Advanced Computer Software Group plc 
Annual Report 2014
Connect, Collaborate  
and Innovate for Growth Advanced Computer Software Group plc  
is a leading provider of software and IT services which  
enable organisations to drive growth by improving  
efficiency and reducing costs.
The Group’s strategy is to increase shareholder value by  
building a strong, profitable and cash-generative organisation 
through a combination of organic growth and acquisitions. 
Organic growth will come from developing innovative 
applications and identifying new markets for existing products 
and services. Acquisition targets will include complementary 
businesses and products to broaden the portfolio of solutions  
in existing divisions and create an expanded customer base  
for the cross-selling of Group products.
In just over five years turnover has grown to more than 
£203m and the Group now employs more than 2,000 staff 
working from offices across the UK, Ireland, US and India.  
In April 2014, Advanced was named 13th largest company  
on AIM by Investors Chronicle.
Advanced is listed on AIM (symbol ASW) and is an AIM UK 
50 company.
Visit us at:
www.advancedcomputersoftware.com Strategic report Governance Financials
Advanced Computer Software Group plc 
Annual Report 2014
1
Contents
Strategic report
Financial and operational highlights 2
Business at a glance 4 
Chairman’s letter to shareholders 6
Chief Executive’s review 8
Business model 11 
Principal risks and uncertainties 18
Operating review 20 
Financial review 23
Governance
Corporate social responsibility statement 27
Board of directors 30
Directors’ report 32
Chairman’s governance report 35
Audit Committee report 38 
Statement from the Chairman  
of the Remuneration Committee 40
Directors’ remuneration report 41
Statement of directors’ responsibilities 44 
 Independent auditor’s report 45
Financials
Consolidated income statement 46
Consolidated statement  
of other comprehensive income 47 
Consolidated balance sheet 48
Consolidated cash flow statement 49
Consolidated statement of changes  
in equity 50 
Notes to the consolidated  
financial statements 51
Company balance sheet 81
Notes to the financial statements  
of the Company 82
Company information 85  2
Advanced Computer Software Group plc 
Annual Report 2014
Financial highlights
Revenue
£m +68%
45.3
2014 203.2
2013 120.9
2012 98.2*
2011 89.2*
2010 30.2
Adjusted EBITDA
£m +68%
45.3
2014 45.3
2013 27.0
2012 24.1*
2011 22.1*
2010 7.2
Pre-tax profit
£m +32%
45.3
2014 12.1
2013 9.2
2012 6.4*
2011 2.8*
2010 4.2
Health & Care revenue
£m
2014 30.6
2013 26.2
2012 22.7
2011 20.0
2010 15.8
+17%
Business Solutions 
revenue £m
2014 136.4
2013 59.9
2012 53.9*
2011 49.6*
2010 2.6
+128%
365 Managed Services 
revenue £m
2014 36.6
2013 34.7
2012 21.8
2011 19.6
2010 11.8
+5%
Adjusted pre-tax profit
£m +60%
45.3
2014 38.5
2013 24.1
2012 21.2*
2011 18.7*
2010 6.8
Adjusted EPS
p +18%
45.3
2014 6.6
2013 5.6
2012 5.0*
2011 4.1*
2010 1.7
XX%
45.3
2014
2013
2012
2011
2010
Cash conversion
%
105
108
105*
102*
88
* From continuing operations. All KPIs are defined on page 25 in the financial review.
Financial and operational highlights
The Group has continued to perform 
strongly across all divisions, delivering  
good organic growth underpinned  
by excellent cash generation. Strategic report Governance Financials
Advanced Computer Software Group plc 
Annual Report 2014
3
Operational highlights
Northern Ireland Department of Health, 
Social Services and Public Safety project 
successfully implemented.
Investment in offshore development 
centres continues to support  
product development.
Advanced University rolled out  
across the Group to promote  
staff development.
Acquisition of Computer Software 
Holdings now successfully integrated.
Cross-selling continues to make 
significant contribution to growth.
Major supplier of software systems  
to 85% of providers to new  
NHS 111 service.
Mobile user licence and airtime orders 
up to 42,000.
Key wins in community and mental 
health offer opportunities for growth.
Largest ever contract for Managed 
Services signed in second half.
The ongoing demand for efficient software and mobile  
solutions means that the Group continues to see a wide range  
of opportunities for further growth, both through strategic  
acquisitions and from organic growth and cross-selling. 4
Advanced Computer Software Group plc 
Annual Report 2014
Business at a glance
Advanced is structured as three divisions. 
Together, these divisions provide a full range of 
software and IT services that enable both public 
and private sector organisations to manage  
their operations effectively and efficiently.
Our divisions
Health & Care
Revenue
£30.6m 
(2013: £26.2m)
Adjusted EBITDA
£8.9m 
(2013: £7.2m)
Business Solutions
Revenue
£136.4m 
(2013: £59.9m)
Adjusted EBITDA
£34.2m 
(2013: £16.6m)
365 Managed Services
Revenue
£36.6m 
(2013: £34.7m)
Adjusted EBITDA
£5.5m 
(2013: £5.1m)
Customers of Advanced have  
the advantage of knowing all  
their IT requirements are met  
by one supplier – including  
business-critical software  
solutions to secure managed 
services delivered on site or  
via the Cloud; the nationwide  
mission-critical platform for  
the NHS 111 service; and the 
development of innovative 
applications for mobile  
working in response to  
the drive for more care in  
the community. Strategic report Governance Financials
Advanced Computer Software Group plc 
Annual Report 2014
5
What we do Products
Business Solutions
Revenue
£136.4m 
(2013: £59.9m)
Adjusted EBITDA
£34.2m 
(2013: £16.6m)
365 Managed Services
Revenue
£36.6m 
(2013: £34.7m)
Adjusted EBITDA
£5.5m 
(2013: £5.1m)
Advanced Health & Care is a leading supplier 
of patient management systems to providers  
of urgent and unplanned care, community care, 
mental health care, care at home and residential 
care. The division supports the providers of over 
85% of the NHS 111 service coverage and is a 
leading innovator in the development of mobile 
applications for community-based care
Advanced Business Solutions delivers a range 
of back office software solutions to a wide 
variety of customers in the public and private 
sectors. Public sector customers include NHS 
trusts, local authorities, housing associations, 
schools and education establishments. Private 
sector customers include law firms, financial 
services companies, retailers and not-for-profit 
organisations. These solutions can be deployed 
as hosted or Cloud-based models in conjunction 
with Advanced 365 Managed Services
Advanced 365 Managed Services delivers  
IT services in support of Group products and  
to a wide range of direct customers. Services 
provided include hosting, IT outsourcing, Cloud 
computing, application development and 
support, and unified communications. Solutions 
can be Cloud-based, such as Software as a 
Service (SaaS), or delivered as a fully managed 
service with software hosted in Advanced’s own 
data centre, in a data centre of the customer’s 
choice, or at the customer’s own premises
 > Out-of-hours and unscheduled 
care management
 > Care referral management for 
urgent and unscheduled care
 > Patient administration and 
clinical care management for 
community care and mental 
health providers
 > Mobile solutions for  
community clinicians and  
care workers
 > Administration, financial 
management and care 
management systems for 
residential care providers  
and hospices
 > Financial management 
 > Human capital management 
 > Corporate and financial analytics
 > Planning, budgeting and 
forecasting
 > Procurement
 > Document management
 > Supply chain management  
and warehousing
 > Back office and case 
management for legal firms
 > Legal forms distribution
 > Record and relationship 
management software for 
educational establishments, 
venues, membership 
organisations and charities
 > Field services management
 > Complete IT outsourcing from 
desktop to data centre
 > Modular outsourcing 
arrangements such as service 
desk or desk-side support
 > Core IT infrastructure 
outsourcing
 > Application hosting and 
management
 > Bespoke application design
 > Development and support  
of e-commerce systems
 > Unified communications design, 
deployment and management
 > Legacy software management 6
Advanced Computer Software Group plc 
Annual Report 2014
Chairman’s letter to shareholders
In less than six years, Advanced has grown  
to become one of the largest UK-based 
software companies and is currently ranked  
as the 13th largest company on AIM.*
“ Advanced continues to deliver across 
all measures – strong operational 
performance underpinned by 
excellent cash generation and  
a growing pipeline of opportunity.”
Michael Jackson
Chairman
Overview
We have achieved strong operational performance underpinned 
by excellent cash generation and a growing pipeline of 
opportunity for organic growth and acquisitions that are a 
good fit with the Group’s existing structure. In addition we 
have high visibility of future revenue and profitability and 
significant opportunity for cross-selling Group products  
and services. 
The three acquisitions completed in the year, described more 
fully in the strategic report, all match our acquisition criteria. 
Computer Software Holdings, acquired in March 2013, was 
successfully integrated during the year and broadens the 
products and markets of our Business Solutions division.  
Plain Healthcare, acquired in October 2013, has provided  
a valuable contribution to our plans for a deeper penetration  
of the UK healthcare market. Compass Computer Consultants, 
acquired in January 2014, is an exciting addition to our Business 
Solutions division, which already counts 2,000 local authorities, 
academies and education providers in its customer base. Strategic report Governance Financials
Advanced Computer Software Group plc 
Annual Report 2014
7
Dividend
0.44p 
Up 10%
People
Last year we announced that we were seeking to strengthen 
the Board by the appointment of a further independent 
non-executive director. On 12 December 2013, we welcomed 
Dr Chris Hand to the Board where he will be a member  
of the Audit and Remuneration Committees. Chris has over  
20 years’ experience in the healthcare industry and is currently  
Chief Executive of Abingdon Health Limited. 
As previously announced, non-executive director Guy Millward 
took up his position as Chief Financial Officer on 10 June 2013, 
taking over from Barbara Firth who became Chief Operating 
Officer for Acquisitions and Integration. 
On behalf of the Board, I would like to place on record our 
thanks to the excellent management team and all the hard-
working, committed and loyal members of staff who have 
contributed to the success of Advanced to date. I am certain 
that their enthusiasm and dedication will ensure further 
remarkable progress is achieved in the current year  
to February 2015.
Dividend
The Group’s dividend policy is to balance the distribution  
of profits with the Group’s working capital requirements,  
the ongoing needs of the business, and its plans  
for acquisition activities, with the focus firmly remaining  
on growing the business. 
The Board is recommending a 10% increase in the final 
dividend to 0.44 pence per share in respect of the results  
for the year ended 28 February 2014.
Conclusion
Advanced’s strong performance matched by strong cash 
generation provides an excellent foundation for future growth. 
We continue to focus on both organic growth and acquisitions 
to complement and broaden our existing portfolio and are 
confident that our strategy will generate sustainable returns 
and growth for our shareholders.
Michael Jackson
Chairman
4 June 2014
Advanced’s strong performance matched  
by strong cash generation provides an  
excellent foundation for future growth. 
* Investor’s Chronicle Top 100 AIM Companies 2014.  8
Advanced Computer Software Group plc 
Annual Report 2014
Chief Executive’s review
We continue to deliver strong 
performance underpinned by excellent 
cash generation whilst, at the same time, 
successfully integrating transformational 
acquisitions and building opportunities  
for future growth. 
Revenue
£203.2m 
Up 68%
“I am pleased to report another  
very successful year for Advanced – 
today one of the largest providers 
of software and IT services to the 
UK market.”
Vin Murria
Chief Executive Officer
Strategy and performance
This year the Group made substantial progress towards building 
a strong, dynamic company focussed on organic growth and 
growth through complementary acquisitions. Advanced  
is now recognised as the second largest UK-based software  
and IT services provider to the UK market, as well as the  
13th largest company on AIM.
Advanced maintained strong organic growth momentum during 
the year, with organic revenue up 7%, excluding the results of 
Computer Software Holdings (CSH) acquired in March 2013
†
, 
contributing to total revenue growth of 68%. This reflects the 
Group’s continued focus on performance whilst integrating  
one transformational acquisition and completing two further 
complementary acquisitions in the year.
 
Group revenue was £203.2m, up 68%, and adjusted EBITDA 
rose 68% to £45.3m. Approximately 20% of revenue for 2014 
was SaaS-based. This percentage is expected to grow steadily 
as customers appreciate the lower cost of ownership of 
transaction-based models.
 
Cash conversion remained strong at 105% (cash generated 
from operating activities as a percentage of adjusted EBITA). 
Basic EPS rose 12% to 2.9 pence.
This performance is a direct result of the Group’s focus on 
developing and delivering products and services that are  
critical to its customers’ operations and its commitment to 
maintaining excellent customer service. High customer retention 
rates are maintained by listening to customers, identifying their 
needs and developing intelligent solutions to resolve their  
IT needs.
Driving growth whilst containing costs and increasing efficiency 
is absolutely critical for organisations in today’s marketplace  
and Advanced’s products and services are focussed on providing 
IT solutions to assist customers in achieving optimal performance. 
The Advanced advantage is that all a customer’s IT needs can  
be fulfilled under one roof – from supplying software, hosted  
on the Cloud as Software as a Service (SaaS), to the complete 
outsourcing of a customer’s IT function, or the implementation 
of mobile working with an integral airtime package. Strategic report Governance Financials
Advanced Computer Software Group plc 
Annual Report 2014
9
Adjusted EBITDA
£45.3m 
Up 68%
Advanced Health & Care achieved particularly good results. 
Many new products and services have been added to the 
portfolio, including solutions addressing the growing mental 
health and community health markets. Highlights from the 
division include the winning and implementing of strategically 
significant contracts with two key community health trusts 
featuring workforce mobilisation, and becoming the major 
supplier of software and services to approximately 85% of 
providers to the new NHS 111 service. 
Advanced Business Solutions successfully completed the 
Group’s largest ever contract with the Northern Ireland 
Department of Health, Social Care and Public Safety – with  
the project executed efficiently and effectively, to time and 
budget. As expected at the time of the acquisition in March 
2013, results from CSH were flat for 2014. However, the 
integration into the division was successfully completed to 
plan and the turnaround back to growth is progressing well.
Both the Advanced Business Solutions and Advanced  
365 Managed Services divisions have benefitted from cross-
selling opportunities created by organisations looking to reduce 
costs and improve efficiency. Advanced 365’s second half 
performance also gained pace from its largest ever contract  
win, which contributed to increases in both transitional and 
managed service revenue in the second half. 
Offshore development
The Group is committed to product development to fuel 
organic growth and has continued to invest in overseas 
development centres in India to ensure that its products remain 
technically ahead of the competition. Offshore headcount has 
grown from 76 heads in February 2013 to 105 heads as at 
February 2014 and continues to expand to support key areas 
of technology, such as android-based mobile applications, 
business analytics and SaaS.
Acquisitions 
The Group started the year strongly with the acquisition  
of CSH in March 2013 for £107.0m in cash. CSH revenue  
for the 12 months to February 2013 was £61.2m, mostly arising 
from the supply of accounting and management information 
systems, and adjusted EBITDA was £13.1m. The Board’s 
familiarity with CSH’s products and markets was a significant 
advantage and the integration is now successfully completed. 
In October 2013, the Group acquired Plain Healthcare Limited, 
the trading subsidiary of Avia Health Informatics. This was a 
strategic acquisition for the Group’s Health & Care division and 
provided valuable applications for referral facilitation and clinical 
decision support system to support Advanced’s plans for a 
deeper penetration of the NHS market.
In January 2014, Compass Computer Consultants Limited 
(Compass), a leading provider of higher education software  
to more than 80% of UK colleges and higher education 
establishments, was acquired and integrated into the Group’s 
Business Solutions division. Its flagship product – an invaluable 
tool for meeting Government inspection needs – has been 
chosen by over 80% of all colleges in England. Compass has  
an outstanding reputation for customer support and training 
which will be built on to achieve future growth.
Our high levels of recurring revenue give us 
confidence in future performance and our strong 
underlying profitability enables us to continually 
invest in innovative product development to 
maintain our market-leading position. 10
Advanced Computer Software Group plc 
Annual Report 2014
Chief Executive’s review continued
Adjusted EPS
 6 .6p 
Up 18%
Advanced is well positioned to take advantage of opportunities 
in growth areas where it has deep domain expertise such as 
business intelligence, corporate performance management 
(particularly budgeting and forecasting) and solutions for the 
legal market. Other plans for the year ahead include maximising 
customers’ appetite for Cloud-based solutions and increasing 
product offerings available on a SaaS or hosted basis.
365 Managed Services
Cross-selling managed services with Group software remains 
an important source of revenue and profit for the division  
and is a key contributor to increasing future revenue under 
contract. Initial implementation of Advanced 365’s largest ever 
multi-year, multi-million pound contract is well underway.
Few software organisations have the integration skills to 
architect, implement and manage a multi-Cloud service solution 
that is customised to specific requirements. Advanced is uniquely 
placed to solve its customers’ business needs and deliver a 
comprehensive solution, and will continue to focus on these key 
strengths, as customers transition to full Cloud-based solutions.
Current trading and outlook
Advanced continues to trade in accordance with Board 
expectations. Turnover is underpinned by strong recurring 
revenue of 64% (2013: 57%) giving excellent revenue visibility. 
SaaS or subscription-based revenue accounts for approximately 
32% of recurring revenue and is expected to continue to grow 
as customers discover the benefits of a low initial cost model.
Opportunities exist for organic growth in the core business, 
particularly in community healthcare, mobile solutions, 
collaboration, and Cloud-enablement. Acquisitions that 
strengthen the existing Group structure and have the potential 
to increase shareholder value are actively being sought.
Health & Care
Advanced continues to make excellent progress in winning  
bids in the NHS and community health space. The conclusion of 
the National Programme for IT, with approximately 50 contracts 
of the original 68 still to be awarded in a market, offers 
significant opportunity for growth. 
Advanced is a supplier to over 85% of providers to the  
new NHS 111 service and performance to date has been good. 
The division is at the centre of plans to further develop the  
111 model. 
The Group is committed to investment in health and care 
products. A significant proportion of profit for this division  
will be reinvested in building community and mental health 
products and flexible delivery models across health and social 
care. Advanced’s position as the leading provider of urgent care 
software systems will be maintained by promoting workforce 
mobilisation in every aspect of out-of-hospital care.
Business Solutions
The division has started the year well with acquired business 
CSH fully integrated and showing positive signs of growth.  
The integration of recent acquisition Compass is proceeding  
to plan with trading in line with expectations. 
* Calculated on a like-for-like basis. 
** EBITDA before one-off acquisition and restructuring costs, 
share-based payments and amortisation of acquired  
intangible assets. 
***EPS before one-off acquisition and restructuring costs,  
share-based payments, amortisation of acquired intangible  
assets and tax adjustments.
$
 SaaS/subscription revenue relates to Advanced software 
applications on public or private Cloud and management  
of other client applications on the Group’s Cloud platform.
†
 5% including CSH Strategic report Governance
Advanced Computer Software Group plc 
Annual Report 2014
11
Financials
 > Known market 
Deep domain knowledge is critical for success
 > Complementary product or customer base 
Cross-selling Group products and services is  
important for future growth
 > High contracted recurring revenue  
Excellent visibility of future performance 
 > Proprietary software  
Maintain high margins
 > Ability to add value 
Opportunity to extract synergies
 > Investment in innovative product development  
To fuel organic growth
 > Focus on cross-selling 
Build a software one-stop-shop 
 > Agile, entrepreneurial management team  
To take advantage of changing market conditions
 > Creative thinking  
New markets for existing products
 > Investment in staff  
Advanced University fosters a skilled workforce  
and develops the leaders of tomorrow
The business model is underpinned by strong entrepreneurial 
leadership, both at Group and local business level, supported 
by robust central services, effective risk management and 
investment in infrastructure and resource. 
Success is ensured by focussing on the following primary value drivers:
Business model
Organic growth Growth by acquisition
The Group’s strategy is to build a strong 
business organically by developing intelligent 
software to meet customers’ needs, and by 
growing through acquisition in a controlled 
manner in markets where opportunities  
for consolidation or growth are identified. 
Case study 
Acquisition of CSH
The acquisition of CSH,  
although one of the largest 
executed by Advanced, was 
significantly de-risked by the 
detailed knowledge of the 
Advanced executives who 
previously managed the business.
In addition, the CSH product 
portfolio, which comprised 
accounting, and management 
information systems, fitted  
neatly into Advanced’s Business 
Solutions division, allowing the 
acquisition to be fully integrated 
within 12 months.
Computer Software Holdings (CSH) bore  
all the characteristics of the ideal acquisition  
for Advanced when it came to the market  
in early 2013. 12
Advanced Computer Software Group plc 
Annual Report 2014
Premier Care Dorset
Advanced advantage: 
Advanced’s one-stop-shop 
approach of providing 
innovative software complete 
with handsets and airtime 
enabled Premier to reduce 
administration costs by 50% 
and significantly improve  
staff communications
Premier Care Dorset (Premier), 
implemented Advanced’s mobile 
monitoring solution to enable its 
office-based team to send real-time 
task lists and data to care worker 
colleagues via their mobile phones. 
Actual arrival and departure times at 
clients’ homes are also recorded using 
near-field communication technology.
Prior to the implementation,  
Premier communicated rostering 
information to staff by post and  
text message, which was both  
time-consuming and expensive.
“It very quickly became clear that 
Advanced Mobile Technology  
would enable us to reduce time and 
expenditure relating to communications. 
“Advanced’s software has also enabled  
us to reduce costs relating to postage, 
paper, toner cartridges and texts  
by 50% which will save us thousands  
of pounds each year. We are saving 
time too – we have managed to reduce 
the time taken to collate and manage 
timesheet information from three  
days a week to just one day!
“By analysing actual arrival and 
departure times of our care workers, 
we can identify more accurately how 
much time is needed by each client 
and therefore how much to charge.  
As a result we have been able  
to reduce care-related costs  
for Dorset County Council’s  
social services department.”
Cliff de Jong
Company Secretary  
Premier Care Dorset
Health & Care Reduced administration  
costs by  
50%
Strategic report Governance Financials
Advanced Computer Software Group plc 
Annual Report 2014
13 14
Advanced Computer Software Group plc 
Annual Report 2014
Imperial College  
Healthcare NHS Trust
Advanced advantage:  
When Imperial College 
Healthcare NHS Trust 
identified a £35m deficit  
five months into its financial 
year, the Trust turned to  
long-term partner Advanced 
to implement a sophisticated 
budgeting and forecasting 
system as part of its  
‘Building World-Class  
Finance’ programme
Imperial College Healthcare NHS Trust 
(‘ICHNT’ or the ‘Trust’) is one of the 
UK’s largest trusts and is responsible 
for managing five London hospitals.  
The Trust has a budget of £978m, 
employs over 10,000 staff and treats 
more than a million patients every year.
A large deficit in its 2011-2012  
financial year caused the Trust to 
instigate a series of measures to take 
better control of its finances. A key 
part of the programme was the 
transformation of budgeting and 
forecasting in the short and medium 
term. A pilot implementation of 
Collaborative Planning was initially 
offered to 100 finance and service 
managers, who rapidly embraced  
the system. Full implementation 
throughout the Trust followed shortly 
after with integration into its existing 
financial management system from 
Advanced.
Since then, Collaborative Planning has 
enabled both services and financial 
managers to work closely together to 
formulate accurate forecasts – key to 
safeguarding the future of the Trust. 
For the 2013-2014 financial year, 
ICHNT delivered a surplus of £15m.
“We needed to move away from the 
traditional NHS model where budgets 
were set centrally by the finance 
department – we wanted to empower 
clinical service managers to generate 
forecasts themselves. 
“We are particularly pleased with how 
the solution has engaged non-finance 
staff in the forecasting process, which 
is fundamental to accurate financial 
planning and central to the ongoing 
success of the ‘Building World-Class 
Finance’ programme.”
Neil Callow
Deputy Director of Finance,  
Business Partnering  
Imperial College Healthcare NHS Trust
Business 
Solutions Strategic report Governance Financials
Advanced Computer Software Group plc 
Annual Report 2014
15
Working together  
to deliver a surplus of  
£15m 16
Advanced Computer Software Group plc 
Annual Report 2014
Merseyside Fire  
& Rescue Service
Advanced advantage:  
Merseyside Fire & Rescue 
Service was impressed that 
Advanced Business Solutions 
and 365 Managed Services 
were able to combine 
software deployment, 
integration and hosting as 
one project and in addition 
work with NorthgateArinso  
to successfully provide  
a complete managed  
services solution
Merseyside Fire & Rescue Service 
(‘MF&RS’ or ‘the Service’), one of the 
UK’s largest and most respected fire 
service operations, serves a population 
of 1.5m people and employs 850 fire 
fighters and 350 back office staff  
over 35 sites.
MF&RS had already been making 
significant savings from using 
Advanced’s financial and document 
management systems for more than 
five years, when a new project to 
implement a one-stop-shop hosted 
solution, across accounting, HR and 
payroll, was initiated.
Although the Service had established  
a strong partnership with Advanced 
over many years, MF&RS followed  
a rigorous tendering process to select  
a new partner, in accordance with 
European procurement rules, which 
involved more than five managed 
services providers.
The managed services contract will 
cover 24/7 infrastructure support,  
a dedicated service desk staffed from 
8.30am to 6pm, and a full disaster 
recovery programme. The partnership 
will result in a closely managed hosted 
deployment of NorthgateArinso’s fully 
integrated HR and payroll solution.
“Advanced was able to run all of the 
applications we needed in a cost-
effective way, which is vitally important 
in the emergency services sector, and 
will completely manage the finance, 
procurement and HR/payroll functions 
for the Service. There will be a single 
point of contact for support and any 
issues – what we didn’t want was a 
split contract and having to deal with 
multiple account managers. Working 
solely with Advanced will give us a 
more efficient and reliable service.”
Mike Davies
Project Manager 
Merseyside Fire & Rescue Service
365 Managed 
Services Strategic report Governance Financials
Advanced Computer Software Group plc 
Annual Report 2014
17
Delivering an  
efficient and  
reliable service 18
Advanced Computer Software Group plc 
Annual Report 2014
Principal risks and uncertainties
The Group has a process for identifying risks that 
could affect business operations and consequently 
the financial results. Further information on this 
process is set out on page 35 in the Chairman’s 
governance report. 
Advanced considers the following to be its principal risks:
Risk category Specific risks Mitigation 2013/2014 activity
Economic The Group’s markets fall into decline.
Weak economic conditions affect  
the ability of the Group’s clients to  
do business.
The Group has a diversified portfolio 
of products, services and markets, so 
as to mitigate dependence on any one 
product, service or market.
Innovative solutions are offered in a 
variety of ways to best suit each 
customer’s business needs, including 
the traditional licence and services 
model or payment by subscription via 
Software as a Service.
In addition to continued development 
of existing products, acquisitions 
broadened both the Group’s products 
and target markets.
Strategic The Group fails to execute its M&A 
strategy successfully or to properly 
integrate acquisitions.
The Group applies clearly defined 
criteria to identify and make earnings-
enhancing acquisitions, with strong 
recurring revenue streams, that are 
complementary to the Group’s existing 
portfolio. Due diligence appropriate  
to the size and complexity of the 
target company is carried out  
before any acquisition is made.  
The Group has extensive experience  
of integrating acquisitions.
The three acquisitions completed in 
the year, described more fully in the 
strategic report, all match the Group’s 
acquisition criteria.
Computer Software Holdings, acquired 
in March 2013, was successfully 
integrated during the year.
Product 
development
The Group operates in highly 
competitive markets characterised by 
rapidly changing technology and 
increasingly sophisticated customer 
requirements. Failure to respond 
promptly and effectively may lead to 
loss of market share.
Significant investment is made in 
product development.
Dedicated development resource 
centres exist in Bangalore and Baroda, 
India, which continually review and 
update products.
The Group continued to develop and 
expand its product and service 
offering. The Group invested £22.5m 
in R&D during the year (2013: £9.2m).
The Group outsources the development 
of one of its learning products.
Use of third party software is kept  
to a minimum.
The relationship and output is 
monitored and reviewed regularly.
Systems failure The loss or failure of the 365 Managed 
Services systems would impact on both 
the Group’s operations and those of its 
hosted clients.
All critical new business and client 
focussed systems have High 
Availability built in by design.
Regular testing of business continuity/ 
disaster recovery plans is carried  
out, including annual full live 
scheduled testing.
A power outage at a key data centre 
caused by a third-party was 
successfully managed. All live systems 
were restored within acceptable  
time frames.
Project delivery The Group contracts for multiple 
projects each year to deliver products 
and services to clients. Failure to 
delivery large or even smaller projects 
can result in significant financial loss.
The Group has proven procedures and 
policies for project delivery and 
regularly measures and reviews project 
progress. Problem projects involve 
senior management at an early stage.
The Business Solutions division 
successfully completed 
implementation of the Group’s largest 
ever contract with the Northern 
Ireland Department of Health, Social 
Services and Public Safety.
Other case studies are set out on 
pages 11 to 17. Strategic report Governance Financials
Advanced Computer Software Group plc 
Annual Report 2014
19
Risk category Specific risks Mitigation 2013/2014 activity
Financial 
reporting 
Incomplete management/ financial 
information informing Board/
management decisions could result  
in the business being managed 
sub-optimally and adversely  
affect performance.
Detailed management information on 
each division is circulated monthly and 
reviewed by the management board 
and Group Board.
The Group finance team has been 
strengthened following the CSH 
acquisition and all parts of CSH now 
use the Group’s financial management 
information systems and shared 
service finance.
Liquidity risk The Group may have insufficient cash 
reserves and working capital to pay its 
debts as they fall due or to finance 
growth or acquisitions.
The Group is highly cash generative. 
Further information on liquidity  
risk is set out in note 20 to the  
financial statements.
The Group has a £105.0m term loan 
and revolving credit facility taken out 
in March 2013. 
The Group continued to be highly 
cash-generative with cash conversion 
at 105% during the year.
People The Group’s success relies on recruiting, 
developing and incentivising senior 
management and other key employees, 
the loss of whom may affect the 
financial performance of the Group.
A comprehensive vetting and 
recruitment process exists.
There is continual development of 
employees through objective setting 
and regular appraisals.
An in-house development and training 
facility provides a structured learning 
environment for the professional 
development of all staff.
Key employees are incentivised via 
bonus plans and share schemes.
A new long-term incentive plan was 
introduced providing awards to 
executive directors and senior 
employees.
The range of courses offered by 
Advanced University, the in-house 
training facility, was extended. Further 
details are set out on page 27 of the 
corporate social responsibility statement. 
Compliance The Group is subject to a wide range of 
UK legislation and regulation.
There is regular interface with the 
Group’s external advisers on changes 
to applicable law and regulation.
Appropriate policies and procedures 
are in place across the Group, 
including staff training.
There were no significant incidents  
of non-compliance with legislation, 
regulation or Group policies during  
the period. 20
Advanced Computer Software Group plc 
Annual Report 2014
Operating review
Following the demise of the National Programme for IT,  
up to 50 of the original 68 NHS contracts are still seeking  
new suppliers of an integrated and interoperable health record 
solution with mobile working across all pathways including 
mental health, community and child health services. Advanced 
has already been awarded preferred supplier status at three 
community and mental health trusts, including Oxford  
Health NHS Foundation Trust, and is well-positioned  
for further success.
Patient workflow management is at the heart of the division’s 
portfolio of products and AHC’s urgent and unscheduled care 
solution remains the class leader in this sector now supporting 
85% of providers to the new NHS 111 service. 
The addition of the Healthcare clinical decision support system 
acquired with Plain Software provides interesting opportunities 
for enhancing the urgent care delivery model.
The Group’s product development strategy is predicated on 
anticipating market developments affecting care providers. 
Investment in community and mental health solutions will 
continue together with mobile care systems and the new 
generation of integrated care systems for social care. Plans  
for the year ahead include the delivery of a new generation  
of native android- and IOS-based mobile care products plus 
many new developments in the community and mental  
health sectors, urgent care and integrated home and  
residential social care.
Advanced Health & Care (AHC) works with providers of care  
in the NHS, local government, social enterprises, and the  
private sector to deliver class-leading clinical and non-clinical IT 
solutions in support of safe, effective and efficient patient care.
 
