Advanced Computer Software

Acquisitive healthcare software specialist Advanced Computer Software (ACS) has run its slide-rule over four companies in recent months, but is keen not to overpay.

The AIM-listed company is the vehicle of serial entrepreneur Vin Murria, and it has not disappointed. In the six months to August it increased revenues 7% to £47.3m, as adjusted pre-tax profits rose 14% to £10.4m. Murria boasts, 'We have enjoyed good growth in all three divisions, and view the future with optimism.'

ACS argues that there is increasing recognition by both the public and private sectors that IT can be used as an enabler to reduce costs, as well as boosting efficiency. Gross margins are high at 84% and contracted recurring revenue is a healthy 58% of sales. ACS is also keen to drive further cross-selling through its business.

The company has recently partnered with Vodafone to supply its iNurse technology, which enables healthcare professionals to access, record and communicate patient care information using a smartphone. Take-up is increasing, providing a good source of revenue to ACS, and at a decent margin.

ACS offloaded its non-core Cedar HR business to Capita for £15m in October, which has helped reduce net debt to nearer £15m, from a peak of £41m in February 2010. With debt facilities of £55m, Murria is keen to do more deals, in what remains a fragmented space.

The forward order book is a record £85.2m, providing good underpinning to Singer Capital Markets' forecasts for 2012 of £95.8m revenue, pre-tax profits of £19.8m and EPS of 4p. Growth Company Investor highlighted the attractions of ACS in July at 39.25p, and we continue to rate the business and its management. Buy.