Tuesday July 29, 2014


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Advanced Computer Software – Does a £44 million placing make any sense?

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- Tom Winnifrith

Advanced Computer Software (ASW), arguably the best run buy and build software services group in London, has announced a £44 million placing at 80p. Post the completion of that placing Advanced will have (according to its house broker) net cash of £42 million and credit lines available to it of £74 million to make acquisitions. But in the absence of such deals on the table right now, the issue is dilutive so are investors buying a pig in a poke?

According to the house broker Arden Partners, if Advanced’s CEO Vin Murria makes no acquisitions the effect on earnings per share of this placing is to reduce the February 28th 2014 forecast from 4.9p to 4.5p and the 2015 forecast from 5.2p to 4.7p. Arden forecasts earnings of 4.5p this year ( up from 4.2p last). But to assume such numbers is to bet against Murria who, quite simply, has the best track record in buy and build in UK software services. She is a bird worth backing and following.

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