ACS predicts profits up a fifth

The owner of the Adastra out-of-hours system, Advanced Computer Software, has announced it expects to make profits of around £24m this year; an increase of 21% on last year.

In a year-end trading update, the companyreported that it expects organic revenue growth of about 4%, with second half revenues and profits “in line with expectations”.

It said revenues for the year were expected to be not less than £95m, which makes it one of the largest UK-owned healthcare IT suppliers.

ACS bought Adastra in 2008 and followed up with a series of other acquisitions in health and social care IT and accounting and businesse management. The latest buy was the CareSys community health software solution in October last year.

In its update, ACS set out the government’s plans to overhaul the NHS and replace PCTs with GP consortia. It predicted the company would gain from the changes.

“Advanced’s exposure to the demise of PCTs is minimal, potentially dwarfed by the new market opportunity resulting from the creation of these new organisations.”

It said the Comprehensive Spending Review had also emphasised the need for government funded organisations to reduce costs and improve efficiency.

And it argued that in this area Advanced was also well placed “with its deep public sector knowledge and extensive portfolio of business software applications” to help organisations optimise their operating efficiency.

The company said its Advanced Health, Care and Public Sector division, which includes Adastra and its mobile application iNurse, had shown "good organic growth" of 4% and an operating margin improvement to 30%.

Sales of iNurse and iConnect, launched in 2010, "have gathered momentum”, with 5,000 nurses and carers now using the software with contracts typically covering a five year term.

Results from the Advanced 365 Managed Services division were strong, with 16% organic revenue growth. But ACS’ Business Solutions devision had a disappointing first half.

The division’s second half revenue results were similar to the first, but the operating margin improved to 27% following restructuring implemented by a new management team.

Vin Murria, chief executive of Advanced Computer Software, said 2011 had been an excellent year for the group.

She added: “We remain confident that growing interest in our mobile applications for the health and social care markets, the move away from PCTs to GP consortia following the July 2010 white paper, and the increased demand for cost-effective hosting and outsourcing from local authorities will provide exciting opportunities for growth.”