logo-loader

UPDATE - Advanced Computer confident of more contract wins

Last updated: 22:20 18 Mar 2014 AEDT, First published: 23:20 18 Mar 2014 AEDT

350awsnhscard_5327f9beec11f

---ADDS BROKER COMMENT, CFO COMMENT AND SHARE PRICE---

Advanced Computer Software (LON:ASW) has reported another strong annual performance with both revenues and underlying profits two-thirds higher.

The healthcare and business software specialist expects revenues to climb by 67% to at least £202mln with underlying profit [EBITDA] to be no less than £45mln (£27mln) in the year to February. Consensus forecasts were for around £199mln of revenue and about £44mln of profit.

All of the group’s three legs performed well, said the company, but its work on the NHS 111 emergency service saw particularly good results, while managed services arm 365 won its largest ever contract in the second half of the year.

Computer Software Holdings (CSH) also contributed following its acquisition for £107mln in March and now is expected to grow again this year, having had a flat performance last year.

“We spent most of the last financial year integrating the [csh] business, putting in more sales and marketing resource, putting in development resource to bring some of the products up to speed, and doing a lot of integrations of our processes and back office,” chief financial officer Guy Millward told Proactive Investors.

“All of that’s complete now, and we are already seeing green shoots as regards sales growth,” Millward revealed.

Advanced Computer also announced the award of its third contract in the community and mental health area. It has been named by the Oxford Health NHS Trust as preferred supplier for a health records system that will include all of its mental, child, community and specialist services. A further 68 NHS contracts in community and mental health are expected to be renewed between 2014 and 2016.

Millward said Advanced Computer expects to be involved in most of those contract bids. “We’ve always said that of the 68 contracts that are up in the next two or three years that we would expect to win between 10 and 15 of them,” Millward said, adding that with the third contract in this space in the bag, the company only needs to land another seven to meet its target.

Asked about the company’s win rate in tendering for such bids, Millward explained that it is a case of “horses for courses”, with the company generally winning the contracts that favour its product set.

Vin Murria, chief executive, said: "This has been a strong year, with transformational acquisitions completed and integrating well.

“We have also continued to deliver strong organic revenue and EBITDA growth underpinned by excellent cash generation.

"The ongoing demand for efficient software and mobile solutions means that we continue to see a wide range of opportunities for further growth, both through strategic acquisitions, organic growth and cross selling."

Year-end net debt was £49.5mlm (2013: net cash £30.9m), reflecting the Computer Software purchase.

Panmure Gordon said the headline numbers were “comfortably in line with expectations” but has left its current year and 2015 forecasts unchanged, sorely tempted though it was to increase them. The broker is holding fire on upping its estimates until it gets some “further granularity” on the contribution from CSH, but it believes earnings risk is firmly on the upside.

“Overall, another strong year and further testament to management’s ability to blend organic and acquisitive growth in the delivery of consistently healthy margins and strong cash conversion,” was Panmure Gordon’s verdict as it reiterated its ‘buy’ recommendation and 139p price target.

Shares in Advanced Computer currently trade at 120p, up 2.6%.

Poseidon Nickel signs binding agreement with Mineral Resources to divest...

Departing Poseidon Nickel Ltd (ASX:POS, OTC:PSDNF) CEO Craig Jones and incoming CEO Brendan Shalders join Proactive’s Jonathan Jackson to discuss the divestment of Lake Johnston to Mineral Resources Ltd (ASX:MIN). Jones, who has played a pivotal role in this strategic move, shared insights on...

3 hours, 10 minutes ago