Advanced Computer Software (ACS) has seen good growth in the first half and is performing ‘in line with management expectations’. It’s encouraging to see that the integration of Computer Software Holdings (see here) is progressing well and that the group is able to report both organic and inorganic growth.
With CSH on board, first half revenue is up by 74% to no less than £99m whilst ‘adjusted EBITDA’ is up by 67% to around £22m. Having funded the CSH acquisition, ACS reports a net debt of £50.9m at the end of August (compared to net cash of nearly £31m six months earlier), but with strong cash generation CEO Vin Murria is confident the net debt position won’t last long.
The CSH acquisition has changed the shape of ACS somewhat. The Group’s largest division, Advanced Business Solutions, now accounts for close to two-thirds of revenue. It delivered “above-market organic growth” in the first half and is seeing continued demand from the public and private sectors for shared services, procurement, budgeting and forecasting solutions. The 365 Managed Services division, which now brings in around a fifth of Group revenue, continues to benefit from cross-selling from ABS with strong growth in recurring managed services revenue, but reduced lower-margin hardware sales.
Advanced Health & Care is now the smallest division accounting for only about 14% of revenue. But it also grew strongly in the first half thanks to its success in the NHS 111 market, demand for mobile solutions and opportunities in the emerging community care market.
All in all, ACS appears to be a solid business that is ticking along nicely. But it is still very much a ‘buy & build’ company and with CSH well on the way to being bedded in, it can only be a question of time before Vin and her team are on the acquisition trail again in a bid to boost growth further.