisition is, usefully, a business that already has a lot of connections to other companies in the healthcare software sector.
Adastra, which was bought by ACS for £12.9m (an EV of £10.6m) last August, provides clinical and operational workflow applications that serve out-of-hours functions, including NHS Direct and NHS 24, as well a NHS walk-in clinics. By automating the workflow from NHS help lines it transacts approximately 14 million patient episodes per year.
During its first six months as part of ACS it generated £7.3m in revenue and £2.6m in adjusted EBITDA (a 142% increase over the equivalent period a year previously). But crucially, as far as ACS’s appetite for acquisitions is concerned, Adastra’s software is already integrated into more than 100 different healthcare systems, which suits Murria perfectly. “I can identify a lot of companies that we might acquire because I’m already talking to them,” she says.
Adastra itself is building upon its core out-of-hours health software business. As part of this product diversification it has run a pilot trial of its community nurse application iNurse with the Derby Primary Care Trust. This trial demonstrated that iNurse increased productivity by 25% over a four-month period, representing a return on investment of up to 500%.
iNurse is being marketed this year to other Primary Care Trusts, as well as community services and charitable organisations such as those involved in palliative care.
The focus of ACS’s future healthcare software acquisitions will be on other parts of Primary Care, including urgent care centres, minor injury units, district nurses and ultimately GP practices. A key requirement of acquisition targets for Murria is that they have significant levels of recurring revenue and a stable customer base; for example, approximately 65% of Adastra’s income is underpinned by recurring maintenance contracts.
But the group is also targeting acquisitions. The majority will be mid size £5-20m t/o,, but also those sub £!m if the products promises large amounts of organic growth. “If you see me buying anything with below £1m in revenues I am buying it for the product,” says Murria
The healthcare sector offers a lot of opportunity for software businesses at the moment. According to the recent Kings Fund report, “health care has been relatively slow to adopt new technologies that are already in widespread use elsewhere”. For example, Murria believes that just as ‘field service’ software is now generally used to manage the daily activity of such professionals as salesmen and maintenance engineers, it can easily be applied to manage the workflow of medical professionals.
Meanwhile, the recent budget confirmed that PCTs would get 5.5% expenditure increases during the next two years just as the NHS as a whole will need to find £2.6bn in savings during 2011/2012. Such targets are good news for businesses like ACS that sell products used to improve efficiency in healthcare.
Helping Murria in her task of consolidating the healthcare software sector is chief financial officer Karen Bach, who was involved in delivering strong returns for shareholders when she was at IXEurope, and chairman Michael Jackson – the co-founder of software giant Sage who last worked with Murria when he was chairman of CSG.
Consensus estimates for ACS suggest that the firm should generate revenues of £13.8m during the year to the end of February 2010 (2009: £7.3m), delivering a pre-tax profit of £3.5m (2009: £1.1m) – which would translate to earnings per share of 1.3 pence.
The eventual figures for 2010 are likely to be very different, however, since we do not think it will be long before Murria makes her next acquisition.
A veteran of the enterprise software sector, having spent 16 years at Kewill Systems (where she reached the position of chief operating officer), Murria made a name for herself as a chief executive when she significantly boosted returns for shareholders of fellow AIM-quoted firm Computer Software Group during her tenure in charge of the business.
Murria joined CSG in mid-2002 (when it was still known as ‘Software for Sport’) as a non-executive director representing the interests of substantial shareholder Elderstreet and byJan 2003 she had been appointed chief executive.
Although CSG had done one small acquisition, this activity was stepped up significantly after Vin Murria became chief executive. Her strategy involved focusing on acquiring firms that sold software into niche markets, such as ‘not for profit’ organizations and the legal sector resulting in managing the software for 100% of the Barristers, 90% of coroners as 70% of legal practices as well as large number of charities.