The pressures arising from an ageing population and finite 
resources are critical issues and technology plays an increasingly 
important part in delivering scalability of care. The provision  
of care nearer the home and the convergence of health and 
social care have become key policy drivers and AHC is at the 
forefront of developing new technology to address this 
developing market. 
Non-NHS providers of care such as social enterprises, and 
private sector businesses are expected to take a larger share  
of the burden of care and AHC’s primary purpose is to provide 
IT solutions in support of these providers. A range of clinical 
and non-clinical solutions helps community care providers to 
reduce costs, increase capacity and improve the quality of care 
delivered to patients by reducing time spent on administration, 
case management, home visit scheduling, referral management 
and many other specialist clinical requirements.
The mobilisation of care workers is an integral part of the 
solution for care in the community, however take-up of new 
technologies and processes is slower than in other commercial 
sectors. AHC is a leader in workforce management in the care 
sector with its unique combination of patient management and 
workforce rostering systems, together with the capability to 
provide highly competitive airtime solutions via Advanced 
Mobile Communications as a single package.
The Group’s strong performance 
is a direct result of its focus  
on delivering products and 
services that are critical to  
its customers’ operations.
Health & Care Strategic report Governance Financials
Advanced Computer Software Group plc 
Annual Report 2014
21
Business Solutions
Public sector
The UK public sector remains under constant pressure to deliver 
efficient and transparent citizen services whilst driving down 
costs and transforming ways of working. These organisations 
are now taking a hybrid approach to software procurement 
which combines on site and Cloud-based applications to 
maximise economic and technological benefits. Advanced has 
responded to this challenge by developing new Cloud-based 
solutions for its enterprise management systems to transform 
the user experience. The latest release of the e5 financial 
management tool, for example, allows approval of expenditure 
to be achieved on the move by accessing the system via an 
application on any mobile device.
Advanced’s position as a leading supplier of large-scale shared 
services solutions to local authorities and health organisations 
was reinforced during the year with the successful completion  
of the Group’s largest ever contract with the Northern Ireland 
Department of Health, Social Services and Public Safety.
Advanced has continued to grow its customer base with modules 
such as its budgeting and forecasting solution Collaborative 
Planning (which can also be deployed across other financial 
management systems such as SAP and Oracle); Business 
Intelligence; and Spend Analytics (targeted at analysing spending 
patterns and facilitating interrogation of procurement policies). 
New public sector customers signed during the year included 
Kings College Hospital NHS Foundation Trust, Buckinghamshire 
and Milton Keynes Fire & Rescue Service, Norfolk County 
Council and East London NHS Foundation Trust.
The acquisition of Compass in January 2014 has immediately 
positioned Advanced as the dominant provider of Management 
Information Systems (MIS) to colleges of further education. 
Compass’ software furthers best practice and compliance with 
the constantly updated rules imposed by the Skills Funding 
Agency. Exceptional service levels have ensured strong 
customer loyalty for the products which provides a valuable 
opportunity for Advanced to work with the user base to 
identify technology needs and thus encourage further 
investment in Group products.
Advanced Business Solutions (ABS) provides business 
management software to both the public and private sectors, 
including accounting and financial management systems 
integrated with a range of collaborative planning, document 
management and business intelligence solutions, which assist 
businesses and organisations to drive growth. 
The acquisitions of Computer Software Holdings (CSH) in 
March 2013 and Compass Computer Consultants (Compass)  
in January 2014 added new products and markets to extend 
and strengthen the division’s portfolio, which now includes 
case management and administration systems for legal firms, 
pupil management information systems for schools, academies 
and higher education establishments, and customer/donor 
relationship management software for charities, membership 
organisations and venues. 
Advanced Business Solutions sits firmly in the middle market  
for software solutions, which has shown great resilience in the 
economic downturn. The division offers a variety of integrated 
business management products designed to address all sectors 
of the market from robust enterprise level systems for local 
authorities, the NHS and large corporates, through to versatile 
and flexible solutions for commercial organisations, legal  
firms and charities. 
Advanced’s unique advantage is its ability to deliver all its 
software products as a complete end-to-end solution either  
as software and service on site or via the Cloud, in collaboration 
with Advanced 365 Managed Services. 22
Advanced Computer Software Group plc 
Annual Report 2014
Operating review continued
365 Managed Services
Advanced 365 is a Cloud services integrator, designing, 
deploying and operating IT services for its customers across  
a broad spectrum of service offerings from the desktop  
to the data centre. Using a combination of Cloud technologies 
Advanced 365 relieves organisations of often unpredictable 
capital expenditure and allows costs to be flexed up and down 
in response to business requirements. 
Supporting Group products, by cross-selling managed services 
to Advanced Business Solutions customers, continued to be  
a major focus during the year, with new contracts signed with  
a number of existing Group customers including Essex County 
Council, Merseyside Fire & Rescue and Supergroup. When 
cross-selling application hosting to Group customers, the 
Advanced 365 proposition is unique, with Advanced owning 
both the application and the hosting platform.
Growth in 2014 came from both the provision of outsourcing 
services to existing Group customers by delivering a quick-to-
deploy hosted solution, and through winning new full 
outsourcing contracts directly. The considerable success  
in new business generation has come from the strength of the 
London-based operation and the breadth of technical ability 
within the Advanced team to deliver a professional solution 
with a personal touch. 
In September 2013, Advanced 365 signed its largest ever 
contract to date. The five-year agreement has a total contract 
value of more than £14m which covers the management of an 
entire IT hybrid Cloud infrastructure for 1,000 users. Advanced 
365 also welcomed new direct managed services customers 
Ignis, Aberdeen Asset Management and Anacap during the year 
and has delivered a leading-edge development project with 
Mitsubishi Electric to enable its customers to control their 
heating and air conditioning systems remotely via tablets, 
smartphones and PCs.
Private sector
In the private sector, Advanced’s business management 
products are instrumental in helping businesses and 
organisations to drive growth and profitability. Advanced’s 
financial management software has been ranked fourth most 
used in the UK by Gartner and was recently named winner  
of the Progress Application Development Challenge for its 
innovative expenses application. New customers for Advanced’s 
business management solutions include the National Trust,  
Baxi Heating UK and TCB, a Swindon-based public house 
operator with a large nationwide estate.
Advanced continues to maintain its market-leading position  
in legal software solutions, outperforming both the UK legal 
technology market and the legal services market across its three 
main business areas of solicitors, barristers and legal forms. 
Growth has come from both existing customers and a 
significant number of new customers seeking to invest in 
technology to gain competitive advantage in a changing legal 
marketplace. Adoption of Cloud and hosting solutions 
continues to gain momentum as more law firms embrace Cloud 
computing with its low cost of ownership and ease of use.
The launch of a new workflow product was an important 
milestone for legal software solutions. Developed in-house  
to meet law firms’ increasing demand for a tool to manage 
efficiency and compliance effectively, the product is expected 
to contribute strongly to growth in the coming year. Other new 
products introduced during the year included modules for 
automatic time capture, KPI dashboard reporting and digital 
signatures – all designed to deliver incremental value to the 
existing customer base and promising future growth. 
Advanced is a leading provider of Customer Relationship 
Management (CRM) solutions to the UK not for profit sector 
and the ticketing and stadium management market. During  
the year more than 40 new customers went live with one  
or more of Advanced’s specific fundraising and donor 
management solutions for small, medium and large charities 
and membership organisations. 
Ticketing and stadium management CRM solutions, ranging 
from a cost-effective, fully hosted box office management 
system to a fully integrated stadium or venue management 
system provided in a hosted environment, also attracted 
significant new business including a contract to provide  
a new ticketing commerce platform for Silverstone Circuits,  
the world famous motor racing circuit. Strategic report Governance Financials
Advanced Computer Software Group plc 
Annual Report 2014
23
Financial review
Revenue
Group turnover for the year increased 68% to £203.2m  
(2013: £120.9m), with 7% organic growth excluding  
the results of Computer Software Holdings’ (CSH).  
Organic growth including CSH was 5%. 
Recurring revenues increased to 64% of the total, up from 
57% in FY13. Software-as-a-Service (SaaS)/subscription
$ 
 
