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It's all gone flat. Results not resonated with pi's that's for sure, and I can understand that, whilst not agreeing it for myself.
There's the Australian thing ( 10% of the business there, and resolved they say.) And there's increased expenditure as against profit. But you have to spend to add value for the company as well as from a customer's standpoint, and that's been done.
From a shareholders perspective, just on P/E, last year's actual at 107.5p was 17. That's reasonable. This year if Finncaps target of 140p met it'll be 19.9, and at the same time on unchanged profit forecast Castleton will be just £200k shy of being debt free. I know it's forecasts, but FinnCap discussed with CFO and amended their figures accordingly, set against a background of company success and FinnCap correct ( more or less ) forecasting, so it's the best I've got.
So I'm running with that.
We're in the doldrums price wise just now. Maybe there'll be new news on success arising from recent expenditure The Cloud and all that. We'll have to wait for that, and for interims for Australian news unless they do something viewed as remarkable before then.
Been at near enough this price for weeks. Over 1mil volume today, and we're down just under 1%. I'm thinking, hoping, we must have established a base level here. Anyway, all those shares over the past weeks and today starting again at this price.
I imagine the trades at 105 relate to the holdings RNS. Such large trades are likely between parties and notified to market, brokered by Finncap.
Today's response to the RNS was disappointing. Sometimes that happens. But it has not deterred BGF, a patient investor. And it strengthens the investor base.The detail in the RNS reaffirms my decision to hold for the present, and greater forward momentum is anticipated in the second half. On Australia, it is a pity that individual incompetence has marred the otherwise excellent results. Dean Dickinson will keep a sharp eye there. Raising the total revenue was more costly in comparative terms, but the larger portion of revenue is contracted and therefore repeat. And adding 60 customers to those taking more than one product or service in the year is impressive. Reading the previous posts, for which I am grateful, it appears that the brokers, who have been fairly accurate to date, sought clarification from Castleton on matters relating to forecasts generally, and the realistic expectation of earnings from Australian operations. They have erred on the side of caution, and as a result of lower amortisation and depreciation over this year are able to keep profit figures as previously forecast. That is good news after debate with the CFO, and the net result is a saving of the deferred consideration to the Kinetic vendors. Dean Dickinson is pleased with Australia's first quarter - hopefully under competent management they will progress from there and recover any lost ground, initially with sales of EDRM and mobile. And there is the dividend as promised - not worth a lot but a positive statement regarding future cash generation, and the ability to make acquisitions from existing cash and arrangements, whilst paying down debt. A perfectly satisfactory RNS from a growing company.
BGF, a new 3%er, weighs in today at 3.1%.
being introduced today as the latest partner at Castleton Cloud Discovery Event in London. Associations can deal direct, but it all adds to the one stop shop integrated proposition.
Castleton Technology: cross-selling drives strong FY performance
Georgina O'Toole, 10:08, 18 June 2019
Casteton logoCastleton Technology is not one to sit still. Its list of achievements over the last year is long and all have all been covered in UKHotViews (see UKHotViews archive). They have included the launch of Castleton.DIGITAL, a self-service customisable digital delivery platform; the acquisition of DeeplakeDigital, a provider of digital tech for landlord and tenant communication in social housing; the acquisition of Castleton India, providing additional development capability; and the acquisition of an exclusive and perpetual license for its modelling solution platform.
The full year results reveal that despite all the corporate activity, management has kept its eye on the ball. In the year to 31st March 2019, the company achieved organic growth in both revenue and adjusted EBITDA. Total revenues were up 13% to o£26.4m (organic growth of 7%) and adjusted EBITDA rose 24% to £6.3m, pushing the margin from 22% to 24%. The only blot on the horizon seems to be the performance of the Australian business following the acquisition of Kinetic Information Systems in December 2017 (see Castleton buys and builds down under).
But the KPI we track most closely for Castleton is the percentage of customers taking more than one product or service. That’s because Castleton has ‘bought and built’ over the years, and with a finite social housing market, cross-selling and up-selling its solutions is a big driver of future growth. That figure is particularly pleasing. The proportion of customers taking more than one product or services has risen impressively from 40% in FY18 to 50% (of 600 housing association customer) in FY19 – the result of numerous multi-year and multi-product contracts signed throughout the year.
