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Worth a note that FinnCap has actually adjusted pre-tax profit up from £5.1m to £5.6m.
Everyone takes a profit eventually. Everyone has an agenda. I try to take little notice of share transfers when the business is sound and the investment case persuasive, though I like to see a broad cadre of professional investors. Something IC mentioned, thankyou. But it must be right to say that the 25% holding sold by Mxc at prices between 82.5 and 104.6 were not bought on a whim and without enquiry and due diligence by those with the necessary resources and contacts, the results of which are confirmed by the latest company releases. Nigel WRAY was one such, himself an Mxcp shareholder also, buying shares from them at 101.5 and raising his holding in Castleton from 7% to 13%. With shares from another related company involved, that can be seen as furthering his Mxc interest at the same time as assisting Mxcp in raising cash for it's future acquisitions, but in relation to Castleton and with Nigel WRAY having a foot in both camps I take it as an indication of future prospects from a person who may be regarded as having more relevant knowledge than most. It was not a philanthropic gesture.
We have done well to divest ourselves of Mxcp shares, and their evergreen options, with no such options remaining. That large recycling of shares should go towards consolidation around this price. In my opinion. Usual caveats apply.
Thank you for posting. Reporters seem to take the view of steady reliable progress.
IC View
Solid half-year numbers were accompanied by news that the group intends to introduce a progressive dividend policy for the full year. Early investor MXC sold out of its stake in Castleton during the period, although the proceeds will be churned back “in line with MXC's stated strategy of investing in technology companies”. Even with the divestment, institutional investors remain prominent on Castleton’s shareholder register. Trading at 16 times forecast adjusted earnings, the shares look reasonably priced against software peers. Buy.
Last IC View: Buy, 89p, 12 Jul 2018
There wasn’t much to lament in Castleton Technology’s (CTP) half-year results to September. Strong revenue growth fed through to a 75 per cent increase in operating profit to £0.62m, albeit on an 80 basis point reduction in the underlying margin (ex exceptional items) since the March year-end. The social housing software specialist said that its cost base has stabilised following the integration of acquired assets, so investors might realistically expect margins to build over the second half. The steep rise in reported profits gave way to a fall in net earnings, but this was expected as the 2017 half-year returns were buoyed by exceptional tax credits.
CTP:LSE
Castleton Technology PLC
1mth
Today change
0.00% Price (GBP)
98.00
Professional services revenues grew by 44 per cent, which also drove a change in the group’s overall sales mix, so that recurring revenues constituted a smaller proportion of the group total from a year earlier. This should be a temporary effect, given the rising number of multi-year contracts, including a Dumfries and Galloway Housing Partnership deal, worth £1.2m over four years, and an extended managed services contract with Circle Voluntary Housing Association.
Broker FinnCap forecasts adjusted pre-tax profits of £5.6m for the year to March 2019, with EPS of 5.9p – up from £4.5m and 5.2p in FY2018.
Make that 98p. But we shall have our down days too, no doubt.
97 to sell. The price at which Mxcp, founder and largest shareholder, sold the final 5.6m shares of its holding back in August, having sold the rest at higher prices and cashed in options for future ventures. Somebody bought them all, looking for a return. Just a thought as we reach this pice again.
In the absence of anything else being pointed out, it could be to do with Cannacord's acquisition of Hargreaves Hale. Anyway, they've gone up through 10% Tuesday.
Can't immediately work that one out - Castleton Major Shareholders gives them 9.14% on 18th. October. So something happened, wrong, or just me.
Cannacord doubled holding from 5% - 10%. We may see the other side of that shortly.
The board has decided to pay a dividend and pay off/service debt. That is a win/win. And of course it is in the nature of a progressive dividend that it increases with earnings, subject to capital requirements. There will be ongoing discussion with their lenders. A sensible balance has been struck. Healthy trading at the price on offer, following the rather sudden widespread drop, so investors agreeing with sentiment here.
Plenty of buys coming in. All looking very good and low price been taken advantage off as results showed the company is steadily progressing and a progressive divi going to be implemented.
in morning note reiterates price guidance set in June of 125.
We are not alone! " The market" likes it, and can take advantage of the general sell off down from 105.
Some big numbers changing hands. Somebody selling, somebody buying. Good for us with no change in sp.
Can't get into TechMarketView - not a subscriber but no previous probs. Oh well, so here's a summary - no opinion - from Shares Mag.
2018, 09:47Source - SMW
Software group Castleton Technology said Tuesday pre-tax profit doubled in the first half of the year through September supported by revenue growth in its software solutions and manged services businesses.