based revenue increased by 49% to £40.9m (2013: £27.5m)  
of total recurring revenue, 19% organically. 
The Group manages its operations by division, primarily based 
on the type of software or service supplied to the customer base.
The Health & Care division, including the acquisition of  
Plain Healthcare in October 2013, grew revenue by 17%,  
of which 13% was organic, to £30.6m (2013: £26.2m) overall, 
with good licence and hosting growth in all areas of the 
business. Recurring revenue increased to 60% of total revenue 
(2013: 59%) and mobile revenue increased 32% on last year.
The Business Solutions division, including the acquisition  
of CSH, grew revenue by 128%, of which organic growth 
excluding CSH was 6%, to £136.4m (2013: £59.9m).  
CSH revenue was flat year-on-year as expected, with growth 
anticipated to return in FY15 following a year of restructuring 
and product investment under Advanced’s ownership. 
Recurring revenue increased to 63% of the total following  
the CSH acquisition, up from 53% in FY13.  
The 365 Managed Services division grew revenue by 5%, of 
which 7% was organic, to £36.6m (2013: £34.7m). Growth 
was slower than expected during the year with the first half  
in particular seeing low services utilisation following corporate 
activity at a major client. The second half of the year saw the 
signing of the division’s largest contract to date contributing  
to better growth in Managed Services recurring revenue, which 
improved by 15% to 70% of total divisional revenue. Significant 
new business was signed in the year which will positively 
impact growth in FY15 as the full year effect of the new 
contracts is reflected in the results.
Guy Millward
Chief Financial Officer
Another year of high growth, strong cash 
generation and increasing revenue visibility 
and predictability. 24
Advanced Computer Software Group plc 
Annual Report 2014
Financial review continued
Finance costs
Net finance costs were £2.5m higher at £3.7m (2013: £1.2m)  
due to the new loan facility taken out to finance the purchase of 
CSH. Barring further acquisitions, future expected finance costs 
should be lower as debt is paid down from future earnings.
Pre-tax profit
Pre-tax profit of £12.1m was £2.9m higher than the previous 
year, reflecting an increase in adjusted EBITDA offset by higher 
depreciation, amortisation of acquired intangible assets, finance 
costs, fees and restructuring expenditure associated with  
the Group’s acquisitions. 
Taxation
The Group reported a tax credit for the year (2013: zero charge) 
as a result of tax relief available from the exercise of share 
options during the year (credit: £1.6m), particularly the 
Management Participation Scheme (MPS) scheme which 
matured in August 2013, and adjustments to deferred tax 
following the change in the UK corporation tax rate (credit  
of £1.6m). The underlying effective rate excluding these 
adjustments is 21% (2013: 23%) which is lower than the 
statutory rate of 23% as a result of additional R&D relief and 
the utilisation of prior year losses. Future years’ tax charges will 
benefit from a further reduction of the rate of UK corporation 
tax from 21% to 20%, enacted in July 2013 and effective  
on 1 April 2015.
The Group has £11.6m (2013: £5.8m) of trading losses of which 
£3.0m (2013: £1.0m) are expected to be utilised against future 
profits. The balance largely relates to losses acquired with the 
COA and CSH groups that are unlikely to be utilised. 
The Group continues to be tax paying with a current year 
charge of £6.3m before prior year adjustments. The effective 
cash tax rate of 52% is significantly higher than the standard 
rate of corporation tax due to the amortisation of consolidated 
intangible fixed assets which is not tax deductible.
Adjusted EBITDA
Group adjusted EBITDA (EBITDA before one-off acquisition and 
restructuring costs, share-based payments and the amortisation 
of acquired intangible assets) rose 68% to £45.3m (2013: 
£27.0m), 10% organically, driven by the revenue growth and 
cost savings made from the CSH acquisition. 
Adjusted EBITDA for Health & Care was up 24% to £8.9m  
(2013: £7.2m), improving the EBITDA margin to 29%.  
The intention to maintain high levels of product investment  
in a demanding market environment will lead to increased  
R&D expenditure in future periods which may dampen  
margin growth in the short term.
Business Solutions’ adjusted EBITDA was up 106% (11% 
organically) to £34.2m (2013: £16.6m), with EBITDA margin 
reducing to 25% (2013: 28%) following the purchase of CSH.  
Future margin growth will be driven by improving licence  
sales following new product investment in FY14 which 
continues into FY15.
365 Managed Services was up 8% to £5.5m (2013: £5.1m), 
with the adjusted EBITDA percentage remaining constant at 
15% (2013: 15%). Margin improvement in this division will 
come from increasing levels of managed services recurring 
revenue and the scaling back of low-margin hardware revenue. 
Pro-forma results
The table below shows the unaudited pro-forma operating 
results of the Group’s divisions as if the results of all the 
acquisitions made during the year had been included from  
1 March 2013. 
Health
& Care
Business
 Solutions
365
 Managed
 Services
Central
 functions
Group
 results
Revenue (£m) 31.4 142.6 36.6 (0.4) 210.2
Adjusted 
EBITDA (£m) 8.9 37.5 5.4 (3.3) 48.5
Adjusted 
EBITDA 
(percentage) 28% 26% 15% – 23% Strategic report Governance Financials
Advanced Computer Software Group plc 
Annual Report 2014
25
Net debt at the completion of the CSH acquisition was  
£62.5m and was reduced to £49.4m at the year end despite 
paying £14.4m for Compass in January 2014, along with 
significant tax, capital expenditure, interest and dividend 
payments during the year. Future earnings and continued 
strong cash conversion should ensure net debt continues  
to reduce in the coming year, barring further acquisitions. 
Capital expenditure and research and development
Capital expenditure of £3.1m includes investment of £1.5m  
in infrastructure to support the growth in the 365 Managed 
Services division and £0.4m of improvements to Group 
properties. Other than these investments and the general 
replacement of existing computer hardware and office 
equipment as it reaches the end of its useful life, the Group 
does not have other capital expenditure requirements which 
will significantly increase expenditure in future periods.
Expenditure on research and development in the year was 
£22.5m (2013: £9.2m) of which £2.4m (2013: £2.1m) was 
capitalised in accordance with IFRS. Amortisation of previously 
capitalised research and development in the year was £1.9m 
(2013: £1.1m). The Group continues to invest heavily in its 
product set and, going forward, expects to increase the 11%  
of revenue it spent on research and development this year.
* Calculated on a like-for-like basis.
** EBITDA before one-off acquisition and restructuring costs, 
share-based payments and amortisation of acquired  
intangible assets. 
***EPS before one-off acquisition and restructuring costs,  
share-based payments, amortisation of acquired intangible  
assets and tax adjustments.
$
 SaaS/subscription revenue relates to Advanced software 
applications on public or private Cloud and management  
of other client applications on the Group’s Cloud platform. 
#
 Cash generated from operating activities as a percentage  
of adjusted EBITA.
The strategic report was approved by the Board of directors 
and authorised for issue on 4 June 2014 and was signed  
on its behalf by: 
Barbara Firth
Director and Company Secretary
4 June 2014 
Earnings per share (EPS) 
The significant increase in shares in issue following the  
maturity of the MPS share option scheme and the issue of 
shares to finance the CSH acquisition has restricted the rate  
of EPS growth notwithstanding the increase in profitability  
for the year. Adjusted EPS (adjusted to exclude one-off 
acquisition and restructuring costs, share-based payments, 
amortisation of acquired intangible assets and the tax effects of 
these adjustments) was up 18% to 6.6p (2013: 5.6p). Basic EPS 
from continuing operations was up 12% to 2.9p (2013: 2.6p). 
Dividend
The Board is recommending a dividend of 0.44p per ordinary 
share, a 10% increase on last year. It remains the Board’s policy 
to consider payment of a dividend in the light of the ongoing 
needs of the business and the Group’s acquisition activities.
Cash flow and net debt/cash
Cash generated from operating activities was £43.2m  
(2013: £26.7m) with the increase on last year driven by 
increased profits and continued strong operating cash 
conversion of 105% (2013: 108%) of adjusted EBITA.
The resulting net debt position as at 28 February 2014  
was £49.4m, compared to a net cash position of £30.9m as at 
28 February 2013, and comprised £25.1m cash (2013: £33.4m), 
£42.5m term loan (2013: £2.5m) and £32.0m revolving credit 
facility (2013: nil).
On 7 March 2013 the Group negotiated a new banking facility 
of £105.0m with HSBC, RBS and Silicon Valley Bank to help 
finance the acquisition of CSH. The facility is structured as a 
£55.0m term loan and a £50.0m revolving credit facility both 
falling due for repayment in September 2016. The interest  
rate on both the term loan and revolving credit facility varies 
between 2.25% and 3% over LIBOR depending on the  
Group’s net debt to EBITDA ratio.
During the year the Group repaid £15m of its term loan  
and £5m of the revolving credit facility. Repayments and 
withdrawals in connection with the revolving credit facility  
were made during the year in accordance with cash  
flow requirements.  26
Advanced Computer Software Group plc 
Annual Report 2014
Governance
Corporate social responsibility statement 27
Board of directors 30
Directors’ report 32
Chairman’s governance report 35
Audit Committee report 38 
Statement from the Chairman  
of the Remuneration Committee 40
Directors’ remuneration report 41
Statement of directors’ responsibilities 44 
 Independent auditor’s report 45
Financials
Consolidated income statement 46
Consolidated statement  
of other comprehensive income 47 
Consolidated balance sheet 48
Consolidated cash flow statement 49
Consolidated statement of changes  
in equity 50 
Notes to the consolidated  
financial statements 51
Company balance sheet 81
Notes to the financial statements  
of the Company 82
Company information 85  Strategic report Governance Financials
Advanced Computer Software Group plc 
Annual Report 2014
27
Save as you earn (SAYE) option scheme
For the fifth consecutive year, the Company offered all  
UK-based employees the opportunity to participate in a 
tax-efficient SAYE scheme, enabling them to purchase shares  
in the Company at a pre-determined discounted price at the 
end of a three-year savings contract. The scheme helps 
employees to identify with the success of the Group and 
encourages them to remain with the Group while their benefits 
mature. At 28 February 2014, more than 50% of the Group’s 
employees were participating in one or more SAYE schemes.
Health and safety
The provision of a safe, healthy and productive work 
environment for all Group employees, contractors and visitors  
is a priority for which all management and employees are  
held accountable. Responsibility is delegated to the managing 
directors of each business unit for ensuring that their business 
complies with Group policies and health and safety legislation. 
Each business unit reviews its own performance on a regular 
basis and any issues are reported to the monthly meeting of  
the management board.
During the year, the Group engaged a firm of health and safety 
specialists, who are leading a review of the Group’s health and 
safety policies and practices to ensure consistency across all 
Group locations. A health and safety administrator has been 
nominated at each location and a Group health and safety 
coordinator has been appointed to liaise with the external 
advisers on a programme of works, including compliance audits 
and training, to provide a day-to-day contact for the health  
and safety administrators and to receive and collate monthly 
reports on health and safety matters.
Each business division is responsible for its own corporate 
responsibility activities at a local level, alongside Group-wide 
initiatives focussed on business conduct and ethics, health and 
safety, the development of talent and environmental impact.
Social responsibilities
Employees
The Group firmly believes in equal opportunities and treats 
potential recruits and employees fairly, regardless of disability, 
race, gender, age, gender orientation or religious and  
political beliefs.
The Group aims to maintain a high level of staff retention by 
providing a positive work environment in which all staff can 
thrive. This is illustrated by (i) recognising and rewarding 
outstanding performance via bonus plans and participation  
in share option schemes; (ii) promoting training and personal 
development; and (iii) ensuring that career success and 
progression within the Group is solely determined by ability  
and achievement.
Employee engagement
Advanced Awareness, a news site for all Advanced employees, 
is updated on a monthly basis and is intended to keep staff 
informed on developments across the Group, from acquisitions, 
new business wins and product launches to charity fundraising 
events and staff news.
Development and training
During the year, the Group’s in-house learning and 
development facility, Advanced University, continued to expand 
in line with the growth of the Company. This structured 
learning environment for professional development is available 
to all Group employees and addresses core competencies as 
well as vital soft skills. Courses are delivered in the Group’s 
offices throughout the UK and online using web conferencing 
technology. The University provides learning opportunities 
across five knowledge domains representing the functional 
areas of personal development, management skills, service 
skills, commercial skills and technology. During the year, 239 
courses were delivered to over 1,200 staff attendees. In 
addition to scheduled courses, management development 
programmes provide additional skills for high potential staff 
across the Group.
Corporate social responsibility statement
Advanced recognises its social, environmental 
and ethical responsibilities and is committed 
to managing its business responsibly and 
with integrity and transparency. 28
Advanced Computer Software Group plc 
Annual Report 2014
Corporate social responsibility statement continued
Environmental initiatives
Since 2006, V1 Limited, the document management software 
company which is part of the Business Solutions division (V1),  
has been planting trees in school grounds and sustainable 
forests throughout the UK. Tree planting forms part of V1’s 
environmental initiative and ties in with the company’s 
development of ‘paperless office’ software. It has planted  
almost 5,000 trees to date. 
Advanced Business Solutions continues to promote  
Carbon Accounting which automatically tracks and budgets 
organisation-wide carbon emissions. The solution, which  
is integrated with Advanced’s OpenAccounts financial 
management system, enables businesses to measure carbon 
emissions quickly and easily and to more effectively budget  
for emissions through integration with the OpenAccounts 
budgeting system.
Environmental awards
In November 2013, V1, in partnership with environmental 
charity, Field Studies Council, won a Green Apple Award.  
The award celebrates how V1’s document management 
solutions have facilitated environmental best practice at Field 
Studies Council. The Green Apple Awards, run by independent 
environment group, The Green Organisation, honour 
companies which demonstrate environmental best practice. 
Ethics
Advanced actively promotes integrity in its dealings with all  
its stakeholders.
The Group promotes high ethical standards in carrying out its 
business activities and has clear guidelines for dealing with 
gifts, hospitality, corruption, fraud and the use of inside 
information. All employees must comply with the laws and 
regulations of the country in which they operate as well as 
Group policies. 
The Group has a whistleblowing procedure which enables any 
employee or third party who feels that the normal reporting 
channels through line management are not appropriate to 
confidentially report any issues around dishonesty, fraud, 
bribery, malpractice, bullying, unfair treatment or unsafe 
working practices. Any such reports are notified to the  
Human Resources Director and are independently investigated 
by senior management who are not connected to the report. 
The outcome of any investigation is reported to the Chairman 
of the Audit Committee.
Charitable donations
The Group supports various local community projects from 
time to time and also contributes financial support to charitable 
organisations. In the year ended 28 February 2014, £0.4m  
of the Chief Executive’s bonus was waived by her and an 
equivalent amount plus the ENIC saved was paid to PS 
Foundation, a registered charity promoting social welfare, 
health and education in disadvantaged areas.
In addition, the Group paid £15,000 to the Prince’s Trust  
for membership of its Technology Leadership Group.
The environment
The Group operates in a business sector that has a low 
environmental impact. However, it recognises the importance  
of its responsibilities to the environment and adheres to 
environmental regulations at all times. The Group has identified 
its principal areas of environmental impact as energy use, paper 
and printing, and travel.
Employees are expected to switch off lights and electronic 
equipment when not in use and business units are encouraged 
to apply for environmental accreditation where appropriate. 
Advanced 365 Limited holds the environmental management 
system accreditation ISO14001: 2004 demonstrating its 
commitment to providing industry-leading IT services to clients 
and delivering cost savings and carbon efficiencies through 
utilising best environmental management practice.
The annual report is produced in the UK by printers accredited 
with the Forest Stewardship Council (FSC) chain of custody.  
All inks are vegetable-based and the paper is fully recyclable 
and biodegradable. Shareholders are encouraged to receive  
the annual report electronically, thereby saving on production 
and distribution resources and costs.
The Group actively participates in the recycling of office waste 
and waste paper and appropriate facilities are provided in all 
offices. Electronic equipment is recycled via WEEE-compliant 
recycling companies. The Company also recycles mobile 
phones, expired batteries and light bulbs which are collected 
and disposed of by authorised recyclers.
The Group recognises that some business travel is necessary  
for the effective management of the business. However, it 
encourages the use of conference calls and video conferencing 
wherever possible and facilitates working from home,  
where appropriate. Strategic report Governance Financials
Advanced Computer Software Group plc 
Annual Report 2014
29
Both Advanced Business Solutions and Advanced 365 are 
registered to the international quality standard, ISO9001: 2008, 
recognising their commitment to managing projects to the 
highest quality standards in order to minimise risks and ensure 
delivery on time.
During the year, Advanced Health & Care was also certified to 
the ISO9001: 2008 accreditation following an independent 
audit. The certification rewards the division’s commitment to 
quality and improved service. It also encourages efficiency and 
time saving processes and provides a framework for continuous 
assessment and improvement. 
Advanced 365 holds the ISO27001: 2013, information security 
management system (ISMS) certification for its business 
activities, including the provision of data centre hosting 
facilities, management of data operations and the provision of 
managed services. The accreditation demonstrates Advanced 
365’s commitment to providing its clients with the very highest 
standards of security in an increasingly demanding and complex 
area of the business environment.
During the year, Advanced Health & Care was also accredited to 
ISO27001: 2013.
The Group is committed to achieving the highest levels of 
customer service and satisfaction in line with delivering high 
quality, reliable products and services. Advanced Health & Care 
provides clinical and back office software and services to 
customers in the healthcare sector and is particularly conscious  
of its responsibility to provide robust solutions that impact  
on the lives and wellbeing of patients and vulnerable people  
requiring care.
Accreditations
The process used to develop the decision support behind 
Advanced Health & Care’s Odyssey range of products is 
accredited by NICE (The National Institute for Health and Care 
Excellence). In the review during the year, the accreditation was 
extended to all products in the Odyssey range covering all 
language variants in all counties where it is deployed. The NICE 
accreditation provides testament to the safety and effectiveness 
of the Odyssey clinical content that is welcomed by patients, 
clinicians and managers of services that use the Odyssey 
decision support software.
For the second consecutive year, Advanced Health & Care has 
achieved 100% compliance at the highest level in the 
Information Governance Statement of Compliance. This 
confirms that the processes for protecting confidential patient 
data are equivalent to the best NHS services in the country and 
allows access to the secure NHS network, which is essential for 
the maintenance of many of the division’s products. All 
employees in Advanced Health & Care are required to pass the 
same mandatory tests in information governance and patient 
confidentiality that are used widely by the NHS before they are 
allowed access to the network. 30
Advanced Computer Software Group plc 
Annual Report 2014
Michael Jackson*
†
Chairman
Michael was appointed Chairman of Advanced in August 2008 
and is also Chairman of the Audit Committee and Nomination 
Committee and a member of the Remuneration Committee.  
He founded Elderstreet Investments Limited in 1990 and is its 
executive Chairman. For the past 30 years he has specialised  
in raising finance for the smaller companies sector. He was 
previously Chairman of FTSE 100 companies, The Sage Group 
plc and PartyGaming plc as well as Computer Software 
Group plc, the business that later became Computer Software 
Holdings. He is a director of many quoted and unquoted 
companies, including Elderstreet portfolio companies.
Guy Millward
Chief Financial Officer
Guy joined the Board as a non-executive director in November 
2012 and on 10 June 2013 was appointed Chief Financial 
Officer. He has spent the majority of his career in the IT 
industry, most recently as Group Finance Director of private 
equity-owned BigHand Limited. Previous roles include Group 
Finance Director of listed companies Kewill plc, Alterian plc  
and Morse plc, and an IT division of GE.
Vin Murria
Chief Executive 
Vin joined Advanced in August 2008 as Chief Executive.  
She has 25 years’ experience of working for private equity-
backed and publicly listed companies focussing on the software 
sector. She was formerly Chief Executive Officer of Computer 
Software Group plc, which she took private in April 2007, 
resulting in a merger and exit at £500m. Her previous roles 
include Chief Operating Officer for Kewill Systems plc, 
Chairman of Leeds Group plc and a non-executive director  
of Concateno plc. Vin is a partner at Elderstreet Capital  
and a non-executive director of Greenko plc and  
Chime Communications plc.
Barbara Firth
Chief Operating Officer, Acquisitions and Integration
Barbara was previously Chief Financial Officer of Computer 
Software Group plc where she worked closely with Vin Murria 
and Michael Jackson until the merger with IRIS Software  
Group Limited in July 2007. Following the merger Barbara  
was Acquisitions Director of the combined group until joining 
Advanced as Chief Financial Officer in September 2009. 
Following the acquisition of Computer Software Holdings in 
March 2013, Barbara was appointed Chief Operating Officer 
with specific responsibility for acquisitions and integration.
Board of directors Strategic report Governance Financials
Advanced Computer Software Group plc 
Annual Report 2014
31
Paul Gibson
Chief Operating Officer, Operations
Paul was appointed to the Board of Advanced in November 
2012, having been Chief Operating Officer since 2010.  
Paul was Finance Director at COA Solutions for eight years 
before its acquisition by Advanced in 2010. Prior to that  
he was European Finance Director of a NASDAQ-listed  
systems integrator and spent seven years with Oracle  
where his final role was as the director responsible for 
establishing its European shared services centre in Dublin.
Mike McGoun*
†
Non-Executive Director
Mike was appointed to the Board in November 2012.  
He chairs the Remuneration Committee and is a member  
of the Audit Committee. He has a wealth of management 
experience within the IT industry. After ten years at IBM,  
Mike co-founded a successful ComputerLand franchise in 1984.  
In 1994 he moved to SkillsGroup plc (now known as QA plc)  
as a main board director with responsibility for corporate 
development. Most recently he was non-executive Chairman  
of Tikit plc, a provider of software, consultancy and services  
to legal and accounting firms in the UK, until its acquisition  
by British Telecom in November 2012.
Dr Chris Hand*
†
Non-Executive Director
Chris was appointed to the Board in December 2013 and  
is a member of the Audit Committee and Remuneration 
Committee. He is Chief Executive Officer of Abingdon Health 
Limited, a director of Bioscience Ventures Limited and Alta 
Bioscience Limited and Chief Executive Officer of Molecular Vision 
Limited. Chris co-founded AIM-listed medical diagnostics company 
Cozart plc and was Chief Executive until 2007 when the company 
was sold to Concateno plc. Chris was a non-executive director of 
Concateno until its sale in 2009 and remained with the company 
as a consultant until June 2010. Prior to founding Cozart, Chris 
was Director of Research for the European base of DPC (now part 
of Siemens Healthcare Solutions).
*Member of Remuneration Committee.
†
 Member of Audit Committee. 32
Advanced Computer Software Group plc 
Annual Report 2014
Principal activities
Advanced is a leading provider of software and IT services for 
organisations in the public, private and not for profit sectors 
delivered through its three divisions: Business Solutions,  
Health & Care, and 365 Managed Services.
Results and dividends
The results for the year are set out in the consolidated income 
statement on page 46. Group profit for the year after provision 
for taxation was £13.1m (2013: £9.1m).
The Board’s dividend policy is to consider payment of  
a dividend in the light of the Group’s working capital 
requirements, the ongoing needs of the business and its 
mergers and acquisitions activities. Accordingly, the directors 
will recommend the payment of a dividend of 0.44p per  
share (2013: 0.4p) to shareholders at the forthcoming annual 
general meeting. 
Acquisitions
During the year, the Group made a number of acquisitions, 
details of which are set out in the strategic report and  
note 11 to the financial statements.
Post balance sheet events
On 31 March 2014, the Group acquired 100% of the ordinary 
share capital of Consultgrp Limited for a net cash consideration 
of £2.4m including shares yet to be issued on the exercise 
of options. 
Research and development
During the year, the Group capitalised £2.4m (2013: £2.1m)  
of development costs relating to internal software development 
in accordance with IAS 38. Other research and development 
costs not meeting the criteria for capitalisation were written  
off during the year.
Financial instruments
The Group uses financial instruments to manage certain types 
of risks including those relating to credit, market, interest rates, 
currency exchange and liquidity. Details of the objectives and 
management of these instruments and an indication of the 
exposure of the Group to such risks are contained in  
note 20 to the financial statements.
Going concern
The financial statements have been prepared on a going 
concern basis as, after making appropriate enquiries, the 
directors have a reasonable expectation that the Group  
has adequate resources to continue to operate for the 
foreseeable future.
Directors and their interests
The table below sets out the beneficial interests in the 
Company’s shares of those persons who were directors  
at the end of the financial year:
Name of director
2014
Number of
ordinary
 shares
2013
Number of
ordinary
shares
Vin Murria,  
Chief Executive 58,521,310 36,550,867
Guy Millward,  
Chief Financial Officer Nil Nil
Barbara Firth, COO,  
Acquisitions and Integration 5,503,342 250,000
Paul Gibson,  
COO, Operations 2,300,000 Nil
Michael Jackson,  
Non-Executive Chairman 1,422,884 736,149
Mike McGoun,  
Non-Executive Director Nil Nil
Chris Hand,  
Non-Executive Director 
(appointed  
12 December 2013) Nil N/a
No changes have taken place in the above interests of the 
directors between 28 February 2014 and 30 May 2014, being 
the latest practicable date prior to publication of this report.
The biographical details of the persons currently serving  
as directors are set out on pages 30 to 31.
In accordance with the Company’s articles of association,  
Chris Hand retires as a director, having been appointed since 
the 2013 annual general meeting, but offers himself for 
re-election. In addition, the Company’s articles require that all 
directors retire at least every three years and that a third of the 
directors retire by rotation. At the next annual general meeting, 
Barbara Firth and Michael Jackson retire by rotation and, being 
eligible, offer themselves for re-election.
Directors’ powers
The directors’ powers are conferred on them by UK legislation 
and by the Company’s articles of association. Further details 
can be found in the Chairman’s governance report on pages  
35 to 37.
Directors’ indemnity arrangements
The Company has purchased and maintained throughout the 
year directors’ and officers’ liability insurance, which gives 
appropriate cover for any legal action brought against the 
directors. The directors also have the benefit of the indemnity 
provision contained in the Company’s articles of association.
Details of directors’ remuneration and service contracts  
are set out in the directors’ remuneration report. 
Directors’ report Strategic report Governance Financials
Advanced Computer Software Group plc 
Annual Report 2014
33
Corporate governance statement
The Company’s compliance with corporate governance  
is disclosed in the Chairman’s governance report  
on pages 35 to 37.
Share capital
Details of the authorised and issued share capital, together with 
details of the movements in the Company’s issued share capital 
during the year, are shown in note 24 to the financial statements.
The Company has one class of ordinary shares which carry  
no right to fixed income. As at 30 May 2014, being the latest 
practicable date prior to publication of this report, the 
Company had issued 477,989,956 fully paid ordinary shares 
of 10p each, which are listed on the Alternative Investment 
Market of the London Stock Exchange. Each ordinary  
share carries the right to one vote at general meetings  
of the Company.
There are no specific restrictions on the size of holding nor on 
the transfer of shares which are both governed by the general 
provisions of the Company’s articles of association and 
prevailing legislation. The directors are not aware of any 
agreements between holders of the Company’s shares that 
may result in restrictions on the transfer of securities  
or voting rights.
No person has any special rights of control over the  
Company’s share capital and all issued shares are fully paid.
Information on employee share schemes is set out  
in note 25 to the financial statements.
Substantial shareholdings
As at 30 May 2014, the Company was aware of the following 
interests in 3% or more of its issued share capital:
Name of fund manager/individual
Percentage
of issued
share capital
M+G Investment Management 14.64
Vin Murria 12.24
Liontrust Asset Management 10.48
Artemis Investment Management 4.99
Hargreave Hale 4.27
NFU Mutual 3.75
Octopus Investments 3.39
JPMorgan Asset Management 3.10
Ruffer 3.02
Authority to purchase own shares
At the Company’s annual general meeting held on  
30 August 2013, shareholders renewed the Company’s 
authority to make market purchases of up to 64,377,826 
ordinary shares. This authority was not used during the year  
or up to the date of this report. At the 2014 annual general 
meeting, shareholders will be asked to renew this authority  
for another year and the directors will once again propose  
a maximum aggregate number of ordinary shares which the 
Company can purchase of less than 15% of the issued ordinary 
share capital. Details are contained in the notice of annual 
general meeting. The Company held no treasury shares during 
the year or up to the date of this report.
Employees
The Group places considerable value on the involvement  
of its employees and keeps them informed on the performance 
of the Group and other matters affecting them as employees.  
This is achieved via formal and informal meetings, email  
and the Company’s website. The Group further promotes the 
involvement of its staff in its business aims and performance  
by linking reward to achievement. Many employees are 
stakeholders in the business through participation in share 
option and Sharesave schemes. 
The Company is an Equal Opportunities employer. Its policy  
is to ensure that no job applicant or employee receives less 
favourable treatment on the grounds of gender, race, disability, 
colour, nationality, ethnic or national origin, marital status, 
sexuality, responsibility for dependents, religion or belief, trade 
union activity or age. Selection criteria and procedures are kept 
under review to ensure that individuals are selected, promoted 
and treated on the basis of their relevant merits and abilities. 
Fair consideration is given to applications for employment from 
disabled people and the retention and retraining, where 
practicable, of employees who become disabled is encouraged.
More information relating to employee engagement  
can be found in the CSR report on pages 27 to 29.
Significant agreements
There are a number of agreements that take effect, alter  
or terminate upon a change of control, such as commercial 
contracts, bank loan agreement and employee share plans.  
The only one of these which is considered to be significant in 
terms of likely impact on the business of the Group as a whole 
is the bank facility (as described in note 20 to the financial 
statements) which requires majority lender consent for any 
change of control. Should such consent not be forthcoming,  
a change of control would trigger a mandatory repayment of 
the entire facility. As at 30 May 2014, £68.5m of the facility 
was outstanding, comprising £42.5m term debt and £26.0m 
revolving credit facility. 34
Advanced Computer Software Group plc 
Annual Report 2014
The directors are not aware of any agreements between  
the Company and its directors or staff that provide for 
compensation for loss of office or employment that occurs 
because of a change of control.
Auditors
The directors confirm that, as at the date this report was 
approved, and so far as each director is aware, there is no 
relevant audit information of which the Group’s auditor is 
unaware and each director has taken all the steps that he/she 
ought to have taken as a director in order to make himself/
herself aware of any relevant audit information and to establish 
that the Group’s auditor is aware of that information.
KPMG LLP have expressed their willingness to continue in office 
as auditor and a resolution to reappoint them and authorise the 
directors to approve their remuneration for the ensuing year will 
be proposed at the forthcoming annual general meeting.
Articles of association
The Company’s articles of association may be amended  
by special resolution of the shareholders. The current  
articles can be found on the Company’s website at  
www.advancedcomputersoftware.com. 
By order of the Board
Barbara Firth
Director and Company Secretary
4 June 2014 
Directors’ report
continued Strategic report Governance Financials
Advanced Computer Software Group plc 
Annual Report 2014
35
Chairman’s governance report
Michael Jackson
Chairman
The following pages comprise  
the Chairman’s governance report 
for the year ended 28 February 2014.
Governance statement
The Board remains committed to maintaining high standards of 
corporate governance and managing the Company in a flexible, 
effective and entrepreneurial manner for the benefit of all its 
stakeholders over the long term. The Company is not subject  
to the UK Corporate Governance Code (the Code). However, 
the Board firmly supports the principles of good corporate 
governance as set out in the Code and complies, so far as it 
feels is appropriate for an AIM-listed company of its size and 
complexity, by adopting the Quoted Company Alliance (QCA) 
Corporate Governance Code for Small and Mid-Size Quoted 
Companies 2013 (the QCA Code) except that:
 > not all of the directors forming the Remuneration and  
Audit Committees may be deemed independent, as defined 
by the QCA Code. The Chairman, Michael Jackson, has links 
with Vin Murria and Barbara Firth through their mutual 
involvement in other companies. All three were previously 
directors of Computer Software Group plc, the business  
that later became Computer Software Holdings and was 
acquired by Advanced in March 2013. Vin Murria is  
a partner of Elderstreet, the investment company founded 
and chaired by Michael Jackson; and
 > the Board does not undertake a formal evaluation of its 
performance, as this is under constant review given its size.
This governance report, together with the directors’ 
remuneration report and Audit Committee report, explains  
how the Company has applied the principles of the QCA Code.
Role of the Board
The role of the Board is to establish the overall vision for the 
Company, provide entrepreneurial leadership to management 
and deliver shareholder value. It determines corporate strategy, 
reviews the Group’s operating and financial performance to 
ensure it is effectively controlled and is the primary decision-
maker for all matters considered to be significant to the  
Group as a whole.
The schedule of matters reserved for approval by the Board, 
which was last reviewed in April 2014, gives it responsibility for:
 > the long term objectives and commercial strategy  
of the Company;
 > the approval of the annual operating and capital  
expenditure budgets;
 > changes to the Group’s capital structure;
 > changes to the Group’s activities;
 > approval of major acquisitions and disposals;
 > corporate governance;
 > approval of treasury policies; and
 > approval of material capital expenditure projects.
The schedule of matters reserved for the Board can be  
viewed on the Company’s website at  
www.advancedcomputersoftware.com
Board appointments
The articles of association of the Company authorise the  
Board to appoint new directors. To ensure a formal and 
appropriate process for appointing new directors, a Nomination 
Committee comprising the whole of the Board was formally set 
up in April 2013. The Committee’s report is set out on page 36 
of this report.
In order to discharge its responsibilities effectively, the Board 
must comprise the right combination of individuals, skills and 
experience. In addition, directors must exhibit independence  
of mind, integrity and the confidence to challenge constructively, 
when appropriate. In the case of non-executive director 
appointments, care is taken to ensure that candidates  
have sufficient time to fulfil their Board and committee 
responsibilities. As part of the appointment process, candidates 
are required to disclose all other time commitments and, 
following appointment, to inform the Board of any changes.
Any directors appointed during the year submit themselves for 
election by shareholders at the next annual general meeting. 
The Company’s articles of association require that directors 