A real boost has been the ability to deliver some milestone projects at early adopter sites for the integrated solutions; any clients or prospects taking a ‘wait and see’ approach, now have limited excuses not to progress. Castleton will be feeling pleased that recent investments to support future growth can be justified.
Thank you. Pressed a button I shouldn't have earlier. Sorry. I'm all for prudence with the possibility of an upwards lift. That still gives us a forecast of adj. PBT of £6.4mil, which if it pans out as indicated will near enough be sufficient, should that choice be made, to clear debt as near as makes little difference. That will be a milestone in itself.
If they wish to acquire, they have the cash coming in.
Forecasts
Following the acquisition of the Australian business in December 2017, a new General Manager was appointed to head up the Australian business. After some execution issues, the General Manager left in October 2018; furthermore, the vendors of Kinetic decided to move on before the end of their earn out period (foregoing potential deferred consideration of AU$0.5m). Internal promotion has steadied the ship and the last quarter of trading was
encouraging.
Nevertheless, the expected net effect is a reduction in revenue expectations from Australia of £1.0m, and of EBITDA by £0.2m. Alongside review of performance in the whole group, with a focus on margin quality, we review group revenue £-1.29m, and EBITDA by £-0.14m; however, with lower D&A, adjusted PBT remains unchanged; and with lower tax, Adj dil. EPS improves 4%.
Dividend expectations are in line for FY19 forecasts. We had assumed an increase with payment of both interim and final dividend in FY20; and a more normal 10% growth rate from 10%. However, on reflection and discussion with management, a consistent 10% growth rate with room to upgrade is considered more prudent, focusing on debt repayment and capacity for M&A as well as emphasising cashflow discipline with a growing dividend.
I'll add a bit more from FinnCap
Castleton has delivered results in line with forecasts, confirmed at the trading update
of 8 April. Recurring revenue grew to £15.4m (FY18: £14.0m), 58% of group revenue and only down from 60% because of stronger growth in Professional Services associated with client take-ons. EBITDA margin expanded to 24.8% in 2H19, with lower-margin hardware revenue weaker in the mix, lifting 2H gross margin to 77% (2H18: 71%). The maiden 1p dividend has been complemented by the acquisitions of Deeplake (giving two-way landlord tenant text communication functionality as well as 80 customers, 22 of which are new to Castleton) and the formerly outsourced R&D base in India, alongside a reduction in net debt. Net debt of £4.6m (Castleton reports £5.1m after adjusting for the equity accounting element of the loan notes, and deferred consideration) shows the benefit of £4.8m free cash flow (FY18: £3.6m). FY20 forecasts are tweaked (revenue -4%; EBITDA -2%, adj PBT unchanged; EPS +4%).
?Delivery of three early adoption sites for Integrated Solutions has already delivered referenceability to encourage further wins. Continuing R&D has led to 6 new products and 26 product releases, lifting the number of customers taking two or more products to 50% (40%). The Australian operation hit some resources speed bumps, however revenue still grew from £1m to £1.9m. The merger of the Software Solutions and Managed Services businesses is expected to aid cross selling and the increasing ‘cloud first’ attitude which some new and existing customers intend to embrace.
?Positioning itself as the ERP to the Social Housing sector, Castleton performs well in comparison with Accounting & Enterprise software peers, exceeding the Megabuyte peer group median margin, margin expansion, and cash conversion, while matching organic growth. We lift our target to 16.4x FY20 EBITDA, compared with peers at 15.5x, given premium, and still improving, performance.
I'll add a bit more from FinnCap:-
Castleton has delivered results in line with forecasts, confirmed at the trading update
of 8 April. Recurring revenue grew to £15.4m (FY18: £14.0m), 58% of group revenue and only down from 60% because of stronger growth in Professional Services associated with client take-ons. EBITDA margin expanded to 24.8% in 2H19, with lower-margin hardware revenue weaker in the mix, lifting 2H gross margin to 77% (2H18: 71%). The maiden 1p dividend has been complemented by the acquisitions of Deeplake (giving two-way landlord tenant text communication functionality as well as 80 customers, 22 of which are new to Castleton) and the formerly outsourced R&D base in India, alongside a reduction in net debt. Net debt of £4.6m (Castleton reports £5.1m after adjusting for the equity accounting element of the loan notes, and deferred consideration) shows the benefit of £4.8m free cash flow (FY18: £3.6m). FY20 forecasts are tweaked (revenue -4%; EBITDA -2%, adj PBT unchanged; EPS +4%).
