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Adding to what you have said, firstly I am bound to say this is a strange situation. On the basis of what the company and FinCap published, these are more of my thoughts. I do not know, but suspect the largely generic suppliers, a few of whom partner with Castleton and use Castleton EDRM and Agile mobile on their implementations, must have been affected in a similar way. It is difficult to comprehend how this downturn can suddenly in a 3 month period affect Castleton alone. They are all private companies apart from Capita and so we hear little. We have no easy comparators. But on the positive side we know Castleton relatively recently secured contracts with housing associations for full end-to-end managed services and also full suite solutions, providing part of the referenceability you mention. In the year ending March cross-selling went well, with the number of customers taking more than one individual solution increasing from 40% to 50% and their customer satisfaction survey ran at 96%. There is nothing wrong with that, quite the opposite. Despite the poor trading update, I cannot come up with anything 'wrong' with the company, which has been performing in line right up to the last trading update, and nor apparently can the NHF. It's products have stood the test of time. We have an innovative, responsive management, who as an example are pioneering the Alexa solution with a customer, and Castleton develop and market their own new products in response to changing customer requirements. Castleton Community is just one such. I therefore accept that the situation indeed represents a 'short term challenge' (as described by Dean Dickinson, with broker explanation) which will be overcome once the sector starts moving again, in the direction for which the company has planned. I think this price would react very positively on contract news. We can but wait for more information.
t's a bit ironic really. They've been preparing ( new data centre space and merging software and managed services ) for bigger and better multi-year contracts, and got ahead of the market ( on what we're told ) with one off deals drying up. Anyway, on the bigger ones it was only in July this year that we learned they had previously bid on 2 large full suite contracts. They got one. They won the other on price, but not on referenceability. They have that now and are happy to bid on more. Knowing how long the tender process takes there is still plenty of time for success on at least some of the 7 new live bids mentioned.
This is not a fly by night company. Mr. Dickinson has said he is always open and transparent in company affairs, and says things as they are. I think he must at least have sight on improved figures for the second half. The use of 'material' may be, material. I would expect him to put some meat on the bones of a trading update which saw a 40% drop, when they report on 5th. November.
We know that Castleton is a successful and growing company. It's products are valued, obtained as a result of the acquisition of other companies and their best in breed solutions. It has grown to be the largest pure social housing IT provider from a virtual shell company, in the face of competition from large and established providers.
The recent RNS and FinCap comment when read together indicate that the company was in a sense the victim of a change in market conditions, which has resulted in associations not buying one off solutions and carrying on with what they have whilst they consider the move to the cloud, full managed services, and what I can call ' bigger' and more integrated full suite technology. The one-stop shop. Castleton has prepared for that. I had expected one or two larger deals to be coming through, based on the referenceability Castleton now has from it's first movers. They may still be. In any event, associations have a need for modern technology and someone has to provide it. But there is something in the pipeline. I doubt Dean Dickinson would otherwise have spoken of 'material' improvement in the second half. In any event, associations have a need for modern technology and someone has to provide it. I believe Castleton has positioned itself well for the future.