retire and stand for re-election at least once every three years. 36
Advanced Computer Software Group plc 
Annual Report 2014
Board balance and independence
The Board, chaired by Michael Jackson, comprises four 
executive directors and three non-executive directors. This size 
of board allows individuals to communicate easily and freely 
and to exercise their individual skills and experience in the 
decision-making process. Board members have a wide range  
of relevant business and financial experience and knowledge 
which is vital to the success of the Group. During the year,  
a new non-executive director, Dr Chris Hand, was appointed.
As noted above, the Chairman is not considered independent 
as defined by the QCA Code. However, the Board considers  
the two other non-executive directors to be independent  
and is confident that all non-executive directors are of  
sufficient calibre that their views carry appropriate weight  
in any Board discussions.
The Chief Executive and Chairman have clearly defined and 
distinct roles, which are summarised below.
Chairman Chief Executive 
 > Lead and manage  
the Board
 > Provide leadership to the 
executive team in running  
the business
 > Lead the Board’s  
consideration of strategy
 > Develop proposals for the 
Board to consider in all areas 
reserved for its judgement, 
particularly acquisitions
 > Promote the highest  
standards of corporate 
governance
 > Implement agreed  
strategy and all Board 
approved actions
 > Ensure effective  
communication with 
shareholders
 > Lead the communication 
programme with analysts  
and potential investors
Board committees
To assist it in fulfilling its duties, the Board has delegated  
certain of its duties and powers to a number of committees. 
Each of the Audit, Remuneration and Nomination  
Committees has written terms of reference, approved by  
the Board, summarising its objectives, remit and powers.  
These are available to view on the Company’s website at  
www.advancedcomputersoftware.com The terms of 
reference of its various committees were last reviewed by 
the Board in April 2014.
Audit Committee
The Audit Committee report on pages 38 to 39 includes a 
description of the role, composition and activities of the 
committee, which acts on behalf of the Board.
Remuneration Committee
The directors’ remuneration report on pages 41 to 43 includes  
a full description of the role and composition of the committee, 
which acts on behalf of the Board.
Nomination Committee
The Nomination Committee was set up in 2013. It comprises  
all members of the Board and is chaired by the Chairman  
of the Board. Its primary purposes are:
 > to regularly review the structure, size and composition 
(including the skills, knowledge, experience and diversity)  
of the Board and make recommendations with regard  
to any changes;
 > to be responsible for identifying and nominating candidates 
to fill Board vacancies as and when they arise; and
 > before any appointment is made by the Board, to evaluate 
the balance of skills, knowledge, experience and diversity  
on the Board.
During the year, the committee met on two occasions and 
attendance at those meetings is shown in the table below. 
Actions undertaken by the committee in the period  
include the following items:
 > to consider the composition and balance of the Board and 
implement a search to identify an independent candidate 
with suitable experience, culminating in the appointment  
of Chris Hand as a non-executive director; and
 > to consider the proposed appointment of Vin Murria  
as a non-executive director of Chime Communications plc 
and determine whether the proposed appointment would 
give rise to a conflict of interest.
Board and committee meeting attendance
At the beginning of each year, Board and committee meetings 
are scheduled in line with the Company’s annual corporate 
calendar. Additional meetings are arranged as necessary for 
specific purposes.
The table below shows the number of scheduled meetings  
of the Board and Board committee meetings held during the 
year and directors’ actual attendance.
Board
Audit
Committee
Remuneration
Committee
Nomination
Committee
Number of 
meetings held 12 2 10 2
Michael Jackson 12 2 10 2
Vin Murria 12 – – 2
Barbara Firth 12 – – 2
Paul Gibson 12 – – 2
Guy Millward 12 – – 2
Mike McGoun 11 2 10 2
Chris Hand
(appointed  
12 December 2013) 2 – 2 –
Other Board meetings were called at short notice, which  
did not necessarily require full attendance. These related 
principally to the allotment of shares following the exercise  
of share options.
Chairman’s governance report
continued Strategic report Governance Financials
Advanced Computer Software Group plc 
Annual Report 2014
37
Board support
An agenda and supporting papers are distributed in  
a timely manner ahead of each meeting to enable the Board  
or committee to function effectively and to allow directors  
to discharge their responsibilities. Directors are able to make 
further enquiries of the executive directors or management, 
whenever necessary, and have access to the advice and  
services of the Company Secretary. All directors are able  
to take independent professional advice if necessary and  
at the Company’s expense.
Conflicts of interest
Directors have a statutory duty to avoid actual or potential 
conflicts of interest. Procedures are in place to capture the 
disclosure by directors of any situations which may conflict  
with the Company’s interests. All such disclosures are recorded 
and the Board confirms that the procedures have operated 
effectively during the year under review.
No director had a material interest in any contract  
of significance in relation to the Company’s business  
at any time during the year or to the date of this report.
Board protection
In law, directors are ultimately responsible for the Company’s 
actions and business dealings. As a result, they face potentially 
significant personal liability as well as possible fines and other 
penalties. In line with normal market practice, the Company 
believes that it is in its best interests to protect the individuals 
on the Board from the consequences of innocent error  
or omission. 
In accordance with its articles of association, the Company has 
provided indemnities to the directors (to the extent permitted 
by the Companies Act) in respect of liabilities incurred as a 
result of their office. The Company also maintains, at its 
expense, a directors’ and officers’ liability insurance policy  
in respect of those liabilities for which directors may not be 
indemnified. Neither the indemnity nor insurance provides 
cover in the event that the director is proved to have acted 
dishonestly or fraudulently. 
Internal control and risk management
The Board has overall responsibility for ensuring that the  
Group maintains a system of internal control to provide 
it with reasonable assurance regarding effective and efficient 
operations, internal financial control and compliance with laws 
and regulations. The Audit Committee assists the Board in 
discharging its responsibilities in this regard. The Board is not 
aware of any significant failings or weaknesses in the system  
of internal control. The risk management process and system  
of internal control can only manage rather than eliminate risk 
and the Board recognises that this system of internal control 
can only provide reasonable and not absolute assurance  
against material misstatement or loss.
The Group has a clearly defined organisational structure. 
Managers assume responsibility for running day-to-day 
operational activities, with performance regularly reviewed,  
and employees are required to follow procedures and policies 
appropriate to their position within the business.
The Group’s assessment of its principal risks and uncertainties  
is set out on page 18 and 19.
The Board is responsible for identifying, evaluating and 
managing all major business risks facing the Group. To facilitate 
the assessment of risks, monthly reports on non-financial 
matters are compiled by all business units covering such matters 
as sales performance, project progress, compliance, health and 
safety, environment, product quality, customer support metrics 
and human resource issues. 
The Group has a comprehensive system for reporting financial 
results to the Board. Monthly accounts for each business  
unit, with a financial commentary comparing current year 
performance with budget and forecast, together with key 
performance metrics, are prepared in accordance with  
the Group accounting policies and principles for  
Board consideration.
The Board monitors the Group’s funding requirements,  
treasury function and banking facilities and approves capital 
and significant investment expenditure.
The Board considers that there have been no substantial 
weaknesses in internal financial controls that have resulted  
in material loss, contingency or uncertainty which require  
to be disclosed in the accounts. 
On the recommendation of the Audit Committee, the Board 
has determined that a separate internal audit function is not 
appropriate given the size and complexity of the Group,  
but it will continue to review the position at least annually.
Communication with shareholders
The Board attaches great importance to maintaining good 
relationships with the Company’s shareholders. Relations with 
shareholders are managed principally by the Chief Executive 
and Chief Financial Officer. Following the announcement of the 
half year and year end results, a series of formal meetings takes 
place with institutional shareholders which allows the executive 
directors to form relationships with actual and potential 
investors and shareholders to discuss long term issues and 
communicate their views. The Company’s brokers and financial 
PR advisers provide feedback from investor and analyst 
meetings which is communicated to the Board as a whole.
The annual general meeting provides a welcome opportunity 
for the Board to communicate directly with shareholders.
The Company maintains a website at  
www.advancedcomputersoftware.com which contains  
further information on the Group, regulatory announcements 
and financial statements.
Michael Jackson
Chairman
4 June 2014 38
Advanced Computer Software Group plc 
Annual Report 2014
Audit Committee report
Michael Jackson
Audit Committee Chairman
The following pages comprise 
the Audit Committee report for  
the year ended 28 February 2014.
As noted earlier in the Chairman’s governance report, the 
Board delegates certain duties, responsibilities and powers  
to the Audit Committee, so that these can receive suitably 
focussed attention. However, the committee acts on behalf  
of the full Board and the matters reviewed and managed  
by the committee remain the responsibility of the Board  
as a whole.
Role of the Audit Committee
The authorities delegated to the committee from the  
Board are set out in the committee’s terms of reference  
and cover all the matters recommended under the UK 
Corporate Governance Code. The terms of reference  
can be viewed on the Company’s website at  
www.advancedcomputersoftware.com.
The committee’s primary responsibilities are to:
 > monitor the integrity of the financial statements of the 
Group and any formal announcement relating to its financial 
performance, reviewing any significant financial reporting 
issues and judgements which they contain;
 > review the adequacy and effectiveness of the Company’s 
internal financial controls and internal control and risk 
management systems;
 > make recommendations to the Board, to be put to 
shareholders for approval in general meeting, on the 
appointment of the Company’s external auditor and 
approval of their terms of engagement and remuneration;
 > assess annually the independence and objectivity of the 
external auditor and the effectiveness of the audit process, 
taking into account relevant professional and regulatory 
requirements; and
 > develop and implement a policy on the supply of non-audit 
services by the external auditor, taking into account any 
relevant ethical guidance on the matter.
The Audit Committee reports to the Board after each  
Audit Committee meeting, making recommendations to the 
Board where it considers action or improvement is needed.
Composition of the Audit Committee
The members of the Audit Committee are Michael Jackson 
(Chairman), Mike McGoun and Chris Hand, who joined  
the committee following his appointment to the Board in 
December 2013. Guy Millward was a member of the committee 
from his appointment to the Board on 19 November 2012 until 
7 March 2013, when he accepted the role of Chief Financial 
Officer of the Company.
Michael Jackson, who chairs the committee, is a chartered 
accountant and the Board regards Michael as the member 
possessing recent and relevant financial skills. For the past  
30 years he has specialised in raising finance for the smaller 
companies sector. Mike McGoun has a wealth of management 
experience within the IT industry and Chris Hand brings 
experience and knowledge of the healthcare sector to the mix. 
The biographies of all Board members are set out on pages 30 
and 31. The varied backgrounds of the committee’s members 
and their collective skills, experience and knowledge of the 
Company enable them to fulfil the committee’s remit and  
to oversee the Company’s auditors.
Meetings
The Audit Committee meets formally at least twice per year 
and has an agenda linked to the Group’s financial calendar. 
During the year under review, the committee met on two 
occasions and attendance at those meetings is shown  
on page 36.
The Audit Committee invites the Chief Executive, Chief Financial 
Officer and Chief Operating Officers to attend for all or part  
of its meetings, as and when appropriate. The Secretary  
to the committee is Barbara Firth.
Activities of the committee
The committee has an annual work plan developed from  
its terms of reference and linked to the Company’s  
corporate calendar.
Since March 2013, the committee has:
 > reviewed the 2013 annual report and financial statements, 
the 2014 half year review and 2014 annual report and 
financial statements;
 > received reports from the external auditor on their audit  
of the annual report and financial statements and the half 
year review; 
 > considered key accounting policies and judgements, the 
going concern assumption and compliance with relevant 
accounting standards; Strategic report Governance Financials
Advanced Computer Software Group plc 
Annual Report 2014
39
 > reviewed and agreed the scope of the audit work to be 
undertaken by the external auditor;
 > agreed the fees to be paid to the auditor for their audit  
of the 2014 report and accounts and financial statements;
 > monitored the external auditor’s compliance with applicable 
ethical guidance and, in addition, considered their 
independence and objectivity taking into account  
all appropriate guidelines;
 > recommended to the Board the reappointment  
of the external auditor; and
 > reviewed the whistleblowing policy and the policy  
on use of the external auditor.
The committee received a report from management setting 
out the main items of discussion with the external auditor in 
relation to the 2014 audit and the key areas of judgement taken 
by management on each. The significant judgements considered 
by the committee in relation to the 2014 accounts were:
 > revenue recognition 
Revenue is recognised to the extent that it is probable that 
economic benefits will flow to the Group. There is a key area 
of judgement in the timing of this recognition, in particular 
around large contracts and the percentage complete for 
each one at a period end. The Group’s revenue recognition 
policy is as set out in note 3 to the financial statements and 
has been followed consistently throughout the year. The 
committee has concluded that the timing of recognition 
continues to be in line with IFRS requirements and is 
comfortable that the judgements made are appropriate.
 > impairment of intangible assets 
The carrying amounts of the Group’s goodwill and 
acquisition-related assets were reviewed to determine 
whether there was any indication of impairment. The key 
judgement surrounds whether the discounted future cash 
flows of the cash generating units (CGUs) exceed the book 
value of their intangible assets. The committee is satisfied 
that there is considerable headroom between the values in 
use calculated and the values of the intangible assets in the 
books. In addition, the Group’s external market 
capitalisation – a useful comparator for the value of the 
intangibles as the Group is largely made up of acquisitions 
– was considered. At the year end, the market capitalisation 
was, and continues to be, significantly in excess of the assets 
on the balance sheet. The committee concurs with 
management’s assessment that the value in use of the CGUs 
exceeds the carrying value of the goodwill and intangible 
assets and consequently that no goodwill impairment is 
required. Further information on the treatment of intangible 
assets is set out in note 12 to the financial statements on 
page 68.
 > deferred tax 
The key judgement in this area relates to recognition of 
deferred tax assets on future tax benefits available from 
losses and other tax deductible items brought forward from 
prior periods, in this case acquired with acquisitions. A 
deferred tax asset is only recognised where it is likely that tax 
benefits can be utilised in the next three years. Tax benefits 
are not recognised if there is any uncertainty over whether 
the benefits can be utilised.
 > going concern 
In considering going concern, the committee reviewed 
cash flow forecasts for the four years to February 2018 and 
debt covenant forecasts for the same period. The forecasts 
indicated that the Group should comfortably generate 
sufficient cash to pay down and service its debts. 
Consequently, the committee agreed that it was appropriate 
to apply the going concern concept to the preparation of 
the financial statements.
 > purchase price allocation 
When the Group makes an acquisition, it is required  
to separately value all assets acquired. For significant 
acquisitions, the Group uses specialist external valuers. 
The committee considered the report from these valuers  
for the CSH and Compass acquisitions during the year  
and concluded that the valuations shown in the financial 
statements were appropriate.
External auditor
The committee is responsible for managing the Group’s 
relationship with the external auditor, including approving  
the terms of their engagement and monitoring their 
independence, objectivity and compliance with ethical and 
regulatory requirements. A formal external auditor policy, 
which includes details of the non-audit services which the 
external auditor is and is not allowed to provide to the Group, 
together with a policy on the employment of former partners 
and employees of the external auditor, is in place and is 
reviewed annually.
Internal audit function
The committee considers on an annual basis the requirement 
for an internal audit function. Due to the size and complexity  
of the Group, the committee continues to believe that there  
is no requirement for an internal audit function at this time. 
Instead, the Group-level finance function will continue  
to review the financial reporting provided by the subsidiary 
operations. Since last year, the Group-level finance function 
has been expanded and its skills base enhanced.
Conclusion
As a result of its work during the year, the Audit Committee 
considers that it has acted in accordance with its terms of 
reference and has ensured the independence and objectivity  
of the external auditor.
The Chairman of the committee will be available at the annual 
general meeting to answer any questions about the work  
of the committee.
On behalf of the Audit Committee
Michael Jackson
Chairman
4 June 2014 40
Advanced Computer Software Group plc 
Annual Report 2014
Statement from the Chairman of the Remuneration Committee
Mike McGoun
Remuneration Committee Chairman
The following pages comprise the 
directors’ remuneration report for 
the year ended 28 February 2014. 
During the year, the Company has continued to deliver strong 
operational performance underpinned by excellent cash 
generation and a growing pipeline of opportunity for organic 
growth and complementary acquisitions.
This success reflects our greatest asset: our people. Talent 
management is one of the cornerstones of our business 
success, as we seek to recruit and retain talented and 
committed individuals. The main focus of our retention  
strategy is through our culture and shared values. Ensuring  
the Company is able to offer a competitive remuneration  
mix that rewards sustainable performance is key to our  
future success.
Our overall executive remuneration policy is governed by 
two guiding principles – alignment to shareholder interests 
and performance of the Group. The committee considers 
the overall remuneration of the executive directors to be 
appropriate, responsible and balanced. The rewards of the 
Company’s leadership are strongly aligned to shareholder 
interests and the long term and sustained performance  
of the Group.
No changes have been made to the executive remuneration 
policy during the year and none are envisaged for the 
forthcoming year.
A benchmarking review undertaken during the year confirmed 
that directors’ fixed remuneration is set below market median. 
Furthermore, for the fourth consecutive year, there was  
no increase in the basic salary of the executive directors.  
The average salary increase throughout the organisation  
for 2014 was in line with inflation.
On 29 August 2013, our previous long term incentive  
plan, the Management Participation Scheme (MPS), terminated.  
The scheme operated from 2008 to 2013 and rewarded  
Vin Murria and other key executives with a share of the  
increase in shareholder value of the Company, subject  
to an 11% compound total shareholder return hurdle being 
achieved over the initial three years. The business performed 
very strongly over this period and we believe that this was  
in part due to the MPS providing very clear alignment  
between investors and the management team.
When the scheme ended in August 2013, we committed  
to introduce a new long term incentive plan (LTIP) to replace the 
MPS for the executive directors and other key executives from 
that date. We spent some time designing a new scheme to align 
the interests of shareholders and executives in a similar way to 
the MPS. The new plan operates in a similar manner to the MPS 
and will provide participants with a share of the growth in value 
of the business provided key share price targets are achieved. 
Further details are provided in the directors’ remuneration report 
which follows and in note 25 to the accounts.
The Remuneration Committee believes that its remuneration 
policy will enable the Company to continue to motivate  
and retain key individuals and ensure continued alignment  
with shareholder interests. We are happy to discuss any 
remuneration matters with shareholders at any time and hope 
that we can enjoy your support on the remuneration-related 
votes at the forthcoming AGM.
Mike McGoun
Remuneration Committee Chairman
4 June 2014 Strategic report Governance Financials
Advanced Computer Software Group plc 
Annual Report 2014
41
Directors’ remuneration report
This report has been prepared by the Remuneration Committee 
in accordance with the Companies Act 2006 (the Act)  
and also meets the relevant requirements of the AIM Rules.  
A resolution to approve the report will be proposed at the 
annual general meeting of the Company at which the  
financial statements will be approved. 
Remuneration Committee
The Company has an established Remuneration Committee,  
the terms of reference of which are available at  
www.advancedcomputersoftware.com. The members of 
the committee are Mike McGoun (Chairman), Michael Jackson 
and Chris Hand, who joined the committee following his 
appointment to the Board in December 2013. Guy Millward 
resigned as a member of the committee on 7 March 2013, 
when he accepted the role of Chief Financial Officer of the 
Company. The Secretary is Barbara Firth.
The committee is responsible for determining and agreeing 
with the full Board the broad policy for the remuneration  
of the executive directors.
The committee met on ten occasions during the year. Matters 
considered by the committee included:
 > executive directors’ bonus payments for 2013;
 > executive directors’ remuneration for 2014;
 > bonus targets for the executive directors for 2014;
 > amendments to the rules of the Company Share Option 
Scheme (CSOP) and Enterprise Management Incentive (EMI)/
unapproved share option scheme;
 > matters relating to the operation of the Management 
Participation Scheme (MPS); and
 > approval of the new LTIP and the grant of awards.
Remuneration policy for the executive directors
The remuneration policy is designed to support the delivery  
of strong returns to shareholders through the strong and 
appropriate alignment of the interests of shareholders and  
the executive team. The policy is unchanged from that in force 
in recent financial years, which is to remunerate the directors 
appropriately, taking into account the size and growth of the 
Group, and to focus on performance-related remuneration.  
The objective of the policy is to ensure that the executive 
directors are provided with appropriate incentives to encourage 
enhanced performance and are rewarded for their individual 
contributions to the success of the Company in a fair and 
reasonable manner. The remuneration package for the 
executive directors comprises both fixed and variable  
elements and includes the following:
Basic salary
The basic salary of each director is reviewed annually by the 
Remuneration Committee with changes, if any, taking effect  
on 1 March each year. 
Other benefits
In addition to basic salary, each executive director is entitled to 
a range of benefits, or the cash equivalent, including company 
car, permanent health insurance, private health insurance, 
Company pension contributions and life assurance.
Bonus payments
Annual bonuses continue to be a key element in the 
remuneration mix. Each year, the committee determines the 
targets that must be met if a bonus is to be paid. For the year 
under review, the targets were based on the achievement of 
revenue and EBITDA targets and the amount of the bonus paid 
to executive directors has been determined by the committee 
based solely on those targets. The entire bonus was settled 
in cash. The bonus structure will remain the same for the 
coming year.
Long term incentive arrangements
The Company operates long term incentive arrangements  
to align the interests of the executive directors with those  
of shareholders. Further details of these schemes are set  
out below and in note 25 to the financial statements  
on pages 78 to 80.
Non-executive directors
The Board determines the remuneration of the non-executive 
directors within the limits set by the articles of association  
and based on fees paid by similar companies and the skills  
of, and expected time commitment required from, the 
individual concerned. All the current non-executive directors  
are remunerated through payroll. No non-executive director 
participates in the Group’s incentive arrangements  
or pension plans.
Service contracts
The directors’ service contracts and date of appointment  
are summarised in the table below:
Date of
appointment
Notice
period
Executive directors
Vin Murria 29.08.2008 12 months
Barbara Firth 01.09.2009 6 months
Paul Gibson 19.11.2012 6 months
Guy Millward 10.06.2013 6 months
Non-executive directors
Michael Jackson 29.08.2008 12 months
Mike McGoun 19.11.2012 3 months
Chris Hand 12.12.2013 3 months
Shareholding guidelines
There are no requirements for directors to hold shares in the 
Company. However, details of any shares held by the directors 
can be found in the directors’ report on page 32. 42
Advanced Computer Software Group plc 
Annual Report 2014
Directors’ remuneration report
continued
Directors’ remuneration for the year to 28 February 2014
Salary
£’000
Bonus
£’000
Bonus
waived
£’000
Benefits
1
 £’000
Pension
 contributions
 £’000
2014
Total
 remuneration
 £’000
2013 
Total
 remuneration
£’000
Executive directors
Vin Murria
2
290 – 407 – – 697 451
Guy Millward
3
146 64 – – – 210 4
Barbara Firth
4
156 71 – – – 227 238
Paul Gibson
5
160 94 – 19 16 289 93
Non-executive directors
Michael Jackson 35 – – – – 35 25
Mike McGoun 45 – – – – 45 6
Chris Hand
6
4 – – – – 4 –
836 229 407 19 16 1,507 817
1
 Benefits include a combination of company car, life assurance, pension contributions, private health insurance and permanent health insurance.
2
  Vin Murria’s salary includes an amount of £15,000 paid to a person ‘connected with’ her (as defined in the Companies Act 2006) and comprises 
fees for services rendered during the year to Advanced University. Vin Murria waived bonuses totalling £407,000 during the year, including a 
bonus in respect of the acquisition of CSH. The Company agreed to pay an amount equivalent to the bonuses waived plus the ENIC saved to 
PS Foundation, registered charity number 1123570.
3
  Guy Millward was appointed to the Board as a non-executive director on 19 November 2012 and appointed as Chief Financial Officer with effect 
from 10 June 2013.
4
 Barbara Firth’s remuneration reflects a reduced working week.
5
  Paul Gibson is a member of the Group Personal Pension Scheme, a defined contribution scheme. The Company contributes an amount 
equivalent to 10% of his basic salary into the scheme.
6
  Chris Hand was appointed to the Board as a non-executive director on 12 December 2013 and the above reflects his remuneration from  
that date.
Long term incentive arrangements
In 2008 and 2010, the Company granted Management Participation Shares (MPS) to certain directors and key executives to align 
their interests with those of shareholders. The scheme entitled the counterparty to receive a fixed percentage of any increase  
in shareholder value from the commencement of the scheme, calculated on exercise or at termination of the scheme, whichever 
was earlier. The calculated percentage of any increase in value was settled by the issue of shares in the Company at the market 
price on the date of exercise or termination of the scheme, as applicable.
The scheme was subject to a vesting condition which required the Company’s share price to exceed an 11% compound growth 
rate measured over the three-year period from 29 August 2008 to 29 August 2011. The vesting condition was determined  
to have been achieved on 5 October 2011 and the scheme vested accordingly on that date.
During the year, directors exercised their MPS options and the following shares were issued to satisfy awards:
Name of director
Total number
of shares 
issued in
 settlement of
MPS award
Vin Murria 21,940,193
Barbara Firth 6,232,342
Paul Gibson 4,040,750
Michael Jackson 3,036,735
The MPS scheme terminated on 29 August 2013 and no further awards remain to be settled under the scheme. Strategic report Governance Financials
Advanced Computer Software Group plc 
Annual Report 2014
43
On 25 February 2014, the Remuneration Committee approved a new long term incentive plan (LTIP). The scheme is open  
to all senior employees and awards may be subject to performance criteria. On the same date, the committee granted the 
following nil cost awards under the LTIP to executive directors:
Name of director
Maximum 
number
of shares
subject
to option Performance period Exercise period
Vin Murria 16 million 1 September 2013 to 31 August 2016 31 August 2016 to 31 August 2018
Guy Millward 4 million 1 September 2013 to 31 August 2016 31 August 2016 to 31 August 2018
Paul Gibson 4 million 1 September 2013 to 31 August 2016 31 August 2016 to 31 August 2018
Barbara Firth 2.4 million* 1 September 2013 to 31 August 2016 31 August 2016 to 31 August 2018
*
 Award reflects a reduced working week.
The proportion of shares that can be acquired on exercise is subject to the Company’s share price reaching the following target 
values, measured as the volume weighted average share price over any 30-day period in the performance period to 31 August 2016:
Proportion of the maximum number of shares  
subject to the option which shall vest
The highest volume weighted average 
30-day share price at any time 
during the performance period
Nil Below £1.20
One-third £1.20 or more but less than £1.32
Two-thirds £1.32 or more but less than £1.50
100% £1.50 or more
The awards expire on 31 August 2018 and normal good leaver/bad leaver conditions apply.
SAYE options
During the year, Michael Jackson continued to contribute £250 per month into the Company’s Save As You Earn (SAYE) scheme. 
On 14 March 2013, Vin Murria and Barbara Firth exercised their respective 2010 SAYE options to purchase 30,250 ordinary shares 
in the Company at an exercise price of 30p per share. On 28 November 2013, Vin Murria and Barbara Firth agreed to contribute 
£250 per month into a new SAYE scheme. As a result, at the year end, the directors held options over the following shares. 
Name of director Date of grant
Number of
shares over
which options
held at
28 February
2014
Option price
(£) Maturity date
Vin Murria 28.11.2013 961 0.78 01.01.2017
Barbara Firth 28.11.2013 961 0.78 01.01.2017
Michael Jackson 07.12.2011 17,307 0.39 01.01.2015
On behalf of the Remuneration Committee
Mike McGoun
Chairman
4 June 2014 44
Advanced Computer Software Group plc 
Annual Report 2014
Statement of directors’ responsibilities
The directors are responsible for preparing the strategic report, 
the directors’ report and the Group and Parent Company 
financial statements in accordance with applicable law  
and regulations. 
Company law requires the directors to prepare Group and 
Parent Company financial statements for each financial year.  
As required by the AIM Rules of the London Stock Exchange, 
they are required to prepare the Group financial statements  
in accordance with IFRSs as adopted by the EU and applicable 
law and have elected to prepare the Parent Company financial 
statements in accordance with UK Accounting Standards and 
applicable law (UK Generally Accepted Accounting Practice).
Under company law, the directors must not approve the 
financial statements unless they are satisfied that they give  
a true and fair view of the state of affairs of the Group and 
Parent Company and of their profit or loss for that period.  
In preparing each of the Group and Parent Company financial 
statements, the directors are required to: 
 > select suitable accounting policies and then apply them 
consistently; 
 > make judgements and estimates that are reasonable  
and prudent; 
 > for the Group financial statements, state whether they  
have been prepared in accordance with IFRSs as adopted  
by the EU; 
 > for the Parent Company financial statements, state whether 
applicable UK accounting standards have been followed, 
subject to any material departures disclosed and explained  
in the financial statements; and 
 > prepare the financial statements on the going concern basis 
unless it is inappropriate to presume that the Group and the 
Parent Company will continue in business.
The directors are responsible for keeping adequate accounting 
records that are sufficient to show and explain the Parent 
Company’s transactions and disclose with reasonable accuracy 
at any time the financial position of the Parent Company and 
enable them to ensure that its financial statements comply with 
the Companies Act 2006. They have general responsibility for 
taking such steps as are reasonably open to them to safeguard 
the assets of the Group and to prevent and detect fraud and 
other irregularities.
The directors are responsible for the maintenance and integrity 
of the corporate and financial information included on the 
Company’s website. Legislation in the UK governing the 
preparation and dissemination of financial statements may 
differ from legislation in other jurisdictions. Strategic report Governance Financials
Advanced Computer Software Group plc 
Annual Report 2014
45
Independent auditor’s report
to the members of Advanced Computer Software Group plc
We have audited the financial statements of Advanced 
Computer Software Group plc for the year ended 28 February 
2014 set out on pages 46 to 84. The financial reporting 
framework that has been applied in the preparation of the 
Group financial statements is applicable law and International 
Financial Reporting Standards (IFRSs) as adopted by the EU. 
The financial reporting framework that has been applied in 
the preparation of the Parent Company financial statements 
is applicable law and UK accounting standards (UK Generally 
Accepted Accounting Practice). 
This report is made solely to the Company’s members,  
as a body, in accordance with Chapter 3 of Part 16 of the 
Companies Act 2006. Our audit work has been undertaken so 
that we might state to the Company’s members those matters 
we are required to state to them in an auditor’s report and for 
no other purpose. To the fullest extent permitted by law, we do 
not accept or assume responsibility to anyone other than the 
Company and the Company’s members, as a body, for our 
audit work, for this report, or for the opinions we have formed. 
Respective responsibilities of directors and auditor 
As explained more fully in the statement of the directors’ 
responsibilities set out on page 44, the directors are responsible 
for the preparation of the financial statements and for being 
satisfied that they give a true and fair view. Our responsibility 
is to audit, and express an opinion on, the financial statements 
in accordance with applicable law and International Standards 
on Auditing (UK and Ireland). Those standards require us to 
comply with the Auditing Practices Board’s Ethical Standards 
for Auditors. 
Scope of the audit of the financial statements 
A description of the scope of an audit of financial statements 
is provided on the Financial Reporting Council’s website at 
www.frc.org.uk/auditscopeukprivate.
Opinion on financial statements 
In our opinion: 
 > the financial statements give a true and fair view of the state 
of the Group’s and of the Parent Company’s affairs as at 
28 February 2014 and of the Group’s profit for the year then 
ended; 
 > the Group financial statements have been properly prepared 
in accordance with IFRSs as adopted by the EU; 
 > the Parent Company financial statements have been properly 
prepared in accordance with UK Generally Accepted 
Accounting Practice; 
 > the financial statements have been prepared in accordance 
with the requirements of the Companies Act 2006.
Opinion on other matters prescribed by the Companies 
Act 2006 
In our opinion, the information given in the strategic report 
and the directors’ report for the financial year for which the 
financial statements are prepared is consistent with the 
financial statements. 
Matters on which we are required to report by exception 
We have nothing to report in respect of the following matters 
where the Companies Act 2006 requires us to report to you if, 
in our opinion: 
 > adequate accounting records have not been kept by the 
Parent Company, or returns adequate for our audit have not 
been received from branches not visited by us; or 
 > the Parent Company financial statements are not in 
agreement with the accounting records and returns; or 
 > certain disclosures of directors’ remuneration specified by 
law are not made; or 
 > we have not received all the information and explanations 
we require for our audit. 
Paul Gresham 
(Senior Statutory Auditor) 
for and on behalf of KPMG LLP, Statutory Auditor 
Chartered Accountants 
Arlington Business Park
Theale
Reading
Berkshire RG7 4SD
United Kingdom
4 June 2014 46
Advanced Computer Software Group plc 
Annual Report 2014
Consolidated income statement
for the year ended 28 February 2014
Notes
2014 
£’000
2013 
£’000
Revenue 4,5 203,154 120,914
Operating expenditure 6,8 (187,383) (110,526)
Adjusted EBITDA 45,282 27,001
One-off acquisition and restructuring costs (1,989) (485)
Share-based payments (IFRS 2) 8,25 (1,122) (1,246)
Depreciation 13 (3,095) (1,697)
Amortisation of acquired intangible assets (IFRS 3) 6,12 (23,305) (13,185)
Profit from operations 5,6 15,771 10,388
Finance income 7 49 51
Finance costs 7 (3,764) (1,276)
Profit before taxation 12,056 9,163
Taxation 9 1,056 (31)
Profit for the year 13,112 9,132
Earnings per share
Basic (pence) 10 2.9 2.6
Diluted (pence) 10 2.7 2.2
 