?Delivery of three early adoption sites for Integrated Solutions has already delivered referenceability to encourage further wins. Continuing R&D has led to 6 new products and 26 product releases, lifting the number of customers taking two or more products to 50% (40%). The Australian operation hit some resources speed bumps, however revenue still grew from £1m to £1.9m. The merger of the Software Solutions and Managed Services businesses is expected to aid cross selling and the increasing ‘cloud first’ attitude which some new and existing customers intend to embrace.
?Positioning itself as the ERP to the Social Housing sector, Castleton performs well in comparison with Accounting & Enterprise software peers, exceeding the Megabuyte peer group median margin, margin expansion, and cash conversion, while matching organic growth. We lift our target to 16.4x FY20 EBITDA, compared with peers at 15.5x, given premium, and still improving, performance.
Thank you for those, 42.
The you tube is very watchable and positive. Further comment there on Australia ( the only downside to the results comment) Mr. Dickinson refers to it as a minor execution problem resolved in Q4 and turned for the better in Q1. Any backlog should feed through into the rest of this year.
And, as expected from FinCap, an uplift from 125 to 140, which will overlap the LTIP which senior department employees have succeeded on for last year.
Productive rest of year ahead we're told, with recent developments now coming together to cross sell into the large market in the 600 strong customer base.
Castleton Technology (CTP): Corp
Prelims
Castleton’s prelims report performance in line with the trading update: EBITDA of £6.3m (vs £6.3mE) from revenue of
£26.4m (vs £26.5mE), with operating cash conversion of 97%, and free cash flow of £4.8m. With the maiden dividend
reaffirming the board’s confidence in cash flow and net debt approaching breakeven, the balance sheet retains capacity
for acquisitions to complement 7.3% organic growth achieved in FY19, and expected to persist into FY20 and FY21.
EBITDA margin expansion from 24% (FY19) to 26.5% (FY21) is expected to derive from continuing improvement in
cross sales, and the integration of the now unified Software and Managed Services divisions. With operating
fundamentals consistently positive and improving, we lift our target price to 140p (125p), representing a 16.4x
EV/EBITDA multiple and 4.5% target free cash flow yield.
Not a brilliant immediate response to a generally pleasing RNS. And a seller has taken an opportunity. We'll see how the day and the week progresses.
Fin cap will review this now, and l believe will raise the target price. TechmarketView should speak very favourably also. And maybe others.
You've got to read that line by line to see how good it is, and excellent future prospects.
There's a lot in there, but actually is as mentioned on here over the period. What we didn't know about really was the Australian thing, but that's explained and dealt with, and goes to people rather than product. Unfortunate, but hasn't prevented an impressive set of results.
They are basically as forecast, and targets met. Dividend as promised, 1p as expected and progressive. It's not the amount, it's about the stage the company has reached. As mentioned on here before, one more year of earnings like this and Castleton will be minimally short of debt free. And contracted backlog of work is rising.
It adds up to "The combination of a healthy pipeline of new business, together with our new development capabilities and our improved organisational structure, give me confidence for the year ahead and I expect that we will show continued progress in both our financial and operational metrics when we next report."
And we also have a substantial contract renewal.
Another excellent results. The company continues to grow.
Profits up.
Cash up.
Debt down.
Date for dividend.
Castleton partner with several of the competitors including Aareon. Orchard and Capita, https://www.castletonplc.com/about-us/partners/ As an aside, Sagacity is an Mxc Company. We don't as far as I know have anything to do with the huge private equity Civica, who also operate in Australian housing.