CSG was a business turning over less than £3m per year when Murria arrived in Jan2003, but by the time the group was sold four years later it had become a business with annualised proforma revenues of almost £80m. More importantly, it had changed from being a firm that was posting £1.4m per year in losses to a diversified group that was achieving an annualized proforma profit before tax of more than £10m+
Even more important as far as investors are concerned is that her involvement in the group coincided with its shares increasing from 150 20 pence each in jan 03150 pence each when CSG was finally bought out in the spring of 2007.
One of Murria’s key policies is her focus on buying profitable businesses for low multiples of their earnings – a fact she is proud of. “The average P/E on my last 17 acquisitions has been less than four ,” she says.
Such a goal is even easier to achieve today, given the current economic circumstances of many small, software companies. And Murria’s latest vehicle – Advanced Computer Software – has already embarked on its own run of acquisitions.
This time, Murria is focusing on the healthcare software industry. “If you want to be anywhere [at the moment], you want to be in sector that has high level of defensiveness, generally supported by the Government funding, in our case either defence or health,” she says and ACS’s first acquisition is, usefully, a business that already has a lot of connections to other companies in the healthcare software sector.
Adastra, which was bought by ACS for £12.9m (an EV of £10.6m) last August, provides clinical and operational workflow applications that serve out-of-hours functions, including NHS Direct and NHS 24, as well a NHS walk-in clinics. By automating the workflow from NHS help lines it transacts approximately 14 million patient episodes per year.
During its first six months as part of ACS it generated £7.3m in revenue and £2.6m in adjusted EBITDA (a 142% increase over the equivalent period a year previously). But crucially, as far as ACS’s appetite for acquisitions is concerned, Adastra’s software is already integrated into more than 100 different healthcare systems, which suits Murria perfectly. “I can identify a lot of companies that we might acquire because I’m already talking to them,” she says.
Adastra itself is building upon its core out-of-hours health software business. As part of this product diversification it has run a pilot trial of its community nurse application iNurse with the Derby Primary Care Trust. This trial demonstrated that iNurse increased productivity by 25% over a four-month period, representing a return on investment of up to 500%.
iNurse is being marketed this year to other Primary Care Trusts, as well as community services and charitable organisations such as those involved in palliative care.
The focus of ACS’s future healthcare software acquisitions will be on other parts of Primary Care, including urgent care centres, minor injury units, district nurses and ultimately GP practices. A key requirement of acquisition targets for Murria is that they have significant levels of recurring revenue and a stable customer base; for example, approximately 65% of Adastra’s income is underpinned by recurring maintenance contracts.
But the group is also targeting acquisitions. The majority will be mid size £5-20m t/o,, but also those sub £!m if the products promises large amounts of organic growth. “If you see me buying anything with below £1m in revenues I am buying it for the product,” says Murria
The healthcare sector offers a lot of opportunity for software businesses at the moment. According to the recent Kings Fund report, “health care has been relatively slow to adopt new technologies that are already in widespread use elsewhere”. For example, Murria believes that just as ‘field service’ software is now generally used to manage the daily activity of such professionals as salesmen and maintenance engineers, it can easily be applied to manage the workflow of medical professionals.
Meanwhile, the recent budget confirmed that PCTs would get 5.5% expenditure increases during the next two years just as the NHS as a whole will need to find £2.6bn in savings during 2011/2012. Such targets are good news for businesses like ACS that sell products used to improve efficiency in healthcare.
Helping Murria in her task of consolidating the healthcare software sector is chief financial officer Karen Bach, who was involved in delivering strong returns for shareholders when she was at IXEurope, and chairman Michael Jackson – the co-founder of software giant Sage who last worked with Murria when he was chairman of CSG.
Consensus estimates for ACS suggest that the firm should generate revenues of £13.8m during the year to the end of February 2010 (2009: £7.3m), delivering a pre-tax profit of £3.5m (2009: £1.1m) – which would translate to earnings per share of 1.3 pence.
The eventual figures for 2010 are likely to be very different, however, since we do not think it will be long before Murria makes her next acquisition.