The notes on pages 51 to 80 form part of these financial statements. Strategic report Governance Financials
Advanced Computer Software Group plc 
Annual Report 2014
47
 
2014 
£’000 
2013 
£’000 
Items that will or may be classified subsequently to profit or loss
Foreign exchange translation differences (150) (50)
Net loss recognised directly in equity (150) (50)
Profit for the year 13,112 9,132
Total comprehensive income for the year 12,962 9,082
Attributable to:
Equity shareholders 12,962 9,082
The notes on pages 51 to 80 form part of these financial statements.
Consolidated statement of other comprehensive income
for the year ended 28 February 2014 48
Advanced Computer Software Group plc 
Annual Report 2014
 Notes
2014 
£’000
 2013 
£’000
Non-current assets
Intangible assets 12 269,868 135,249
Property, plant and equipment 13 8,596 5,937
Investment 520 520
Total non-current assets 278,984 141,706
Current assets 
Inventories 14 2,692 2,892
Trade and other receivables 15 57,237 36,825
Cash and cash equivalents 16 25,098 33,419
Total current assets 85,027 73,136
Non-current deferred tax asset 18 4,043 3,432
Total assets 368, 054 218,274
Current liabilities 
Trade and other payables 17 (35,048) (22,060)
Deferred income (65,551) (38,936)
Corporation tax (1,521) (1,448)
Loans and borrowings 20 (12,182) (2,707)
Total current liabilities (114,302) (65,151)
Non-current liabilities
Deferred tax 18 (21,355) (11,645)
Provisions 19 (2,967) (1,830)
Loans and borrowings 20 (61,609) (533)
Total non-current liabilities (85,931) (14,008)
Total liabilities (200,233) (79,159)
Net assets 167,821 139,115
Equity
Share capital 24 47,696 40,904
Share premium 24 72,615 58,364
Merger reserve 24 7,826 7,826
Foreign exchange reserve 24 (239) (89)
Share trust reserve 24 – (1,777)
Retained earnings 24 39,923 33,887
Total equity attributable to equity holders of the Company 167,821 139,115
The notes on pages 51 to 80 form part of these financial statements. These financial statements were approved  
by the Board of directors and authorised for issue on 4 June 2014 and were signed on its behalf by:
Guy Millward
Director
Company number 5965280
Consolidated balance sheet
as at 28 February 2014 Strategic report Governance Financials
Advanced Computer Software Group plc 
Annual Report 2014
49
 Notes
2014
£’000
 2013
£’000
Cash flows from operating activities 
Profit for the year 13,112 9,132
Adjustments for: 
Depreciation 13 3,095 1,697
Amortisation of intangible assets 12 25,164 14,255
Acquisition costs 11 1,040 –
Share-based payment – IFRS 2 25 1,122 1,246
Net finance costs 7 3,715 1,225
Tax (credit)/charge 9 (1,056) 31
Operating cash flows before movement in working capital 46,192 27,586
Increase in trade and other payables 2,490 2,814
Increase in trade and other receivables (5,588) (3,507)
Decrease/(increase) in inventories 93 (176)
Cash generated from operating activities 43,187 26,717
Corporation tax paid (5,500) (4,840)
Net cash inflow from operating activities 37,687 21,877
Cash flows from investing activities 
Acquisition of subsidiaries (net of cash acquired) 11 (122,551) (14,686)
Development expenditure capitalised (2,369) (2,056)
Acquisition of property, plant and equipment (3,049) (2,708)
Cash outflow from investing activities (127,969) (19,450)
Cash flows from financing activities 
Proceeds from issue of new shares 16,685 30,177
Proceeds from new loan 90,163 –
Repayment of borrowings (20,000) (7,500)
Equity dividend payment (1,883) –
Finance costs (3,004) (633)
Cash inflow from financing activities 81,961 22,044
Change in cash and cash equivalents (8,321) 24,471
Cash and cash equivalents at beginning of the year 33,419 8,948
Cash and cash equivalents at the end of the year 25,098 33,419
The notes on pages 51 to 80 form part of these financial statements.
Consolidated cash flow statement
for the year ended 28 February 2014 50
Advanced Computer Software Group plc 
Annual Report 2014
 
Ordinary
share capital
£’000
Share
premium
£’000
Merger
reserve
£’000
Share trust
reserve
£’000
Revaluation
reserve
£’000
Retained
earnings
£’000
Total
£’000
Balance at 28 February 2013 40,904 58,364 7,826 (1,777) (89) 33,887 139,115
Total comprehensive  
income for the year – – – – (150) 13,112 12,962
Transactions with the owners:  
Issue of ordinary shares 1,935 13,548 – – – – 15,483
Share options exercised 499 1,090 – – – – 1,589
MPS options exercised 4,358 – – – – (4,358) –
Cost of issuing share capital – (387) – – – – (387)
Transfer of shares held in EBT – – – 1,777 – (1,777) –
Deferred tax asset  
on share-based payment – – – – – (180) (180)
Share-based payment – – – – – 1,122 1,122
Equity dividend payment – – – – – (1,883) (1,883)
Balance at 28 February 2014 47,696 72,615 7,826 – (239) 39,923 167,821
 