The trend is towards combinations, as Castleton has done by acquisition and partnership - not necessarily good for associations, though the benefits of competition to associations seem to be offset by better integration of products and the ease of dealing with a single provider on technical matters. The market is evolving
Accepting there will always be competition, I think we're well-placed with the solutions it has and being focused, nimble and innovative, and with that large customer base which it's looking to migrate to the new cloud. I see it's also advertising a fresh post of Head of Technical Delivery to sharpen up their processes.https://www.castletonplc.com/careers/head-of-technical-delivery-professional-services/
The company has the solutions it needs, bought as best in breed, and has integrated them on mobile. It has shown the competence in house both to update old and to create new solutions catering for the vagaries of its potential customer base. Where it does not own best in breed and sees benefit in perhaps more generic solutions, such as Gantus or Localz, it partners with them and integrates the product within its portfolio. It has the most modern cloud storage available. In short, it's offering is at the top tier of whatever customers require. Wifi, or a futuristic derivative is here to stay and there is increasing interest in its application. Housing associations are cautious customers. The initiative with HS Homes demonstrates that Castleton is willing to embrace new technology, thus future proofing its products. Regardless of immediate take up of the Alexa product, what some might view as the icing on the cake, this is another shrewd move by Dean Dickinson in 'selling' Castleton to the market. To the best of my knowledge the only other pure social housing competitor is Aareon. With barriers to new entrants so high as to be well-nigh insurmountable, Castleton with its existing large contracted customer base seems even better placed to progress than before.
Continued from below
Modern methods of construction are increasing in popularity, and it’s only a matter of time before the Uber concept will successfully be applied to other areas such as repairs and maintenance.
We’re also seeing a rapidly changing context for the social housing sector, with new entrants, for-profits and changing customer demands all having the potential to significantly change the face and structure of how the sector operates. These areas create significant risks for not embracing change.
Other sectors – including those similar to housing – are embracing these areas and truly transforming the way that they operate. That rate of change is exponential, meaning the gap with housing will only get larger.
The potential opportunities for future service delivery are huge. The question is will we be able to say the same about the social housing sector in 2025, and if not, why not?
Michael Appleby, markets and growth director, Altair
There's an article here talking about this sort of thing:-
If social landlords stand still on innovation, they are in danger of being left behind
COMMENT
30/05/19
BY MICHAEL APPLEBY
While some housing associations are adapting well to the use of new technology, others are in danger of being left behind, writes Michael Appleby #ukhousing
If social landlords stand still on innovation, they are in danger of being left behind, writes Michael Appleby #ukhousing
What might our sector look like in 2025? That was the question that we posed in our first Future Gazing, Future Shaping report in 2016. We’ve just revisited it and while the world around us is changing fast, we think there is more that the sector can do to keep pace with the rate of change, especially in technology.
At the time of our first report there was a sense of excitement around the sector – a feeling that the technology integration we have observed in other sectors would transfer to social housing and that aspects of services would start to be delivered quite differently, responding to the expectations of customers.
The sector expected social housing organisations to look very different in 2025.
Our latest report, working with technology consultants 3C (available below), aimed to track how much progress has been made in the sector in delivering this transformation.
The picture is mixed. There are some that continue to explore the use of data and technology to provide a service that reflects the needs of modern interaction with residents, customers and tenants. And they are genuinely transforming services.
However, the top three drivers for transformation remain the same as in 2016: improving customer experience, increasing efficiency, and implementation of a new corporate strategy. But nearly a third of organisations do not believe they have the skills available to drive the required change, with 90% of respondents describing themselves as either ‘early adopters’ or ‘early majority’ when it comes to their approach to innovation and transformation.
There are, however, some excellent examples in the sector of organisations that have challenged the status quo and are truly embracing new approaches, and interestingly have results that show that this can lead to improved customer satisfaction and greater efficiency.
However, a standout finding in our report is that about 90% of organisations currently still have less than 40% of their customer transactions completed online.
And it does not have to be about innovation, it’s about adaptation. There is already the standard technology that is available but still to be used effectively across the sector.
Soon, 4G will be a thing of the past. Artificial intelligence and automated services are now proliferating in other sectors. Technology to create smart homes is becoming more advanced all the time and there are forecasts that most homes will have an Alexa-style device within five years.
Modern met
Showing off their investment in Cloud technology
https://www.eventbrite.co.uk/e/your-business-in-safe-hands-registration-60031456703
https://www.24housing.co.uk/opinion/alexa-open-housing-solutions/
Castleton are ahead of the market with this. Time will tell if it is an innovation that other housing providers will wish to take up.