For the six months to 30 September, pre-tax profit more than doubled to £0.5m from £0.2m a year earlier and revenue grew 20% to £12.9m, while adjusted earnings (EBITDA) rose to £3.0m from £2.3m.
The uptick in revenue growth was supported by strong performance in the software solutions division which saw revenue grow 21%, and the managed services division, which delivered growth of 18% from a year earlier.
Recurring revenues of £7.0m represented 55% of total revenues, compared with 63% a year earlier, following strong professional services growth in the period of 44%, which led to a change in mix, the company said.
Looking ahead, however, the company forecast further growth in recurring owing to an increasing number of multi-year contracts recently entered into, as well as its success in selling products on a hosted basis.
'I am pleased with the progress the Group has made in the first six months of FY19, with the strong organic growth achieved demonstrating Castleton is delivering against its stated strategy. Additionally, new contract wins and the acquisition of the perpetual software licence in relation to the platform upon which Castleton's modelling solution is based further strengthens Castleton's position in the market and offering to customers, said Dean Dickinson, CEO of Castleton.
'The Board remains optimistic about the Group's success and is confident that the growth achieved during the period will continue as we further cross-sell into our customer base. Since the period end, the Company has successfully obtained approval for a capital reduction process which gives the Company the ability to make distributions to shareholders and it is our intention to commence a progressive dividend policy for the full year.'
It's all good and well in line at least. Just waiting now to see what TechMarketView have to say. They generally do a nice little sensible summary. Then I'll have a listen to the company's recorded comments posted earlier.
The dividend will come and for this full year, but I anticipated some dates with this RNS. But of no consequence.
It appears Kinetic is building through cross selling in Australia. I believe there are 50 or so customers there, so although it is a slow business, if Castleton is as successful as in the UK and ROI it will be a very useful addition to the contracted repeat, cumulative revenue and increasing profitability.
I forgot. I said previously we should take particular notice of the PBT this time, as net profit was thrown out last full year due to credits applied, inflating the figure and EPS. I suggested something better might occur, but it is still a very healthy 170% odd increase on half year figures. And it is now confirmed cost base is stable going forward. And the £600k mobile payments will cease this year, and be available for the bottom line.
No surprises, which is what we have come to expect - just following the successful strategy based on cross selling into existing customers with lots of headroom there. But they are plainly looking to bring new products to market, and ensure they remain competitive by constant update of solutions -
"Our contracted backlog of revenue has grown 12% (Software Solutions) and 14% (Managed Services) year on year which gives us good forward visibility. We remain focused on product development with the aim of providing our customers with the technology and services they require to operate effectively and achieve their goals."
Cash conversion now at 102% - and the position for future growth summarised -
"The market opportunity remains large and given the Group's now established position as a 'one-stop-shop' serving the social housing sector, the Board is very optimistic about the Group's continued growth prospects."
I am a little surprised, but not disappointed re. the dividend, having regard to the wording -
" it is our intention to commence a progressive dividend policy for the full year."
That satisfies me. Revenue up to the extent Castleton appears just about on track to meet full year broker forecast of £26.3m. Good to see a change in the revenue mix, with a balance forming against sales solutions from Professional and Managed Services, which was the intention. Profit up, and for me a pleasing increase yet again in the contracted backlog of work, and with recurring revenue giving further visibility of earnings. I am a little surprised that there has been no date set on the dividend, but the intention to implement it this year is reiterated.
It has been nothing but good news and steady progress here, with an innovative team now building on its integrated acquisitions through cross selling, whilst introducing
new products and bringing it's managed service offerings to the fore. I shalł really be looking for the anticipated confirmation that future performance is likely to be sufficiently strong to continue to hit Castleton's own minimum 10% year on year growth target, whilst bearing in mind, housebroker FinnCaps reiterated target from last June of 125p., and the LTIP senior manager ( non director ) aspiration of 133p during next financial year to stay in tune with full vesting at 186.
And a start on the progressive dividend.
Held this price for a couple of weeks since dropping back from £1 plus, apparently as a result of the general sell off. Somebody is picking up any sells at 90p now. Currently at the same price as when tipped as a buy by Investors Chronicle in July.
The company has made operational headway since then, as per previous posts, the 9th. October update was very positive, and we're now closer to implementation of the promised maiden dividend.
Waiting on Tues 6th. November information, and any follow up reporting. There will certainly be comment from TechMarketView, who are following and are so far quite impressed.
Castleton's drive to migrate customers to their private cloud fully hosted and managed service is gathering strength. It seems likely more will be said about that next week.
https://www.castletonplc.com/2018/10/31/journey-to-the-cloud/