Ordinary
share capital
 £’000
Share
 premium
 £’000
Merger
reserve
£’000
Share trust
reserve
£’000
Revaluation
reserve
£’000
Retained
earnings
£’000
Total
£’000
Balance at 29 February 2012 35,616 33,498 7,826 (1,777) (39) 23,108 98,232
Total comprehensive  
income for the year – – – – (50) 9,132 9,082
Transactions with the owners:  
Issue of ordinary shares 3,564 24,952 – – – – 28,516
Share options exercised 1,724 704 – – – – 2,428
Cost of issuing share capital – (790) – – – – (790)
Deferred tax asset  
on share-based payment – – – – – 401 401
Share-based payment – – – – – 1,246 1,246
Balance at 28 February 2013 40,904 58,364 7,826 (1,777) (89) 33,887 139,115
The notes on pages 51 to 80 form part of these financial statements.
Consolidated statement of changes in equity Strategic report Governance Financials
Advanced Computer Software Group plc 
Annual Report 2014
51
1 General information
Advanced Computer Software Group plc (AIM: ASW, ‘Advanced’, ‘the Company’ or ‘the Group’), a leading provider of software 
and IT services to the healthcare, public and private sectors, is a limited liability company listed on AIM (a market of the London 
Stock Exchange). The Company’s registered address is Munro House, Portsmouth Road, Cobham, Surrey KT11 1TF and the 
Company’s registration number is 5965280.
The Group financial statements consolidate those of the Company and its subsidiaries (together referred to as the ‘Group’). 
The Company financial statements present information about the Company as a separate entity and not about its Group.
The consolidated financial statements have been prepared in accordance with International Financial Reporting Standards (IFRSs)  
as adopted by the European Union. The Company has elected to prepare its Company financial statements in accordance with  
UK GAAP. The Company’s subsidiaries’ accounts are prepared in accordance with UK GAAP. The principal accounting policies used 
in preparing the financial statements are detailed in note 3.
2 Basis of preparation
Measurement convention
The financial statements are prepared on the historical cost basis.
Subsidiary basis of consolidation
Subsidiaries are entities controlled by the Group. Control exists when the Group has the power, directly or indirectly, to govern  
the financial and operating policies of an entity so as to obtain benefits from its activities. In assessing control, potential voting 
rights that are currently exercisable or convertible are taken into account. The financial statements of subsidiaries are included  
in the consolidated financial statements from the date that control commences until the date that control ceases.
Functional and presentation currency
The Group presentation currency is sterling which is the financial currency of the Company. All financial information presented in 
sterling has been rounded to the nearest thousand.
Going concern 
On 7 March 2013 the Group negotiated a banking facility of £105.0m, with HSBC, RBS and Silicon Valley Bank. The facility  
is structured as a £55.0m term loan and £50.0m revolving credit facility both falling due for repayment in September 2016.
The interest rate on both the term loan and revolving credit facility varies between 2.25% and 3% over LIBOR depending  
on the Group’s net debt to EBITDA ratio.
In May 2013, an agreement was reached with Royal Bank of Scotland to hedge two-thirds of the term debt for the period  
of the loan by way of a cap on LIBOR of 1%.
The Group’s forecasts and projections, taking account of reasonably possible changes in trading performance, show that the 
Group will continue to operate within the level of these facilities.
The directors are confident that the Group will continue meeting its financial covenants and has adequate resources to continue  
in operational existence for the foreseeable future and therefore they continue to adopt the going concern basis in preparing  
the annual financial statements.
3 Significant accounting policies 
The accounting policies adopted in the preparation of the financial statements are consistent with those followed in preparation  
of the Group’s annual financial statements for the year ended 28 February 2013.
Certain new standards, amendments and interpretations to existing standards have been published that are mandatory for the 
Group’s accounting periods beginning on or after 1 March 2013 and these have been adopted in the financial statements. None of 
these standards had an impact on the current or prior year results or financial position of the Group, therefore no further 
disclosure is given.
Notes to the consolidated financial statements 52
Advanced Computer Software Group plc 
Annual Report 2014
3 Significant accounting policies continued 
IAS 1 Presentation of items of other comprehensive income – amendments to IAS 1
As a result of the amendments to IAS 1, the Group has modified the presentation of items in its consolidated statement of other 
comprehensive income to present separately items that would be classified to profit and loss in the future from those that would 
never be. Comparative information has also been re-presented. The amendment affected presentation only and had no impact  
on the Group’s financial position or performance.
IFRS 7 Financial instruments: disclosure – offsetting financial assets and financial liabilities – amendment to IFRS 7
The amendment requires an entity to disclose information about rights to set off financial instruments and related arrangements 
(e.g. collateral agreements). The new disclosures are required for all recognised financial instruments that are set off in accordance 
with IAS 32. The disclosures also apply to recognised financial instruments that are subject to an enforceable master netting 
arrangement or similar agreement, irrespective of whether the financial instruments are set off in accordance with IAS 32.  
The amendment had no impact on the Group’s financial position or performance.
IFRS 13 Fair value measurement
IFRS 13 establishes a single source of guidance under IFRS for all fair value measurements. IFRS 13 does not change when an entity 
is required to use fair value, but rather provided guidance on how to measure fair value under IFRS when fair value is required  
or permitted. IFRS 13 also requires specific disclosures on fair values, some of which replace existing disclosure requirements in 
other standards, including IFRS 7 Financial Instruments: Disclosures. In accordance with the transitional provision of IFRS 13, the 
Group has applied the new fair value measurement guidance prospectively and has not provided any comparative information for 
the new disclosure.
Improvements to IFRS – 2009-2011 Cycle issued May 2012
The International Accounting Standards Board issued an omnibus of amendments to its standards, primarily with a view to 
removing inconsistencies and clarifying wording. The adoption of these amendments did not have any impact on the financial 
position or performance of the Group.
Property, plant and equipment
Property, plant and equipment are stated at cost less accumulated depreciation and impairment losses. Where parts of an item  
of property, plant and equipment have different useful lives, they are accounted for as separate items of property, plant and 
equipment.
Depreciation
Depreciation is charged to the income statement on a straight-line basis over the estimated useful lives of each part of an item  
of property, plant and equipment. The depreciation policies for each class of asset are as follows:
Leasehold improvements – over the period of the lease
Office equipment and furniture – 20% to 33 1⁄3% straight-line
Computer equipment – 20% to 25% straight-line
Land and buildings – 2% straight-line
Depreciation methods, useful lives and residual values are reviewed at each reporting date.
Intangibles
Goodwill
Goodwill arising on the acquisition of an entity represents the excess of the consideration over the fair value of tangible and 
intangible assets acquired. The carrying value of goodwill is reviewed at each reporting date, with any impairment charged  
to the income statement.
Research and development
Development activities involve a plan or design for the production of new or substantially improved computer software. 
Development expenditure is capitalised only if development costs can be measured reliably, the software program is technically 
and commercially feasible, future economic benefits are probable, and the Group has sufficient resources available to complete 
development and to use, lease or sell the asset. The expenditure capitalised includes only the cost of gross direct labour that  
is directly attributable to preparing the asset for its intended use or third-party costs incurred directly on the development  
activities above. 
Capitalised development expenditure is measured at cost less accumulated amortisation and accumulated impairment losses. 
Other research and development expenditure not meeting the above criteria is recognised in the income statement as incurred.
Notes to the consolidated financial statements
continued Strategic report Governance Financials
Advanced Computer Software Group plc 
Annual Report 2014
53
3 Significant accounting policies continued 
Intangibles continued
Acquired intangible assets
Following business combinations (see note 11) the assets acquired are classified into tangible and intangible assets and fair values 
applied using the principles of IFRS 3. This leads to the creation of intangible assets recognised on the consolidated balance sheet 
which are amortised over their estimated useful lives. The assets typically recognised are:
 > Brand name
 > Customer contracts and relationships
 > Technology assets
 > Contractual arrangements
 > In-progress research and development
Amortisation
Amortisation is recognised in the income statement within administrative costs on a straight-line basis over the estimated useful 
lives of intangible assets, other than goodwill, from the date they are available for use. The estimated useful lives for each period 
are different depending on the profile of the acquisition. 
The amortisation policy for each class of intangible asset is as follows:
 > capitalised development costs are amortised over the period from the date the development generates revenue.  
This period is estimated by management as between four and eight years;
 > brand names recognised on acquisition are amortised over a period of four to five years;
 > technology assets recognised on acquisition are amortised over a period of four to five years;
 > customer contracts and relationships recognised on acquisition are amortised over a period of one to ten years, based  
on the useful life of the contract or relationship. Customer pipelines and backlog are amortised over one year;
 > contractual arrangements recognised on acquisition are amortised over a period of one to ten years, based on the useful life  
of the contract. 
Impairment of intangibles and property, plant and equipment
The carrying amounts of the Group’s assets are reviewed at each balance sheet date to determine whether there is any indication 
of impairment. If any such indication exists, the assets’ recoverable amount is estimated.
An impairment loss is recognised whenever the carrying amount of an asset, or its cash-generating unit, exceeds its recoverable 
amount. Impairment losses are recognised in the income statement.
Calculation of recoverable amount
The recoverable amount of assets is the greater of their net selling price and value in use. In assessing value in use, the estimated 
future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments  
of the time value of money and the risks specific to the asset. For an asset that does not generate largely independent cash 
inflows, the recoverable amount is determined for the cash-generating unit to which the asset belongs. Impairments of goodwill 
are never reversed.
Inventories
Finished goods
Finished goods are stated at the lower of cost and net realisable value. Cost is based on the first-in first-out principle and includes 
expenditure incurred in acquiring the inventories and bringing them to their existing location and condition. Net realisable value  
is the estimated selling price in the ordinary course of business, less the estimated costs of completion and selling expenses.
Work in progress
Work in progress is recognised using the percentage of completion method. 54
Advanced Computer Software Group plc 
Annual Report 2014
3 Significant accounting policies continued 
Financial instruments
The Group’s financial instruments comprise cash and various items such as trade receivables and trade payables that arise directly 
from its operations. Finance payments associated with financial liabilities are dealt with as part of finance expenses.
Financial assets
The Group’s financial assets are loans and receivables. These assets are non-derivative financial assets with fixed or determinable 
payments that are not quoted in an active market. They arise principally through the provision of services to customers (trade 
receivables), but also incorporate other types of contractual monetary assets, such as deposits on rental property and prepayments, 
which are contractually recoverable. They are initially recognised at fair value and subsequently carried at amortised cost. Unless 
otherwise indicated, the carrying amounts of the Group’s financial assets are a reasonable approximation of their fair values. 
Certain balances in the financial assets have been reclassified for improved presentation in the disclosures to the accounts.
Financial liabilities
The Group’s financial liabilities are trade payables and other financial liabilities. These liabilities are initially recognised at fair value 
and subsequently measured at amortised cost using the effective interest rate method. Unless otherwise indicated, the carrying 
amounts of the Group’s financial liabilities are a reasonable approximation of their fair values. 
Share capital
Financial instruments issued by the Group are treated as equity only to the extent that they do not meet the definition  
of a financial liability. The Group’s ordinary shares are classified as equity instruments.
Further information on the Group’s financial instruments can be found in note 20.
Cash and cash equivalents
Cash and cash equivalents comprise cash at bank and in hand, call deposits and short-term deposits with a maturity of less than 
three months. Bank overdrafts are repayable on demand and form an integral part of the Group’s cash management strategy. 
Leased assets
Leases where the Group assumes substantially all the risks and rewards of ownership are classified as finance leases. Upon initial 
recognition, the leased asset is measured at an amount equal to the lower of its fair value and the present value of the minimum 
lease payments. Subsequent to initial recognition, the asset is accounted for in accordance with the accounting policy applicable  
to that asset. Other leases are operating leases.
Operating lease payments
Payments made under operating leases are recognised in the income statement on a straight-line basis over the term of the lease. 
Lease incentives received are recognised in the income statement as an integral part of the total lease expense.
Foreign currency transactions
Transactions in foreign currencies are translated at the foreign exchange rate ruling at the date of the transaction. Monetary assets 
and liabilities denominated in foreign currencies at the balance sheet date are translated at the foreign exchange rate ruling at that 
date. Foreign exchange differences arising on translation are recognised in the income statement. Non-monetary assets and 
liabilities that are measured in terms of historical cost in a foreign currency are translated using the exchange rate at the date  
of the transaction.
The assets and liabilities of foreign operations, including goodwill and fair value adjustments arising on consolidation, are 
translated to the Group’s presentational currency, sterling, at foreign exchange rates ruling at the balance sheet date. The revenues 
and expenses of foreign operations are translated at an average rate for the year, where this rate approximates to the foreign 
exchange rates ruling at the dates of the transactions.
Exchange differences arising from the translation of foreign operations are taken directly to the exchange revaluation reserve  
and are released into the income statement upon disposal of the foreign operation in due course.
Notes to the consolidated financial statements
continued Strategic report Governance Financials
Advanced Computer Software Group plc 
Annual Report 2014
55
3 Significant accounting policies continued 
Revenue recognition
The Group’s revenues are derived from the sale of software product licences, the associated consultancy services, hardware, 
maintenance, managed services and supplies of third-party software. All revenue is reported exclusive of value-added tax.
The Group will only recognise revenue when:
 > persuasive evidence of an arrangement exists. This is typically a signed contract or customer purchase order;
 > the price to the customer is fixed or determinable;
 > delivery has occurred; and
 > collectability is reasonably assured and there are no material outstanding conditions or contingencies attaching to the receipt  
of monies due.
The Group recognises revenue on each element of a contract as follows:
 > software product licence – revenue is recognised when risks and rewards have passed to the customer and there is no 
significant ongoing obligation on the Group. Where software is sold as part of a bundled arrangement, the Group allocates 
revenue to each component based on its fair value or, where a contractual component involves significant modification or 
customisation of software, revenue allocated to that component is recognised using the percentage of completion method;
 > hardware – revenue is recognised on delivery of the goods;
 > consultancy services (including training) – the Group performs a number of professional services for its customers. These can 
include implementation and configuration of the software and training of the customer’s staff. Revenue is recognised as the 
services are performed;
 > product maintenance – the Group provides software updates to its customers as part of the ongoing maintenance contract. 
Revenue is recognised rateably over the duration of the contract;
 > managed services – where the Group provides hosting services, revenue is recognised rateably over the duration of the 
contract; and
 > airtime – the Group recognises revenue from airtime which is incorporated into agreements with customers. This revenue  
is recognised once the connection has been made as this is the point when the risks and rewards have been transferred  
to the customer.
Typically, a number of the above elements may be sold together as a bundled contract. Revenue is recognised separately  
for each component if it is considered to represent a separable good or service and a fair value can be reliably established.
The Group derives fair value for its consultancy services based on day rates for consultants and for product maintenance based  
on maintenance renewal prices. Where software is included within a bundled arrangement, the residual value of the contract  
is ascribed to the software after a fair value has been allocated to all other components. 
Deferred revenue primarily relates to managed services and customer support fees, which have been invoiced to the customer 
prior to the performance of these services. Deferred revenue is generally recognised over a period of one to three years. 
Employee Benefit Trust
The Employee Benefit Trust (EBT) was dependent on Advanced Computer Software Group plc for its funding and its investment  
in the Company’s shares as at 28 February 2013 was shown in the share trust reserve and treated as a deduction from equity in 
the consolidated balance sheet. During the period the shares were transferred to the beneficiaries and the share trust reserve was 
transferred to revenue reserves.
Corporation tax
Tax on the profit or loss for the year comprises current and deferred tax. Tax is recognised in the income statement except  
to the extent that it relates to items recognised directly in equity, in which case it is recognised in equity.
Current tax is the expected tax payable on the taxable income for the year, using tax rates enacted, or substantively enacted,  
at the balance sheet date and any adjustment to tax payable in respect of previous years. 56
Advanced Computer Software Group plc 
Annual Report 2014
3 Significant accounting policies continued
Corporation tax continued
Deferred tax is provided on temporary differences between the carrying amounts of assets and liabilities for financial reporting 
purposes and the amounts used for taxation purposes. The following temporary differences are not provided for: the initial 
recognition of goodwill; the initial recognition of assets or liabilities that affect neither accounting nor taxable profit other than  
in a business combination and differences relating to investments in subsidiaries to the extent that they will probably not reverse  
in the foreseeable future. The amount of deferred tax provided is based on the expected manner of realisation or settlement  
of the carrying amount of assets and liabilities, using tax rates enacted, or substantively enacted, at the balance sheet date.
A deferred tax asset is recognised only to the extent that it is probable that future taxable profits will be available against which 
the asset can be utilised.
Employee benefits
Defined contribution plans
Obligations for contributions to defined contribution pension plans are recognised as an expense in the income statement  
as incurred.
Short term benefits
Short term employee benefit obligations are measured on an undiscounted basis and are expensed as the related service  
is provided. A provision is recognised for the amount expected to be paid under short term cash bonus or profit-sharing plans  
if the Group has a present legal or constructive obligation to pay this amount as a result of past service provided by the employee 
and the obligation can be estimated reliably.
Share-based payment transactions
Share-based payment arrangements in which the Group receives goods or services as consideration for its own equity instruments 
are accounted for as equity-settled share-based payment transactions. 
The grant date fair value of options granted to employees is recognised as an employee expense, with a corresponding increase  
in equity, over the period in which the employees become unconditionally entitled to the options. The fair value of the options 
granted is measured using an option valuation model, taking into account the terms and conditions upon which the options were 
granted. The amount recognised as an expense is adjusted to reflect the actual number of share options that vest except where 
forfeiture is due only to share prices not achieving the threshold for vesting.
Critical accounting estimates and judgements
Revenue recognition
Revenue for arrangements that involve significant modification or customisation of the software may be recognised based on 
achievement of contract-specific milestones. The Group determines the stage of completion based on an assessment of direct 
labour costs incurred to date as a percentage of total estimated project costs required to complete the project.
If collectability is not reasonably assured at the outset of a contract, the Group defers revenue and only recognises revenue  
on receipt of the cash and to the extent that it has discharged its obligations under the contract.
Impairment of goodwill
The Group is required to test goodwill for potential impairment on an annual basis. The recoverable amount is determined  
based on value in use calculations which require the estimation of future cash flows and the selection of a discount rate.  
Actual outcomes of this calculation may vary. Further information including the carrying values are given in note 12.
Acquired intangible assets
On acquisition of a business, the Group is required to value the assets acquired and recognise intangible assets on the balance 
sheet. The valuation of these assets relies on various assumptions, including future revenue and costs derived from those assets 
and the selection of an appropriate discount rate in order to calculate the present value of those cash flows. Further information 
including the carrying value of intangibles acquired is given in note 12.
Notes to the consolidated financial statements
continued Strategic report Governance Financials
Advanced Computer Software Group plc 
Annual Report 2014
57
3 Significant accounting policies continued
Critical accounting estimates and judgements continued
Useful lives of intangible assets and property, plant and equipment
Intangible assets, property and plant and equipment are amortised or depreciated over their useful lives. These useful lives  
are based on management’s estimates of the length of the period that the assets will generate revenue. These estimates are 
periodically reviewed for continued appropriateness. Changes to estimates can result in significant variations in the carrying  
value and amounts charged to the consolidated income statement in specific periods. 
Inventories
Inventories comprise finished goods for resale and work-in-progress on customer projects. Subsidiaries in the group review both 
items on a regular basis to ensure that net realisable value is in excess of carrying value. Finished goods are reviewed by considering 
current selling prices (including those of competitors), demand and new product development that may give rise to obsolescence. 
Work in progress is reviewed by considering the stage of completion of the project, the latest estimate of costs to complete and 
any contingent element of revenue. Provisions are made to the extent that any assessments indicate that carrying value may not  
be recovered in full.
Share-based payments
The fair value of share-based payments is estimated using the binomial valuation model as at the date of grant and using  
certain assumptions. These assumptions are disclosed in note 25.
Provisions
A provision is recognised in the balance sheet when the Group has a present legal or constructive obligation as a result  
of a past event, that can be reliably measured and it is probable that an outflow of economic benefits will be required to settle  
the obligation. In arriving at estimates for provisions, judgements are made, in particular with regard to timing and amount. 
Calculations are based on anticipated future cash flows relating to the relevant event, which are estimated by management  
and where appropriate supported by the use of external advisers.
Taxation
The Group is subject to UK corporate taxation and judgement is required in determining the provision for income and deferred 
taxation. The Group recognises taxation assets and liabilities based upon estimates and assessments of many factors including past 
experience, advice received on the relevant taxation legislation and judgements about the outcome of future events. To the extent 
that the final outcome of these matters is different from the amounts recorded, such differences will impact on the taxation 
charge made in the consolidated income statement in the period in which such determination is made.
Standards, amendments and interpretations to existing standards not yet effective
At the date of approval of these financial statements, the following standards, interpretations and amendments were issued but 
not yet mandatory for the Group and early adoption has not been applied:
International Financial Reporting Standards (IFRS)
 > IFRS 10 Consolidated Financial Statements
 > IFRS 11 Joint Arrangements
 > IFRS 12 Disclosure of Interests in Other Entities
All other amendments to existing standards are not yet endorsed by the EU at the date of approval of these financial statements.
It is considered that the above mentioned standards, amendments and interpretations will not have a significant effect on the 
results or performance of the Group. 58
Advanced Computer Software Group plc 
Annual Report 2014
4 Revenue 
Revenue for the Group was generated from subsidiaries and almost all of the revenue is from customers based in the 
UK. Revenue can be split into recurring (managed services and software and hardware support contracts) and non-
recurring (services and sale of software licences and hardware). The split of revenues for the year to 28 February 2014 
is shown below.
2014
£’000
2013
£’000
Recurring revenues 129,324 69,454
Non-recurring revenues 73,830 51,460
203,154 120,914
5 Segments
During the year the Group had three reportable segments as described below, which were the Group’s divisions. These divisions 
represent the lower level of operating segment, excluding any aggregation, which is consistent with the internal reporting to the 
Board. The cash generating units (CGU) used for the goodwill impairment test in note 12 are in line with the reported segments.
The divisions offered differing solutions and were managed separately as they required different resources and strategies. For each 
of the divisions, the Group’s Board reviewed internal management reports on a monthly basis, which showed adjusted EBITDA 
performance of each division. The following summary describes the operations of each division:
 > Health & Care: provides clinical software solutions, including patient care management and clinical support software to urgent 
and unscheduled healthcare providers and social care providers;
 > 365 Managed Services: provides hosting, cloud-enablement and managed IT services to a wide range of customers in both the 
public and private sectors; 
 > Business Solutions: provides a complete suite of back office applications including financial management, payroll, human capital 
management, e-procurement and document management to businesses in the retail, not for profit, legal, health and care, 
banking, leisure and other commercial sectors.
All three segments were reported in the prior year. In the year under review, the acquisition of Compass and CSH augmented the 
size of the Business Solutions segment and Plain augmented the size of Health & Care.
 
‘Unallocated items’ represents the elimination of the inter-segment sales and shows the non-segmental Group expenses incurred 
during the year.
Information regarding the result of each reportable segment is included below which is consistent with the monthly information 
provided to the Board.
Other information reported to the Board is on a Group-wide basis and therefore not associated with segments. 
Health & Care Business Solutions 365 Managed Services Unallocated items Total
 
2014
£’000
2013
£’000
2014
£’000
2013
£’000
2014
£’000
2013
£’000
2014
£’000
2013
£’000
2014
£’000
2013
£’000
External revenue 30,602 26,146 136,342 59,933 36,596 34,719 (386) 116 203,154 120,914
Recurring 18,279 15,430 85,303 31,729 25,742 22,295 – – 129,324 69,454
Non-recurring 12,323 10,716 51,039 28,204 10,854 12,424 (386) 116 73,830 51,460
Inter-segment revenue (375) (190) (468) (401) (81) (287) 924 878 – –
EBITDA 8,620 6,915 33,690 15,665 5,260 4,875 (5,399) (2,185) 42,170 25,270
Share-based payments 251 277 578 698 213 238 80 33 1,122 1,246
Acquisition costs – – – 219 – – 1,989 266 1,989 485
Adjusted EBITDA 8,871 7,192 34,268 16,582 5,473 5,113 (3,330) (1,886) 45,282 27,001
Depreciation      (3,095) (1,697) (3,095) (1,697)
Amortisation      (23,305) (13,185) (23,305) (13,185)
Finance costs      (3,715) (1,225) (3,715) (1,225)
Tax      1,056 (31) 1,056 (31)
Notes to the consolidated financial statements
continued Strategic report Governance Financials
Advanced Computer Software Group plc 
Annual Report 2014
59
5 Segments continued
Product information
Revenue from products and services of the Group was as follows in the year:
2014
£’000
2013
£’000
Product licences 28,571 17,685
Consultancy services 38,134 27,153
Maintenance 95,060 48,309
Managed services 34,264 21,145
Other 7,125 6,622
 203,154 120,914
Geographic information
The reported segments of the Group are mainly located in the UK and all material sales are made to customers inside the UK.
There are no material assets located outside of the UK.
Major customer
No single customer accounted for more than 2% of the Group’s revenue in the year.
Net assets
Assets and liabilities are not reported internally by segments.
6 Operating expenditure
2014
£’000
2013
£’000
Profit from operations is stated after charging:
Profit on disposal of fixed assets 16 –
Depreciation of tangible fixed assets
Owned assets 2,874 1,540
Leased assets 221 157
Amortisation of intangible fixed assets
Capitalised development costs 1,859 1,070
Acquired intangible assets 23,305 13,185
Operating lease – lease payments
Hire of plant and machinery – operating leases 2,581 1,892
Hire of other assets – operating leases 2,609 1,087
Net foreign currency translation loss 255 69
Audit services
Fees payable to the Company’s auditor for the audit of the Company  
and consolidated financial statements 20 20
Fees payable to the Company’s auditor and its associates for other services:
Audit of the Company’s subsidiaries 260 150
Audit-related assurance services 15 15
Other assurance services 5 5
Taxation services – 84
Other services 305 181
Third party products and services 33,649 25,873
Other operating expenditure 20,419 9,303
The Group has changed the presentation of its Consolidated Income Statement to show the expenses by nature rather than by 
function. This is consistent with a number of other software and services companies. The employee expenses set out in note 8 
complete the disclosure of costs included in operating expenses. 60
Advanced Computer Software Group plc 
Annual Report 2014
7 Finance income and costs
 
2014 
£’000
2013 
£’000
Bank interest receivable 49 51
Total financial income 49 51
Bank interest payable (3,370) (1,070)
Other interest (139) (137)
Loss on foreign exchange (255) (69)
Total financial costs (3,764) (1,276)
8 Employee expenses
2014
£’000 
2013
£’000
Wages, salaries and fees 85,658 48,351
Social security costs 9,688 4,898
Pension costs 2,522 1,400
 97,868 54,649
Share-based payments 1,122 1,246
 98,990 55,895
The average monthly number of employees of the Group (including directors) during the year was:
 2014 2013 
Development and operations 1,323 674
Sales and marketing 337 167
Management and administration 246 110
 1,906 951
The remuneration of the directors of the Company was as follows:
 
2014 
£’000
2013 
£’000
Emoluments 1,492 817
Share-based payments 47 –
Total 1,539 817
Highest paid director
Gross salary 275 450
Car and other benefits in kind – 1
Waived salary and bonus to charity 407 –
 682 451
In the year ended 28 February 2014, seven directors were remunerated as employees through payroll. Vin Murria received  
£0.3m gross salary and £0.4m bonus during the year. The directors believe that the key management personnel  
are the executive directors.
 
Notes to the consolidated financial statements
continued Strategic report Governance Financials
Advanced Computer Software Group plc 
Annual Report 2014
61
9 Taxation
 
2014
£’000 
2013
£’000 
UK corporation tax 5,555 3,991
UK deferred tax (6,611) (3,960)
 (1,056) 31
The tax charge for the year is lower than the standard rate of 23% (2013: 24%) corporation tax in the UK as explained below:
 
2014
£’000 
2013
£’000 
Tax reconciliation:  
Profit on ordinary activities before tax 12,056 9,163
UK corporation tax at 23% (2013: 24%) 2,783 2,200
Effects of:
Items not deductible for tax purposes 190 508
Additional deduction for R&D expenditure (68) (46)
Other timing differences – (164)
Overseas tax differences (134) 28
Relief for employee share schemes (1,531) (316)
Utilisation of previously unrecognised tax losses (221) (101)
Prior year adjustment (460) (1,220)
Change in tax rate (1,615) (858)
Tax charge for the year (1,056) 31
The Group has recognised a £1.1m tax credit for the year (2013: zero). The effective tax rate of (9%) (2013: 0%) has been driven 
by adjustments to deferred tax as a result of the change in the UK corporation tax rate (credit: £1.6m), prior year adjustments 
(credit: £0.5m) and additional relief on share options exercised during the year (£1.6m). The effective rate excluding these 
adjustments would be 21% (2013: 23%) which is lower than the statutory rate of 23% as a result of additional R&D relief  
and utilisation of tax losses at £0.3m less non-tax deductible expenses of £0.2m.
 
On 2 July 2013 a 21% rate of UK corporation tax was enacted effective 1 April 2014. The Group benefits from a £1.6m reduction 
in the 2014 tax charge as a result of the reduction of the net deferred tax liabilities as at 28 February 2014 from 23% to 21%.  
A further reduction to 20% was enacted on 2 July 2013, effective on 1 April 2015, which will result in future reductions in the 
deferred tax liabilities. 62
Advanced Computer Software Group plc 
Annual Report 2014
10 Earnings per share
The basic earnings per share has been calculated by dividing the net profit attributable to ordinary shareholders by the weighted 
average number of shares in issue during the relevant period.
Basic earnings per share
 2014 2013 
Net earnings attributable to ordinary shareholders (£’000) 13,112 9,132
Weighted average number of ordinary shares in issue 453,200,498 346,407,684
Basic earnings per share 2.9p 2.6p
Diluted earnings per share
 2014 2013 
Weighted average number of ordinary shares in issue 453,200,498 346,407,684
Adjustment for share schemes 28,582,295 65,659,056
Weighted average number of potential ordinary shares in issue 481,782,793 412,066,740
Diluted basic earnings per share 2.7p 2.2p
The diluted profit per share has been calculated by dividing the net profit attributable to ordinary shareholders by the weighted 
average number of shares in issue during the period, adjusted for potentially dilutive shares that are not anti-dilutive. 
The adjusted EPS is calculated by removing the one-off acquisition costs, share-based payments, amortisation of intangible assets 
and tax adjustments from the net profit.
 
Earnings
£’000
Weighted 
average
number of
shares
Per share
amount
pence
Basic earnings 13,112 453,200,498 2.9
Dilution for employee share options 28,582,295
Diluted earnings 13,112 481,782,793 2.7
Basic earnings 13,112 453,200,498 2.9
Amortisation of acquired intangible assets 23,305
Share-based payments 1,122
One-off acquisition and restructuring costs 1,989
Tax effect of adjustment (9,699)
Adjusted earnings 29,829 453,200,498 6.6
Diluted earnings 13,112 481,782,793 2.7
Amortisation of acquired intangible assets 23,305
Share-based payments 1,122
One-off acquisition and restructuring costs 1,989
Tax effect of adjustment (9,699)
Adjusted diluted earnings 29,829 481,782,793 6.2
Notes to the consolidated financial statements
continued Strategic report Governance Financials
Advanced Computer Software Group plc 
Annual Report 2014
63
11 Acquisitions
Acquisitions during the year
CSG Equityco Limited
On 7 March 2013 the Group acquired all the ordinary share capital of CSG Equityco Limited (CSH) for a net cash consideration of 
£107.0m, including the repayment of shareholder and institutional debt. CSH is a leading provider of accounting and back office 
software to the UK professional services market (legal and coroners) and customer relationship management (CRM) software  
for the not for profit (NFP) market. It also provides accounting software to SMEs, as well as mobile solutions for field services 
operations. In the 51 weeks to 28 February 2014 the subsidiary contributed £60.0m and £14.7m to the consolidated revenue  
and Adjusted EBITDA respectively. If the acquisition had occurred on 1 March 2013, Group revenue and Adjusted EBITDA would 
have increased by £1.2m and £0.4m respectively. In determining these amounts, management has assumed that the fair value 
adjustments that arose on the date of acquisition would have been the same if the acquisition had occurred on 1 March 2013.
Book value
£’000
Adjustment
£’000
Fair value
at acquisition
£’000
Property, plant and equipment 2,100 – 2,100
Cash and cash equivalents 13,245 – 13,245
Current assets 13,453 237 13,690
Current liabilities (32,089) (339) (32,428)
Loans and borrowings (103,448) – (103,448)
Customer contracts and relationships – 20,860 20,860
Technology – 38,329 38,329
Deferred tax liabilities – (13,613) (13,613)
(106,739) 45,474 (61,265)
Goodwill on acquisition 78,062
Consideration paid 16,797
Cash acquired (13,245)
Loans and borrowing repaid 103,448
Net cash consideration 107,000
Fees paid during the year 1,040
Net cash outflow 108,040
On acquisition of CSH, all assets were fairly valued and appropriate intangible assets recognised following the principles of IFRS 3. 
Management identified two separately identifiable intangible assets: 
 > customer contracts and relationships; and
 > technology.
A deferred tax liability relating to these intangible assets was also recognised.
Customer contracts and relationships
The customer contracts and relationships were valued on an income basis. The value is the present value of projected cash flows  
in excess of returns on contributory assets during the life of the relationship with customers. Management believe that these 
customer contracts and relationships have a useful economic life of at least ten years and therefore the intangible assets 
recognised will be recognised over this period. 64
Advanced Computer Software Group plc 
Annual Report 2014
11 Acquisitions continued
Acquisitions during the year continued
Technology
CSH technology has been valued on a replacement cost basis capturing the efforts that would be required to develop similar 
software. Management believes that the technology has a useful economic life of at least five years and therefore the intangible 
assets recognised will be recognised over this period.
Assumptions
The assumptions used for valuing the intangibles included the internal rate of return (13.0%), assumptions about levels of new  
and lost revenue and assumptions around costs that would be incurred to generate that revenue.
Compass Computer Consultants Limited
On 31 January 2014 the Group acquired all the voting share capital of Compass Computer Consultants Limited (Compass)  
for a net cash consideration of £14.4m. Compass provides business solutions for the education sector, including record 
management and CRM software, training and support to more than 80% of UK colleges and higher education establishments. 
In the one month to 28 February 2014 the subsidiary contributed £0.5m and £0.3m to the consolidated revenue and Adjusted 
EBITDA respectively. If the acquisition had occurred on 1 March 2013, Group revenue and Adjusted EBITDA would have increased 
by £5.0m and £2.8m respectively. In determining these amounts, management has assumed that the fair value adjustments that 
arose on the date of acquisition would have been the same if the acquisition had occurred on 1 March 2013.
Book value
 £’000
Adjustment
 £’000
Fair value
at acquisition
 £’000
Property, plant and equipment 621 – 621
Cash and cash equivalents 2,680 – 2,680
Current assets 803 – 803
Current liabilities (2,566) – (2,566)
Customer contracts and relationships – 5,403 5,403
Technology – 6,720 6,720
Deferred tax liabilities – (2,788) (2,788)
1,538 9,335 10,873
Goodwill on acquisition 6,251
Consideration paid 17,124
Cash acquired (2,680)
Net cash consideration 14,444
On acquisition of Compass, all assets were provisionally fair valued and appropriate intangible assets recognised following the 
principles of IFRS 3. Management identified two separately identifiable intangible assets: 
 > customer contracts and relationships; and
 > technology.
A deferred tax liability relating to these intangible assets was also recognised.
Notes to the consolidated financial statements
continued Strategic report Governance Financials
Advanced Computer Software Group plc 
Annual Report 2014
65
11 Acquisitions continued
Acquisitions during the year continued
Customer contracts and relationships
The customer contracts and relationships were valued on an income basis. The value is the present value of projected cash  
flows in excess of returns on contributory assets during the life of the relationship with customers. Management believes that  
these customer contracts and relationships have a useful economic life of at least ten years and therefore the intangible assets 
recognised will be recognised over this period.
Technology
Technology has been valued on a replacement cost basis capturing the efforts that would be required to develop similar software. 
Management believes that the technology has a useful economic life of at least five years and therefore the intangible assets 
recognised will be recognised over this period.
Assumptions
The assumptions used for valuing the intangibles included the internal rate of return (21.0%), assumptions about levels of new  
and lost revenue and assumptions around costs that would be incurred to generate that revenue.
Small acquisitions during the year
The Group acquired all the ordinary shares of Plain Healthcare Limited on 24 October 2013 for a cash consideration of £1.  
In the five months to 28 February 2014 the subsidiary contributed £0.5m and nil to the consolidated revenue and Adjusted  
EBITDA respectively. If the acquisition had occurred on 1 March 2013, Group revenue would have increased by £0.8m with no 
change to Adjusted EBITDA.
Book value
 £’000
Adjustment
 £’000
Fair value
at acquisition
 £’000
Cash and cash equivalents 8 – 8
Current assets 153 – 153
Current liabilities (1,444) – (1,444)
Customer contracts and relationships – 731 731
Technology – 333 333
Deferred tax liabilities – (223) (223)
(1,283) 841 (442)
Goodwill on acquisition 442
Consideration paid –
Cash acquired (8)
Net cash outflow (8) 66
Advanced Computer Software Group plc 
Annual Report 2014
11 Acquisitions continued
Prior year acquisitions
Fabric Technologies Limited
On 30 April 2012, the Group acquired all the ordinary share capital in Fabric Technologies Limited (Fabric) for a total cash 
consideration of £4.6m. Fabric provides managed services and unified communication solutions to customers in banking and other 
professional services sectors and has been fully integrated into the Advanced 365 Managed Services division. 
Book value
 £’000
Adjustment
 £’000
Fair value at
 acquisition
 £’000
Property, plant and equipment 156 – 156
Cash and cash equivalents (8) – (8)
Current assets 2,926 – 2,926
Current liabilities (3,029) (113) (3,142)
Long term liabilities (37) – (37)
Customer contracts and relationships – 746 746
Technology – 119 119
Deferred tax liabilities (16) (208) (224)
(8) 544 536
Goodwill on acquisition 4,064
Consideration paid 4,600
Overdraft acquired 8
Net cash outflow 4,608
Serco Learning
On 31 December 2012, the Group acquired the trade and assets of Serco Learning (Serco) for a cash consideration of £7.3m. 
Serco is a supplier of management information systems to the UK education market, providing training and support to over 2,000 
academies, independent schools and higher and further education providers. Serco has been incorporated into the Advanced 
Business Solutions division complementing the division’s portfolio of IT solutions for the public sector. 
Book value
 £’000
Adjustment
 £’000
Fair value
at acquisition
 £’000
Fair value
 adjustment
 recognised
in the year
 £’000
Fair value
at acquisition
 £’000
Property, plant and equipment 64 – 64 – 64
Cash and cash equivalents 110 – 110 – 110
Current assets 3,558 – 3,558 (208) 3,350
Current liabilities (8,862) – (8,862) – (8,862)
Customer contracts and relationships – 3,040 3,040 – 3,040
Contracts – 2,840 2,840 – 2,840
Technology – 1,464 1,464 – 1,464
(5,130) 7,344 2,214 (208) 2,006
Goodwill on acquisition 5,036 283 5,319
Consideration paid 7,250 75 7,325
Cash acquired (110) – (110)
Net cash outflow 7,140 75 7,215
Notes to the consolidated financial statements
continued Strategic report Governance Financials
Advanced Computer Software Group plc 
Annual Report 2014
67
11 Acquisitions continued
Prior year acquisitions continued
On the acquisition of Serco, all assets were measured at fair value and appropriate intangible assets recognised following the 
principles of IFRS 3. Management identified three separately identifiable intangible assets:
 > customer contracts and relationships;
 > technology; and 
 > contractual arrangement.
Customer contracts and relationships
The customer contracts and relationships were valued on an income basis. The value represents the present value of the projected 
cash flow, in excess of returns on contributory assets during the life of the relationship with the customer. Management believes that 
these customer relationships have a useful economic life of ten years and the intangible assets will be recognised over this period. 
Technology
Technology has been valued on a replacement cost basis capturing the effort that would be required to develop similar software. 
Management believes that the technology has a useful life of five years and the intangible asset will be recognised over this period.
Contractual arrangement
The contractual arrangement has been valued on a cost-saving basis. Management believes that the contractual arrangement  
has a useful life of ten years and the intangible asset will be recognised over this period.
During the year a working capital fair value adjustment was recognised.
Small acquisitions during the prior year
The Group acquired all the ordinary shares of two entities during the prior year – Strand Technology Limited (acquired  
on 12 September 2012) and ATMS plc (acquired on 16 November 2012) as shown in the aggregated table below:
Strand
£’000
ATMS
£’000
Fair value
at acquisition
 £’000
Property, plant and equipment 5 19 24
Cash and cash equivalents 114 (132) (18)
Current assets 151 135 286
Current liabilities (351) (651) (1,002)
Customer contracts and relationships 221 – 221
Technology 45 – 45
Deferred tax liabilities (64) – (64)
121 (629) (508)
Goodwill on acquisition 1,879 1,029 2,908
Consideration paid 2,000 400 2,400
Cash acquired (114) 132 18
Net cash outflow 1,886 532 2,418
  68
Advanced Computer Software Group plc 
Annual Report 2014
12 Intangible assets
Year ended 28 February 2014
 
Customer 
contracts and 
 relationships
£’000
Brand
£’000
Technology
£’000
Contracts
£’000
Goodwill
£’000
Development
costs
£’000
Total
£’000
Cost
At beginning of year 66,509 3,630 22,434 2,840 77,309 6,851 179,573
Acquisitions through 
business combinations 26, 994 – 45,382 – 85,038 – 157, 414
Eligible development costs 
capitalised – – – – – 2,369 2,369
At end of year 93,503 3,630 67,816 2,840 162,347 9,220 339,356
Amortisation 
At beginning of year 23,751 2,773 15,196 166 – 2,438 44,324
Charged in year 9,203 774 12,760 568 – 1,859 25,164
At end of year 32,954 3,547 27,956 734 – 4,297 69,488
Net book value
At 28 February 2014 60,549 83 39,860 2,106 162,347 4,923 269,868
Net book value
At 28 February 2013 42,758 857 7,238 2,674 77,309 4,413 135,249
Expenditure on research and development in the year was £22.5m (2013: £9.2m) of which £2.4m (2013: £2.1m) relating  
to the development of new products was capitalised in accordance with IFRS.
Year ended 28 February 2013
 
Customer
 contracts and
 relationships
 £’000
Brand
£’000
Technology
 £’000
Contracts
£’000
Goodwill
£’000
Development
costs
£’000
Total
£’000
Cost
At beginning of year 62,502 3,630 20,806 – 65,301 4,795 157,034
Acquisitions through 
business combinations 4,007 – 1,628 2,840 12,008 – 20,483
Eligible development costs 
capitalised – – – – – 2,056 2,056
At end of year 66,509 3,630 22,434 2,840 77,309 6,851 179,573
Amortisation      
At beginning of year 16,721 1,912 10,068 – – 1,368 30,069
Charged in year 7,030 861 5,128 166 – 1,070 14,255
At end of year 23,751 2,773 15,196 166 – 2,438 44,324
Net book value
At 28 February 2013 42,758 857 7,238 2,674 77,309 4,413 135,249
Net book value
At 29 February 2012 45,781 1,718 10,738 – 65,301 3,427 126,965
Notes to the consolidated financial statements
continued Strategic report Governance Financials
Advanced Computer Software Group plc 
Annual Report 2014
69
12 Intangible assets continued  
Impairment tests for cash-generating units (CGU) containing goodwill
The goodwill on the balance sheet relates to the acquisitions in the current and prior periods (note 11) and is calculated as the total 
consideration paid less the fair value of the net assets acquired.
This goodwill was tested for impairment as at 28 February 2014 following IAS 36 criteria.
Management compared the carrying value of each CGU to the value in use, to confirm that no impairment of goodwill is 
necessary. The value in use was calculated using the subsidiary’s Board approved 2014-2015 budget and the 2015-2016 and 
2016-2017 forecasts, with a 4% growth assumption, for the following four years. Terminal values were calculated, based on 
the perpetuity of cash generated. Forecasts and terminal values were discounted using the following discount rates:
365 Managed Services  21.0%
Business Solutions 13.0%
Health & Care  13.0%
The pre-tax discount rates are based on the Group’s weighted average cost of capital, beta values and rates of similar companies  
in the same industry, adjusted to reflect management’s assessment of specific risks related to the subsidiary.
No impairment is deemed necessary as a result of the testing performed as shown in the table below:
CGU listing
Goodwill
£’000
Intangibles
 £’000
Fixed
assets
 £’000
Carrying
value
 £’000
Value in use
 (VIU)
£’000
Excess
VIU
£’000
Sensitivity
£’000
365 Managed Services 9,446 1,189 3,399 14,034 27,878 13,844 99%
Business Solutions 137,438 99,451 4,138 241,027 328,262 87,235 36%
Health & Care 15,463 1,930 961 18,354 99,736 81,382 443%
The sensitivity shows the sensitivity of the excess over VIU in relation to the carrying value of the CGU.
The key assumptions used and the approach to determining their value are:
Assumption How determined
Discounted future cash flows 
These have been based on the Board approved forecasts for 2016  
and 2017 with a 4% growth assumption for the following two years.
Perpetuity cash flows 2.5% growth
  70
Advanced Computer Software Group plc 
Annual Report 2014
13 Property, plant and equipment
Year ended 28 February 2014
 
Property 
£’000
Office
 equipment
and furniture
 £’000
Computer
 equipment
 £’000
Total
£’000
Cost    
Balance at 1 March 2013 2,053 3,426 17,401 22,880
Additions in the year 350 199 2,500 3,049
Assets acquired as part of business combinations 1,336 2,914 3,720 7,970
Disposals – (558) (1,305) (1,863)
At 28 February 2014 3,739 5,981 22,316 32,036
Depreciation
Balance at 1 March 2013 469 2,986 13,488 16,943
Depreciation charge for the year 392 394 2,309 3,095
Assets acquired as part of business combinations 415 2,080 2,754 5,249
Disposals – (558) (1,289) (1,847)
At 28 February 2014 1,276 4,902 17,262 23,440
Net book value
At 28 February 2014 2,463 1,079 5,054 8,596
Net book value    
At 28 February 2013 1,584 440 3,913 5,937
The net book value of computer equipment includes an amount of £0.7m (2013: £0.8m) in respect of assets held under  
finance leases.
Year ended 28 February 2013
 
Property 
£’000
Office
 equipment
and furniture
 £’000
Computer
 equipment
 £’000
Total
£’000
Balance at 1 March 2012 1,632 3,376 14,547 19,555
Additions in the year 421 41 2,338 2,800
Assets acquired as part of business combinations – 9 516 525
At 28 February 2013 2,053 3,426 17,401 22,880
Depreciation
Balance at 1 March 2012 283 2,850 11,832 14,965
Depreciation charge for the year 186 131 1,380 1,697
Assets acquired as part of business combinations – 5 276 281
At 28 February 2013 469 2,986 13,488 16,943
Net book value
At 28 February 2013 1,584 440 3,913 5,937
Net book value    
At 29 February 2012 1,349 526 2,715 4,590
 
Notes to the consolidated financial statements
continued Strategic report Governance Financials
Advanced Computer Software Group plc 
Annual Report 2014
71
14 Inventories
 
2014
£’000
2013
£’000
Finished goods 304 397
Work in progress 2,388 2,495
 2,692 2,892
15 Trade and other receivables 
 
2014
£’000
2013
£’000
Trade receivables 48,729 28,571
Other receivables 290 964
Prepayments 7,394 6,181
Accrued income 824 1,109
 57,237 36,825
Trade receivables include a provision of £1.7m (2013: £1.2m) for bad debts.
16 Cash and cash equivalents
 
2014
£’000
2013
£’000
Cash at bank 25,083 33,408
Bank short term deposits 15 11
 25,098 33,419
17 Trade and other payables: current
 
2014
£’000
2013
£’000
Trade payables 5,468 3,753
Taxation and social security 10,391 5,457
Accruals 19,056 12,617
Other payables 133 233
 35,048 22,060 72
Advanced Computer Software Group plc 
Annual Report 2014
18 Deferred tax liability
Deferred tax is calculated in full on temporary differences under the liability method using the taxation rate of 21% (2013: 23%). 
Deferred tax assets have been recognised on temporary differences where the directors believe that it is probable that these assets 
will be recovered. 
 2014 2013
Asset/
(liability) 
£’000
(Charged)/
 credited to
profit or loss
£’000
Asset/
(liability)
£’000
(Charged)/
 credited to
profit or loss
£’000
Accelerated capital allowances 1,381 (219) 1,108 (349)
Short term temporary differences – liabilities (1,060) (78) (1,038) (158)
Short term temporary differences – assets 2,032 23 2,093 290
Acquired intangible assets (20,295) 6,999 (10,607) 4,201
Taxation losses 630 (114) 231 (24)
 (17,312) 6,611 (8,213) 3,960
Included in the net deferred tax liability of £17.3m is £4.0m of deferred tax assets split between £1.4m accelerated capital 
allowance, £0.6m tax losses and £2.0m short term temporary differences, and £21.3m of deferred tax liability split between 
£20.3m intangible assets and £1.0m short term temporary differences.
The Group has £11.6m (2013: £5.8m) of trading losses of which £3.0m (2013: £1.0m) is expected to be utilised against  
future profits. The balance largely relates to losses acquired with the CSH group that are unlikely to be utilised.
Deferred tax assets have not been recognised in respect of the following items due to uncertainties over availability  
of qualifying profits:
 
 
2014
£’000
2013
£’000
Non-trade loan relationship deficit 13,231 7,611
Management expenses 6,808 3,320
Capital losses 3,310 2,744
Taxation losses 8,619 1,503
 31,968 15,178
Deferred tax asset at 21% (2013: 23%) 6,713 3,491
19 Provisions: non-current
The non-current provision relates to dilapidations and onerous leases in respect of buildings leased by the Group.  
 
 
Onerous lease 
provision
£’000
Leasehold 
dilapidation
£’000
Total
£’000
At 28 February 2013 1,016 814 1,830
Amounts utilised during the year (943) (118) (1,061)
Amounts provided during the year 384 177 561
Amounts arising from acquisitions 995 642 1,637
At 28 February 2014 1,452 1,515 2,967
Notes to the consolidated financial statements
continued Strategic report Governance Financials
Advanced Computer Software Group plc 
Annual Report 2014
73
20 Financial instruments
The maturity analysis of the Group’s financial liabilities for the year ended 28 February 2014 is as follows: 
 
Within 
the next 
12 months 
£’000
Within
one to two
 years 
£’000
Within
two to five 
years
£’000
Total
financial
 liabilities 
£’000
Loans and borrowings    
Revolving credit facility – – 32,000 32,000
Term loan 12,500 12,500 17,500 42,500
 12,500 12,500 49,500 74,500
Unamortised loan issue costs (556) (556) (288) (1,400)
 11,944 11,944 49,212 73,100
Finance lease >1 year 238 453 – 691
 12,182 12,397 49,212 73,791
Unamortised loan issue costs 556 556 288 1,400
Future interest payments 3,143 2,893 1,134 7,170
 15,881 15,846 50,634 82,361
 
The future interest payments have been calculated based on the forecast maturities of the term loan and revolving credit facility 
shown above, using an estimated 4% interest rate.
If the interest rates were to vary by 50 basis points, the effect on the future interest payment would be as follows:
Sensitivity on interest rate
Within
the next
12 months 
£’000
Within
one to two
years 
£’000
Total
future interest 
payments
 £’000
3.5% 2,750 2,313 992
4.0% 3,143 2,893 1,134
4.5% 3,405 2,884 1,247
The maturity analysis of the Group’s financial liabilities for the year ended 28 February 2013 was as follows:
 
Within
the next
12 months
£’000
Within
one to two
years
£’000
Within
two to five
years
£’000
Total
financial
liabilities
£’000 
Loans and borrowings    
Term loan 2,500 – – 2,500
 2,500 – – 2,500
Finance lease >1 year 207 203 330 740
 2,707 203 330 3,240
Future interest payments 41 41 72 154
 2,748 244 402 3,394
    74
Advanced Computer Software Group plc 
Annual Report 2014
Notes to the consolidated financial statements
continued
20 Financial instruments continued
The Group’s financial assets
Cash and receivables
 
2014
£’000
2013
£’000
Trade and other receivables 49,019 29,535
Cash and cash equivalents 25,098 33,419
74,117 62,954
The above balance represents the Group’s maximum exposure to credit risk.
The fair value of the financial instruments is equal to the carrying value. In the normal course of the Group’s business and  
in common with other businesses, the Group encounters risks that arise from financial instruments. This note describes the 
Group’s objectives, policies and processes in managing these risks and the methods used to measure them.
Credit risk
Credit risk is the risk that a counterparty to a transaction with the Group fails to discharge its obligations in respect of the 
instrument. The Group’s credit risk arises on (i) transactions with customers following delivery of goods and/or services  
or (ii) cash and cash equivalents placed with banks and financial institutions.
Customers
The Group provides services to Government-backed organisations and commercial businesses. A small proportion of revenue is 
generated outside of the UK. 
Management focusses strongly on working capital management and the collection of due invoices. Regular reports of overdue 
invoices are circulated amongst senior management and the Board reviews debtor days each month as part of the monthly 
reporting cycle. The risk with any one customer is limited by constant review of debtor balances and action to resolve any issues 
preventing discharge of obligations.
The table below shows the ageing of trade debtors that are past due invoice date and not impaired as at 28 February 2014.
Ageing of trade receivables 2014:   
 
Current
£’000
1-3 months
£’000
>3 months
£’000
Trade receivables 30,503 15,770 2,456
Ageing of trade receivables 2013:   
 
Current
£’000
1-3 months
£’000
>3 months
£’000
Trade receivables 20,158 7,960 453
At the balance sheet date there were no significant concentrations of credit risk. The maximum exposure to credit risk  
is represented by the carrying amount of the trade and other receivables in the balance sheet.
Dividend policy
The Board’s dividend policy is to balance the distribution of profits with the Group’s working capital requirements, the ongoing 
needs of the business, and its plans for merger and acquisition activities.  Strategic report Governance Financials
Advanced Computer Software Group plc 
Annual Report 2014
75
20 Financial instruments continued
Market risk
Market risk is the risk that the fair value or cash flows of a financial instrument will fluctuate due to changes in market prices.  
In managing interest rate and currency risks, the Group aims to reduce the impact of short term fluctuations on the Group’s 
earnings. Over the longer term, however, permanent changes in interest rates and foreign exchange would have an impact  
on consolidated earnings.
Interest rate risk
On 7 March 2013 the Group negotiated a new banking facility. The facility is structured as a term loan repayable in equal 
instalments until 2016 and a revolving credit facility, which expires in 2016. Both facilities are denominated in sterling and incur 
interest at LIBOR plus 2.25%-3%. The revolving credit facility is repayable at the Group’s discretion on a monthly basis with  
the interest accrued, or on demand. The Group is obliged to comply with certain covenants, as detailed in the going  
concern disclosures.
In May 2013, the Group entered into a contract to hedge two-thirds of the term loan with a cap at 1% on LIBOR. The directors 
believe this hedge limits the Group’s exposure to interest rate changes to a manageable level. 
 
 
2014
£’000
2013
£’000
Weighted average interest rates receivable – –
Weighted average interest rates payable 3.17% 2.77%
 
Currency risk
The Group earns very small levels of revenue from outside the UK. The value of recurring revenue is converted at each invoice date 
from a fixed sterling value to varied USD and EUR values, thereby minimising the currency risk to the Group. It is Group policy not 
to enter into hedging arrangements to mitigate currency risk due to the disproportionate cost versus risk.
Cash and cash equivalents at 28 February 2014 included £4.2m and £2.1m denominated in USD and EUR respectively.  
If the exchange rate was to vary by 10% the effect would be as follows:
Sensitivity on exchange rate
USD
£’000
EUR
£’000
10% 386 190
Liquidity risk
Liquidity risk is the risk that the Group cannot meet financial liabilities when they fall due. The Group’s policy for managing liquidity 
risk is to ensure that the business has enough financial resources to carry out its day-to-day activities at any point in time. 
Management believes that the cash resources on hand, together with the profits of the business, more than cover the resources 
needed to meet the financial liabilities of the Group.
Capital management
The Group manages its capital structure to safeguard the going concern of the Group and provide returns for shareholders and 
benefits for other stakeholders. 
The capital structure of the Group consists of equity (including share capital, retained earnings and other reserves) and debt.  
The Group may maintain or adjust capital structure in the future by issuing new shares, repaying debt, returning capital  
to shareholders or paying dividends. 76
Advanced Computer Software Group plc 
Annual Report 2014
Notes to the consolidated financial statements
continued
21 Commitments
Operating leases
At the end of the year, the future minimum lease payments under non-cancellable operating leases are payable as follows:
 2014 2013
 
Land and 
buildings 
£’000
Plant and
 machinery
 £’000
Others 
£’000
Land and 
buildings 
£’000
Plant and
 machinery
 £’000
Others 
£’000
Less than one year 2,480 1,686 561 1,494 1,474 295
Between one and five years 2,198 1,170 516 2,859 1,622 395
More than five years 80 – – 210 – –
 4,758 2,856 1,077 4,563 3,096 690
The other operating leases are mainly related to office equipment. 
Pension commitments
The Group has no defined benefit pension schemes in place. The Group pays defined contributions into a Group Personal  
Pension Plan and certain individual pension plans. The assets of each of these plans are held separately from those of the Group  
in independently administered funds. The pension charge represents contributions payable by the Group in the year and amounted 
to £2.5m (2013: £1.4m).
22 Related parties 
The Group has identified two related parties with which it has transacted during the year.
Vin Murria, Chief Executive of the Group, waived her right to part of her compensation due under her employment contract and 
the Company made a donation of £0.4m, equivalent to the waived remuneration plus Employer’s National Insurance Contributions 
(ENIC) saved, to PS Foundation, registered charity no 1123570.
 
During the year a close family member of Vin Murria received £15,000 for services rendered to Advanced University.
23 Group entities
Control of the Group
The Company believes there is no overall controlling party of Advanced Computer Software Group plc. 
The significant subsidiaries of the Group have been disclosed below.
 
Country of
incorporation
Principal 
activity
Class of 
share held
Percentage 
held
Drury Lane (Jersey) Limited* Jersey Holding company Ordinary shares 100%
Advanced Health and Care Limited** England Software development Ordinary shares 100%
Advanced 365 Limited** England IT managed services Ordinary shares 100%
Advanced Business Software and Solutions Limited** England Software development Ordinary shares 100%
Computer Software Group Limited** England Software development Ordinary shares 100%
Advanced Legal Solutions Limited** England Software development Ordinary shares 100%
Compass Computer Consultants Limited** England Software development Ordinary shares 100%
Advanced Ticketing Limited** England Software development Ordinary shares 100%
Transoft Group Limited** England Software migration Ordinary shares 100%
V1 Limited** England Software development Ordinary shares 100%
* Owned directly by Advanced Computer Software Group plc
** Owned indirectly by Advanced Computer Software Group plc Strategic report Governance Financials
Advanced Computer Software Group plc 
Annual Report 2014
77
24 Equity 
As at 28 February 2014 the Company had 476,963,967 issued and fully paid ordinary shares listed on the Alternative Investment 
Market of the London Stock Exchange. The Company has one class of ordinary shares which carry no right to fixed income.  
Each share carries the right to one vote at general meetings of the Company.
2014 2013
Number £’000 Number £’000
Authorised for issue
Ordinary shares of £0.10 each 1,000,000,000 100,000 1,000,000,000 100,000
Allotted, called up and fully paid
Ordinary shares of £0.10 each 476,963,967 47,696 409,042,382 40,904
During the year to 28 February 2014 the Company issued 19,354,511 shares for cash and 48,567,074 shares for share options 
exercised. The movement in equity was as follows:
 
Number
of shares £’000
Balance at 29 February 2012 356,161,887 35,616
Issue of share capital
Shares issued for cash 35,645,489 3,564
Shares issued to settle entitlements under the MPO 13,307,424 1,331
Shares issued in respect of employee options exercised 3,927,582 393
Balance at 28 February 2013 409,042,382 40,904
Issue of share capital
Shares issued for cash 19,354,511 1,935
Shares issued to settle entitlements under the MPS 43,579,002 4,358
Shares issued in respect of employee options exercised 4,988,072 499
Balance at 28 February 2014 476,963,967 47,696
Share premium reserve
This represents the amounts subscribed for share capital in excess of the nominal value of those shares.
Merger reserve
The merger reserve represents the difference between the fair value and nominal value of the 59,004,541 ordinary shares allotted 
to the vendors of the new businesses acquired since August 2008.
Share trust reserve
Transactions of the Company-sponsored EBT are treated as being those of the Company and are therefore reflected in the Parent 
Company and Group financial statements. In particular, the EBT’s purchases and sales of shares in the Company are debited and 
credited directly to equity. The share trust reserve comprises the costs of shares held by the EBT. During the year the shares were 
transferred to the beneficiaries.
Retained earnings
This represents cumulative net gains and losses recognised in the consolidated income statement.
Foreign exchange reserve
The foreign exchange reserve comprises all foreign exchange differences arising from the translation of the financial statements  
of foreign operations.
Dividend
During the year the Company distributed a dividend at £1.9m, this corresponded to 0.4p per share. 78
Advanced Computer Software Group plc 
Annual Report 2014
Notes to the consolidated financial statements
continued
25 Share options and management incentives 
Share option schemes
During the year, the Group implemented a new Save As You Earn scheme and granted options to certain employees  
under the existing Enterprise Management Incentive/unapproved share option scheme and Company Share Option Plan. 
The total expense recognised for the year from share-based payments was:
2014
£’000
2013
£’000
Equity-settled share-based payment expense 1,122 1,246
Enterprise Management Incentive (EMI)/unapproved share option scheme
The EMI scheme was approved by HM Revenue and Customs for share option grants that fall within the EMI rules. Options 
granted that do not fall within the EMI rules are deemed to be unapproved share options. Under the terms of this scheme all 
employees and directors of the Group are eligible to participate. The options entitle the recipient to acquire ordinary shares  
in the Company at an exercise price determined at the date of grant.
Marwyn Participation Option (MPO) and Management Participation Shares (MPS)
The MPO was an option over the Company’s shares held by Marwyn Management Partners LLP (Marwyn). 
On 17 September 2012 Marwyn exercised its option in the MPO scheme and was awarded 13,307,424 shares in the Company  
at an exercise price of 10p per share.
The key executives of the Group subscribed for MPS shares in Drury Lane (Jersey) Limited, a subsidiary of the Company. 
On 29 August 2013 the MPS scheme came to an end and 43,579,002 shares were issued in settlement of the scheme.
Accounting for the MPO and MPS
The MPO and MPS schemes were share-based payment arrangements and awards made under each scheme to the relevant 
counterparty were made using similar terms and conditions. 
In exchange for the MPO, Marwyn agreed to assist the Company in meeting its business strategy by providing advice and 
assistance in evaluating the merits of strategic acquisitions and support in the overall market positioning of the Group in order  
to create additional shareholder value. These services were provided for the duration of the vesting period. The Company was  
not separately charged for any of these services by Marwyn. At inception of the scheme, the Company judged these services  
to be substantially similar to those provided by a non-executive director of the Group. Consequently, the Company accounted  
for this scheme under IFRS 2 as if the services were rendered by an employee.
Each scheme entitled the counterparty to receive a fixed percentage of any increase in ‘shareholder value’ at the termination  
of the scheme. Each award was subject to the achievement of a growth condition and certain vesting criteria. Shareholder value  
for this purpose was broadly defined as the difference between:
 > the market capitalisation of the Company at the date of exercise; and
 > the sum of the market capitalisation of the Company on 29 August 2008 plus the aggregate subscription price of all ordinary 
share capital up to the relevant date of exercise, adjusted for dividends and any returns of capital to shareholders.
The growth condition was measured over a three-year period (the initial vesting period) from the commencement of the scheme 
on 29 August 2008 to 28 August 2011. In order for the participants to receive any award, the Company’s share price needed to 
have grown by an 11% compound annual growth rate over the initial vesting period. 
On 5 October 2011, the Remuneration Committee of the Board determined that the growth condition had been achieved and the 
awards therefore vested.
In the case of the MPO scheme, the counterparty was required to pay 10p (or nominal price) for the share on the date when  
the award was settled. However, the counterparty received an award equivalent to 5% of the increase in shareholder value after 
deduction of this price. The MPO scheme was treated as equity settled as the counterparty subscribed for ordinary share capital  
of the Company. There was no other settlement option. 
In the case of the MPS scheme, the counterparties subscribed for shares in a subsidiary company, Drury Lane (Jersey) Limited. 
On exercise of the awards, the counterparties sold these shares and received an amount equivalent to a predetermined proportion 
of 15% of the increase in the Group’s value. At the Company’s discretion, the amount could be settled in cash or issue of shares 
in Advanced Computer Software Group plc. Strategic report Governance Financials
Advanced Computer Software Group plc 
Annual Report 2014
79
25 Share options and management incentives continued
Long Term Incentive Plan (LTIP)
The LTIP was approved and adopted by the Remuneration Committee on 25 February 2014. The vesting of the awards will  
depend on share price growth measured over a three-year period. The scheme is open to certain senior employees and shares  
will vest according to performance criteria. The options are awarded at nil cost.
Save As You Earn (SAYE)
The Group has implemented five Save As You Earn schemes, in August 2009, August 2010, December 2011, December 2012  
and November 2013. Participation was open to all employees employed at the date of commencement of each three-year scheme.  
All participants agreed to save a fixed amount monthly into the scheme and in return received an option to purchase shares in the 
Company at a discounted price at the conclusion of the scheme. The discounted share price is calculated as the market price at the 
commencement of the scheme less 10%-15%.
Company Share Option Plan (CSOP)
CSOP share options are awarded to certain Group employees to incentivise them to positively impact the Group’s performance 
over the medium term. The options are awarded with an exercise price equal to fair market value and typically cannot be exercised 
until three years after the date on which the option was granted. Options granted to employees who leave before the exercise 
date will usually lapse. 
The number and weighted average exercise prices of share options are as follows:
 2014 2013
 
Weighted
 average
 exercise price
 (pence)
Number of
 options 
granted 
Weighted
 average
 exercise price
 (pence)
Number of
 options 
granted 
Outstanding at the beginning of the year 13.6 65,631,822 14.5 65,243,147
Granted during the year 87.8 43,756,519 12.0 3,911,170
Movement in the number of shares required  
to fulfil awards made under MPO/MPS – (41,569,293) 0.7 14,970,267
Options lapsed or exercised during the year 34.4 (6,017,309) 15.4 (18,492,762)
Outstanding at the end of the year 27.3 61,801,739 13.6 65,631,822
As at 28 February 2014 7,348,743 options were exercisable.
The fair value of all employee share schemes is measured using a binomial lattice model. Measurement inputs and assumptions  
are as follows:
For the options granted during the year:
Weighted
 average fair
 value of share
 options
(pence)
Weighted
 average share
 price of share
 options
(pence)
Weighted
 average
 exercise price
 (pence)
Expected
 volatility
Option 
life
Expected
 dividends
Risk-free 
rate
EMI (unapproved) 24.1 92.0 92.0 24.0% 3.0 0.4% 2.2%
CSOP 24.1 92.0 92.0 24.0% 3.0 0.4% 2.2%
SAYE 17.4 91.8 78.0 24.0% 3.0 0.4% 1.1%
LTIP 55.3 120.8 0.0 24.0% 2.5 – 1.3%
For the options granted during the year ending 28 February 2013:
Weighted
 average fair
 value of share
 options 
(pence)
Weighted
 average share
 price of share
 options 
(pence)
Weighted
 average
 exercise price
 (pence)
Expected
 volatility
Option 
life
Expected
 dividends
Risk-free 
rate
EMI (unapproved) 20.6 65.3 62.1 30.0% 3.0 – 1.7%
CSOP 19.8 61.4 61.9 34.0% 3.0 – 1.0%
SAYE 12.1 65.3 55.0 25.0% 3.0 – 0.6% 80
Advanced Computer Software Group plc 
Annual Report 2014
Notes to the consolidated financial statements
continued
25 Share options and management incentives continued
The expected volatility is based on the historic volatility adjusted for any expected changes to future volatility.
The range of exercise prices and contractual life of these options can be analysed as follows:
Date 
of grant
2014 
number
Exercise 
price
Contractual 
life
EMI 14/10/2008 800,000 10.0  10.0 
EMI unapproved 14/10/2008 200,000 10.0  10.0 
EMI 04/06/2009 21,500 10.0  10.0 
EMI 08/06/2009 300,000 10.0  10.0 
CSOP 06/01/2010 444,344 38.5  10.0 
EMI unapproved 06/01/2010 1,344,156 38.5  10.0 
CSOP 18/03/2010 562,621 40.0  10.0 
EMI unapproved 18/03/2010 2,076,000 40.0  10.0 
SAYE 13/08/2010 168,565 31.5  4.0 
CSOP 23/12/2010 121,470 34.0  10.0 
EMI unapproved 23/12/2010 1,267,060 34.0  10.0 
CSOP 23/12/2010 43,027 36.8  10.0 
EMI unapproved 14/06/2011 33,000 35.5  10.0 
EMI unapproved 30/11/2011 4,200,000 28.0  10.0 
CSOP 30/11/2011 1,258,438 45.8  10.0 
EMI unapproved 30/11/2011 841,562 45.8  10.0 
SAYE 12/07/2011 1,089,819 39.0  4.0 
CSOP 24/07/2012 149,869 57.8  10.0 
EMI unapproved 24/07/2012 457,131 57.8  10.0 
CSOP 01/08/2012 49,792 60.3  10.0 
EMI unapproved 01/08/2012 208 60.3  10.0 
CSOP 14/12/2012 93,552 71.8  10.0 
EMI unapproved 14/12/2012 238,500 55.0  10.0 
EMI unapproved 14/12/2012 406,448 71.8  10.0 
SAYE 28/12/2012 1,908,387 55.0  4.0 
SAYE 28/11/2013 3,351,290 0.78  4.0 
CSOP 03/12/2013 2,814,223 0.92  10.0 
EMI unapproved 03/12/2013 5,160,777 0.92 10.0
LTIP 25/02/2014 32,400,000 – 5.0
61,801,739
26 Subsequent events
On 31 March 2014 the Group acquired 100% of the ordinary share capital of Consultgrp Limited (Consult) for a net cash 
consideration of £2.4m, including shares yet to be issued on the exercise of options. The fair valuation of the target’s assets, 
liabilities and allocation of excess of consideration over net assets will be performed in due course. Strategic report Governance Financials
Advanced Computer Software Group plc 
Annual Report 2014
81
Company balance sheet
as at 28 February 2014
 Notes
2014
£’000
2013
£’000
Fixed assets  
Investment in subsidiary undertakings 3 127,348 109,884
Total fixed assets 127,348 109,884
Current assets
Debtors – due within one year 4 7,896 –
Cash at bank and in hand 193 125
Total current assets 8,089 125
Creditors: amounts falling due within one year 5 (73) (40)
Net current assets 8,016 85
Total assets less current liabilities 135,364 109,969
Creditors: amounts falling due after more than one year 6 – (600)
Net assets 135,364 109,369
Capital and reserves
Share capital 7,8 47,696 40,904
Share premium 8 72,615 58,364
Merger reserve 8 7,826 7,826
Share trust reserve 8 – (1,777)
Retained earnings 8 7,227 4,052
Shareholders’ funds 8 135,364 109,369
The notes on pages 82 to 84 form part of these financial statements. These financial statements were approved by the Board  
of directors and authorised for issue on 4 June 2014 and were signed on its behalf by:
Guy Millward
Director
Company number 5965280 82
Advanced Computer Software Group plc 
Annual Report 2014
Notes to the financial statements of the Company
1 Accounting policies
The following accounting policies have been applied consistently in dealing with items which are considered material in relation  
to the Company’s financial statements.
Basis of preparation
The financial statements have been prepared in accordance with applicable accounting standards generally accepted  
in the UK and under the historical cost convention. The accounts have been prepared on the going concern basis.
Profit and loss account
Under section 408 of the Companies Act 2006 the Company is exempt from the requirement to present its own profit  
and loss account. The profit for the year ended 28 February 2014 is disclosed in note 8.
Taxation
Current tax, including UK corporation tax, is provided at amounts expected to be paid (or recovered) using the tax rates  
and laws that have been enacted or substantively enacted by the balance sheet date.
Deferred tax is recognised, without discounting, in respect of all timing differences between the treatment of certain items for 
taxation and accounting purposes which have arisen but not reversed by the balance sheet date, except as otherwise required  
by FRS 19: Deferred Tax. Deferred tax assets are recognised to the extent that it is regarded as more likely than not that they will 
be recovered.
Investments in subsidiaries
Investments in subsidiaries are stated at cost less provision for impairment value. 
Employee Benefit Trust
As the Company is deemed to have some control of the Employee Benefit Trust, it is treated as a subsidiary undertaking.  
The assets (other than investments in the Company’s shares), liabilities, income and expenses are included on a line by line basis  
in the consolidated financial statements. The investment in the Company’s shares is shown in the share trust reserve and is treated 
as a deduction from equity in the balance sheet.
Share-based payments 
The Company operates equity-settled share-based option plans. During the year the Company changed its policy from accounting 
for the options granted to the employees of subsidiary undertakings as an increase to the investment in subsidiaries with the 
corresponding credit recognised in equity, to accounting for the options in the accounts of the employing subsidiary.
The fair value of employee service is based on the fair value of the equity instrument granted. This expense is spread over  
the vesting period of the instrument. The corresponding entry is credited to equity. The liability for social security costs arising  
in relation to the awards is measured at each reporting date based upon the share price at the reporting date and the elapsed 
portion of the relevant vesting periods to the extent that it is considered that a liability will arise.
Dividends
Dividend distributions to the Company’s shareholders are recognised in the period when paid or, if earlier, in which the  
dividend is approved by the Company’s shareholders. During the year a dividend of £1.9m was distributed to the shareholders;  
this corresponded to 0.4p per share. 
2 Wages and salary costs
The Company has seven directors; their costs are borne by subsidiary companies and their remuneration details are provided  
in note 8 to the Group financial statements. Strategic report Governance Financials
Advanced Computer Software Group plc 
Annual Report 2014
83
3 Investments in subsidiaries
 £’000
As at 28 February 2013 109,884
Investment in subsidiaries 23,116
Share incentive charges – subsidiaries (5,652)
As at 28 February 2014 127,348
The investment is the cost of the Company’s holding in Drury Lane (Jersey) Limited and Intercede 2445 Limited.
The significant undertakings, in which the Company has an interest at 28 February 2014 of more than 20%, either directly or 
indirectly, are as set out in note 23 to the Group financial statements.
4 Debtors: amounts falling due within one year
 
2014 
£’000
2013 
£’000
Amounts due from Group companies 7,896 –
5 Creditors: amounts falling due within one year
 
2014 
£’000
2013 
£’000
Accruals and deferred income 73 40
6 Creditors: amounts falling due after more than one year
 
2014 
£’000
2013 
£’000
Amounts due to Group companies – 600
7 Called up share capital
  2014 2013
 Number £’000 Number £’000
Authorised for issue    
Ordinary shares of £0.10 each 1,000,000,000 100,000 1,000,000,000 100,000
Allotted, called up and fully paid  
Ordinary shares of £0.10 each 476,963,967 47,696 409,042,382 40,904
Details of the share capital issued by the Company and share options are shown in notes 24 and 25 of the Group  
financial statements. 84
Advanced Computer Software Group plc 
Annual Report 2014
Notes to the financial statements of the Company
continued
8 Reconciliation of movement in shareholders’ funds
 
Ordinary
share capital
£’000
Share 
premium
£’000
Merger 
reserve
£’000
Share trust
 reserve
£’000
Retained
 earnings
£’000
2014 
Total
£’000
2013 
Total
£’000
Opening balance 40,904 58,364 7,826 (1,777) 4,052 109,369 77,969
Issue of share capital 
For cash 1,935 13,548 – – – 15,483 28,516
In respect of the exercise  
of options 499 1,090 – – – 1,589 2,428
In respect of exercise of the MPS 4,358 – – – (4,358) – –
Cost of issuing share capital – (387) – – – (387) (790)
Transfer of shares held in EBT – – – 1,777 (1,777) – –
Share-based payment – – – – 1,122 1,122 1,246
Equity dividend paid – – – – (1,883) (1,883) –
Dividends received – – – – 7,964 7,964 –
Profit for the period – – – – 2,107 2,107 –
Closing balance 47,696 72,615 7,826 – 7,227 135,364 109,369
9 Result for the year
The profit for the year was £2.1m (2013: £nil).  Strategic report Governance Financials
Advanced Computer Software Group plc 
Annual Report 2014
85
Company information
Registered office
Munro House
Portsmouth Road
Cobham
KT11 1TF
Registered number
5965280
Nominated adviser and joint broker
N+1 Singer Capital Markets Limited
One Bartholomew Lane
London 
EC2N 2AX
Joint broker
Arden Partners plc
125 Old Broad Street
London
EC2N 1AR
Banker
HSBC Bank Plc
8 Canada Square
London
E14 5HQ
Auditor
KPMG LLP
Arlington Business Park
Theale
Reading
RG7 4SD
Solicitor
Morrison & Foerster (UK) LLP
City Point
One Ropemaker Street
London
EC2Y 9AW
Registrar
Capita Registrars Limited
34 Beckenham Road
Beckenham
BR3 4TU Advanced Computer Software Group plc
Munro House 
Portsmouth Road 
Cobham 
Surrey KT1 1 1TF
T: +44 (0) 8451 606 162 
F: +44 (0) 1932 584 001 
E: investor-relations@advancedcomputersoftware.com
www.advancedcomputersoftware.com